On 29 December 2023, the U.S. IRS declared in the ‘Announcement 2024-05’ the effective date of the termination of the 1979 tax treaty with Hungary.
The Government of the United States provided a diplomatic notification, dated 8 July 2022, to the Government of the Republic of 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 (Convention).
In accordance with Article 26 of the Convention, termination was effective on 8 January 2023 (Termination Date). In respect of tax withheld at source, Article 26 states that the Convention shall cease to have effect with respect to amounts paid or credited on or after the first day of the next January following the Termination Date. In respect of other taxes, Article 26 states that the Convention shall cease to have effect with respect to taxable periods beginning on or after the first day of the next January following the Termination Date.
Accordingly, in respect of tax withheld at source, the Convention ceases to have effect with respect to amounts paid or credited on or after 1 January 2024. In respect of other taxes, the Convention ceases to have effect with respect to taxable periods beginning on or after 1 January 2024.
