Hungary – Mli Arbitration Profile As of 25-03-2021

HUNGARY – MLI ARBITRATION PROFILE AS OF 25-03-2021

This document contains information on Hungary’s arbitration position under Part VI of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). It also contains hyperlinks to Hungary’s competent authority agreements concluded to settle the mode of application of the provisions contained in Part VI of the MLI.

References

• MLI Position (https://www.oecd.org/tax/treaties/beps-mli-signatories-and-parties.pdf)

• MAP Profile (https://www.oecd.org/tax/dispute/country-map-profiles.htm)

• Synthesised text (the hyperlinks to the synthesised texts obtainable from the MLI Matching Database https://www.oecd.org/tax/treaties/mli-matching-database.htm)

Type of arbitration process

The “independent opinion” approach will apply as the default type of arbitration process to Hungary’s Covered Tax Agreements except to the extent that competent authorities mutually agree on different rules or except where other Contracting Jurisdictions have reserved their right to not apply the “independent opinion” pursuant to Article 23(3) of the MLI.

Competent authority agreements and entry into effect of Part VI

Competent authority agreements:

The competent authority of Hungary has, by mutual agreement settled the mode of application of the provisions contained in Part VI of the MLI with the competent authority of the jurisdictions as indicated below:

No Treaty partner Hyperlinks to Date on which both Contracting Jurisdictions competent authority agreements have notified that they reached mutual agreement1 1 Australia 2 Austria 3 Belgium 4 Canada 5 Denmark 6 Finland 7 France 8 Germany 9 Greece 10 Ireland 11 Italy 12 Japan

1 Dates and hyperlinks will be added once notified. HUNGARY – MLI ARBITRATION PROFILE AS OF 25-03-2021

13 Liechtenstein 14 Luxembourg 15 Malta 16 Netherlands 17 Portugal 18 Singapore 19 Slovenia 20 Spain 21 Sweden 22 United Kingdom

Entry into effect of Part VI of the MLI:

Article 36 of the MLI governs the entry into effect of the provisions of Part VI of the MLI with respect to:

• cases presented to the competent authority of a Contracting Jurisdiction on or after the later of the dates on which the MLI enters into force for each of the Contracting Jurisdictions; and,

• cases presented to the competent authority of a Contracting Jurisdiction prior to the later of the dates on which the MLI enters into force for each of the Contracting Jurisdictions.

Reservations on the entry into effect of Part VI

Pursuant to Article 36(2) of the MLI, Hungary has reserved the right for Part VI to apply to a case presented to the competent authority of a Contracting Jurisdiction prior to the later of the dates on which the MLI enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement only to the extent that the competent authorities of both Contracting Jurisdictions agree that it will apply to that specific case.

Reservations on the scope of cases eligible to Part VI of the MLI

Pursuant to Article 28(2)(a) of the MLI, Hungary has formulated the following reservations with respect to the scope of cases that shall be eligible for arbitration under the provisions of Part VI:

1. Hungary reserves the right to exclude from the scope of Part VI any case that falls within the scope of application of the Convention on the Elimination of Double Taxation in Connection with the Adjustment of Profits of Associated Enterprises (90/436/EEC) as amended or any subsequent regulation replacing, amending or updating these rules.

2. Hungary reserves the right to exclude from the scope of Part VI any case that falls within the scope of application of the COUNCIL DIRECTIVE (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European Union or any subsequent regulation replacing, amending or updating these rules.

3. Hungary reserves the right to exclude from the scope of Part VI – on a case-by-case basis – any case where penalties were imposed in relation to the adjusted income or capital for tax fraud, wilful default and gross negligence in accordance with Hungary’s domestic rules included in Section 41/J. paragraph (12) of the Act XXXVII of 2013 on Certain Rules of International Administrative Cooperation in Relation to Taxes and Other Public Duties. Any subsequent provision replacing, amending or updating these rules would also be included in this reservation. Hungary shall notify the Depositary of any such subsequent provision.

4. Hungary reserves the right to exclude from the scope of Part VI any case which the competent authorities of both Contracting Jurisdictions agree that are not suitable for arbitration. Such agreement shall be reached before the date on which arbitration proceedings would otherwise have begun and shall be notified to the person who presented the case.

5. Hungary reserves the right to exclude from the scope of Part VI any case which relates to questions of dispute relating to income or capital earned in a tax year commencing before 1 January 2018.

Additional note

Reservation as regards Mandatory Binding Arbitration

Pursuant to Article 19(12) of the MLI, Hungary has reserved the right for the following rules to apply with respect to its Covered Tax Agreements notwithstanding the other provisions of Article 19:

a) any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for by the MLI shall not be submitted to arbitration, if a decision on this issue has already been rendered by a court or administrative tribunal of either Contracting Jurisdiction;

b) if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the Contracting Jurisdictions, a decision concerning the issue is rendered by a court or administrative tribunal of one of the Contracting Jurisdictions, the arbitration process shall terminate.

Agreement on a Different Resolution

Pursuant to Article 24(1) of the MLI, Hungary has choosen to apply Article 24(2), namely an arbitration decision shall not be binding on the Contracting Jurisdictions to a Covered Tax Agreement and shall not be implemented if the competent authorities of the Contracting Jurisdictions agree on a different resolution of all unresolved issues within three calendar months after the arbitration decision has been delivered to them.