The US Ministry of Finance announced that it will abolish the tax treaty with Hungary by the 31st December 2023. The key reason for this is that the Hungarian government is reluctant to adopt the global minimum tax approach (GLOBE) recommended by the OECD and approved by all the other EU countries. The US administration uses this tool to enforce a change in the view of the officials in charge and have a common consent of the rules to be adopted. We cannot now predict what will be the end of the story, but for sure, the abolishment of the treaty would result in undesirable and uncertain positions for those investors who enjoyed the benefits of the treaty.
Hungary was very well placed for US investors for international trading and other business purposes, highly because of the very favorable conditions of the tax treaty. This will now ultimately change and even though the ‘new’ US-Hun treaty has already been approved back in 2009, it is not sure whether the US government would be ready to adopt it one once the current transitional period ends on the 1st January 2024. Therefore, all the affected investors have a genuine business reason to seek new and safer investment vehicles through which they can ensure smooth business operations. It is worth to mention that Malta – which has a favorable tax treaty with both countries, granting similar advantages to the investors – should be put on the table for consideration, not purely from a tax perspective, but rather from a regulatory and stability perspective. If you like to discover the possibility of doing business in Malta, please contact us!
