Double taxation agreements and general costs in Hungary for residents
Published at: 06/03/2014 10:56 am
The Hungarian Double Taxation Agreements
The exclusion of double taxation is based on the provisions of double taxation treaties or, in the absence of such, the Hungarian law.
If there is a double taxation treaty in force, the provisions of the relevant treaty must be applied to income earned abroad.
Taxable income of private individuals who are not residents in Hungary become taxable as per the rules on taxable income in Hungary applicable to Hungarian residents under the convention to avoid double taxation. Income of private individuals who are residents in Hungary that are liable to tax outside of Hungary based on the convention (typically except for dividends) is exempt from taxes in Hungary.
Unless otherwise provided by an international agreement or the principle of reciprocity, calculated tax is reduced by 90% of the tax paid on the income abroad or maximally by the tax calculated by applying the tax rate to the tax base of this income.
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Until the end of 2013. Hungary had double taxation agreements with the following non-EU member states:
Albania, Australia, Azerbaijan, Belarus, Bosnia and Herzegovina, Brazil, Republic of South Africa, Egypt, Philippines, Georgia, Hong Kong, India, Indonesia, Iceland, Israel, Japan, Canada, Qatar, Kazakhstan, China, Republic of Korea, Kuwait, Macedonia, Malaysia, Morocco, Mexico, Moldova, Mongolia, Commonwealth of Independent States, Armenia, Pakistan, Serbia, Montenegro, Switzerland, Taiwan, Thailand, Turkey, Tunisia, Ukraine, Uruguay, Uzbekistan, USA and Vietnam.
General administration (filing of tax returns, payment of taxes)
The completion of tax returns is based on self-assessment. Private individuals not engaged in entrepreneurial activities may, if they qualify under the applicable statutory provisions, request the assistance of the Tax Authority with the completion of tax returns. Employers and payers are obliged to deduct taxes and/or tax advances from wages and other payments. Private individuals are obliged to pay income tax and/or income tax advances themselves if their income is from sources other than payers or employers.
Resident individuals must file their annual tax returns by the 20. of May of the year following the given tax year, private individuals required to pay VAT and individual entrepreneurs must file by the 25 February of the following year. The possible outstanding taxes are also to be paid by these dates, taking the already withheld tax and paid tax advance into consideration.
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