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Agreement between the Government of the United States of America and 

the Government of Hungary to Improve International Tax Compliance 

and to Implement FATCA

Whereas, the Government of the United States of America and the Government of Hungary

(each, a “Party,” and together, the “Parties”) desire to conclude an agreement to improve 

international tax compliance through mutual assistance in tax matters based on an effective 

infrastructure for the automatic exchange of information;

Whereas, Article 23 of the Convention between the Government of the United States of 

America and the Government of the Hungarian People’s Republic for the Avoidance of 

Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, 

done at Washington on February 12, 1979 (the “Convention”), authorizes the exchange of 

information for tax purposes, including on an automatic basis;

Whereas, the United States of America enacted provisions commonly known as the Foreign 

Account Tax Compliance Act (“FATCA”), which introduce a reporting regime for financial 

institutions with respect to certain accounts;

Whereas, the Government of Hungary is supportive of the underlying policy goal of FATCA 

to improve tax compliance;

Whereas, FATCA has raised a number of issues, including that Hungarian financial 

institutions may not be able to comply with certain aspects of FATCA due to domestic legal 

impediments;

Whereas, the Government of the United States of America collects information regarding 

certain accounts maintained by U.S. financial institutions held by residents of Hungary and 

is committed to exchanging such information with the Government of Hungary and pursuing 

equivalent levels of exchange, provided that the appropriate safeguards and infrastructure for 

an effective exchange relationship are in place;

Whereas, the Parties are committed to working together over the longer term towards 

achieving common reporting and due diligence standards for financial institutions;

Whereas, the Government of the United States of America acknowledges the need to 

coordinate the reporting obligations under FATCA with other U.S. tax reporting obligations 

of Hungarian financial institutions to avoid duplicative reporting;

Whereas, an intergovernmental approach to FATCA implementation would address legal 

impediments and reduce burdens for Hungarian financial institutions;

Whereas, the Parties desire to conclude an agreement to improve international tax 

compliance and provide for the implementation of FATCA based on domestic reporting and 

reciprocal automatic exchange pursuant to the Convention or any successor Convention and 

subject to the confidentiality and other protections provided for therein, including the 

provisions limiting the use of the information exchanged under the Convention or any 

successor Convention;
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Now, therefore, the Parties have agreed as follows: 

Article 1

Definitions

1. For purposes of this agreement and any annexes thereto (“Agreement”), the 

following terms shall have the meanings set forth below: 

a) The term “United States” means the United States of America, including the 

States thereof, and, when used in a geographical sense, means the land

territory of the United States of America, including inland waters, and the air 

space, the territorial sea thereof and any maritime area beyond the territorial 

sea within which the United States of America may exercise sovereign rights 

or jurisdiction in accordance with international law; the term, however, does 

not include the U.S. Territories. Any reference to a “State” of the United 

States includes the District of Columbia. 

b) The term “U.S. Territory” means American Samoa, the Commonwealth of 

the Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico, or 

the U.S. Virgin Islands. 

c) The term “IRS” means the U.S. Internal Revenue Service. 

d) The term “Hungary” means Hungary and, when used in a geographical 

sense, it means the territory of Hungary.

e) The term “Partner Jurisdiction” means a jurisdiction that has in effect an 

agreement with the United States to facilitate the implementation of FATCA. 

The IRS shall publish a list identifying all Partner Jurisdictions. 

f) The term “Competent Authority” means: 

(1) in the case of the United States, the Secretary of the Treasury or his 

delegate; and 

(2) in the case of Hungary, the minister responsible for tax policy or his 

authorized representative.

g) The term “Financial Institution” means a Custodial Institution, a 

Depository Institution, an Investment Entity, or a Specified Insurance 

Company. 

h) The term “Custodial Institution” means any Entity that holds, as a 

substantial portion of its business, financial assets for the account of others. 

An entity holds financial assets for the account of others as a substantial 

portion of its business if the entity’s gross income attributable to the holding 

of financial assets and related financial services equals or exceeds 20 percent 

of the entity’s gross income during the shorter of: (i) the three-year period 

that ends on December 31 (or the final day of a non-calendar year accounting 
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period) prior to the year in which the determination is being made; or (ii) the 

period during which the entity has been in existence. 

i) The term “Depository Institution” means any Entity that accepts deposits in 

the ordinary course of a banking or similar business. 

j) The term “Investment Entity” means any Entity that conducts as a business 

(or is managed by an entity that conducts as a business) one or more of the 

following activities or operations for or on behalf of a customer: 

(1) trading in money market instruments (cheques, bills, certificates of 

deposit, derivatives, etc.); foreign exchange; exchange, interest rate 

and index instruments; transferable securities; or commodity futures 

trading; 

(2) individual and collective portfolio management; or 

(3) otherwise investing, administering, or managing funds or money on 

behalf of other persons. 

This subparagraph 1(j) shall be interpreted in a manner consistent with 

similar language set forth in the definition of “financial institution” in the 

Financial Action Task Force Recommendations. 

k) The term “Specified Insurance Company” means any Entity that is an 

insurance company (or the holding company of an insurance company) that 

issues, or is obligated to make payments with respect to, a Cash Value 

Insurance Contract or an Annuity Contract. 

l) The term “Hungarian Financial Institution” means (i) any Financial 

Institution resident in Hungary, but excluding any branch of such Financial 

Institution that is located outside Hungary, and (ii) any branch of a Financial 

Institution not resident in Hungary, if such branch is located in Hungary. 

m) The term “Partner Jurisdiction Financial Institution” means (i) any 

Financial Institution established in a Partner Jurisdiction, but excluding any 

branch of such Financial Institution that is located outside the Partner 

Jurisdiction, and (ii) any branch of a Financial Institution not established in 

the Partner Jurisdiction, if such branch is located in the Partner Jurisdiction. 

n) The term “Reporting Financial Institution” means a Reporting Hungarian

Financial Institution or a Reporting U.S. Financial Institution, as the context 

requires. 

o) The term “Reporting Hungarian Financial Institution” means any 

Hungarian Financial Institution that is not a Non-Reporting Hungarian

Financial Institution. 

p) The term “Reporting U.S. Financial Institution” means (i) any Financial 

Institution that is resident in the United States, but excluding any branch of 
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such Financial Institution that is located outside the United States, and (ii) 

any branch of a Financial Institution not resident in the United States, if such 

branch is located in the United States, provided that the Financial Institution 

or branch has control, receipt, or custody of income with respect to which 

information is required to be exchanged under subparagraph (2)(b) of Article 

2 of this Agreement. 

q) The term “Non-Reporting Hungarian Financial Institution” means any 

Hungarian Financial Institution, or other Entity resident in Hungary that is 

described in Annex II as a Non-Reporting Hungarian Financial Institution or 

that otherwise qualifies as a deemed-compliant FFI, or an exempt beneficial 

owner under relevant U.S. Treasury Regulations in effect on the date of 

signature of this Agreement. 

r) The term “Nonparticipating Financial Institution” means a 

nonparticipating FFI, as that term is defined in relevant U.S. Treasury 

Regulations, but does not include a Hungarian Financial Institution or other 

Partner Jurisdiction Financial Institution other than a Financial Institution 

treated as a Nonparticipating Financial Institution pursuant to subparagraph 

2(b) of Article 5 of this Agreement or the corresponding provision in an 

agreement between the United States and a Partner Jurisdiction. 

s) The term “Financial Account” means an account maintained by a Financial 

Institution, and includes: 

(1) in the case of an Entity that is a Financial Institution solely because it 

is an Investment Entity, any equity or debt interest (other than 

interests that are regularly traded on an established securities market) 

in the Financial Institution; 

(2) in the case of a Financial Institution not described in subparagraph 

1(s)(1) of this Article, any equity or debt interest in the Financial 

Institution (other than interests that are regularly traded on an 

established securities market), if (i) the value of the debt or equity 

interest is determined, directly or indirectly, primarily by reference to 

assets that give rise to U.S. Source Withholdable Payments, and (ii) 

the class of interests was established with a purpose of avoiding 

reporting in accordance with this Agreement; and 

(3) any Cash Value Insurance Contract and any Annuity Contract issued 

or maintained by a Financial Institution, other than a noninvestmentlinked, nontransferable immediate life annuity that is issued to an 

individual and monetizes a pension or disability benefit provided 

under an account that is excluded from the definition of Financial 

Account in Annex II. 

Notwithstanding the foregoing, the term “Financial Account” does not 

include any account that is excluded from the definition of Financial Account 

in Annex II. For purposes of this Agreement, interests are “regularly traded” 

if there is a meaningful volume of trading with respect to the interests 
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on an ongoing basis, and an “established securities market” means an 

exchange that is officially recognized and supervised by a governmental 

authority in which the market is located and that has a meaningful annual 

value of shares traded on the exchange. For purposes of this subparagraph 

1(s), an interest in a Financial Institution is not “regularly traded” and shall 

be treated as a Financial Account if the holder of the interest (other than a 

Financial Institution acting as an intermediary) is registered on the books of 

such Financial Institution. The preceding sentence will not apply to interests 

first registered on the books of such Financial Institution prior to July 1, 

2014, and with respect to interests first registered on the books of such 

Financial Institution on or after July 1, 2014, a Financial Institution is not 

required to apply the preceding sentence prior to January 1, 2016.

t) The term “Depository Account” includes any commercial, checking, 

savings, time, or thrift account, or an account that is evidenced by a 

certificate of deposit, thrift certificate, investment certificate, certificate of 

indebtedness, or other similar instrument maintained by a Financial 

Institution in the ordinary course of a banking or similar business. A 

Depository Account also includes an amount held by an insurance company 

pursuant to a guaranteed investment contract or similar agreement to pay or 

credit interest thereon. 

u) The term “Custodial Account” means an account (other than an Insurance 

Contract or Annuity Contract) for the benefit of another person that holds any 

financial instrument or contract held for investment (including, but not 

limited to, a share or stock in a corporation, a note, bond, debenture, or other 

evidence of indebtedness, a currency or commodity transaction, a credit 

default swap, a swap based upon a nonfinancial index, a notional principal 

contract, an Insurance Contract or Annuity Contract, and any option or other 

derivative instrument). 

v) The term “Equity Interest” means, in the case of a partnership that is a 

Financial Institution, either a capital or profits interest in the partnership. In 

the case of a trust that is a Financial Institution, an Equity Interest is 

considered to be held by any person treated as a settlor or beneficiary of all or 

a portion of the trust, or any other natural person exercising ultimate effective 

control over the trust. A Specified U.S. Person shall be treated as being a 

beneficiary of a foreign trust if such Specified U.S. Person has the right to 

receive directly or indirectly (for example, through a nominee) a mandatory 

distribution or may receive, directly or indirectly, a discretionary distribution 

from the trust. 

w) The term “Insurance Contract” means a contract (other than an Annuity 

Contract) under which the issuer agrees to pay an amount upon the 

occurrence of a specified contingency involving mortality, morbidity, 

accident, liability, or property risk. 

x) The term “Annuity Contract” means a contract under which the issuer 

agrees to make payments for a period of time determined in whole or in part 

by reference to the life expectancy of one or more individuals. The term also 
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includes a contract that is considered to be an Annuity Contract in accordance 

with the law, regulation, or practice of the jurisdiction in which the contract 

was issued, and under which the issuer agrees to make payments for a term of 

years.

y) The term “Cash Value Insurance Contract” means an Insurance Contract 

(other than an indemnity reinsurance contract between two insurance 

companies) that has a Cash Value greater than $50,000. 

z) The term “Cash Value” means the greater of (i) the amount that the 

policyholder is entitled to receive upon surrender or termination of the 

contract (determined without reduction for any surrender charge or policy 

loan), and (ii) the amount the policyholder can borrow under or with regard to 

the contract. Notwithstanding the foregoing, the term “Cash Value” does not 

include an amount payable under an Insurance Contract as: 

(1) a personal injury or sickness benefit or other benefit providing 

indemnification of an economic loss incurred upon the occurrence of 

the event insured against; 

