Hungary: Double Tax Treaties

Nearly all the treaties provide for a reduced withholding tax of 5% or 10% on dividends paid out to foreign shareholders, meaning a maximum rate of 8% in Hungary.

Double Tax Treaties concluded by Hungary do not include anti-avoidance clauses, and can often be used highly efficiently in international tax structures.

The table below includes gives the rates of withholding tax applied to dividend, interest and royalty payments between Hungary and its tax treaty partners. For dividends, the normal rate of withholding is given ('Reg. %') and also the lower rate that is applicable subject to a minimum level of shareholding ('Min. Hold.'), where applicable.

Notes:

(a) 0 % if the interest is paid for commercial credits, for credits between banks or for deposits at any bank;
(b) 0 % if the royalty is paid for works of literature, arts or science (cultural royalty);
(c) 0 % if the interest is paid by the state, by a province or by a local authority of the country of source;
(d) 0 % if the interest is paid for commercial credits or paid by the state, by a local authority, by the central bank or by another state-owned bank of the country of source;
(e) 10 % if the interest is paid to a bank;
(f) 0 % if the interest is paid for special credits determined by the laws of Malaysia;
(g) 20 % if the royalty is paid for "technical services";
(h) 10 % if the interest is paid for investment credits with a duration of at least 8 years;
(i) 25 % if the royalty is paid for brand name;
(j) 0 % if the interest is paid to the state, to a local authority, to the central bank or to another state-owned bank of the other country;
(k) 10 % if the royalty is paid for "technical services";
(l) 25 % respectively 20 % if the dividend is distributed to a silent partner;
(m) 10 % only in the case (additional criterion) if the share is held by the recipient for at least 2 years continuously before the dividend distribution;
(n) 10 % if the dividend is distributed by a Canadian "non-resident owned investment corporation" to a Hungarian company controlling at least 25 % of the votes in the Canadian corporation.