Dubai Double Tax Convention

The Dubai Double Taxation Convention is important to read and understand. We meet many clients who have already run their circles through Hungarian service providers and come to us with the understanding that they can withdraw 10,000 Euros tax free or under 3M without being monitored by the NAV or who, when and where becomes a tax resident. There is a huge confusion in people's minds, which is understandable if you do not deal with this in your daily life.

Tax conventions

It is important to recognise that these double tax treaties are about settling transactions that involve both countries in some form. It is a framework and it is comprehensive. You will not find a situation that is not settled by such a convention. There are no numbers in there as to what amount is still acceptable or can be given.

Dubai Double Tax Convention

The Convention has a number of points that help to optimise tax. However, this should not be treated lightly or generously. A notable article is the taxation of directors' fees (Article 15) and employment income (Article 16). However, on the one hand, there are possibilities for control by the tax authorities and, on the other hand, a transaction whose sole purpose is the non-payment of tax will not ultimately result in a tax advantage, since the tax authorities will classify the contract, transaction and other similar acts in their procedure according to their true content. Thus, it requires much more careful planning and implementation if we want to pay less tax legally.

I strongly recommend reading the Convention if you are interested in the subject and it is important to check what you have heard from others. If you have any questions about the Dubai Double Taxation Avoidance Convention or even about company formation or Dubai visas, we are at your disposal.

Act CLXI of 2013

on the ratification of the Convention between the Government of Hungary and the Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion in the field of income taxes, signed in Dubai on 30 April 2013 ^* 

§ 1 This Act of Parliament authorises the recognition of the binding force of the Convention between the Government of Hungary and the Government of the United Arab Emirates on the avoidance and prevention of double taxation in the field of income taxes (hereinafter referred to as the Convention), signed in Dubai on 30 April 2013.

§ 2 Parliament shall promulgate the Convention by this Act.

§ 3 The authentic text of the Convention in the English and Hungarian languages shall be as follows:

"AGREEMENT.
BETWEEN THE GOVERNMENT OF HUNGARY AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES
ON AVOIDING DOUBLE TAXATION AND PREVENTING TAX EVASION IN THE FIELD OF INCOME TAXATION

The Government of Hungary and the Government of the United Arab Emirates,

desirous of promoting economic relations between them by concluding a convention for the avoidance and prevention of double taxation and the evasion of taxes in the field of income taxes,

have agreed as follows:

Article 1

PERSONAL SCOPE

This Convention shall apply to persons who are residents under the law of one or both Contracting States.

Article 2

TAXES COVERED BY THE CONVENTION

1.This Convention shall apply to taxes on income levied by a Contracting State or by political subdivisions, local governments or local authorities of a Contracting State, irrespective of the manner of collection.

2. Taxes on income shall be deemed to be all taxes levied on total income or on parts of income, including taxes on gains from the disposal of movable or immovable property, taxes on the total amount of wages and salaries paid by enterprises.

3. Existing taxes which are specifically covered by the Convention:

(a) For the United Arab Emirates:

(i) income tax; and

(ii) corporate tax

(hereinafter referred to as the "UAE tax");

(b) for Hungary:

(i) personal income tax; and

(ii) corporate tax

(hereinafter referred to as the "Hungarian tax").

4.This Convention shall also extend to any identical or substantially similar tax which, after the signature of this Convention, is introduced under the legislation of a Contracting State in addition to or in place of existing taxes. The competent authorities of the Contracting States shall notify each other within a reasonable time of any substantial change in their respective tax laws.

Article 3

INCOME FROM HYDROCARBONS

This Convention shall in no way affect the right of Contracting States, their local governments or local authorities to apply their domestic laws and regulations and other provisions relating to the taxation of income and profits derived from hydrocarbons and related activities in the territory of the relevant Contracting State.

