(1) Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
(2) Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.
(3) Capital represented by ships and aircraft operated in international traffic, and by boats engaged in inland waterways transport, and by movable property pertaining to the operation of such ships and aircraft and boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
(4) All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
(1) Tax shall be determined in the case of a resident of Germany as follows:
a) Unless foreign tax credit is to be allowed under sub-paragraph b), there shall be exempted from the assessment basis of the German tax any item of income arising in Hungary and any item of capital situated within Hungary which, according to this Agreement, is effectively taxed in Hungary.
In the case of items of income from dividends the preceding provision shall apply only to such dividends as are paid to a company (not including partnerships) being a resident of Germany by a company being a resident of Hungary at least 10 per cent of the capital of which is owned directly by the German company and which were not deducted when determining the profits of the company distributing these dividends.
There shall be exempted from the assessment basis of the taxes on capital any shareholding the dividends of which if paid, would be exempted, according to the foregoing sentences.
b) Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against German tax on income payable in respect of the following items of income the Hungarian tax paid under the laws of Hungary and in accordance with this Agreement:
aa) dividends not dealt with in sub-paragraph a);
bb) items of income that may be taxed in Hungary according to paragraph 2 of Article 13;
cc) items of income that may be taxed in Hungary according to paragraph 3 of Article 14;
dd) directors’ fees;
ee) items of income that may be taxed according to Article 16.
c) The provisions of sub-paragraph b) shall apply instead of the provisions of sub-paragraph a) to items of income as defined in Articles 7 and 10 and to the assets from which such income is derived if the resident of Germany does not prove that the gross income of the permanent establishment in the business year in which the profit has been realised or of the company resident in Hungary in the business year for which the dividends were paid was derived exclusively or almost exclusively from activities within the meaning of nos. 1 to 6 of paragraph 1 of section 8 of the German Law on External
Tax Relations (Aussensteuergesetz); the same shall apply to immovable property used by a permanent establishment and to income from this immovable property of the permanent establishment (paragraph 4 of Article 6) and to profits from the alienation of such immovable property (paragraph 1 of Article 13) and of the movable property forming part of the business property of the permanent establishment (paragraph 3 of Article 13).
d) Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital, which are under the provisions of this Agreement exempted from German tax.
e) Notwithstanding the provisions of sub-paragraph a) double taxation shall be avoided by allowing a tax credit as laid down in sub-paragraph b)
aa) if in the Contracting States items of income or capital are placed under differing provisions of this Agreement or attributed to different persons (except pursuant to Article 9) and this conflict cannot be settled by a procedure in accordance with paragraph 3 of Article 24 and if as a result of this difference in placement or attribution the relevant income or capital would remain untaxed or be taxed lower than without this conflict or
bb) if the competent authority of Germany notifies the competent authority of Hungary of other items of income to which it intends to apply the provisions of sub-paragraph b). Double Taxation is then avoided for the notified income by allowing a tax credit from the first day of the calendar year, next following that in which the notification was received and all legal requirements according to the internal law of Germany are fulfilled.
(2) Tax shall be determined in the case of a resident of Hungary as follows:
a) Where a resident of Hungary derives income or owns capital which, in accordance with the provisions of this Agreement may be taxed in Germany, Hungary shall, subject to the provisions of subparagraphs b) and c), exempt such income or capital from tax.
b) Where a resident of Hungary derives items of income which, in accordance with the provisions of Article 10, may be taxed in Germany, Hungary shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Germany. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given which is attributable to such items of income derived from Germany.
c) Where in accordance with any provision of the Agreement income derived or capital owned by a resident of Hungary is exempt from tax in Hungary, Hungary may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.
d) The provisions of subparagraph a) shall not apply to income derived or capital owned by a resident of Hungary where Germany applies the provisions of this Convention to exempt such income or capital from tax or applies the provisions of paragraph 2 of Article 10 to such income.
(1) Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
(2) Stateless persons who are residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected.
(3) The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
(4) Except where the provisions of paragraph 1 of Article 9, paragraph 5 of Article 11, or paragraph 5 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
(5) Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
(6) The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
(1) Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
(2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
(3) The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
(4) The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.
(1) The competent authorities of the Contracting States shall exchange such information as is forseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of a Contracting State, of a Land or a political subdivision or local authority thereof, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.
(2) Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1 or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public prosecutor’s investigation proceedings, public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such else.
(3) In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
a) to carry out administrative measures for the supply of information at variance with the laws and administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).
(4) If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
(5) In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
(1) If in one of the Contracting States the taxes on dividends, interest, royalties or other items of income derived by a person who is a resident of the other Contracting State are levied by withholding at source, the right of the first-mentioned State to apply the withholding of tax at the rate provided under its domestic law shall not be affected by the provisions of this Agreement. The tax withheld at source shall be refunded on application by the taxpayer if and to the extent that it is reduced by this Agreement or ceases to apply.
