The 1979 U.S.-Hungary treaty was terminated. IRS Table 3 lists its general effective period as January 1, 1980 to December 31, 2023, and Table 1 no longer carries Hungary. Payments to Hungarian residents are withheld at the statutory 30% rate (or the other statutory rules, such as the portfolio interest exemption) with no treaty reduction.
What to withhold
- U.S.-source FDAP income (interest, dividends, royalties, rents, pay for services performed in the United States): 30%, unless a statutory exemption applies, such as portfolio interest or effectively connected income documented on Form W-8ECI.
- Services performed entirely outside the United States are foreign-source: no withholding and no Form 1042-S.
- A W-8BEN or W-8BEN-E that claims treaty benefits under this treaty cannot be relied on for the treaty claim. It still documents foreign status.