Article 4

GENERAL DEFINITION

1. For the purposes of this Convention, unless the context otherwise requires:

(a) the terms "a Contracting State" and "other Contracting State" mean Hungary or the United Arab Emirates, as the context requires;

(b) the term "UAE" means the United Arab Emirates and, used in a geographical sense, the territory under its sovereignty and the territorial sea, airspace and submarine areas over which the UAE exercises its sovereign rights in accordance with international law and UAE law, including the land and islands under its jurisdiction in respect of any activities related to the exploration for or exploitation of natural resources.

(c) the term "Hungary" means the territory determined by Hungarian law in accordance with international law;

(d) the term "person" includes any natural person or company and any other association of persons;

(e) the term "citizen" means:

(a) for the UAE:

any natural person who is a national of the UAE, any legal entity or partnership deriving its status from the laws of the UAE;

(b) for Hungary:

(i) any natural person who is a citizen of Hungary;

(ii) any legal person, partnership, association or other entity which derives such status from the laws in force in Hungary;

(f) the term "company" means any legal person or other entity treated in the same way as a legal person for tax purposes;

(g) the term "undertaking" means any business activity;

(h) the terms "an undertaking of a Contracting State" and "an undertaking of the other Contracting State" mean an undertaking carried on by a resident of a Contracting State and by a resident of the other Contracting State respectively;

(i) the term "international traffic" means any carriage using a vessel or aircraft operated by an undertaking of a Contracting State, unless the vessel or aircraft is operated exclusively between points in the other Contracting State;

(j) the term "tax" means Hungarian tax or UAE tax, as the context requires;

(k) the term "competent authority" means:

(i) in the case of the UAE: the Minister of Finance or his/her authorised representative;

(ii) for Hungary: the Minister responsible for tax policy or his/her authorised representative;

(l) the term "business" includes the pursuit of a liberal profession and other activities of a self-employed nature.

2.In the application of this Convention by a Contracting State at any time, terms used in this Convention without definition shall, unless the context otherwise requires, have the meaning which they have at that time in the laws of that Contracting State in relation to the taxes to which this Convention applies; the definitions contained in the tax laws of that State shall prevail over the definitions contained in the other laws of that Contracting State.

Article 5

RESIDENT PERSON

1. For the purposes of this Convention, the term "resident of a Contracting State" means:

(a) for the UAE:

(i) any natural person who, under the laws of the United Arab Emirates, is treated as a resident of the country by virtue of his domicile, residence or other similar criterion;

(ii) any company or other legal entity incorporated or formed under the laws of the United Arab Emirates by virtue of its registered office, domicile, place of business or any other similar criterion;

(iii) that State itself and any political subdivision, local authority, local government or governmental institution thereof.

(b) in the case of Hungary: any person who is taxable in Hungary under the laws of Hungary by reason of his residence, place of business, place of management, place of incorporation or any other similar criterion, including that State and any local authority thereof. However, this term does not include persons who are taxable in Hungary solely on the basis of income derived from sources in Hungary.

2. the term "resident of a Contracting State" also includes:

(a) a pension fund which is recognized and controlled in accordance with the laws of a Contracting State and whose income is generally exempt from tax in that State;

(b) a governmental institution of a Contracting State. Any institution shall be treated as a governmental institution which is established, wholly owned and controlled by the government of a Contracting State or of one of the Contracting States or a political subdivision thereof.

3 Where a natural person is a resident of both Contracting States within the meaning of paragraph 1, his status shall be determined as follows:

(a) is considered a resident only in the Contracting State in which he has his permanent residence; if he has his permanent residence in both Contracting States, he is considered a resident only in the Contracting State with which he has the closest personal and economic ties (centre of vital interests);

(b) if it is not possible to determine in which Contracting State he has his centre of main interests, or if he has no permanent residence in either Contracting State, he shall be considered a resident only in the Contracting State in which he has his habitual residence;

(c) if he is habitually resident in both Contracting States or in neither, he shall be considered a resident only of the Contracting State of which he is a national;

(d) where the situation cannot be determined on the basis of the provisions of subparagraph (c), the competent authorities of the Contracting States shall settle the matter by mutual agreement.

