Az egyesült államokbeli befektetésekkel rendelkező magyaroknak mérlegelniük kell a Magyarország-USA jövedelemadó-szerződés felmondásának amerikai adóvonzatait
On July 15, 2022, the U.S. Department of Treasury (“the Treasury”) announced that it provided notice to Hungary that it was terminating the United States notified Hungary of its termination of the Convention between the Government of the United States of America and the Government of the Hungarian People’s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, in force since 1979 (the “Treaty”). The Treasury provided this notification on July 8, 2022, with an effective date of January 28, 2023. However, the reduced withholding tax rates of the Treaty will remain through December 31, 2023.
The following chart highlights some of the anticipated changes due to the termination of the Treaty:
| Type of Income | Treaty Withholding Rate* | Withholding Rate After Termination |
|---|---|---|
| Dividends paid to a company that owns, directly or indirectly, at least 10% of the voting shares of the dividend-distributing company | 5% | 30% |
| Other dividends | 15% | 30% |
| Interest | 0% | 30% |
| Royalty | 0% | 30% |
*Certain exclusions may apply.
With the high increase in withholding tax rates, Hungarians with U.S. investments should review their current American holdings from a tax efficiency perspective. Other tax structures may reduce the impact of the higher withholding tax rates. Investors should also consider the capital structure of their U.S. investments to ensure the best tax efficiency.
It has been widely reported that the Treasury’s decision to terminate the Treaty resulted from Hungary’s reluctance to adopt a global corporate minimum tax rate as part of the OECD Base Erosion and Profits Shifting tax law recommendations. We understand that it may be possible for the Treasury to rescind the termination notice of the Treaty, but the process is not described in the Treaty. Hungarian taxpayers should still consider the U.S. tax considerations before the increase in withholding tax rates, as any tax planning may take time to complete.
Please
contact International Capital Associates, LLC if you need help with
inbound tax planning and structuring or
U.S. investment tax reviews.
