Iran: Double tax treaty between Iran and Hungary enters into force

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Iran: Double tax treaty between Iran and Hungary enters into force

AdobeStock_79753785_Iranmap

The first agreement on the avoidance of double taxation and prevention of fiscal evasion between Hungary and Iran entered into force on January 1 2017. Iran has concluded more than 40 tax treaties, but very few of them provide for zero withholding tax rates on rental income and consulting fees. Thus, this specific tax treaty can be a good platform for multinationals looking to invest into Iran.

najm.jpg

Ali Najm

The agreement is applicable to any individual and company liable to tax under the laws of Iran or Hungary.

If any company is resident in both contracting states, it shall be taxed only in the state where the effective management is located.

The key provisions of this agreement are discussed below.

Income from any shares or rights, such as dividends, will be taxable in the residency state of the beneficial owner. Income from royalty and interest rates realised in the other country will be subject to a 5% withholding tax in the country of residence of the beneficiary. The royalty income includes any payments received for the right of use or a consideration for the use of any copyright such as a patent, trademark, design or model, plan, literary, scientific work or formula, cinematograph films and for any information about experience in industry, trade, market or science. The interest income includes sale on credit of any merchandise or equipment, credit or loan of any kind granted by a bank or a governmental authority.

Income from consultancy and lease in the other country will be taxable only in the state of residence of the beneficiary.

Capital gains derived by a resident of one country from the alienation of immovable assets situated in the other country are taxable in that other country, as well as movable assets of a permanent establishment held by a company in the other country.

A company or movable property relating to the operation of ships, aircraft or road and railway vehicles in the other country will be taxable only in that country. Additionally, if a resident of one country has more than 50% of shares or other comparable corporate rights of immovable assets located in the other country, directly or indirectly, those will be taxed only in that country.

Lastly, it is worth noting that any construction project with a duration exceeding six months in the other country, may rise to a permanent establishment according to the tax treaty.

Ali Najm (ali.najm@eurofast.eu)

Eurofast

Tel: +357 22699222

Mobile and telegram: +98 9123138762

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

Uncertainty isn’t always a bad thing, but it’s easy to see how the Trump administration’s IRS commissioner merry-go-round may serve to undermine business confidence
The EU defended its ‘sovereign right’ to impose the tax in the face of US tariff threats; in other news, the US deputy Treasury secretary resigned after just five months
Ascoria’s chief revenue officer shares her career wisdom garnered from the disparate worlds of tax technology, electric cables, radio DJing and more
Businesses no longer have a choice when it comes to tax technology transformation. Pavlo Boyko of TMF Group says the question is simply: sink or swim?
The firm is hunting for a senior TP manager in its quest to build a full-service practice in Indonesia, A&M Tax’s Jakarta head Jaap Zwaan tells ITR
With a new government in place, the evolving tax landscape presents both opportunities and challenges for taxpayers
Major economies have expressed concerns, with China arguing a US global minimum tax exemption would be a violation of the principle of fair competition – ITR understands
Senator Richard Colbeck told ITR he was concerned by the decision to let PwC Australia tender for government contracts again after a scandal-induced ban
Whether it be due to a fragmented advisory market or a rise in M&A, Italy’s frenetic hiring has not gone unnoticed by ITR’s Talent Tracker
The deal gives Azets 14 new partners and boosts its Swedish revenues to over $100 million; in other news, Svalner Atlas launched in Copenhagen
Gift this article