4. Where a non-natural person is a resident of both Contracting States under the provisions of paragraph 1, he shall be deemed to be a resident only of the Contracting State in which he is registered. If he is registered in both States or in neither, the competent authorities of the Contracting States shall settle the question by mutual consent.

Article 6

LOCATION

1. For the purposes of this Convention, the term 'establishment' means a fixed place of business through which an undertaking carries on all or part of its business.

2. The term "establishment" includes in particular:

(a) the place of management;

(b) the branch;

(c) the office;

(d) the factory;

(e) the workshop;

(f) a mine, oil or gas well, quarry or any other site for the exploration or extraction of natural resources.

(3) A building site, construction, assembly or installation works or drilling rigs or vessels for the exploration or exploitation of natural resources, or related supervisory activities, in a Contracting State shall give rise to a place of business, but only if such site, works or activities last for a period of more than 12 months.

(4) The provision of services, including consultancy or management services, by an enterprise of a Contracting State through its employees or through other persons employed by the enterprise for that purpose shall give rise to the establishment of a place of business in the other Contracting State, but only if the pursuit of such activities in the other Contracting State exceeds six months continuously or intermittently in any twelve-month period.

(5) Notwithstanding the preceding provisions of this Article, it shall not be deemed to be a "place of business":

(a) the use of facilities exclusively for the storage, display or delivery of the business's goods or merchandise;

(b) the holding of stocks of goods or merchandise of the undertaking solely for the purpose of storage, display or delivery;

(c) the holding of stocks of goods or merchandise of an undertaking solely for the purpose of processing them by another undertaking;

(d) Maintaining a fixed place of business for the sole purpose of purchasing goods or merchandise for the business or obtaining information;

(e) maintaining a fixed place of business for the sole purpose of carrying on any other preparatory or ancillary activities for the business;

(f) the maintenance of a fixed place of business for the sole purpose of carrying on any combination of the activities referred to in subparagraphs (a) to (e), provided that the entire activity of the fixed place of business resulting from such combination is of a preparatory or ancillary nature.

6. Notwithstanding the provisions of paragraphs 1 and 2, if a person, other than an independent representative to whom paragraph 7. paragraph 1 applies, is acting in one Contracting State for an undertaking of the other Contracting State, that undertaking shall be deemed to be established in the first-mentioned Contracting State in respect of all activities which that person carries out for that undertaking, if that person has a power of attorney which he habitually exercises in the first-mentioned Contracting State to conclude contracts on behalf of that undertaking, unless the activities of such person are covered by the provisions of paragraph 5. paragraph 5, which, if carried on through a fixed place of business, would not constitute an establishment within the meaning of that paragraph.

7 An undertaking of a Contracting State shall not be deemed to have an establishment in the other Contracting State merely because it carries on its activities in that other Contracting State through a broker, trustee or other independent representative, provided that such persons are acting in the ordinary course of their business.

8.The fact that a company resident in one Contracting State controls or is controlled by a company resident in the other Contracting State or carrying on business in that other State (whether through a permanent establishment or otherwise) does not of itself make either company a permanent establishment of the other.

Article 7

INCOME FROM IMMOVABLE PROPERTY

1.Income derived by a resident of a Contracting State from immovable property (including income from agriculture and forestry) situated in the other Contracting State is taxable in that other Contracting State.

2. the term "immovable property" shall have the meaning given to it under the law of the Contracting State in which the property in question is situated. This term shall in all cases include property forming an integral part of immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of private law relating to land ownership apply, usufructuary rights in immovable property and rights to variable or permanent payments in return for the extraction or exploitation of mineral deposits, springs and other natural resources; ships and aircraft shall not be considered as immovable property.

3. The provisions of paragraph 1 shall also apply to income derived from the direct use, rental or any other form of occupation of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to income from immovable property of the enterprise.

Article 8

BUSINESS PROFITS

1.The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State, unless the enterprise carries on business in the other Contracting State through an establishment situated in that other Contracting State. If the enterprise so carries on or has carried on a business, the profits of the enterprise shall be taxable in the other Contracting State, but only to the extent attributable to that establishment.

