On 25th October 2014, the Hungarian parliament approved the pending income tax treaties with Bahrain and Saudi Arabia and a tax information exchange agreement with Jersey.
On 24th February 2014, the tax treaty between Hungary and Bahrain was signed in Manama. The treaty clarifies that dividends are exempt from tax where the beneficial owner is a company other than a partnership that is not liable to tax. In other cases dividends are subject to a maximum 5 % withholding rate. Interest and royalties are taxable only in the beneficial owner’s state of residence. Bahrain uses the credit method to eliminate double taxation and Hungary uses a modification of the credit and exemption methods.
On 23rd March 2014, the treaty between Hungary and Saudi Arabia was signed in Riyadh. Under this treaty dividends are taxable at a maximum rate of 5%, while interest is taxable only in the beneficial owner’s state of residence. Royalties paid for the use of, or the right to use, industrial, commercial, or scientific equipment are taxable at a maximum rate of 5%. In other cases, an 8% rate applies. Hungary uses a modified version of the credit and exemption methods to eliminate double taxation, while Saudi Arabia uses the credit method.