(2) a refund to the policyholder of a previously paid premium under an 

Insurance Contract (other than under a life insurance contract) due to 

policy cancellation or termination, decrease in risk exposure during 

the effective period of the Insurance Contract, or arising from a 

redetermination of the premium due to correction of posting or other 

similar error; or 

(3) a policyholder dividend based upon the underwriting experience of 

the contract or group involved. 

aa) The term “Reportable Account” means a U.S. Reportable Account or a 

Hungarian Reportable Account, as the context requires. 

bb) The term “Hungarian Reportable Account” means a Financial Account 

maintained by a Reporting U.S. Financial Institution if: (i) in the case of a 

Depository Account, the account is held by an individual resident in Hungary

and more than $10 of interest is paid to such account in any given calendar 

year; or (ii) in the case of a Financial Account other than a Depository 

Account, the Account Holder is a resident of Hungary, including an Entity

that certifies that it is resident in Hungary for tax purposes, with respect to 

which U.S. source income that is subject to reporting under chapter 3 of 

subtitle A or chapter 61 of subtitle F of the U.S. Internal Revenue Code is 

paid or credited. 

cc) The term “U.S. Reportable Account” means a Financial Account 

maintained by a Reporting Hungarian Financial Institution and held by one or 

more Specified U.S. Persons or by a Non-U.S. Entity with one or more 

Controlling Persons that is a Specified U.S. Person. Notwithstanding the 

foregoing, an account shall not be treated as a U.S. Reportable Account if 
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such account is not identified as a U.S. Reportable Account after application 

of the due diligence procedures in Annex I. 

dd) The term “Account Holder” means the person listed or identified as the 

holder of a Financial Account by the Financial Institution that maintains the 

account. A person, other than a Financial Institution, holding a Financial 

Account for the benefit or account of another person as agent, custodian, 

nominee, signatory, investment advisor, or intermediary, is not treated as 

holding the account for purposes of this Agreement, and such other person is 

treated as holding the account. For purposes of the immediately preceding

sentence, the term “Financial Institution” does not include a Financial

Institution organized or incorporated in a U.S. Territory. In the case of a Cash 

Value Insurance Contract or an Annuity Contract, the Account Holder is any 

person entitled to access the Cash Value or change the beneficiary of the 

contract. If no person can access the Cash Value or change the beneficiary, 

the Account Holder is any person named as the owner in the contract and any 

person with a vested entitlement to payment under the terms of the contract. 

Upon the maturity of a Cash Value Insurance Contract or an Annuity 

Contract, each person entitled to receive a payment under the contract is 

treated as an Account Holder. 

ee) The term “U.S. Person” means a U.S. citizen or resident individual, a 

partnership or corporation organized in the United States or under the laws of 

the United States or any State thereof, a trust if (i) a court within the United 

States would have authority under applicable law to render orders or 

judgments concerning substantially all issues regarding administration of the 

trust, and (ii) one or more U.S. persons have the authority to control all

substantial decisions of the trust, or an estate of a decedent that is a citizen or 

resident of the United States. This subparagraph 1(ee) shall be interpreted in 

accordance with the U.S. Internal Revenue Code. 

ff) The term “Specified U.S. Person” means a U.S. Person, other than: (i) a 

corporation the stock of which is regularly traded on one or more established 

securities markets; (ii) any corporation that is a member of the same 

expanded affiliated group, as defined in section 1471(e)(2) of the U.S. 

Internal Revenue Code, as a corporation described in clause (i); (iii) the 

United States or any wholly owned agency or instrumentality thereof; (iv) 

any State of the United States, any U.S. Territory, any political subdivision of 

any of the foregoing, or any wholly owned agency or instrumentality of any 

one or more of the foregoing; (v) any organization exempt from taxation 

under section 501(a) of the U.S. Internal Revenue Code or an individual 

retirement plan as defined in section 7701(a)(37) of the U.S. Internal 

Revenue Code; (vi) any bank as defined in section 581 of the U.S. Internal 

Revenue Code; (vii) any real estate investment trust as defined in section 856 

of the U.S. Internal Revenue Code; (viii) any regulated investment company 

as defined in section 851 of the U.S. Internal Revenue Code or any entity 

registered with the U.S. Securities and Exchange Commission under the 

Investment Company Act of 1940 (15 U.S.C. 80a-64); (ix) any common trust 

fund as defined in section 584(a) of the U.S. Internal Revenue Code; (x) any 

trust that is exempt from tax under section 664(c) of the U.S. Internal 
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Revenue Code or that is described in section 4947(a)(1) of the U.S. Internal 

Revenue Code; (xi) a dealer in securities, commodities, or derivative 

financial instruments (including notional principal contracts, futures, 

forwards, and options) that is registered as such under the laws of the United 

States or any State; (xii) a broker as defined in section 6045(c) of the U.S. 

Internal Revenue Code; or (xiii) any tax-exempt trust under a plan that is 

described in section 403(b) or section 457(g) of the U.S. Internal Revenue 

Code. 

gg) The term “Entity” means a legal person or a legal arrangement such as a 

trust. 

hh) The term “Non-U.S. Entity” means an Entity that is not a U.S. Person. 

ii) The term “U.S. Source Withholdable Payment” means any payment of 

interest (including any original issue discount), dividends, rents, salaries, 

wages, premiums, annuities, compensations, remunerations, emoluments, and 

other fixed or determinable annual or periodical gains, profits, and income, if 

such payment is from sources within the United States. Notwithstanding the 

foregoing, a U.S. Source Withholdable Payment does not include any 

payment that is not treated as a withholdable payment in relevant U.S. 

Treasury Regulations. 

jj) An Entity is a “Related Entity” of another Entity if either Entity controls the 

other Entity, or the two Entities are under common control. For this purpose 

control includes direct or indirect ownership of more than 50 percent of the 

vote or value in an Entity. Notwithstanding the foregoing, Hungary may treat 

an Entity as not a Related Entity of another Entity if the two Entities are not 

members of the same expanded affiliated group as defined in section 

1471(e)(2) of the U.S. Internal Revenue Code. 

kk) The term “U.S. TIN” means a U.S. federal taxpayer identifying number. 

ll) The term “Hungarian TIN” means a Hungarian taxpayer identifying 

number. 

mm) The term “Controlling Persons” means the natural persons who exercise 

control over an Entity. In the case of a trust, such term means the settlor, the 

trustees, the protector (if any), the beneficiaries or class of beneficiaries, and 

any other natural person exercising ultimate effective control over the trust, 

and in the case of a legal arrangement other than a trust, such term means 

persons in equivalent or similar positions. The term “Controlling Persons” 

shall be interpreted in a manner consistent with the Financial Action Task 

Force Recommendations. 

2. Any term not otherwise defined in this Agreement shall, unless the context otherwise 

requires or the Competent Authorities agree to a common meaning (as permitted by 

domestic law), have the meaning that it has at that time under the law of the Party applying 

this Agreement, any meaning under the applicable tax laws of that Party prevailing over a 

meaning given to the term under other laws of that Party. 
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Article 2

Obligations to Obtain and Exchange Information with Respect to Reportable Accounts

1. Subject to the provisions of Article 3 of this Agreement, each Party shall obtain the 

information specified in paragraph 2 of this Article with respect to all Reportable Accounts 

and shall annually exchange this information with the other Party on an automatic basis 

pursuant to the provisions of Article 23 of the Convention or the corresponding provisions 

of any successor Convention. 

2. The information to be obtained and exchanged is: 

a) In the case of Hungary with respect to each U.S. Reportable Account of each 

Reporting Hungarian Financial Institution: 

(1) the name, address, and U.S. TIN of each Specified U.S. Person that is 

an Account Holder of such account and, in the case of a Non-U.S. 

Entity that, after application of the due diligence procedures set forth 

in Annex I, is identified as having one or more Controlling Persons 

that is a Specified U.S. Person, the name, address, and U.S. TIN (if 

any) of such entity and each such Specified U.S. Person; 

(2) the account number (or functional equivalent in the absence of an 

account number); 

(3) the name and identifying number of the Reporting Hungarian

Financial Institution; 

(4) the account balance or value (including, in the case of a Cash Value 

Insurance Contract or Annuity Contract, the Cash Value or surrender 

value) as of the end of the relevant calendar year or other appropriate 

reporting period or, if the account was closed during such year, 

immediately before closure; 

(5) in the case of any Custodial Account: 

(A) the total gross amount of interest, the total gross amount of 

dividends, and the total gross amount of other income 

generated with respect to the assets held in the account, in 

each case paid or credited to the account (or with respect to the 

account) during the calendar year or other appropriate 

reporting period; and 

(B) the total gross proceeds from the sale or redemption of 

property paid or credited to the account during the calendar 

year or other appropriate reporting period with respect to 

which the Reporting Hungarian Financial Institution acted as a 

custodian, broker, nominee, or otherwise as an agent for the 

Account Holder;
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(6) in the case of any Depository Account, the total gross amount of 

interest paid or credited to the account during the calendar year or 

other appropriate reporting period; and 

(7) in the case of any account not described in subparagraph 2(a)(5) or 

2(a)(6) of this Article, the total gross amount paid or credited to the 

Account Holder with respect to the account during the calendar year 

or other appropriate reporting period with respect to which the 

Reporting Hungarian Financial Institution is the obligor or debtor, 

including the aggregate amount of any redemption payments made to 

the Account Holder during the calendar year or other appropriate 

reporting period. 

b) In the case of the United States, with respect to each Hungarian Reportable 

Account of each Reporting U.S. Financial Institution: 

(1) the name, address, and Hungarian TIN of any person that is a resident 

of Hungary and is an Account Holder of the account; 

(2) the account number (or the functional equivalent in the absence of an 

account number); 

(3) the name and identifying number of the Reporting U.S. Financial 

Institution; 

(4) the gross amount of interest paid on a Depository Account;

(5) the gross amount of U.S. source dividends paid or credited to the 

account; and 

(6) the gross amount of other U.S. source income paid or credited to the 

account, to the extent subject to reporting under chapter 3 of subtitle 

A or chapter 61 of subtitle F of the U.S. Internal Revenue Code. 

Article 3

Time and Manner of Exchange of Information

1. For purposes of the exchange obligation in Article 2 of this Agreement, the amount 

and characterization of payments made with respect to a U.S. Reportable Account may be 

determined in accordance with the principles of Hungary’s tax laws, and the amount and 

characterization of payments made with respect to a Hungarian Reportable Account may be 

determined in accordance with principles of U.S. federal income tax law. 

2. For purposes of the exchange obligation in Article 2 of this Agreement, the 

information exchanged shall identify the currency in which each relevant amount is 

denominated.

3. With respect to paragraph 2 of Article 2 of this Agreement, information is to be 

obtained and exchanged with respect to 2014 and all subsequent years, except that: 
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a) In the case of Hungary: 

(1) the information to be obtained and exchanged with respect to 2014 is 

only the information described in subparagraphs 2(a)(1) through 

2(a)(4) of Article 2 of this Agreement; 

(2) the information to be obtained and exchanged with respect to 2015 is 

the information described in subparagraphs 2(a)(1) through 2(a)(7) of 

Article 2 of this Agreement, except for gross proceeds described in 

subparagraph 2(a)(5)(B) of Article 2 of this Agreement; and 

(3) the information to be obtained and exchanged with respect to 2016 

and subsequent years is the information described in subparagraphs

2(a)(1) through 2(a)(7) of Article 2 of this Agreement; 

b) In the case of the United States, the information to be obtained and 

exchanged with respect to 2014 and subsequent years is all of the information 

identified in subparagraph 2(b) of Article 2 of this Agreement. 

4. Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account 

that is maintained by a Reporting Financial Institution as of June 30, 2014, and subject to 

paragraph 4 of Article 6 of this Agreement, the Parties are not required to obtain and include 

in the exchanged information the Hungarian TIN or the U.S. TIN, as applicable, of any 

relevant person if such taxpayer identifying number is not in the records of the Reporting 

Financial Institution. In such a case, the Parties shall obtain and include in the exchanged 

information the date of birth of the relevant person, if the Reporting Financial Institution has 

such date of birth in its records. 

5. Subject to paragraphs 3 and 4 of this Article, the information described in Article 2 

of this Agreement shall be exchanged within nine months after the end of the calendar year 

to which the information relates. 