2 Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through an establishment situated therein, the profits which it would make if it were carrying on the same or similar activities as a separate and distinct enterprise under the same or similar conditions and maintaining a wholly independent business relationship with the enterprise of which it is an establishment shall be attributed to that establishment in both Contracting States.

3.In determining the profits of a permanent establishment, deductible expenses incurred in respect of the permanent establishment, including business management and general administrative expenses so incurred, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere, shall be deductible, having regard to the law or rules applicable in the Contracting State concerned. Profit shall not be attributable to the establishment merely by reason of the purchase of goods or merchandise by that establishment for the enterprise.

4.Where in a Contracting State the profits attributable to the establishment are normally determined on the basis of a pro rata apportionment of the total profits of the enterprise between the various units, paragraph 2 shall not preclude that Contracting State from determining the profits to be taxed on the basis of the normal pro rata apportionment; the method of pro rata apportionment used shall, however, be such that the result is consistent with the principles set out in this Article.

(5) For the purposes of the preceding paragraphs, the profit attributable to the establishment shall be determined in the same manner from year to year, unless there are sufficient and justifiable reasons to the contrary.

6.Where the profits include items of income which are dealt with separately in other articles of this Convention, the provisions of those articles shall not be affected by the provisions of this Article.

Article 9

SHIPPING AND AIR TRANSPORT

Notwithstanding the provisions of Article 8 of this Convention:

1 Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2. For the purposes of this Article, profits derived from the operation of ships or aircraft in international traffic shall include:

(a) profits from the hiring of vessels or aircraft without crew;

(b) profits derived from the use, maintenance or hiring of containers used for the transport of goods or products, including trailers and equipment used for the transport of containers;

provided that this profit is possible in relation to the carrying out of these activities.

3. The provisions of paragraph 1 shall also apply to profits which:

1) from participation in a pool, joint operation or internationally operated organisation;

2) from the sale of tickets on behalf of another shipping or air transport company;

3) from a deposit covered by paragraph 1 with a resident bank in the State in which the establishment is situated, and derived from bonds, shares and securities acquired from profits covered by paragraph 1, provided that the deposit and acquisition are incidental and ancillary to the undertaking's operating activities.

Article 10

AFFILIATED COMPANIES

1. If

(a) an enterprise of one Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State,

(b) the same persons have, directly or indirectly, an interest in the management, control or capital of an enterprise of one Contracting State and an enterprise of the other Contracting State,

and in either case, the two undertakings agree in their commercial or financial relations or impose conditions on each other which differ from those which would be agreed between independent undertakings, the profits which one of the undertakings would have made but for those conditions but for the conditions, may be included in the profits of that undertaking and taxed accordingly.

2. Where a Contracting State adds to the profits of an enterprise of that Contracting State profits which have been taxed in that other Contracting State in respect of an enterprise of the other Contracting State, and the profits so added are profits which would have been made by an enterprise of the first-mentioned Contracting State, if the two enterprises had agreed on terms which independent enterprises would have agreed between themselves, that other Contracting State shall adjust the amount of the tax there imposed on such profits accordingly, provided that it agrees to the adjustment made by the first-mentioned State. In making such adjustment, due account shall be taken of the other provisions of this Convention and the competent authorities of the Contracting States shall consult each other as necessary.

Article 11

SECTION

1.A dividend paid by a resident company of a Contracting State to a resident of the other Contracting State who is the beneficial owner of the dividend shall be taxable only in that other Contracting State.

2 For the purposes of this Article, the term 'dividends' means income from shares, debentures or debenture stock, mining shares, founders' shares or other rights conferring a right to participate in profits other than credit claims, and income from other company rights which are subject to the same tax treatment as income from shares under the tax laws of the Contracting State in which the company distributing the profits is resident.

(3) The provisions of paragraph (1) shall not apply where the beneficial owner of a dividend who is a resident of a Contracting State carries on business in the other Contracting State in which the company paying the dividend is resident through a permanent establishment situated in that other Contracting State and the interest in respect of which the dividend is paid is effectively connected with that permanent establishment. In this case the provisions of Article 8 shall apply.