(2) Refund applications must be submitted by the end of the fourth year following the calendar year in which the withholding tax was applied to the dividends, interest, royalties or other items of income.
(3) Notwithstanding paragraph 1, each Contracting State shall provide for procedures to the effect that payments of income subject under this Agreement to no tax or only to reduced tax in the state of source may be made without deduction of tax or with deduction of tax only at the rate provided in the relevant Article.
(4) The Contracting State in which the items of income arise may ask among others for a certificate by the competent authority on the residence in the other Contracting State.
(5) The competent authorities may by mutual agreement implement the provisions of this Article and if necessary establish other procedures for the implementation of tax reductions or exemptions provided for under this Agreement.
This Agreement shall not be interpreted to mean that a Contracting State is prevented from applying its domestic legal provisions on the prevention of tax evasion or tax avoidance.
If the foregoing provision results in double taxation, the competent authorities shall consult each other pursuant to Article 24 paragraph 3 on how to avoid double taxation.
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
The attached Protocol shall be an integral part of this Agreement.
(1) This Agreement shall be ratified; the instruments of ratification shall be exchanged as soon as possible in Berlin.
(2) The Agreement shall enter into force on the 30th day following the day of the exchange of the instruments of ratification and shall have effect in both Contracting States:
a) in the case of taxes withheld at source, in respect of amounts paid on or after the first day of January of the calendar year next following that in which the Agreement entered into force;
b) in the case of other taxes, in respect of taxes levied for periods beginning on or after the first day of January of the calendar year next following that in which the Agreement entered into force.
(3) Upon the entry into force of this Agreement, the Agreement between the Hungarian People’s Republic and the Federal Republic of Germany for the Avoidance of Double Taxation with respect to Taxes on Income, Profits and Capital, signed on 18th July 1977, shall cease to have effect, and respectively expire:
a) in the case of taxes withheld at source, with respect of amounts paid on or after the first day of January of the calendar year next following that in which the Agreement entered into force;
b) in the case of other taxes, in respect of taxes levied for periods beginning on or after the first day of January of the calendar year next following that in which the Agreement entered into force;
c) in the case of paragraph 1 of Article 20, in respect of the exemption of taxes on the day when the period, therein mentioned, has ended.
This Agreement shall continue in effect for an unlimited period but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State, through diplomatic channels, written notice of termination and, in such event, this Agreement shall cease to have effect, and respectively expire:
a) in the case of taxes withheld at source, in respect of amounts paid on or after the first day of January of the calendar year next following that in which notice of termination is given;
b) in the case of other taxes, in respect of taxes levied for periods beginning on or after the first day of January of the calendar year next following that in which notice of termination is given.
The date of receipt of such notice by the other Contracting State shall be definitive for the determination of the deadline.
DONE at Budapest on 28 of February 2011 in two originals, each in the Hungarian, German and English languages, all three texts being authentic. In the case of divergent interpretation of the Hungarian and the German texts, the English text shall prevail.
| For the Republic of Hungary | For the Federal Republic of Germany | ||
| (signatures) |
The Republic of Hungary and the Federal Republic of Germany have in addition to the Agreement of28 February 2011 for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital agreed on the following provisions, which shall form an integral part of the said Agreement:
1. With reference to Articles 3, 4, 8, 13, 14 and 21:
The „place of effective management” is the place where key management and commercial decisions that are necessary for the conduct of the entity’s business are in substance made. The place of the effective management will ordinarily be the place where the most senior person or group of persons makes its decisions, and the day-to-day management is conducted, the place where the actions to be taken by the entity as a whole are determined.
2. With reference to Article 7:
a) Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received therefore by the enterprise but only on the basis of the amount which is attributable to the actual activity of the permanent establishment for such sales or business.
b) The provision of paragraph 3 is applicable irrespective of limitations by the domestic laws, provided that the deducted expenses are in accordance with the international practice.
c) In the case of contracts, in particular for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, where the enterprise has a permanent establishment in the other Contracting State, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Contracting State in which it is situated. Profits derived from the supply of goods through that permanent establishment or profits related to the part of the contract which is carried out in the Contracting State in which the head office of the enterprise is situated shall be taxable only in that State.
d) Payments received as a consideration for technical services, including studies or surveys of a scientific, geological or technical nature, or for engineering contracts including blue prints related thereto, or for consultancy or supervisory services shall be deemed to be payments to which the provisions of Article 7 of the Agreement apply.
3. With reference to Articles 5 and 7:
The application and interpretation of Articles 5 and 7 of this Agreement and, in particular the settlement of any disputes insofar, should be done by using the Commentary on Articles 5 and 7 of the current Model Convention of the OECD. If the Commentary is revised in the future by the OECD, Articles 5 and 7 of this Agreement should be interpreted in the spirit of the revised Commentary, provided this is in accordance with the text of the Agreement.