6. The Competent Authorities of Hungary and the United States shall enter into an 

agreement or arrangement under the mutual agreement procedure provided for in Article 22

of the Convention or the corresponding provisions of any successor Convention, which 

shall: 

a) establish the procedures for the automatic exchange obligations described in 

Article 2 of this Agreement; 

b) prescribe rules and procedures as may be necessary to implement Article 5 of 

this Agreement; and 

c) establish as necessary procedures for the exchange of the information 

reported under subparagraph 1(b) of Article 4 of this Agreement. 

7. All information exchanged shall be subject to the confidentiality and other 

protections provided for in the Convention or any successor Convention, including the 

provisions limiting the use of the information exchanged.
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8. Following entry into force of this Agreement, each Competent Authority shall 

provide written notification to the other Competent Authority when it is satisfied that the 

jurisdiction of the other Competent Authority has in place (i) appropriate safeguards to 

ensure that the information received pursuant to this Agreement shall remain confidential 

and be used solely for tax purposes, and (ii) the infrastructure for an effective exchange 

relationship (including established processes for ensuring timely, accurate, and confidential 

information exchanges, effective and reliable communications, and demonstrated 

capabilities to promptly resolve questions and concerns about exchanges or requests for 

exchanges and to administer the provisions of Article 5 of this Agreement). The Competent 

Authorities shall endeavor in good faith to meet, prior to September 2015, to establish that 

each jurisdiction has such safeguards and infrastructure in place.

9. The obligations of the Parties to obtain and exchange information under Article 2 of 

this Agreement shall take effect on the date of the later of the written notifications described 

in paragraph 8 of this Article. Notwithstanding the foregoing, if the Hungarian Competent 

Authority is satisfied that the United States has the safeguards and infrastructure described 

in paragraph 8 of this Article in place, but additional time is necessary for the U.S. 

Competent Authority to establish that Hungary has such safeguards and infrastructure in 

place, the obligation of Hungary to obtain and exchange information under Article 2 of this 

Agreement shall take effect on the date of the written notification provided by the Hungarian 

Competent Authority to the U.S. Competent Authority pursuant to paragraph 8 of this 

Article. 

10. This Agreement shall terminate on September 30, 2015, if Article 2 of this 

Agreement is not in effect for either Party pursuant to paragraph 9 of this Article by that 

date. 

Article 4

Application of FATCA to Hungarian Financial Institutions

1. Treatment of Reporting Hungarian Financial Institutions. Each Reporting 

Hungarian Financial Institution shall be treated as complying with, and not subject to 

withholding under, section 1471 of the U.S. Internal Revenue Code if Hungary complies 

with its obligations under Articles 2 and 3 of this Agreement with respect to such Reporting 

Hungarian Financial Institution, and the Reporting Hungarian Financial Institution: 

a) identifies U.S. Reportable Accounts and reports annually to the Hungarian

Competent Authority the information required to be reported in subparagraph 

2(a) of Article 2 of this Agreement in the time and manner described in 

Article 3 of this Agreement; 

b) for each of 2015 and 2016, reports annually to the Hungarian Competent 

Authority the name of each Nonparticipating Financial Institution to which it 

has made payments and the aggregate amount of such payments; 

c) complies with the applicable registration requirements on the IRS FATCA 

registration website; 

d) to the extent that a Reporting Hungarian Financial Institution is (i) acting as a 

qualified intermediary (for purposes of section 1441 of the U.S. Internal 

Revenue Code) that has elected to assume primary withholding responsibility 
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under chapter 3 of subtitle A of the U.S. Internal Revenue Code, (ii) a foreign 

partnership that has elected to act as a withholding foreign partnership (for 

purposes of both sections 1441 and 1471 of the U.S. Internal Revenue Code), 

or (iii) a foreign trust that has elected to act as a withholding foreign trust (for 

purposes of both sections 1441 and 1471 of the U.S. Internal Revenue Code), 

withholds 30 percent of any U.S. Source Withholdable Payment to any 

Nonparticipating Financial Institution; and 

e) in the case of a Reporting Hungarian Financial Institution that is not 

described in subparagraph 1(d) of this Article and that makes a payment of, 

or acts as an intermediary with respect to, a U.S. Source Withholdable 

Payment to any Nonparticipating Financial Institution, the Reporting 

Hungarian Financial Institution provides to any immediate payor of such U.S. 

Source Withholdable Payment the information required for withholding and 

reporting to occur with respect to such payment. 

Notwithstanding the foregoing, a Reporting Hungarian Financial Institution with respect to 

which the conditions of this paragraph 1 are not satisfied shall not be subject to withholding 

under section 1471 of the U.S. Internal Revenue Code unless such Reporting Hungarian

Financial Institution is treated by the IRS as a Nonparticipating Financial Institution 

pursuant to subparagraph 2(b) of Article 5 of this Agreement. 

2. Suspension of Rules Relating to Recalcitrant Accounts. The United States shall 

not require a Reporting Hungarian Financial Institution to withhold tax under section 1471 

or 1472 of the U.S. Internal Revenue Code with respect to an account held by a recalcitrant 

account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue Code), or to 

close such account, if the U.S. Competent Authority receives the information set forth in 

subparagraph 2(a) of Article 2 of this Agreement, subject to the provisions of Article 3 of 

this Agreement, with respect to such account. 

3. Specific Treatment of Hungarian Retirement Plans. The United States shall treat 

as deemed-compliant FFIs or exempt beneficial owners, as appropriate, for purposes of 

sections 1471 and 1472 of the U.S. Internal Revenue Code, Hungarian retirement plans 

described in Annex II. For this purpose, a Hungarian retirement plan includes an Entity 

established or located in, and regulated by, Hungary, or a predetermined contractual or legal 

arrangement, operated to provide pension or retirement benefits or earn income for 

providing such benefits under the laws of Hungary and regulated with respect to

contributions, distributions, reporting, sponsorship, and taxation. 

4. Identification and Treatment of Other Deemed-Compliant FFIs and Exempt 

Beneficial Owners. The United States shall treat each Non-Reporting Hungarian Financial 

Institution as a deemed-compliant FFI or as an exempt beneficial owner, as appropriate, for 

purposes of section 1471 of the U.S. Internal Revenue Code. 

5. Special Rules Regarding Related Entities and Branches That Are 

Nonparticipating Financial Institutions. If a Hungarian Financial Institution, that 

otherwise meets the requirements described in paragraph 1 of this Article or is described in 

paragraph 3 or 4 of this Article, has a Related Entity or branch that operates in a jurisdiction 

that prevents such Related Entity or branch from fulfilling the requirements of a 

participating FFI or deemed-compliant FFI for purposes of section 1471 of the U.S. Internal 
14

Revenue Code or has a Related Entity or branch that is treated as a Nonparticipating 

Financial Institution solely due to the expiration of the transitional rule for limited FFIs and 

limited branches under relevant U.S. Treasury Regulations, such Hungarian Financial 

Institution shall continue to be in compliance with the terms of this Agreement and shall 

continue to be treated as a deemed-compliant FFI or exempt beneficial owner, as 

appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code, provided that: 

a) the Hungarian Financial Institution treats each such Related Entity or branch 

as a separate Nonparticipating Financial Institution for purposes of all the 

reporting and withholding requirements of this Agreement and each such 

Related Entity or branch identifies itself to withholding agents as a 

Nonparticipating Financial Institution; 

b) each such Related Entity or branch identifies its U.S. accounts and reports the 

information with respect to those accounts as required under section 1471 of 

the U.S. Internal Revenue Code to the extent permitted under the relevant 

laws pertaining to the Related Entity or branch; and 

c) such Related Entity or branch does not specifically solicit U.S. accounts held 

by persons that are not resident in the jurisdiction where such Related Entity

or branch is located or accounts held by Nonparticipating Financial 

Institutions that are not established in the jurisdiction where such Related 

Entity or branch is located, and such Related Entity or branch is not used by 

the Hungarian Financial Institution or any other Related Entity to circumvent 

the obligations under this Agreement or under section 1471 of the U.S. 

Internal Revenue Code, as appropriate. 

6. Coordination of Timing. Notwithstanding paragraphs 3 and 5 of Article 3 of this 

Agreement: 

a) Hungary shall not be obligated to obtain and exchange information with 

respect to a calendar year that is prior to the calendar year with respect to 

which similar information is required to be reported to the IRS by 

participating FFIs pursuant to relevant U.S. Treasury Regulations; 

b) Hungary shall not be obligated to begin exchanging information prior to the 

date by which participating FFIs are required to report similar information to 

the IRS under relevant U.S. Treasury Regulations; 

c) the United States shall not be obligated to obtain and exchange information 

with respect to a calendar year that is prior to the first calendar year with 

respect to which Hungary is required to obtain and exchange information; 

and 

d) the United States shall not be obligated to begin exchanging information prior 

to the date by which Hungary is required to begin exchanging information. 

7. Coordination of Definitions with U.S. Treasury Regulations. Notwithstanding 

Article 1 of this Agreement and the definitions provided in the Annexes to this Agreement, 

in implementing this Agreement, Hungary may use, and may permit Hungarian Financial 
15

Institutions to use, a definition in relevant U.S. Treasury Regulations in lieu of a 

corresponding definition in this Agreement, provided that such application would not 

frustrate the purposes of this Agreement.

Article 5

Collaboration on Compliance and Enforcement

1. Minor and Administrative Errors. A Competent Authority shall notify the 

Competent Authority of the other Party when the first-mentioned Competent Authority has 

reason to believe that administrative errors or other minor errors may have led to incorrect or 

incomplete information reporting or resulted in other infringements of this Agreement. The 

Competent Authority of such other Party shall apply its domestic law (including applicable 

penalties) to obtain corrected and/or complete information or to resolve other infringements 

of this Agreement.

2. Significant Non-Compliance.

a) A Competent Authority shall notify the Competent Authority of the other 

Party when the first-mentioned Competent Authority has determined that 

there is significant non-compliance with the obligations under this Agreement 

with respect to a Reporting Financial Institution in the other jurisdiction. The 

Competent Authority of such other Party shall apply its domestic law 

(including applicable penalties) to address the significant non-compliance 

described in the notice. 

b) If, in the case of a Reporting Hungarian Financial Institution, such 

enforcement actions do not resolve the non-compliance within a period of 18 

months after notification of significant non-compliance is first provided, the 

United States shall treat the Reporting Hungarian Financial Institution as a 

Nonparticipating Financial Institution pursuant to this subparagraph 2(b). 

3. Reliance on Third Party Service Providers. Each Party may allow Reporting 

Financial Institutions to use third party service providers to fulfill the obligations imposed 

on such Reporting Financial Institutions by a Party, as contemplated in this Agreement, but 

these obligations shall remain the responsibility of the Reporting Financial Institutions. 

4. Prevention of Avoidance. The Parties shall implement as necessary requirements to 

prevent Financial Institutions from adopting practices intended to circumvent the reporting 

required under this Agreement. 

Article 6

Mutual Commitment to Continue to Enhance the Effectiveness of Information 

Exchange and Transparency

1. Reciprocity. The Government of the United States acknowledges the need to 

achieve equivalent levels of reciprocal automatic information exchange with Hungary. The 

Government of the United States is committed to further improve transparency and enhance 

the exchange relationship with Hungary by pursuing the adoption of regulations and 

advocating and supporting relevant legislation to achieve such equivalent levels of 

reciprocal automatic information exchange. 
16

2. Treatment of Passthru Payments and Gross Proceeds. The Parties are committed 

to work together, along with Partner Jurisdictions, to develop a practical and effective 

alternative approach to achieve the policy objectives of foreign passthru payment and gross 

proceeds withholding that minimizes burden. 

3. Development of Common Reporting and Exchange Model. The Parties are 

committed to working with Partner Jurisdictions, the Organisation for Economic Cooperation and Development, and the European Union, on adapting the terms of this 

Agreement and other agreements between the United States and Partner Jurisdictions to a 

common model for automatic exchange of information, including the development of 

reporting and due diligence standards for financial institutions. 

4. Documentation of Accounts Maintained as of June 30, 2014. With respect to 

Reportable Accounts maintained by a Reporting Financial Institution as of June 30, 2014: 

a) The United States commits to establish, by January 1, 2017, for reporting 

with respect to 2017 and subsequent years, rules requiring Reporting U.S. 