4. Where a company resident in one Contracting State derives profits or income from the other Contracting State, that other Contracting State shall not tax dividends paid by the company unless such dividends are paid to a resident of that other Contracting State who is the beneficial owner of the dividends or unless the dividends are paid to a beneficial owner of an interest, in respect of which the dividend is paid is effectively connected with a permanent establishment situated in that other Contracting State, nor shall the undistributed profits of the company be subject to tax on the undistributed profits of the company, even if the dividend paid or the undistributed profits consist wholly or partly of profits or income arising in that other Contracting State.

Article 12

CAMERA

Interest arising in one Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other Contracting State.

2. For the purposes of this Article, the term "interest" shall mean income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and shall include in particular income from government securities, bonds and debentures, including premiums and prizes attaching to such securities, bonds or debentures, and income which is subject to the same tax treatment as income from the lending of money under the tax laws of the Contracting State in which the income arises. For the purposes of this Article, penalty charges for late payment shall not be considered as interest.

(3) The provisions of paragraph 1 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest accrues through a permanent establishment situated in that other Contracting State and the debt claim in respect of which the interest is paid is effectively connected with that permanent establishment. In this case, the provisions of Article 8 shall apply.

Interest shall be deemed to originate in a Contracting State if the person paying the interest is a resident of that Contracting State. If, however, the person paying interest, whether resident or non-resident in a Contracting State, has a permanent establishment in a Contracting State in respect of which the debt claim on which the interest is payable arose and such interest is paid by that permanent establishment, such interest shall be deemed to be originating in the Contracting State in which the permanent establishment is situated.

5.Where, by reason of a special relationship between the person paying interest and the beneficial owner of the interest or between the two of them and a third person, the amount of interest in respect of the claim for which it is paid exceeds the amount which the person paying interest and the beneficial owner would have agreed in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In that case, the excess amount paid shall remain taxable under the laws of both Contracting States, with due regard to the other provisions of this Convention.

Article 13

AWARD

1.A royalty arising in one Contracting State, the beneficial owner of which is a resident of the other Contracting State, shall be taxable only in that other Contracting State.

2. For the purposes of this Article, the term "royalty" means any payment of any kind in respect of the copyright in literary, artistic or scientific works (including cinematographic works and works on film, tape or other media of reproduction used in connection with television or radio broadcasting), any patent, trade mark, design or other design, plan, secret formula or process, or information relating to industrial, commercial or scientific experience (know-how).

3.The provisions of paragraph 1 shall not apply where the beneficial owner of the royalty, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalty arises through an establishment situated in that other Contracting State and the right or property in respect of which the royalty is paid is effectively connected with that establishment. In this case, the provisions of Article 8 shall apply.

4.Where, because of a special relationship between the person paying the royalty and the beneficial owner of the royalty, or between the two of them and a third person, the amount of the royalty in respect of the use, right or information for which it is paid exceeds the amount which the person paying the royalty and the beneficial owner would have agreed in the absence of such relationship, the provisions of this Article shall apply only to the latter amount. In that case, the excess amount paid shall remain taxable under the laws of both Contracting States, with due regard to the other provisions of this Convention.

Article 14

GAIN ON DISPOSAL

1.Gains derived by a resident of a Contracting State from the disposal of immovable property as defined in Article 7 and situated in the other Contracting State shall be taxable in that other Contracting State.

(2) Gains derived from the disposal of movable property forming part of the business assets of an enterprise of a Contracting State of a permanent establishment situated in another Contracting State, including gains derived from the disposal of such permanent establishment (alone or together with the whole enterprise), shall be taxable in that other State.

(3) Gains derived from the disposal of ships or aircraft operated in international traffic by an enterprise of a Contracting State, or of movable property used in the operation of such ships or aircraft, shall be taxable only in that Contracting State.

(4) Gains derived by a resident of a Contracting State from the disposal of shares, more than 50 per cent of the value of which is derived directly or indirectly from immovable property situated in the other Contracting State, shall be taxable in that other State.

