International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

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 & bottom lb ros

More from across our site

The Canadian proprietor of Canary Wharf and Manhattan West faces accusations of avoiding tax through subsidiaries in Bermuda and beyond.
The Department of Finance Canada has put forward a package of transfer pricing reforms to clarify existing provisions and address what it says is a disproportionate loss of tax revenue.
Developments included the end of Saudi Arabia’s tax amnesty, Poland’s VAT battle with the EU, the Indirect Tax Forum, India’s WTO complaint, and more.
Charlotte Sallabank and Christy Wilson of Katten UK look at the Premier League's use of 'dual representation' contracts for tax matters.
Shareholders are set to vote on whether the asset management firm will adopt public CbCR, amid claims of tax avoidance.
US lawmakers averted a default on debt by approving the Fiscal Responsibility Act, but this deal may consolidate the Biden tax reforms rather than undermine them.
In a letter to the Australian Senate, the firm has provided the names of all 67 staff who received confidential emails but has not released them publicly.
David Pickstone and Anastasia Nourescu of Stewarts review the facts and implications of Ørsted’s appeal at the Upper Tribunal.
The Internal Revenue Service will lose the funding as part of the US debt limit deal, while Amazon UK reaps the benefits of the 130% ‘super-deduction’.
The European Commission wanted to make an example of US companies like Apple, but its crusade against ‘sweetheart’ tax rulings may be derailed at the CJEU.