THE UK
and Hungary have inked a new double taxation avoidance agreement (DTAA), which
will replace the existing treaty and bring the agreement up to date with the
latest international standards.
The new agreement maintains the 0%
withholding tax rates imposed on interest and royalties but alters those charged
on dividends. Under the existing treaty, dividends are taxable at either 5% or
15%, depending on the investment in the paying company. The latest DTA
introduces three rates, chargeable at 0% for direct investment dividends and
pension funds, 10% for portfolio dividends and 15% for real estate investment
vehicles. In addition, the latest OECD provision on exchange of information is
included.
Once in force, the treaty will replace the 1977 agreement, and
will do so once both countries wrap up their legislative procedures.
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