Financial Institutions to obtain and report the Hungarian TIN of each 

Account Holder of a Hungarian Reportable Account as required pursuant to 

subparagraph 2(b)(1) of Article 2 of this Agreement; and 

b) Hungary commits to establish, by January 1, 2017, for reporting with respect 

to 2017 and subsequent years, rules requiring Reporting Hungarian Financial 

Institutions to obtain the U.S. TIN of each Specified U.S. Person as required 

pursuant to subparagraph 2(a)(1) of Article 2 of this Agreement. 

Article 7

Consistency in the Application of FATCA to Partner Jurisdictions

1. Hungary shall be granted the benefit of any more favorable terms under Article 4 or 

Annex I of this Agreement relating to the application of FATCA to Hungarian Financial 

Institutions afforded to another Partner Jurisdiction under a signed bilateral agreement 

pursuant to which the other Partner Jurisdiction commits to undertake the same obligations 

as Hungary described in Articles 2 and 3 of this Agreement, and subject to the same terms 

and conditions as described therein and in Articles 5 through 9 of this Agreement. 

2. The United States shall notify Hungary of any such more favorable terms, and such 

more favorable terms shall apply automatically under this Agreement as if such terms were 

specified in this Agreement and effective as of the date of signing of the agreement 

incorporating the more favorable terms, unless Hungary declines the application thereof. 

Article 8

Consultations and Amendments

1. In case any difficulties in the implementation of this Agreement arise, either Party 

may request consultations to develop appropriate measures to ensure the fulfillment of this 

Agreement. 
17

2. This Agreement may be amended by written mutual agreement of the Parties. Unless 

otherwise agreed upon, such an amendment shall enter into force through the same 

procedures as set forth in paragraph 1 of Article 10 of this Agreement. 

Article 9

Annexes

The Annexes form an integral part of this Agreement. 

Article 10

Term of Agreement

1. This Agreement shall enter into force on the 30th day following the date of 

Hungary’s written notification to the United States that Hungary has completed its necessary 

internal procedures for entry into force of this Agreement. 

2. Either Party may terminate this Agreement by giving notice of termination in writing 

to the other Party. Such termination shall become effective on the first day of the month 

following the expiration of a period of 12 months after the date of the notice of termination. 

3. The Parties shall, prior to December 31, 2016, consult in good faith to amend this 

Agreement as necessary to reflect progress on the commitments set forth in Article 6 of this 

Agreement. 

In witness whereof, the undersigned, being duly authorized thereto by their respective 

Governments, have signed this Agreement. 

Done at ___________, in duplicate, in the English language, this __ day of ________, 20__.

FOR THE GOVERNMENT OF

THE UNITED STATES OF AMERICA:

FOR THE GOVERNMENT OF 

HUNGARY:
18

ANNEX I

DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON 

U.S. REPORTABLE ACCOUNTS AND ON PAYMENTS TO CERTAIN 

NONPARTICIPATING FINANCIAL INSTITUTIONS

I. General.

A. Hungary shall require that Reporting Hungarian Financial Institutions apply 

the due diligence procedures contained in this Annex I to identify U.S. Reportable 

Accounts and accounts held by Nonparticipating Financial Institutions. 

B. For purposes of the Agreement, 

1. All dollar amounts are in U.S. dollars and shall be read to include the 

equivalent in other currencies.

2. Except as otherwise provided herein, the balance or value of an 

account shall be determined as of the last day of the calendar year or other 

appropriate reporting period.

3. Where a balance or value threshold is to be determined as of June 30, 

2014 under this Annex I, the relevant balance or value shall be determined as 

of that day or the last day of the reporting period ending immediately before 

June 30, 2014, and where a balance or value threshold is to be determined as 

of the last day of a calendar year under this Annex I, the relevant balance or 

value shall be determined as of the last day of the calendar year or other 

appropriate reporting period. 

4. Subject to subparagraph E(1) of section II of this Annex I, an account 

shall be treated as a U.S. Reportable Account beginning as of the date it is 

identified as such pursuant to the due diligence procedures in this Annex I. 

5. Unless otherwise provided, information with respect to a U.S. 

Reportable Account shall be reported annually in the calendar year following 

the year to which the information relates. 

C. As an alternative to the procedures described in each section of this Annex I, 

Hungary may permit Reporting Hungarian Financial Institutions to rely on the 

procedures described in relevant U.S. Treasury Regulations to establish whether an 

account is a U.S. Reportable Account or an account held by a Nonparticipating 

Financial Institution. Hungary may permit Reporting Hungarian Financial 

Institutions to make such election separately for each section of this Annex I either 

with respect to all relevant Financial Accounts or, separately, with respect to any 

clearly identified group of such accounts (such as by line of business or the location 

of where the account is maintained). 

II. Preexisting Individual Accounts. The following rules and procedures apply for 

purposes of identifying U.S. Reportable Accounts among Preexisting Accounts held by 

individuals (“Preexisting Individual Accounts”). 
19

A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless 

the Reporting Hungarian Financial Institution elects otherwise, either with respect to 

all Preexisting Individual Accounts or, separately, with respect to any clearly 

identified group of such accounts, where the implementing rules in Hungary provide 

for such an election, the following Preexisting Individual Accounts are not required 

to be reviewed, identified, or reported as U.S. Reportable Accounts: 

1. Subject to subparagraph E(2) of this section, a Preexisting Individual 

Account with a balance or value that does not exceed $50,000 as of June 30, 

2014. 

2. Subject to subparagraph E(2) of this section, a Preexisting Individual 

Account that is a Cash Value Insurance Contract or an Annuity Contract with 

a balance or value of $250,000 or less as of June 30, 2014. 

3. A Preexisting Individual Account that is a Cash Value Insurance 

Contract or an Annuity Contract, provided the law or regulations of Hungary

or the United States effectively prevent the sale of such a Cash Value 

Insurance Contract or an Annuity Contract to U.S. residents (e.g., if the 

relevant Financial Institution does not have the required registration under 

U.S. law, and the law of Hungary requires reporting or withholding with 

respect to insurance products held by residents of Hungary). 

4. A Depository Account with a balance of $50,000 or less. 

B. Review Procedures for Preexisting Individual Accounts With a Balance 

or Value as of June 30, 2014, that Exceeds $50,000 ($250,000 for a Cash Value 

Insurance Contract or Annuity Contract), But Does Not Exceed $1,000,000 

(“Lower Value Accounts”).

1. Electronic Record Search. The Reporting Hungarian Financial 

Institution must review electronically searchable data maintained by the 

Reporting Hungarian Financial Institution for any of the following U.S. 

indicia: 

a) Identification of the Account Holder as a U.S. citizen or 

resident; 

b) Unambiguous indication of a U.S. place of birth; 

c) Current U.S. mailing or residence address (including a U.S. 

post office box); 

d) Current U.S. telephone number; 

e) Standing instructions to transfer funds to an account 

maintained in the United States; 
20

f) Currently effective power of attorney or signatory authority 

granted to a person with a U.S. address; or 

g) An “in-care-of” or “hold mail” address that is the sole address 

the Reporting Hungarian Financial Institution has on file for the 

Account Holder. In the case of a Preexisting Individual Account that 

is a Lower Value Account, an “in-care-of” address outside the United 

States or “hold mail” address shall not be treated as U.S. indicia. 

2. If none of the U.S. indicia listed in subparagraph B(1) of this section 

are discovered in the electronic search, then no further action is required until 

there is a change in circumstances that results in one or more U.S. indicia 

being associated with the account, or the account becomes a High Value 

Account described in paragraph D of this section. 

3. If any of the U.S. indicia listed in subparagraph B(1) of this section 

are discovered in the electronic search, or if there is a change in 

circumstances that results in one or more U.S. indicia being associated with 

the account, then the Reporting Hungarian Financial Institution must treat the 

account as a U.S. Reportable Account unless it elects to apply subparagraph 

B(4) of this section and one of the exceptions in such subparagraph applies 

with respect to that account. 

4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of 

this section, a Reporting Hungarian Financial Institution is not required to 

treat an account as a U.S. Reportable Account if: 

a) Where the Account Holder information unambiguously 

indicates a U.S. place of birth, the Reporting Hungarian Financial 

Institution obtains, or has previously reviewed and maintains a record 

of: 

(1) A self-certification that the Account Holder is neither a 

U.S. citizen nor a U.S. resident for tax purposes (which may 

be on an IRS Form W-8 or other similar agreed form); 

(2) A non-U.S. passport or other government-issued 

identification evidencing the Account Holder’s citizenship or 

nationality in a country other than the United States; and 

(3) A copy of the Account Holder’s Certificate of Loss of 

Nationality of the United States or a reasonable explanation 

of: 

(a) The reason the Account Holder does not have 

such a certificate despite relinquishing U.S. 

citizenship; or 

(b) The reason the Account Holder did not obtain 

U.S. citizenship at birth.
21

b) Where the Account Holder information contains a current U.S. 

mailing or residence address, or one or more U.S. telephone 

numbers that are the only telephone numbers associated with the 

account, the Reporting Hungarian Financial Institution obtains, or has 

previously reviewed and maintains a record of: 

(1) A self-certification that the Account Holder is neither a 

U.S. citizen nor a U.S. resident for tax purposes (which may 

be on an IRS Form W-8 or other similar agreed form); and 

(2) Documentary evidence, as defined in paragraph D of 

section VI of this Annex I, establishing the Account Holder’s 

non-U.S. status.

c) Where the Account Holder information contains standing 

instructions to transfer funds to an account maintained in the 

United States, the Reporting Hungarian Financial Institution obtains,

or has previously reviewed and maintains a record of:

(1) A self-certification that the Account Holder is neither a 

U.S. citizen nor a U.S. resident for tax purposes (which may 

be on an IRS Form W-8 or other similar agreed form); and 

(2) Documentary evidence, as defined in paragraph D of 

section VI of this Annex I, establishing the Account Holder’s 

non-U.S. status. 

d) Where the Account Holder information contains a currently 

effective power of attorney or signatory authority granted to a 

person with a U.S. address, has an “in-care-of” address or “hold 

mail” address that is the sole address identified for the Account 

Holder, or has one or more U.S. telephone numbers (if a non-U.S. 

telephone number is also associated with the account), the Reporting 

Hungarian Financial Institution obtains, or has previously reviewed 

and maintains a record of: 

(1) A self-certification that the Account Holder is neither a 

U.S. citizen nor a U.S. resident for tax purposes (which may 

be on an IRS Form W-8 or other similar agreed form); or 

(2) Documentary evidence, as defined in paragraph D of 

section VI of this Annex I, establishing the Account Holder’s 

non-U.S. status. 

C. Additional Procedures Applicable to Preexisting Individual Accounts 

That Are Lower Value Accounts.

1. Review of Preexisting Individual Accounts that are Lower Value 

Accounts for U.S. indicia must be completed by June 30, 2016. 
22

2. If there is a change of circumstances with respect to a Preexisting 

Individual Account that is a Lower Value Account that results in one or more 

U.S. indicia described in subparagraph B(1) of this section being associated 

with the account, then the Reporting Hungarian Financial Institution must 

treat the account as a U.S. Reportable Account unless subparagraph B(4) of 

this section applies. 

3. Except for Depository Accounts described in subparagraph A(4) of 

this section, any Preexisting Individual Account that has been identified as a 

U.S. Reportable Account under this section shall be treated as a U.S. 

Reportable Account in all subsequent years, unless the Account Holder 

ceases to be a Specified U.S. Person. 

D. Enhanced Review Procedures for Preexisting Individual Accounts With 

a Balance or Value That Exceeds $1,000,000 as of June 30, 2014, or December 

31 of 2015 or Any Subsequent Year (“High Value Accounts”).

1. Electronic Record Search. The Reporting Hungarian Financial 

Institution must review electronically searchable data maintained by the 

Reporting Hungarian Financial Institution for any of the U.S. indicia 

described in subparagraph B(1) of this section. 

