Australian Tax Treaties
Hungarian Agreement
AGREEMENT BETWEEN AUSTRALIA AND THE REPUBLIC OF HUNGARY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
ARTICLE 24
Methods of Elimination of Double Taxation
(1)
In the Republic of Hungary double taxation shall be eliminated as follows:
(a) where a resident of the Republic of Hungary derives income or gains which, in accordance with the provisions of this Agreement, may be taxed in Australia, the Republic of Hungary shall, subject to the provisions of subparagraph (b), exempt such income or gains from tax;
(b) where a resident of the Republic of Hungary derives items of income which, in accordance with the provisions of Article 10, may be taxed in Australia, the Republic of Hungary shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Australia. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given which is attributable to such items of income derived from Australia.
(2)
In Australia, double taxation shall be eliminated as follows:
(a) subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Hungarian tax paid under the law of the Republic of Hungary and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Hungary shall be allowed as a credit against Australian tax payable in respect of that income;
(b) where a company which is a resident of the Republic of Hungary and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly not less than 10 per cent of the voting power of the firstmentioned company, the credit referred to in subparagraph (a) shall include the tax paid by that firstmentioned company in respect of that portion of its profits out of which the dividend is paid.
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) has modified the application of this tax treaty. A synthesised text of the MLI and this tax treaty is available to facilitate the understanding of how the MLI modifies this tax treaty.
In the Republic of Hungary double taxation shall be eliminated as follows:
(a) where a resident of the Republic of Hungary derives income or gains which, in accordance with the provisions of this Agreement, may be taxed in Australia, the Republic of Hungary shall, subject to the provisions of subparagraph (b), exempt such income or gains from tax;
(b) where a resident of the Republic of Hungary derives items of income which, in accordance with the provisions of Article 10, may be taxed in Australia, the Republic of Hungary shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Australia. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given which is attributable to such items of income derived from Australia.
(2)
In Australia, double taxation shall be eliminated as follows:
(a) subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Hungarian tax paid under the law of the Republic of Hungary and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Hungary shall be allowed as a credit against Australian tax payable in respect of that income;
(b) where a company which is a resident of the Republic of Hungary and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly not less than 10 per cent of the voting power of the firstmentioned company, the credit referred to in subparagraph (a) shall include the tax paid by that firstmentioned company in respect of that portion of its profits out of which the dividend is paid.
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