Strengthening economic ties: Hungary and Serbia amend double taxation convention
The longstanding partnership between Hungary and Serbia has taken another step forward with the recent amendment to the double taxation convention. These agreements are crucial for eliminating double taxation on income and assets for both individuals and companies, fostering a more favorable business climate. Not only that they prevent double taxation, but they also pave the way for quicker resolution of tax-related disputes, benefiting businesses and tax authorities alike. Economic ties between Hungary and Serbia have grown significantly in recent years, driven by strong political relations and a shared vision for economic development. Serbia has become a key destination for Hungarian investments, especially in sectors like trade and small to medium-sized enterprises. The updated tax convention further cements this partnership, encouraging even more Hungarian companies to explore opportunities in Serbia.
Signed in Budapest back in 2001, the original convention aimed to avoid double taxation on income and capital. The latest amendment, formalized in October 2024, enhances cooperation between Hungary and Serbia by expanding the exchange of tax information, including details related to VAT. This broader exchange is expected to boost tax control measures, helping both countries in their fight against tax evasion.
The amended article of the convention introduces provisions for the exchange of information between the two countries’ tax authorities. This exchange is designed to help enforce the provisions of the convention and ensure proper administration of taxes of all kinds, provided such taxes do not conflict with the convention. Information shared will be treated as confidential and can only be used by relevant authorities involved in tax assessments, collections, or legal proceedings. It may also be disclosed in public court cases or judicial decisions. However, the agreement does not require either country to take actions that are inconsistent with their domestic laws or to share information that is not available through standard procedures or would violate trade secrets or public policy.
The Secretary for Taxes of the Ministry of Finance and the State Secretary of the Serbian Ministry of Finance signed the amendment to the double taxation treaty between the two countries in October 2024. The amended protocol will take effect 30 days after the exchange of ratification instruments, with its provisions applying to tax and business information from 1 January of the following year. This strategic move not only strengthens economic cooperation but also sets the stage for continued growth in trade and investment between the two neighbouring nations.