2. Paper Record Search. If the Reporting Hungarian Financial 

Institution’s electronically searchable databases include fields for, and 

capture all of the information described in, subparagraph D(3) of this section, 

then no further paper record search is required. If the electronic databases do 

not capture all of this information, then with respect to a High Value 

Account, the Reporting Hungarian Financial Institution must also review the 

current customer master file and, to the extent not contained in the current 

customer master file, the following documents associated with the account 

and obtained by the Reporting Hungarian Financial Institution within the last 

five years for any of the U.S. indicia described in subparagraph B(1) of this 

section: 

a) The most recent documentary evidence collected with respect 

to the account; 

b) The most recent account opening contract or documentation; 

c) The most recent documentation obtained by the Reporting 

Hungarian Financial Institution pursuant to AML/KYC Procedures or 

for other regulatory purposes; 

d) Any power of attorney or signature authority forms currently in 

effect; and 

e) Any standing instructions to transfer funds currently in effect. 
23

3. Exception Where Databases Contain Sufficient Information. A 

Reporting Hungarian Financial Institution is not required to perform the 

paper record search described in subparagraph D(2) of this section if the 

Reporting Hungarian Financial Institution’s electronically searchable 

information includes the following: 

a) The Account Holder’s nationality or residence status; 

b) The Account Holder’s residence address and mailing address 

currently on file with the Reporting Hungarian Financial Institution; 

c) The Account Holder’s telephone number(s) currently on file, if 

any, with the Reporting Hungarian Financial Institution; 

d) Whether there are standing instructions to transfer funds in the 

account to another account (including an account at another branch of 

the Reporting Hungarian Financial Institution or another Financial 

Institution); 

e) Whether there is a current “in-care-of” address or “hold mail” 

address for the Account Holder; and 

f) Whether there is any power of attorney or signatory authority 

for the account. 

4. Relationship Manager Inquiry for Actual Knowledge. In addition 

to the electronic and paper record searches described above, the Reporting 

Hungarian Financial Institution must treat as a U.S. Reportable Account any 

High Value Account assigned to a relationship manager (including any 

Financial Accounts aggregated with such High Value Account) if the 

relationship manager has actual knowledge that the Account Holder is a 

Specified U.S. Person. 

5. Effect of Finding U.S. Indicia.

a) If none of the U.S. indicia listed in subparagraph B(1) of this 

section are discovered in the enhanced review of High Value 

Accounts described above, and the account is not identified as held by 

a Specified U.S. Person in subparagraph D(4) of this section, then no 

further action is required until there is a change in circumstances that 

results in one or more U.S. indicia being associated with the account. 

b) If any of the U.S. indicia listed in subparagraph B(1) of this 

section are discovered in the enhanced review of High Value 

Accounts described above, or if there is a subsequent change in 

circumstances that results in one or more U.S. indicia being 

associated with the account, then the Reporting Hungarian Financial 

Institution must treat the account as a U.S. Reportable Account unless 

it elects to apply subparagraph B(4) of this section and one of the 

exceptions in such subparagraph applies with respect to that account.
24

c) Except for Depository Accounts described in subparagraph 

A(4) of this section, any Preexisting Individual Account that has been 

identified as a U.S. Reportable Account under this section shall be 

treated as a U.S. Reportable Account in all subsequent years, unless 

the Account Holder ceases to be a Specified U.S. Person. 

E. Additional Procedures Applicable to High Value Accounts.

1. If a Preexisting Individual Account is a High Value Account as of 

June 30, 2014, the Reporting Hungarian Financial Institution must complete 

the enhanced review procedures described in paragraph D of this section with 

respect to such account by June 30, 2015. If based on this review such 

account is identified as a U.S. Reportable Account on or before December 31, 

2014, the Reporting Hungarian Financial Institution must report the required 

information about such account with respect to 2014 in the first report on the 

account and on an annual basis thereafter. In the case of an account 

identified as a U.S. Reportable Account after December 31, 2014 and on or 

before June 30, 2015, the Reporting Hungarian Financial Institution is not 

required to report information about such account with respect to 2014, but 

must report information about the account on an annual basis thereafter. 

2. If a Preexisting Individual Account is not a High Value Account as of 

June 30, 2014, but becomes a High Value Account as of the last day of 2015 

or any subsequent calendar year, the Reporting Hungarian Financial 

Institution must complete the enhanced review procedures described in 

paragraph D of this section with respect to such account within six months 

after the last day of the calendar year in which the account becomes a High 

Value Account. If based on this review such account is identified as a U.S. 

Reportable Account, the Reporting Hungarian Financial Institution must 

report the required information about such account with respect to the year in 

which it is identified as a U.S. Reportable Account and subsequent years on 

an annual basis, unless the Account Holder ceases to be a Specified U.S. 

Person. 

3. Once a Reporting Hungarian Financial Institution applies the 

enhanced review procedures described in paragraph D of this section to a 

High Value Account, the Reporting Hungarian Financial Institution is not 

required to re-apply such procedures, other than the relationship manager

inquiry described in subparagraph D(4) of this section, to the same High 

Value Account in any subsequent year. 

4. If there is a change of circumstances with respect to a High Value 

Account that results in one or more U.S. indicia described in subparagraph 

B(1) of this section being associated with the account, then the Reporting 

Hungarian Financial Institution must treat the account as a U.S. Reportable 

Account unless it elects to apply subparagraph B(4) of this section and one of 

the exceptions in such subparagraph applies with respect to that account. 
25

5. A Reporting Hungarian Financial Institution must implement 

procedures to ensure that a relationship manager identifies any change in 

circumstances of an account. For example, if a relationship manager is 

notified that the Account Holder has a new mailing address in the United 

States, the Reporting Hungarian Financial Institution is required to treat the 

new address as a change in circumstances and, if it elects to apply 

subparagraph B(4) of this section, is required to obtain the appropriate 

documentation from the Account Holder. 

F. Preexisting Individual Accounts That Have Been Documented for 

Certain Other Purposes. A Reporting Hungarian Financial Institution that has 

previously obtained documentation from an Account Holder to establish the Account 

Holder’s status as neither a U.S. citizen nor a U.S. resident in order to meet its 

obligations under a qualified intermediary, withholding foreign partnership, or 

withholding foreign trust agreement with the IRS, or to fulfill its obligations under 

chapter 61 of Title 26 of the United States Code, is not required to perform the 

procedures described in subparagraph B(1) of this section with respect to Lower 

Value Accounts or subparagraphs D(1) through D(3) of this section with respect to 

High Value Accounts.

III. New Individual Accounts. The following rules and procedures apply for purposes 

of identifying U.S. Reportable Accounts among Financial Accounts held by individuals and

opened on or after July 1, 2014 (“New Individual Accounts”). 

A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless 

the Reporting Hungarian Financial Institution elects otherwise, either with respect to 

all New Individual Accounts or, separately, with respect to any clearly identified 

group of such accounts, where the implementing rules in Hungary provide for such 

an election, the following New Individual Accounts are not required to be reviewed, 

identified, or reported as U.S. Reportable Accounts: 

1. A Depository Account unless the account balance exceeds $50,000 at 

the end of any calendar year or other appropriate reporting period. 

2. A Cash Value Insurance Contract unless the Cash Value exceeds 

$50,000 at the end of any calendar year or other appropriate reporting period.

B. Other New Individual Accounts. With respect to New Individual Accounts 

not described in paragraph A of this section, upon account opening (or within 90 

days after the end of the calendar year in which the account ceases to be described in 

paragraph A of this section), the Reporting Hungarian Financial Institution must 

obtain a self-certification, which may be part of the account opening documentation, 

that allows the Reporting Hungarian Financial Institution to determine whether the 

Account Holder is resident in the United States for tax purposes (for this purpose, a 

U.S. citizen is considered to be resident in the United States for tax purposes, even if 

the Account Holder is also a tax resident of another jurisdiction) and confirm the 

reasonableness of such self-certification based on the information obtained by the 

Reporting Hungarian Financial Institution in connection with the opening of the 

account, including any documentation collected pursuant to AML/KYC Procedures. 
26

1. If the self-certification establishes that the Account Holder is resident 

in the United States for tax purposes, the Reporting Hungarian Financial 

Institution must treat the account as a U.S. Reportable Account and obtain a 

self-certification that includes the Account Holder’s U.S. TIN (which may be 

an IRS Form W-9 or other similar agreed form). 

2. If there is a change of circumstances with respect to a New Individual 

Account that causes the Reporting Hungarian Financial Institution to know,

or have reason to know, that the original self-certification is incorrect or 

unreliable, the Reporting Hungarian Financial Institution cannot rely on the 

original self-certification and must obtain a valid self-certification that 

establishes whether the Account Holder is a U.S. citizen or resident for U.S. 

tax purposes. If the Reporting Hungarian Financial Institution is unable to 

obtain a valid self-certification, the Reporting Hungarian Financial Institution 

must treat the account as a U.S. Reportable Account. 

IV. Preexisting Entity Accounts. The following rules and procedures apply for 

purposes of identifying U.S. Reportable Accounts and accounts held by Nonparticipating 

Financial Institutions among Preexisting Accounts held by Entities (“Preexisting Entity 

Accounts”). 

A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. 

Unless the Reporting Hungarian Financial Institution elects otherwise, either with 

respect to all Preexisting Entity Accounts or, separately, with respect to any clearly 

identified group of such accounts, where the implementing rules in Hungary provide 

for such an election, a Preexisting Entity Account with an account balance or value

that does not exceed $250,000 as of June 30, 2014, is not required to be reviewed, 

identified, or reported as a U.S. Reportable Account until the account balance or 

value exceeds $1,000,000. 

B. Entity Accounts Subject to Review. A Preexisting Entity Account that has

an account balance or value that exceeds $250,000 as of June 30, 2014, and a 

Preexisting Entity Account that does not exceed $250,000 as of June 30, 2014 but 

the account balance or value of which exceeds $1,000,000 as of the last day of 2015 

or any subsequent calendar year, must be reviewed in accordance with the 

procedures set forth in paragraph D of this section. 

C. Entity Accounts With Respect to Which Reporting Is Required. With 

respect to Preexisting Entity Accounts described in paragraph B of this section, only 

accounts that are held by one or more Entities that are Specified U.S. Persons, or by 

Passive NFFEs with one or more Controlling Persons who are U.S. citizens or 

residents, shall be treated as U.S. Reportable Accounts. In addition, accounts held 

by Nonparticipating Financial Institutions shall be treated as accounts for which 

aggregate payments as described in subparagraph 1(b) of Article 4 of the Agreement 

are reported to the Hungarian Competent Authority. 

D. Review Procedures for Identifying Entity Accounts With Respect to 

Which Reporting Is Required. For Preexisting Entity Accounts described in 

paragraph B of this section, the Reporting Hungarian Financial Institution must 

apply the following review procedures to determine whether the account is held by 
27

one or more Specified U.S. Persons, by Passive NFFEs with one or more Controlling 

Persons who are U.S. citizens or residents, or by Nonparticipating Financial 

Institutions: 

1. Determine Whether the Entity Is a Specified U.S. Person. 

a) Review information maintained for regulatory or customer 

relationship purposes (including information collected pursuant to 

AML/KYC Procedures) to determine whether the information 

indicates that the Account Holder is a U.S. Person. For this purpose, 

information indicating that the Account Holder is a U.S. Person 

includes a U.S. place of incorporation or organization, or a U.S. 

address. 

b) If the information indicates that the Account Holder is a U.S. 

Person, the Reporting Hungarian Financial Institution must treat the 

account as a U.S. Reportable Account unless it obtains a selfcertification from the Account Holder (which may be on an IRS Form 

W-8 or W-9, or a similar agreed form), or reasonably determines 

based on information in its possession or that is publicly available, 

that the Account Holder is not a Specified U.S. Person. 

2. Determine Whether a Non-U.S. Entity Is a Financial Institution. 

a) Review information maintained for regulatory or customer 

relationship purposes (including information collected pursuant to 

AML/KYC Procedures) to determine whether the information 

indicates that the Account Holder is a Financial Institution. 

b) If the information indicates that the Account Holder is a 

Financial Institution, or the Reporting Hungarian Financial Institution 

verifies the Account Holder’s Global Intermediary Identification 

Number on the published IRS FFI list, then the account is not a U.S. 

