Hungarian tax liabilities of companies and individuals with U.S. business interests may change significantly from 2024
Revision of transfer pricing indicators
With the treaty no longer applicable (and with the potential of double taxation), the payment obligations of taxpayers could increase. This increase in costs could affect market prices, as well. Hungarian and US affiliates will need to consider the changes in arm’s length prices when determining prices applied in their related party transactions and when applying transfer pricing adjustments in assessing their corporate income tax base. Particular attention must be paid to financing directed from Hungary to the US where interest received may be subject to withholding tax liability. In the future it will be necessary to thoroughly consider the issues of payment title, actual disbursement of interest, withholding tax, crediting of the WHT and accounting treatment of withholding tax, as well as the transfer pricing implications of all these issues.
Although the current treaty between the US and Hungary will remain applicable for approximately one more year, those with US interests should prepare for the changes taking place in January 2024. Our colleagues would be pleased to assist companies and individuals affected by these changes. We are able to provide support in reviewing incomes and contracts and determining any future additional tax liabilities. Should you have any questions regarding the above, please feel free to contact us.