The United States and Hungary terminate double taxation treaty, relations worsen
The United States has terminated the double taxation treaty between it and Hungary. Its provisions are still in force for this year. Next year, however, companies and individuals with US interests face big changes, mostly negative ones.
The US is terminating the agreement
Last July, the United States notified Hungary that it was terminating the double taxation treaty between the two countries, Index reports. The provisions of the expired agreement can still be applied for tax purposes until 31 December 2023. This means that there will be no change in the tax treatment of income earned until the end of this year, the National Tax and Customs Administration (Nemzeti Adó- és Vámhivatal, NAV) said on its website.
For a long time, Index writes, it was uncertain how definitive the denunciation of the agreement would be. However, based on the NAV’s information and the latest US position, the treaty is now considered to be terminated permanently, said Lajos Bagdi, partner in the tax and legal advisory business of Niveus Consulting Group. The grace period lasts until the end of 2023.
Under the treaty, if a Hungarian investor buys a US stock on a stock exchange and receives a dividend, he orthey will pay 15 percent US withholding tax on the dividend income and will not be subject to any additional Hungarian personal income tax. Thus, double taxation is avoided.
What is the consequence of the termination of the treaty?
However, if the treaty is terminated, Hungarian investors will be subject to a 30 percent withholding tax starting from 2024, and an additional 5 percent Hungarian personal income tax. This will bring the total tax burden to 35 percent.
If the agreement is terminated, interest income will be considered other income, subject to a 13 percent social contribution tax in addition to personal income tax. On top of that, transactions in US stocks and bonds will not be considered controlled capital market transactions, which will make it virtually impossible for Hungarians to invest in the US.
US investors do not have it this hard
Since Hungary does not levy withholding tax on dividends, royalties and interest income paid to foreign companies, this type of income is tax exempt, Lajos Bagdi said. He added that there is nothing to prevent Hungary from imposing withholding tax in the future, thus eliminating the unequal situation.
Read alsoHungary remains the only European shareholder of the Russian spy bank
Source: Index.hu
4 Comments
The Biden regime can go fly a kite, in every sense of the word. Another year and a half, and sanity will be restored.
The name Victor Orban, as long as Hungary persist with his Prime Ministership, relationships with the United States of America, will DECLINE.
America – been escalating over years, through the Orban “style” – to play Political Games, forgetting who is FIGHTING.
America, and we Thank again Victor Orban – the DESTROYER of vast numbers of relationships with country’s – DEMOCRATIC governed country’s, through his wrongful self belief of his ability.
WHO are FRIENDS of Hungary?
They are Russia & China – both of which are Communist governed.
The Biden crime family will be gone in just the year after that date. The US under BO and Biden run Ukraine for 8 years and made millions. The entire US goverment is controlled by former BO people. UKraine had a twice elected leader and they got rid of him, all the while yelling democracy.
White Europeans are being eliminated from the goverment along with Christianity. Both have been labeled terrorist threat. A Catholic father of 7 kids had a 12 man swat team of FBI agents come to his home and arrested him in front of his family for saying the Rosesary near a abortion clinic why protecting his young son from a protester who shoved the kid. He put on trial and thankgod he was found not guilty. This is the insanity of the Biden regime, yet insisting he is catholic. Pelosi Impeaching trump twice was a sacarate event over a 30 seconds of a phone call to Ukraine.
@Abandonment & Loneliness: In geopolitics, there is no such thing as friends but convenient partnerships. The US is just as likely as Russia or China to stab you in the back. The difference is that the US would smile while they are doing it. Why do I say that? The US has often screwed Canada in the back when it comes to international trade disputes (ex: the US tariffs on Canada softwood even though the WTO called it illegal).
Of course, I would rather deal with the US than Russia or China. Please don’t think countries don’t work together for their own interests, this includes the US and Hungary.