Reportable Account. 

3. Determine Whether a Financial Institution Is a Nonparticipating 

Financial Institution Payments to Which Are Subject to Aggregate 

Reporting Under Subparagraph 1(b) of Article 4 of the Agreement. 

a) Subject to subparagraph D(3)(b) of this section, a Reporting 

Hungarian Financial Institution may determine that the Account 

Holder is a Hungarian Financial Institution or other Partner 

Jurisdiction Financial Institution if the Reporting Hungarian Financial 

Institution reasonably determines that the Account Holder has such 

status on the basis of the Account Holder’s Global Intermediary 

Identification Number on the published IRS FFI list or other 

information that is publicly available or in the possession of the 

Reporting Hungarian Financial Institution, as applicable. In such 

case, no further review, identification, or reporting is required with 

respect to the account. 
28

b) If the Account Holder is a Hungarian Financial Institution or 

other Partner Jurisdiction Financial Institution treated by the IRS as a 

Nonparticipating Financial Institution, then the account is not a U.S. 

Reportable Account, but payments to the Account Holder must be 

reported as contemplated in subparagraph 1(b) of Article 4 of the 

Agreement. 

c) If the Account Holder is not a Hungarian Financial Institution 

or other Partner Jurisdiction Financial Institution, then the Reporting 

Hungarian Financial Institution must treat the Account Holder as a 

Nonparticipating Financial Institution payments to which are 

reportable under subparagraph 1(b) of Article 4 of the Agreement, 

unless the Reporting Hungarian Financial Institution: 

(1) Obtains a self-certification (which may be on an IRS 

Form W-8 or similar agreed form) from the Account Holder 

that it is a certified deemed-compliant FFI, or an exempt 

beneficial owner, as those terms are defined in relevant U.S. 

Treasury Regulations; or 

(2) In the case of a participating FFI or registered deemedcompliant FFI, verifies the Account Holder’s Global 

Intermediary Identification Number on the published IRS FFI 

list. 

4. Determine Whether an Account Held by an NFFE Is a U.S. 

Reportable Account. With respect to an Account Holder of a Preexisting 

Entity Account that is not identified as either a U.S. Person or a Financial 

Institution, the Reporting Hungarian Financial Institution must identify (i) 

whether the Account Holder has Controlling Persons, (ii) whether the 

Account Holder is a Passive NFFE, and (iii) whether any of the Controlling 

Persons of the Account Holder is a U.S. citizen or resident. In making these 

determinations, the Reporting Hungarian Financial Institution must follow 

the guidance in subparagraphs D(4)(a) through D(4)(d) of this section in the 

order most appropriate under the circumstances. 

a) For purposes of determining the Controlling Persons of an 

Account Holder, a Reporting Hungarian Financial Institution may rely 

on information collected and maintained pursuant to AML/KYC 

Procedures. 

b) For purposes of determining whether the Account Holder is a 

Passive NFFE, the Reporting Hungarian Financial Institution must 

obtain a self-certification (which may be on an IRS Form W-8 or W9, or on a similar agreed form) from the Account Holder to establish 

its status, unless it has information in its possession or that is publicly 

available, based on which it can reasonably determine that the 

Account Holder is an Active NFFE. 
29

c) For purposes of determining whether a Controlling Person of a 

Passive NFFE is a U.S. citizen or resident for tax purposes, a 

Reporting Hungarian Financial Institution may rely on: 

(1) Information collected and maintained pursuant to 

AML/KYC Procedures in the case of a Preexisting Entity 

Account held by one or more NFFEs with an account balance

or value that does not exceed $1,000,000; or 

(2) A self-certification (which may be on an IRS Form W8 or W-9, or on a similar agreed form) from the Account 

Holder or such Controlling Person in the case of a Preexisting 

Entity Account held by one or more NFFEs with an account 

balance or value that exceeds $1,000,000. 

d) If any Controlling Person of a Passive NFFE is a U.S. citizen 

or resident, the account shall be treated as a U.S. Reportable Account.

E. Timing of Review and Additional Procedures Applicable to Preexisting 

Entity Accounts.

1. Review of Preexisting Entity Accounts with an account balance or 

value that exceeds $250,000 as of June 30, 2014 must be completed by June 

30, 2016. 

2. Review of Preexisting Entity Accounts with an account balance or 

value that does not exceed $250,000 as of June 30, 2014, but exceeds 

$1,000,000 as of December 31 of 2015 or any subsequent year, must be 

completed within six months after the last day of the calendar year in which 

the account balance or value exceeds $1,000,000. 

3. If there is a change of circumstances with respect to a Preexisting 

Entity Account that causes the Reporting Hungarian Financial Institution to 

know, or have reason to know, that the self-certification or other 

documentation associated with an account is incorrect or unreliable, the 

Reporting Hungarian Financial Institution must redetermine the status of the 

account in accordance with the procedures set forth in paragraph D of this 

section. 

V. New Entity Accounts. The following rules and procedures apply for purposes of 

identifying U.S. Reportable Accounts and accounts held by Nonparticipating Financial 

Institutions among Financial Accounts held by Entities and opened on or after July 1, 2014 

(“New Entity Accounts”). 

A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. 

Unless the Reporting Hungarian Financial Institution elects otherwise, either with 

respect to all New Entity Accounts or, separately, with respect to any clearly 

identified group of such accounts, where the implementing rules in Hungary provide 

for such election, a credit card account or a revolving credit facility treated as a New 

Entity Account is not required to be reviewed, identified, or reported, provided that 
30

the Reporting Hungarian Financial Institution maintaining such account implements 

policies and procedures to prevent an account balance owed to the Account Holder 

that exceeds $50,000.

B. Other New Entity Accounts. With respect to New Entity Accounts not 

described in paragraph A of this section, the Reporting Hungarian Financial 

Institution must determine whether the Account Holder is: (i) a Specified U.S. 

Person; (ii) a Hungarian Financial Institution or other Partner Jurisdiction Financial 

Institution; (iii) a participating FFI, a deemed-compliant FFI, or an exempt beneficial 

owner, as those terms are defined in relevant U.S. Treasury Regulations; or (iv) an 

Active NFFE or Passive NFFE. 

1. Subject to subparagraph B(2) of this section, a Reporting Hungarian

Financial Institution may determine that the Account Holder is an Active 

NFFE, a Hungarian Financial Institution, or other Partner Jurisdiction 

Financial Institution if the Reporting Hungarian Financial Institution 

reasonably determines that the Account Holder has such status on the basis of 

the Account Holder’s Global Intermediary Identification Number or other 

information that is publicly available or in the possession of the Reporting 

Hungarian Financial Institution, as applicable. 

2. If the Account Holder is a Hungarian Financial Institution or other Partner 

Jurisdiction Financial Institution treated by the IRS as a Nonparticipating 

Financial Institution, then the account is not a U.S. Reportable Account, but 

payments to the Account Holder must be reported as contemplated in 

subparagraph 1(b) of Article 4 of the Agreement.

3. In all other cases, a Reporting Hungarian Financial Institution must obtain 

a self-certification from the Account Holder to establish the Account 

Holder’s status. Based on the self-certification, the following rules apply:

a) If the Account Holder is a Specified U.S. Person, the 

Reporting Hungarian Financial Institution must treat the account as a 

U.S. Reportable Account. 

b) If the Account Holder is a Passive NFFE, the Reporting 

Hungarian Financial Institution must identify the Controlling Persons 

as determined under AML/KYC Procedures, and must determine 

whether any such person is a U.S. citizen or resident on the basis of a 

self-certification from the Account Holder or such person. If any such 

person is a U.S. citizen or resident, the Reporting Hungarian Financial 

Institution must treat the account as a U.S. Reportable Account. 

c) If the Account Holder is: (i) a U.S. Person that is not a 

Specified U.S. Person; (ii) subject to subparagraph B(3)(d) of this 

section, a Hungarian Financial Institution or other Partner Jurisdiction 

Financial Institution; (iii) a participating FFI, a deemed-compliant 

FFI, or an exempt beneficial owner, as those terms are defined in 

relevant U.S. Treasury Regulations; (iv) an Active NFFE; or (v) a 

Passive NFFE none of the Controlling Persons of which is a U.S. 
31

citizen or resident, then the account is not a U.S. Reportable Account,

and no reporting is required with respect to the account. 

d) If the Account Holder is a Nonparticipating Financial 

Institution (including a Hungarian Financial Institution or other 

Partner Jurisdiction Financial Institution treated by the IRS as a 

Nonparticipating Financial Institution), then the account is not a U.S. 

Reportable Account, but payments to the Account Holder must be 

reported as contemplated in subparagraph 1(b) of Article 4 of the 

Agreement. 

VI. Special Rules and Definitions. The following additional rules and definitions apply 

in implementing the due diligence procedures described above: 

A. Reliance on Self-Certifications and Documentary Evidence. A Reporting 

Hungarian Financial Institution may not rely on a self-certification or documentary 

evidence if the Reporting Hungarian Financial Institution knows or has reason to 

know that the self-certification or documentary evidence is incorrect or unreliable. 

B. Definitions. The following definitions apply for purposes of this Annex I. 

1. AML/KYC Procedures. “AML/KYC Procedures” means the 

customer due diligence procedures of a Reporting Hungarian Financial 

Institution pursuant to the anti-money laundering or similar requirements of 

Hungary to which such Reporting Hungarian Financial Institution is subject. 

2. NFFE. An “NFFE” means any Non-U.S. Entity that is not an FFI as 

defined in relevant U.S. Treasury Regulations or is an Entity described in 

subparagraph B(4)(j) of this section, and also includes any Non-U.S. Entity 

that is established in Hungary or another Partner Jurisdiction and that is not a 

Financial Institution. 

3. Passive NFFE. A “Passive NFFE” means any NFFE that is not (i) an 

Active NFFE, or (ii) a withholding foreign partnership or withholding foreign 

trust pursuant to relevant U.S. Treasury Regulations. 

4. Active NFFE. An “Active NFFE” means any NFFE that meets any of 

the following criteria: 

a) Less than 50 percent of the NFFE’s gross income for the 

preceding calendar year or other appropriate reporting period is 

passive income and less than 50 percent of the assets held by the 

NFFE during the preceding calendar year or other appropriate 

reporting period are assets that produce or are held for the production 

of passive income; 

b) The stock of the NFFE is regularly traded on an established 

securities market or the NFFE is a Related Entity of an Entity the 

stock of which is regularly traded on an established securities market; 
32

c) The NFFE is organized in a U.S. Territory and all of the 

owners of the payee are bona fide residents of that U.S. Territory; 

d) The NFFE is a government (other than the U.S. government), a 

political subdivision of such government (which, for the avoidance of 

doubt, includes a state, province, county, or municipality), or a public 

body performing a function of such government or a political 

subdivision thereof, a government of a U.S. Territory, an international 

organization, a non-U.S. central bank of issue, or an Entity wholly 

owned by one or more of the foregoing; 

e) Substantially all of the activities of the NFFE consist of 

holding (in whole or in part) the outstanding stock of, or providing 

financing and services to, one or more subsidiaries that engage in 

trades or businesses other than the business of a Financial Institution, 

except that an Entity shall not qualify for NFFE status if the Entity 

functions (or holds itself out) as an investment fund, such as a private 

equity fund, venture capital fund, leveraged buyout fund, or any 

investment vehicle whose purpose is to acquire or fund companies 

and then hold interests in those companies as capital assets for 

investment purposes; 

f) The NFFE is not yet operating a business and has no prior 

operating history, but is investing capital into assets with the intent to 

operate a business other than that of a Financial Institution, provided 

that the NFFE shall not qualify for this exception after the date that is 

24 months after the date of the initial organization of the NFFE; 

g) The NFFE was not a Financial Institution in the past five years, 

and is in the process of liquidating its assets or is reorganizing with 

the intent to continue or recommence operations in a business other 

than that of a Financial Institution; 

h) The NFFE primarily engages in financing and hedging 

transactions with, or for, Related Entities that are not Financial 

Institutions, and does not provide financing or hedging services to any 

Entity that is not a Related Entity, provided that the group of any such 

Related Entities is primarily engaged in a business other than that of a 

Financial Institution;

i) The NFFE is an “excepted NFFE” as described in relevant 

U.S. Treasury Regulations; or

j) The NFFE meets all of the following requirements: 

i. It is established and operated in its jurisdiction of residence 

exclusively for religious, charitable, scientific, artistic, 

cultural, athletic, or educational purposes; or it is established 

and operated in its jurisdiction of residence and it is a 

professional organization, business league, chamber of 
33

commerce, labor organization, agricultural or horticultural 

organization, civic league or an organization operated 

exclusively for the promotion of social welfare; 

ii. It is exempt from income tax in its jurisdiction of residence; 

iii. It has no shareholders or members who have a proprietary or 

beneficial interest in its income or assets; 

iv. The applicable laws of the NFFE’s jurisdiction of residence 

or the NFFE’s formation documents do not permit any 

income or assets of the NFFE to be distributed to, or applied 

for the benefit of, a private person or non-charitable Entity 

other than pursuant to the conduct of the NFFE’s charitable 

activities, or as payment of reasonable compensation for 

services rendered, or as payment representing the fair market 

value of property which the NFFE has purchased; and 

v. The applicable laws of the NFFE’s jurisdiction of residence 

or the NFFE’s formation documents require that, upon the 

NFFE’s liquidation or dissolution, all of its assets be 

distributed to a governmental entity or other non-profit 

organization, or escheat to the government of the NFFE’s 

jurisdiction of residence or any political subdivision thereof. 

