Hungary and Jersey entered into a tax treaty

04.02.2014

On the 3th of February, 2014 MFA State Secretary of Hungary Zsolt Nemeth made a statement that Hungary has an aim to build economic and trade relationships with countries of North America. One of the tools that allow building confidence with future partners is a growing number of tax treaties. On the 28^th January, 2014 Hungary and Jersey concluded an agreement on the exchange of tax information. It is already nineteenth agreement between Jersey and the European Union. The agreement covers the exchange of information relating to the following taxes: income tax on individuals, corporate tax, VAT, excise tax (Hungary), income tax and a tax on goods and services (Jersey). Also, the agreement on the exchange of tax information covers similar taxes imposed after its entry into force.

Article 5 of the agreement stipulates the obligation of the Contracting party to provide tax information immediately on the request of another Contracting party to the agreement. The Contracting party may request information from banks and other financial institutions and also is able to ask information about owners of companies, partnerships, trusts; about shareholders, beneficiaries and so on.

The Agreement will enter into force after its ratification by Jersey and Hungary.

Based on: http://www.gov.je/SiteCollectionDocuments/Tax%20and%20your%20money/LD%20TIEAJerseyHungary%2020140129.pdf

Expert’s opinion

Low level of taxation on the island together with a favorable business climate for the functioning of financial companies makes the Bailiwick of Jersey attractive to large financial flows.

But large financial flows without taxes are interesting for governments of countries, generating profit that fills the coffers of Jersey companies.

So Hungarian businessmen have to accept the fact that they are transparent for their tax service or to figure out how to change their residency of income

Yaroslav Lomakin ( Managing partner of Honest & Bright” company)