4. With reference to Articles 10 and 11:
Notwithstanding the provisions of Article 10 and 11 of this Agreement, dividends and interest may be taxed in the Contracting States in which they arise, and according to the law of that State,
a) if they are derived from rights or debt claims carrying a right to participate in profits, including income derived by a silent partner („stiller Gesellschafter”) from his participation as such, or from a loan with an interest rate linked to borrower’s profit („partiarisches Darlehen”) or from profit sharing bonds („Gewinnobligationen”) within the meaning of the tax law of and under the condition that they are deductible in the determination of profits of the debtor of such income or
b) if the distributing company is a Real Estate Investment Trust company or a similar entity that is exempt from corporation tax.
5. With reference to Article 25:
If in accordance with domestic law personal data are exchanged under this Agreement, the following additional provisions shall apply subject to the legal provisions in effect for each Contracting State:
a) The receiving agency may use such data only for the stated purpose and shall be subject to the conditions prescribed by the supplying agency.
b) The receiving agency shall on request inform the supplying agency about the use of the supplied data and the results achieved thereby.
c) Personal data may be supplied only to the responsible agencies. Any subsequent supply to other agencies may be effected only with the prior approval of the supplying agency.
d) The supplying agency shall be obliged to ensure that the data to be supplied are accurate and that they are necessary for and proportionate to the purpose for which they are supplied. Any bans on data supply prescribed under applicable domestic law shall be observed. If it emerges that inaccurate data or data which should not have been supplied have been supplied, the receiving agency shall be informed of this without delay. That agency shall be obliged to correct or erase such data without delay.
e) Upon application the person concerned shall be informed of the supplied data relating to him and of the use to which such data are to be put. There shall be no obligation to furnish this information if on balance it turns out that the public interest in withholding it outweighs the interest of the person concerned in receiving it. In all other respects, the right of the person concerned to be informed of the existing data relating to him shall be governed by the domestic law of the Contracting State in whose sovereign territory the application for the information is made.
f) The receiving agency shall bear liability in accordance with its domestic laws in relation to any person suffering unlawful damage as a result of supply under the exchange of data pursuant to this Agreement. In relation to the damaged person, the receiving agency may not plead to its discharge that the damage had been caused by the supplying agency.
g) Where the domestic law of the supplying agency contains special provisions for the deletion of the personal data supplied, that agency shall inform the receiving agency accordingly. Irrespective of such law, supplied personal data shall be erased once they are no longer required for the purpose for which they were supplied.
h) The supplying and the receiving agencies shall be obliged to keep official records of the supply and receipt of personal data.
i) The supplying and the receiving agencies shall be obliged to take effective measures to protect the personal data supplied against unauthorised access, unauthorised alteration and unauthorised disclosure.
6. With reference to Article 26:
If the domestic law of a Contracting State provides for a period of refund applications longer than four years, it is understood that the domestic provision shall prevail.
7. Legal acts of the European Community:
It is understood that this Agreement shall not affect legal acts of the European Community and corresponding provisions of the Contracting States.
DONE at Budapest on 28 February 2011 in two originals, each in the Hungarian, German and English languages, all three texts being authentic. In the case of divergent interpretation of the Hungarian and the German texts, the English text shall prevail.
| For the Republic of Hungary | For the Federal Republic of Germany | ||
| (signatures) |
4. § (1) Ez a törvény - a (2) bekezdésben meghatározott kivétellel - a kihirdetését követő napon lép hatályba.
(2) A 2. és 3. § az Egyezmény 30. Cikk (2) bekezdésében meghatározott időpontban lép hatályba.
(3) A Magyar Népköztársaság és a Németországi Szövetségi Köztársaság között Budapesten 1977. évi július 18-án aláírt, a jövedelem-, a hozadéki és a vagyonadók területén a kettős adóztatás elkerüléséről szóló egyezmény kihirdetéséről rendelkező 1979. évi 27. törvényerejű rendelet (a továbbiakban: Tvr.) a Magyar Népköztársaság és a Németországi Szövetségi Köztársaság között a kettős adóztatás elkerülésére a jövedelem-, a hozadéki és a vagyonadók területén Budapesten, 1977. évi július 18-án aláírt egyezmény (a továbbiakban: korábbi egyezmény) megszűnésével az Egyezmény 30. Cikk (3) bekezdés a)-c) pontjában meghatározott valamennyi feltétel bekövetkeztének napján hatályát veszti.
(4) Az Egyezmény, valamint a 2. és 3. § hatálybalépésének, továbbá a korábbi egyezmény megszűnésének és a Tvr. hatályvesztésének naptári napját a külpolitikáért felelős miniszter - annak ismertté válását követően - a Magyar Közlönyben haladéktalanul közzétett egyedi határozatával állapítja meg.
(5) E törvény végrehajtásához szükséges intézkedésekről az adópolitikáért felelős miniszter gondoskodik.