(5) Gains from the disposal of any property not referred to in paragraphs (1), (2), (3) and (4) shall be taxable only in the Contracting State in which the disposer is resident.

Article 15

INCOME FROM EMPLOYMENT

1 Subject to the provisions of Articles 16, 18, 19 and 21, salary, wages and other similar remuneration received by a resident of a Contracting State in respect of employment shall be taxable only in that State unless the work is performed in the other Contracting State. If the work is carried out there, the remuneration received in respect thereof shall be taxable in that other State.

2.Notwithstanding the provisions of paragraph 1, remuneration received by a resident of a Contracting State in respect of work done in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient does not reside in the other State for a continuous or intermittent period exceeding a total of 183 days in any twelve-month period beginning or ending in the tax year in question, and

(b) the remuneration is paid by or on behalf of an employer who is not resident in the other State, and

(c) the remuneration is not borne by the employer's establishment in the other State.

Notwithstanding the preceding provisions of this Article, remuneration received by a resident of a Contracting State for work performed by an enterprise of the other Contracting State on board a ship or aircraft engaged in international traffic shall be taxable only in that other Contracting State.

4 Notwithstanding the preceding provisions of this Article, the salary, wages, allowances and other remuneration received by a resident employee of a Contracting State posted to another Contracting State in the capacity of senior manager of an air or shipping enterprise of a Contracting State shall be taxable only in the Contracting State in which the enterprise is resident.

Article 16

DIRECTORS' FEES

Directors' fees and other similar payments received by a resident of one Contracting State as a member of the board of directors or supervisory board of a resident company of the other Contracting State are taxable in that other State.

Article 17

ARTISTS AND ATHLETES

1 Without prejudice to the provisions of Articles 8 and 15, income derived by a resident of a Contracting State as a performer, as a stage, film, radio or television artist or musician, or as a sportsman or sportswoman, from personal activities exercised in that capacity in the other Contracting State, shall be taxable in that other State.

2 Where the income derived by a performer or sportsperson from his personal activities in such capacity is not received by the performer or sportsperson himself but by another person, such income shall, notwithstanding the provisions of Articles 8 and 15, be taxable in the Contracting State in which the performer or sportsperson carries on his activities.

3 Notwithstanding the provisions of paragraphs 1 and 2 of this Article, income referred to in this Article which is received by an artist or sportsman resident in a Contracting State shall be exempt from tax in the other Contracting State in which the artist or sportsman carries on his activity, provided that such activity is supported to a substantial extent by resources of the first-mentioned State. In this case, the income shall be taxable only in the Contracting State in which the artist or sportsperson is resident.

Article 18

NEWS

Pensions and other similar remuneration arising in one Contracting State and paid to a resident of the other Contracting State in respect of previous employment shall be taxable only in the first-mentioned State.

Article 19

PUBLIC NETWORK

1.(a) Salaries, wages and other similar remuneration paid by a Contracting State or by a local authority of a Contracting State to a natural person for services rendered to that State or authority shall be taxable only in that State.

(b) Such salaries, wages and other similar remuneration shall, however, be taxable in the other Contracting State only if the service was rendered in that other State and the natural person is a resident of that State who:

(i) a national of that State; or

(ii) has not become a resident of that State solely for the purpose of performing his or her duties.

2.The provisions of Articles 15, 16 and 17 shall apply to salaries, wages and other similar remuneration paid for services rendered in connection with the conduct of a business by a Contracting State or its local government or local authority.

Article 20

STUDENTS

Payments made to a pupil, industrial or commercial apprentice or trainee who, immediately before going to a Contracting State, was or is a resident of the other Contracting State and who is in the first-mentioned State solely for the purpose of study or training, shall not be taxable in that State if such payments are derived from a source outside that State.

If the student, industrial and commercial apprentice or trainee receives a scholarship from the first Contracting State mentioned, the amount of the scholarship is not taxable in either Contracting State.

