HUNGARY CONCLUDED NEW DOUBLE TAX TREATIES

With effect from January 1, 2013 Hungary concluded three new double tax treaties between Denmark, Qatar and Georgia. With this, Hungary is having effective double tax treaties with 74 states now. The payment of dividend, royalty and interest is the most important part of the treaties from the perspective of international tax planning.

In accordance with the Danish-Hungarian Treaty dividends paid by a company resident in one of the Contracting State (source state) to a resident of the other Contracting State (resident state) cannot be taxed by the source State if the beneficial owner of the dividends holds directly at least 10 per cent of the capital of the company for at least one year or the recipient is a pension fund. In all other cases the source state can impose withholding tax up to 15 per cent. In case of interest and royalties, no tax can be withheld in the source state.
In accordance with the Double Tax Treaty between Georgia and Hungary, dividends cannot be taxed in the source state if the beneficial owner of the dividends holds directly at least 25 per cent of the capital of the company for at least 12 months preceding the decision on the dividend payment. In all other cases 5 per cent of the gross amount of the dividends shall be paid in the country of source. The source country cannot impose withholding tax on interest and royalties.
In accordance with the Double Tax Treaty made between Qatar and Hungary, dividends cannot be taxed in the source state if the beneficial owner of the dividends is a company. In all other cases 5 per cent of the gross amount of the dividends can be imposed by the source country. The source country cannot tax interest payments to persons in the resident country, and it can tax royalties up to 5 per cent.