5. Preexisting Account. A “Preexisting Account” means a Financial 

Account maintained by a Reporting Financial Institution as of June 30, 2014.

C. Account Balance Aggregation and Currency Translation Rules.

1. Aggregation of Individual Accounts. For purposes of determining 

the aggregate balance or value of Financial Accounts held by an individual, a 

Reporting Hungarian Financial Institution is required to aggregate all 

Financial Accounts maintained by the Reporting Hungarian Financial 

Institution, or by a Related Entity, but only to the extent that the Reporting 

Hungarian Financial Institution’s computerized systems link the Financial 

Accounts by reference to a data element such as client number or taxpayer 

identification number, and allow account balances or values to be aggregated. 

Each holder of a jointly held Financial Account shall be attributed the entire 

balance or value of the jointly held Financial Account for purposes of 

applying the aggregation requirements described in this paragraph 1. 

2. Aggregation of Entity Accounts. For purposes of determining the 

aggregate balance or value of Financial Accounts held by an Entity, a 

Reporting Hungarian Financial Institution is required to take into account all 

Financial Accounts that are maintained by the Reporting Hungarian Financial 

Institution, or by a Related Entity, but only to the extent that the Reporting 

Hungarian Financial Institution’s computerized systems link the Financial 

Accounts by reference to a data element such as client number or taxpayer 

identification number, and allow account balances or values to be aggregated. 
34

3. Special Aggregation Rule Applicable to Relationship Managers. 

For purposes of determining the aggregate balance or value of Financial 

Accounts held by a person to determine whether a Financial Account is a 

High Value Account, a Reporting Hungarian Financial Institution is also 

required, in the case of any Financial Accounts that a relationship manager 

knows, or has reason to know, are directly or indirectly owned, controlled, or 

established (other than in a fiduciary capacity) by the same person, to 

aggregate all such accounts. 

4. Currency Translation Rule. For purposes of determining the balance 

or value of Financial Accounts denominated in a currency other than the U.S. 

dollar, a Reporting Hungarian Financial Institution must convert the U.S.

dollar threshold amounts described in this Annex I into such currency using a 

published spot rate determined as of the last day of the calendar year 

preceding the year in which the Reporting Hungarian Financial Institution is 

determining the balance or value. 

D. Documentary Evidence. For purposes of this Annex I, acceptable 

documentary evidence includes any of the following: 

1. A certificate of residence issued by an authorized government body 

(for example, a government or agency thereof, or a municipality) of the 

jurisdiction in which the payee claims to be a resident. 

2. With respect to an individual, any valid identification issued by an 

authorized government body (for example, a government or agency thereof, 

or a municipality), that includes the individual’s name and is typically used 

for identification purposes. 

3. With respect to an Entity, any official documentation issued by an 

authorized government body (for example, a government or agency thereof, 

or a municipality) that includes the name of the Entity and either the address 

of its principal office in the jurisdiction (or U.S. Territory) in which it claims 

to be a resident or the jurisdiction (or U.S. Territory) in which the Entity was 

incorporated or organized. 

4. With respect to a Financial Account maintained in a jurisdiction with 

anti-money laundering rules that have been approved by the IRS in 

connection with a QI agreement (as described in relevant U.S. Treasury 

Regulations), any of the documents, other than a Form W-8 or W-9,

referenced in the jurisdiction’s attachment to the QI agreement for identifying 

individuals or Entities. 

5. Any financial statement, third-party credit report, bankruptcy filing, or 

U.S. Securities and Exchange Commission report. 

E. Alternative Procedures for Financial Accounts Held by Individual 

Beneficiaries of a Cash Value Insurance Contract. A Reporting Hungarian 

Financial Institution may presume that an individual beneficiary (other than the 
35

owner) of a Cash Value Insurance Contract receiving a death benefit is not a 

Specified U.S. Person and may treat such Financial Account as other than a U.S. 

Reportable Account unless the Reporting Hungarian Financial Institution has actual 

knowledge, or reason to know, that the beneficiary is a Specified U.S. Person. A 

Reporting Hungarian Financial Institution has reason to know that a beneficiary of a 

Cash Value Insurance Contract is a Specified U.S. Person if the information 

collected by the Reporting Hungarian Financial Institution and associated with the 

beneficiary contains U.S. indicia as described in subparagraph (B)(1) of section II of 

this Annex I. If a Reporting Hungarian Financial Institution has actual knowledge, 

or reason to know, that the beneficiary is a Specified U.S. Person, the Reporting 

Hungarian Financial Institution must follow the procedures in subparagraph B(3) of 

section II of this Annex I.

F. Reliance on Third Parties. Regardless of whether an election is made under 

paragraph C of section I of this Annex I, Hungary may permit Reporting Hungarian 

Financial Institutions to rely on due diligence procedures performed by third parties, 

to the extent provided in relevant U.S. Treasury Regulations.
36

Annex II

The following Entities shall be treated as exempt beneficial owners or deemed-compliant 

FFIs, as the case may be, and the following accounts are excluded from the definition of 

Financial Accounts.

I. Exempt Beneficial Owners other than Funds. The following Entities shall be treated 

as Non-Reporting Hungarian Financial Institutions and as exempt beneficial owners for 

purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code, other than with 

respect to a payment that is derived from an obligation held in connection with a 

commercial financial activity of a type engaged in by a Specified Insurance Company, 

Custodial Institution, or Depository Institution.

A. Governmental Entity. The government of Hungary, any political subdivision of 

Hungary (which, for the avoidance of doubt, includes a state, province, county, or 

municipality), or any wholly owned agency or instrumentality of Hungary or any one 

or more of the foregoing (each, a “Hungarian Governmental Entity”). This category 

is comprised of the integral parts, controlled entities, and political subdivisions of 

Hungary. 

1. An integral part of Hungary means any person, organization, agency, bureau, 

fund, instrumentality, or other body, however designated, that constitutes a 

governing authority of Hungary. The net earnings of the governing authority 

must be credited to its own account or to other accounts of Hungary, with no 

portion inuring to the benefit of any private person. An integral part does not 

include any individual who is a sovereign, official, or administrator acting in a 

private or personal capacity. 

2. A controlled entity means an Entity that is separate in form from Hungary or that 

otherwise constitutes a separate juridical entity, provided that:

a) The Entity is wholly owned and controlled by one or more Hungarian 

Governmental Entities directly or through one or more controlled entities; 

b) The Entity’s net earnings are credited to its own account or to the accounts of 

one or more Hungarian Governmental Entities, with no portion of its income 

inuring to the benefit of any private person; and 

c) The Entity’s assets vest in one or more Hungarian Governmental Entities 

upon dissolution. 

3. Income does not inure to the benefit of private persons if such persons are the 

intended beneficiaries of a governmental program, and the program activities are 

performed for the general public with respect to the common welfare or relate to 

the administration of some phase of government. Notwithstanding the foregoing, 
37

however, income is considered to inure to the benefit of private persons if the 

income is derived from the use of a governmental entity to conduct a commercial 

business, such as a commercial banking business, that provides financial services 

to private persons.

B. International Organization. Any international organization or wholly owned 

agency or instrumentality thereof. This category includes any intergovernmental 

organization (including a supranational organization) (1) that is comprised primarily 

of non-U.S. governments; (2) that has in effect a headquarters agreement with 

Hungary; and (3) the income of which does not inure to the benefit of private 

persons.

C. Central Bank. An institution that is by law or government sanction the principal 

authority, other than the government of Hungary itself, issuing instruments intended 

to circulate as currency. Such an institution may include an instrumentality that is 

separate from the government of Hungary, whether or not owned in whole or in part 

by Hungary.

II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be 

treated as Non-Reporting Hungarian Financial Institutions and as exempt beneficial 

owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code.

A. Treaty-Qualified Retirement Fund. A fund established in Hungary, provided that 

the fund is entitled to benefits under an income tax treaty between Hungary and the 

United States on income that it derives from sources within the United States (or 

would be entitled to such benefits if it derived any such income) as a resident of 

Hungary that satisfies any applicable limitation on benefits requirement, and is 

operated principally to administer or provide pension or retirement benefits.

B. Broad Participation Retirement Fund. A fund established in Hungary to provide 

retirement, disability, or death benefits, or any combination thereof, to individuals 

who are members of the funds (or persons designated by such fund members) in 

consideration for services rendered, provided that the fund:

1. Does not have a single fund member with a right to more than five percent of the 

fund’s assets; 

2. Is subject to government regulation and provides annual information reporting 

about its fund members to the relevant pension supervisory authorities and tax 

authorities in Hungary; and 

3. Satisfies at least one of the following requirements: 

a) The fund is generally exempt from tax in Hungary on investment income 

under the laws of Hungary due to its status as a retirement or pension plan; 

b) The fund receives at least 50 percent of its total contributions (other than 

transfers of assets from other plans described in paragraphs A through D of 
38

this section or from retirement and pension accounts described in 

subparagraph A(1) of section V of this Annex II) from the sponsoring 

employers; 

c) Distributions or withdrawals from the fund are allowed only upon the 

occurrence of specified events related to retirement, disability, or death 

(except rollover distributions to other retirement funds described in 

paragraphs A through D of this section or retirement and pension accounts 

described in subparagraph A(1) of section V of this Annex II), or penalties 

apply to distributions or withdrawals made before such specified events; or

d) Contributions (other than certain permitted make-up contributions) by 

employees to the fund are limited by reference to earned income of the 

employee or may not exceed $50,000 annually, applying the rules set forth in 

Annex I for account aggregation and currency translation.

C. Narrow Participation Retirement Fund. A fund established in Hungary to provide 

retirement, disability, or death benefits to beneficiaries that are current or former 

employees (or persons designated by such employees) of one or more employers in 

consideration for services rendered, provided that:

1. The fund has fewer than 50 participants; 

2. The fund is sponsored by one or more employers that are not Investment Entities 

or Passive NFFEs; 

3. The employee and employer contributions to the fund (other than transfers of 

assets from treaty-qualified retirement funds described in paragraph A of this 

section or retirement and pension accounts described in subparagraph A(1) of 

section V of this Annex II) are limited by reference to earned income and 

compensation of the employee, respectively; 

4. Participants that are not residents of Hungary are not entitled to more than 20 

percent of the fund’s assets; and 

5. The fund is subject to government regulation and provides annual information 

reporting about its beneficiaries to the relevant tax authorities in Hungary.

D. Pension Fund of an Exempt Beneficial Owner. A fund established in Hungary by 

an exempt beneficial owner to provide retirement, disability, or death benefits to 

beneficiaries or participants that are current or former employees of the exempt 

beneficial owner (or persons designated by such employees), or that are not current 

or former employees, if the benefits provided to such beneficiaries or participants are 

in consideration of personal services performed for the exempt beneficial owner.