Article 21

TEACHERS AND TRAINERS

1. A teacher or instructor who visits a Contracting State for a period not exceeding two years from the date on which he first visits that Contracting State shall be admitted only to a university in that Contracting State, college or other recognised research institute or institution of higher education for the purpose of teaching or pursuing higher education studies (including research), and who immediately before such visit was a resident of the other Contracting State, shall be exempt from tax in the first-mentioned Contracting State on remuneration received for such teaching or study.

2.The preceding provisions of this Article shall not apply to remuneration received by a teacher or instructor for the performance of research, if the research is carried out primarily for the individual benefit of a specific person or persons.

Article 22

OTHER INCOME

(1) The portions of the income of a resident of a Contracting State not dealt with in the preceding Articles of this Convention, wherever arising, shall be taxable only in that State.

2 The provisions of paragraph 1 shall not apply to income other than income from immovable property as defined in Article 7(2) if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through an establishment situated therein and the right or property in respect of which the income is paid is effectively connected with that establishment. In this case the provisions of Article 8 shall apply.

Article 23

AVOID DOUBLE TAXATION

1. Double taxation in Hungary should be avoided in the following ways:

Where a resident of Hungary enjoys income which is taxable in the United Arab Emirates under the provisions of this Convention, Hungary shall exempt such income from tax, subject to the provisions of paragraph 3.

2. Double taxation in the UAE shall be avoided in the following manner:

Where a resident of the United Arab Emirates enjoys income which is taxable in Hungary under the provisions of this Convention, the United Arab Emirates shall allow a deduction from the tax on the income of such resident of an amount equal to the tax paid in Hungary on such income. However, the amount so deducted shall not exceed that part of the tax calculated before deduction which falls on income taxable in Hungary.

3.Where, under any provision of this Convention, income received by a resident of a Contracting State is exempt from tax in that State, that State may nevertheless take the exempt income into account in calculating the tax on the other income of that resident.

Article 24

EQUAL TREATMENT

1.Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or to any liability arising therefrom which is different from or more onerous than the taxation or to any liability arising therefrom to which nationals of that other State are or may be subjected in like circumstances, in particular with regard to national residence. This provision shall also apply, notwithstanding the provisions of Article 1, to persons who are not residents of one or both Contracting States.

2.The establishment of an enterprise of a Contracting State in the other Contracting State shall not be subjected to less favourable taxation in that other State than enterprises of that other State engaged in the same activities. Nothing in this provision shall be construed as requiring a Contracting State to grant to residents of the other Contracting State, for tax purposes, the same personal advantages, exemptions and deductions on the basis of civil status or family responsibilities as it grants to its own residents.

3.Interest, royalties and other payments made by an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible in determining the taxable profits of such enterprise on the same conditions as if they had been made to a resident of the first-mentioned State, except where the provisions of Article 10(1), Article 12(5) or Article 13(4) apply. Likewise, debts of an enterprise of a Contracting State owed to a resident of the other Contracting State may be deducted in determining the taxable property of such enterprise under the same conditions as if they had been owed to a resident of the first-mentioned State.

(4) No enterprise of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more persons resident in the other Contracting State, shall be subject in the first-mentioned Contracting State to any taxation or related obligations which are different from or more onerous than those to which other similar enterprises of the first-mentioned State are or may be subject.

5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes covered by this Convention.

6.Notwithstanding the provisions of paragraphs 2, 3 and 4 of this Article, nothing in this Article shall affect the right of any Contracting State to grant exemptions or reductions in accordance with its laws, regulations or administrative practices to its nationals and companies.

Article 25

MUTUAL AGREEMENT PROCEDURE

1.If a person considers that measures taken by one or both Contracting States have led or will lead to taxation of him which is not in accordance with the provisions of this Convention, he may, without prejudice to any remedy provided for by the internal law of those States, submit his case to the competent authority of the Contracting State in which he is resident or, if his case falls within the scope of Article 24(1), to the competent authority of the Contracting State of which he is a national. The case must be brought within three years of the first notification of a measure leading to taxation which does not comply with the provisions of the Convention.

