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

It follows a court case concerning a Freedom of Information request lodged by the founder of a software company
After years of deafening silence, the UK tax authority is taking overdue action against corporates that fail to prevent the facilitation of tax evasion
The US president has raised India’s tariff rate to 50% because of its importation of Russian oil; in other news, firms made key international tax partner hires
Tax auditors themselves had not been aware of the new TP ‘transaction matrix’ requirements, ITR hears as five German partners share their client experiences
Its features include a built-in AI assistant as well as expert insights and commentary from Deloitte specialists
AI is rapidly finding its way into tax advisory services. But how can AI be deployed responsibly, reliably, and in compliance with legal standards?
Specified taxpayers will have to apply a 19% VAT rate on services offered by third parties through their platforms; in other news, Donald Trump imposed 30% South African tariffs
A ‘quiet revolution’ in HMRC’s compliance strategy has caused Adam Craggs to rethink how to advise clients, he tells ITR
If the Reform leader becomes UK prime minister then he may follow the direction of the US in at least one significant way
Trump declared a new national emergency in issuing the order; in other news, Grant Thornton Germany is up for sale and the subject of interest from both its UK and US counterparts
Gift this article