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Termination of U.S.-Hungary Income Tax Treaty



Rödl & Partner Tax Matters Volume 2023-2, published January 26, 2023

On January 8, 2023, termination of the 1979 Convention between the Government of the United States of America and the Government of the Hungarian People's Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the "Convention") took effect, except with respect to taxes withheld at source, for which the Convention shall terminate on January 1, 2024, in accordance with the Convention's termination provisions.  

The U.S. Department of the Treasury announced that it had notified Hungary of the termination of the 1979 Convention on July 8, 2022. According to comments from a U.S. Treasury spokesperson made in July, the desire to terminate the treaty came "because the benefits are no longer reciprocal — with a significant loss of potential tax revenues to the United States, and little in return for U.S. business and investment in Hungary."

The termination of the 1979 Convention with Hungary appears to have been intended to pressure Hungary to support the European Union ("EU")'s global minimum tax rules, also referred to as pillar 2. Hungary had previously vetoed the EU directive on pillar 2 in June 2022. However, on December 12, 2022, Hungary relented and joined the remaining EU member states in deciding to implement pillar 2, which must be enacted in each member state's tax code by the end of 2023.

The U.S. signed a new tax treaty with Hungary in 2010. However, such treaty has been pending in the U.S. senate since that time.

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Elisa Fay


Partner-in-Charge Rödl National Tax

+1 404 525 2600

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