2.The competent authority shall, if it finds the objection well founded and is unable to find a satisfactory solution itself, endeavour to settle the matter by mutual agreement with the competent authority of the other Contracting State with a view to avoiding taxation which is not in accordance with the Convention. The agreement thus reached shall be implemented independently of the time limits provided for in the domestic legislation of the Contracting States.

The competent authorities of the Contracting States shall endeavour to resolve any difficulties or doubts concerning the interpretation or application of this Convention by mutual consent. They may hold joint consultations in order to avoid double taxation in cases not provided for in the Convention.

The competent authorities of the Contracting States may communicate directly with each other, including through a joint committee composed of themselves or their representatives, with a view to reaching agreement in accordance with the preceding paragraphs.

Article 26

INFORMATION EXCHANGE

1 The competent authorities of the Contracting States shall communicate to each other information likely to be relevant for the implementation of the provisions of this Convention or for the implementation and enforcement of the provisions of domestic law relating to taxes of any kind or description levied by Contracting States or their local authorities, provided that taxation thereunder is not contrary to this Convention. The exchange of information shall not be restricted by Articles 1 and 2.

2 Any information received by a Contracting State under paragraph 1 shall be treated by that State as confidential in the same manner as information received by it under its domestic law and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of the taxes referred to in paragraph 1, their enforcement or the related litigation or the determination of appeals or the supervision of the above in respect of such taxes. Such persons or authorities may use the information only for such purposes. They may disclose the information in public court hearings or in court orders.

3.Nothing in paragraphs 1 and 2 shall be construed as obliging a Contracting State to:

(a) take an administrative measure that is different from the laws or administrative practices of one or more Contracting States;

(b) provide information which cannot be obtained under the laws of one or other Contracting State or in the normal course of public administration;

(c) provide any information which would reveal any professional, commercial, industrial, trade or occupational secret or process or the disclosure of which would be prejudicial to public policy.

4.Where a Contracting State requests information in accordance with this Article, the other Contracting State shall apply its own information-gathering measures to obtain the information requested, even if that other State does not need the information for its own tax purposes. The obligation in the preceding sentence shall be subject to the limitations in paragraph 3, but in no case shall these limitations be construed as permitting a Contracting State to refuse to supply information solely because it has no domestic interest in the information.

5.Nothing in paragraph 3 shall be construed to permit a Contracting State to refuse to provide information solely because the information is held by a bank, other financial institution, nominee or person acting in a representative or fiduciary capacity, or because it relates to an ownership interest in a person.

Article 27

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

The Convention shall in no way affect the tax privileges enjoyed by members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special conventions.

Article 28

MIXED RULES

This Convention shall in no way limit any present or future benefit established in accordance with the legislation of a Contracting State.

Article 29

CONTACT

The Contracting States shall notify each other through diplomatic channels that they have fulfilled the internal requirements necessary for the entry into force of this Convention.

2.This Convention shall enter into force on the 30th day following the date of receipt of the later of the notifications referred to in paragraph 1 and its provisions shall apply in both Contracting States:

(a) in respect of taxes deducted at source, income arising on or after 1 January of the first calendar year following the year of entry into force of the Convention;

(b) in respect of other taxes on income, for any taxable year beginning on or after 1 January of the first calendar year following the year of entry into force of the Convention.

Article 30

VIEW

The Convention shall remain in force until denounced by a Contracting State. This Convention may be denounced at any time after five years from the date of its entry into force by either Contracting State giving at least six months' notice of denunciation by diplomatic channels.

In that case, the Convention shall cease to be in force in both Contracting States:

(a) in respect of taxes deducted at source, income arising on or after 1 January of the first calendar year following the year in which the notice of termination is given;

(b) in respect of other taxes on income, for taxes chargeable in respect of any tax year beginning on or after 1 January of the first calendar year following the year in which the notice of termination is given.

In witness whereof the undersigned, being duly authorised thereto, have signed this Convention.

Done at Dubai, this 30th day of April 2013, in duplicate, in the Arabic, English and Hungarian languages, each text being equally authentic. In case of any difference of interpretation, the English text shall prevail.