Several tax-related conventions of the Government of Hungary have been enacted in the recent period of time, but some of them were not applicable until January 1^st 2016. However as of the beginning of 2016 there are newly applicable conventions and also a protocol for an existing convention as follows:

• Act CL of the year 2015 (Convention between Hungary and the Principality of Lichtenstein)

   

  “Convention between Hungary and the principality of Liechtenstein for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital”

   

• Act LII of the year 2014 (Convention between Hungary and the Kingdom of Saudi Arabia)

   

  “Convention between the government of Hungary and the government of the kingdom of Saudi Arabia for the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and on capital”

   

• Act XLIX of the year 2014 (Convention between Hungary and the Kingdom of Bahrain)

   

  “Convention between the government of Hungary and the government of the Kingdom of Bahrain for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income”

   

• Act XXVIII of the year 2014 (Amending Protocol for the treaty between Hungary and Uzbekistan)

   

  “Protocol amending the Convention between the Government of the Republic of Hungary and the Government of the Republic of Uzbekistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital signed on the 17th of April, 2008 at Tashkent”

These conventions and the protocol are applicable as of January 1st 2016. The fact that the mentioned treaties enter into force, basically means – from a taxation point of view – that the income taxed in one contracting country is imputable in the taxes paid in the other country. As a result, the income is not taxed in both contracting states.

Technically this means that the taxes paid in one contracting country can be deducted from the tax paid in the other contracting country. However, the treaties state that “Such deduction shall not exceed that part of the tax, as computed before the deduction is given which is attributable to such items of income derived from the first contracting state”.