In the newsflash sent on 18 March 2016, we gave advice on the new DTT for the avoidance of double taxation with respect to taxes on income and on capital. This treaty was signed on 30 November 2015 between Hungary and the Islamic Republic of Iran, and the related Act IV of 2016 was officially published on 10 March 2016.
According to the protocol, the contracting parties notified each other through diplomatic channels that domestic requirements were complied with for the entry into force of the convention.
The Ministry of Foreign Affairs and Trade in its communiqué has announced that the DTT has come into effect in both contracting states and can be applied:
- with respect to taxes withheld at source, on income derived in or after the 1 January 2017;
- with respect to other taxes on income and on capital, for taxes chargeable for any tax year beginning on or after the 1 January 2017.
Impact on investors: Hungary has progressed further by extending the circle of existing DTTs, thereby increasing the possibility of avoiding double taxation.