Once the U.S.-Hungary Income Tax Treaty Terminates- Can Hungarian Owned Entities be Treated as “Equivalent Beneficiaries” For Tax Treaty Purposes?
By Anthony Diosdi On July 8, 2022, the Biden administration announced that it will terminate the U.S.-Hungary Income Tax Treaty that was enacted in 1979. The provisions of the tax treaty will no longer apply after January 1, 2024. According to a July 8 article in the Wall Street Journal, the Treasury Department explained its action based on long-standing concerns with Hungary’s tax system and the treaty itself, and a lack of satisfactory action by Hungary to remedy these concerns in coordination with other EU member countries that are seeking to implement the OECD Pillar Two global minimum tax proposal. The treaty termination will apply to U.S.-source dividends, interest, and royalties for payments made on or after January 1, 2024. A new U.S. income tax treaty with Hungary was agreed…