E. Investment Entity Wholly Owned by Exempt Beneficial Owners. An Entity that 

is a Hungarian Financial Institution solely because it is an Investment Entity, 

provided that each direct holder of an Equity Interest in the Entity is an exempt 

beneficial owner, and each direct holder of a debt interest in such Entity is either a 
39

Depository Institution (with respect to a loan made to such Entity) or an exempt 

beneficial owner.

III. Small or Limited Scope Financial Institutions that Qualify as Deemed-Compliant 

FFIs. The following Financial Institutions are Non-Reporting Hungarian Financial 

Institutions that shall be treated as deemed-compliant FFIs for purposes of section 1471 

of the U.S. Internal Revenue Code. 

A. Financial Institution with a Local Client Base. A Financial Institution satisfying 

the following requirements:

1. The Financial Institution must be licensed and regulated as a financial institution 

under the laws of Hungary; 

2. The Financial Institution must have no fixed place of business outside of 

Hungary. For this purpose, a fixed place of business does not include a location 

that is not advertised to the public and from which the Financial Institution 

performs solely administrative support functions;

3. The Financial Institution must not solicit customers or Account Holders outside 

Hungary. For this purpose, a Financial Institution shall not be considered to have 

solicited customers or Account Holders outside Hungary merely because the 

Financial Institution (a) operates a website, provided that the website does not 

specifically indicate that the Financial Institution provides Financial Accounts or 

services to nonresidents, and does not otherwise target or solicit U.S. customers 

or Account Holders, or (b) advertises in print media or on a radio or television 

station that is distributed or aired primarily within Hungary but is also 

incidentally distributed or aired in other countries, provided that the 

advertisement does not specifically indicate that the Financial Institution 

provides Financial Accounts or services to nonresidents, and does not otherwise 

target or solicit U.S. customers or Account Holders; 

4. The Financial Institution must be required under the laws of Hungary to identify 

resident Account Holders for purposes of either information reporting or 

withholding of tax with respect to Financial Accounts held by residents or for 

purposes of satisfying Hungary’s AML due diligence requirements; 

5. At least 98 percent of the Financial Accounts by value maintained by the 

Financial Institution must be held by residents (including residents that are 

Entities) of Hungary or a Member State of the European Union; 

6. Beginning on or before July 1, 2014, the Financial Institution must have policies 

and procedures, consistent with those set forth in Annex I, to prevent the 

Financial Institution from providing a Financial Account to any Nonparticipating 

Financial Institution and to monitor whether the Financial Institution opens or 

maintains a Financial Account for any Specified U.S. Person who is not a 

resident of Hungary (including a U.S. Person that was a resident of Hungary 

when the Financial Account was opened but subsequently ceases to be a resident 

of Hungary) or any Passive NFFE with Controlling Persons who are U.S. 

residents or U.S. citizens who are not residents of Hungary; 
40

7. Such policies and procedures must provide that if any Financial Account held by 

a Specified U.S. Person who is not a resident of Hungary or by a Passive NFFE 

with Controlling Persons who are U.S. residents or U.S. citizens who are not 

residents of Hungary is identified, the Financial Institution must report such 

Financial Account as would be required if the Financial Institution were a 

Reporting Hungarian Financial Institution (including by following the applicable 

registration requirements on the IRS FATCA registration website) or close such 

Financial Account;

8. With respect to a Preexisting Account held by an individual who is not a resident 

of Hungary or by an Entity, the Financial Institution must review those 

Preexisting Accounts in accordance with the procedures set forth in Annex I 

applicable to Preexisting Accounts to identify any U.S. Reportable Account or 

Financial Account held by a Nonparticipating Financial Institution, and must 

report such Financial Account as would be required if the Financial Institution 

were a Reporting Hungarian Financial Institution (including by following the 

applicable registration requirements on the IRS FATCA registration website) or 

close such Financial Account;

9. Each Related Entity of the Financial Institution that is a Financial Institution 

must be incorporated or organized in Hungary and, with the exception of any 

Related Entity that is a retirement fund described in paragraphs A through D of 

section II of this Annex II, satisfy the requirements set forth in this paragraph A; 

and 

10. The Financial Institution must not have policies or practices that discriminate

against opening or maintaining Financial Accounts for individuals who are

Specified U.S. Persons and residents of Hungary.

B. Local Bank. A Financial Institution satisfying the following requirements:

1. The Financial Institution operates solely as (and is licensed and regulated under 

the laws of Hungary as) (a) a bank or (b) a credit union or similar cooperative 

credit organization that is operated without profit;

2. The Financial Institution’s business consists primarily of receiving deposits from 

and making loans to, with respect to a bank, unrelated retail customers and, with 

respect to a credit union or similar cooperative credit organization, members, 

provided that no member has a greater than five percent interest in such credit 

union or cooperative credit organization;

3. The Financial Institution satisfies the requirements set forth in subparagraphs

A(2) and A(3) of this section, provided that, in addition to the limitations on the 

website described in subparagraph A(3) of this section, the website does not 

permit the opening of a Financial Account;

4. The Financial Institution does not have more than $175 million in assets on its 

balance sheet, and the Financial Institution and any Related Entities, taken 
41

together, do not have more than $500 million in total assets on their consolidated 

or combined balance sheets; and

5. Any Related Entity must be incorporated or organized in Hungary, and any 

Related Entity that is a Financial Institution, with the exception of any Related 

Entity that is a retirement fund described in paragraphs A through D of section 

II of this Annex II or a Financial Institution with only low-value accounts 

described in paragraph C of this section, must satisfy the requirements set forth 

in this paragraph B. 

C. Financial Institution with Only Low-Value Accounts. A Hungarian Financial 

Institution satisfying the following requirements:

1. The Financial Institution is not an Investment Entity;

2. No Financial Account maintained by the Financial Institution or any Related 

Entity has a balance or value in excess of $50,000, applying the rules set forth in 

Annex I for account aggregation and currency translation; and 

3. The Financial Institution does not have more than $50 million in assets on its 

balance sheet, and the Financial Institution and any Related Entities, taken 

together, do not have more than $50 million in total assets on their consolidated 

or combined balance sheets. 

D. Qualified Credit Card Issuer. A Hungarian Financial Institution satisfying the 

following requirements:

1. The Financial Institution is a Financial Institution solely because it is an issuer of 

credit cards that accepts deposits only when a customer makes a payment in 

excess of a balance due with respect to the card and the overpayment is not 

immediately returned to the customer; and

2. Beginning on or before July 1, 2014, the Financial Institution implements 

policies and procedures to either prevent a customer deposit in excess of $50,000, 

or to ensure that any customer deposit in excess of $50,000, in each case 

applying the rules set forth in Annex I for account aggregation and currency 

translation, is refunded to the customer within 60 days. For this purpose, a 

customer deposit does not refer to credit balances to the extent of disputed 

charges but does include credit balances resulting from merchandise returns.

IV. Investment Entities that Qualify as Deemed-Compliant FFIs and Other Special 

Rules. The Financial Institutions described in paragraphs A through E of this section are 

Non-Reporting Hungarian Financial Institutions that shall be treated as deemedcompliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code. In 

addition, paragraph F of this section provides special rules applicable to an Investment 

Entity. 

A. Trustee-Documented Trust. A trust established under the laws of Hungary to the 

extent that the trustee of the trust is a Reporting U.S. Financial Institution, Reporting 
42

Model 1 FFI, or Participating FFI and reports all information required to be reported 

pursuant to the Agreement with respect to all U.S. Reportable Accounts of the trust.

B. Sponsored Investment Entity and Controlled Foreign Corporation. A Financial 

Institution described in subparagraph B(1) or B(2) of this section having a 

sponsoring entity that complies with the requirements of subparagraph B(3) of this 

section. 

1. A Financial Institution is a sponsored investment entity if (a) it is an Investment 

Entity established in Hungary that is not a qualified intermediary, withholding 

foreign partnership, or withholding foreign trust pursuant to relevant U.S. 

Treasury Regulations; and (b) an Entity has agreed with the Financial Institution

to act as a sponsoring entity for the Financial Institution. 

2. A Financial Institution is a sponsored controlled foreign corporation if (a) the 

Financial Institution is a controlled foreign corporation1 organized under the laws 

of Hungary that is not a qualified intermediary, withholding foreign partnership, 

or withholding foreign trust pursuant to relevant U.S. Treasury Regulations; (b) 

the Financial Institution is wholly owned, directly or indirectly, by a Reporting 

U.S. Financial Institution that agrees to act, or requires an affiliate of the 

Financial Institution to act, as a sponsoring entity for the Financial Institution; 

and (c) the Financial Institution shares a common electronic account system with 

the sponsoring entity that enables the sponsoring entity to identify all Account 

Holders and payees of the Financial Institution and to access all account and 

customer information maintained by the Financial Institution including, but not 

limited to, customer identification information, customer documentation, account 

balance, and all payments made to the Account Holder or payee. 

3. The sponsoring entity complies with the following requirements: 

a) The sponsoring entity is authorized to act on behalf of the Financial 

Institution (such as a fund manager, trustee, corporate director, or managing 

partner) to fulfill applicable registration requirements on the IRS FATCA 

registration website; 

b) The sponsoring entity has registered as a sponsoring entity with the IRS on 

the IRS FATCA registration website; 

c) If the sponsoring entity identifies any U.S. Reportable Accounts with respect 

to the Financial Institution, the sponsoring entity registers the Financial 

Institution pursuant to applicable registration requirements on the IRS 

FATCA registration website on or before the later of December 31, 2015 and 

 1 For the purposes of this Agreement, a “controlled foreign corporation” means any foreign corporation if more 

than 50 percent of the total combined voting power of all classes of stock of such corporation entitled to vote, 

or the total value of the stock of such corporation, is owned, or is considered as owned, by “United States 

shareholders” on any day during the taxable year of such foreign corporation. The term a “United States 

shareholder” means, with respect to any foreign corporation, a United States person who owns, or is considered 

as owning, 10 percent or more of the total combined voting power of all classes of stock entitled to vote of 

such foreign corporation.
43

the date that is 90 days after such a U.S. Reportable Account is first 

identified; 

d) The sponsoring entity agrees to perform, on behalf of the Financial 

Institution, all due diligence, withholding, reporting, and other requirements 

that the Financial Institution would have been required to perform if it were a 

Reporting Hungarian Financial Institution; 

e) The sponsoring entity identifies the Financial Institution and includes the 

identifying number of the Financial Institution (obtained by following 

applicable registration requirements on the IRS FATCA registration website)

in all reporting completed on the Financial Institution’s behalf; and 

f) The sponsoring entity has not had its status as a sponsor revoked.

C. Sponsored, Closely Held Investment Vehicle. A Hungarian Financial Institution 

satisfying the following requirements:

1. The Financial Institution is a Financial Institution solely because it is an 

Investment Entity and is not a qualified intermediary, withholding foreign 

partnership, or withholding foreign trust pursuant to relevant U.S. Treasury 

Regulations; 

2. The sponsoring entity is a Reporting U.S. Financial Institution, Reporting Model 

1 FFI, or Participating FFI, is authorized to act on behalf of the Financial 

Institution (such as a professional manager, trustee, or managing partner), and 

agrees to perform, on behalf of the Financial Institution, all due diligence, 

withholding, reporting, and other requirements that the Financial Institution 

would have been required to perform if it were a Reporting Hungarian Financial 

Institution; 

3. The Financial Institution does not hold itself out as an investment vehicle for 

unrelated parties; 

4. Twenty or fewer individuals own all of the debt interests and Equity Interests in 

the Financial Institution (disregarding debt interests owned by Participating FFIs 

and deemed-compliant FFIs and Equity Interests owned by an Entity if that 

Entity owns 100 percent of the Equity Interests in the Financial Institution and is 

itself a sponsored Financial Institution described in this paragraph C); and

5. The sponsoring entity complies with the following requirements: 

a) The sponsoring entity has registered as a sponsoring entity with the IRS on 

the IRS FATCA registration website; 

b) The sponsoring entity agrees to perform, on behalf of the Financial 

Institution, all due diligence, withholding, reporting, and other requirements 

that the Financial Institution would have been required to perform if it were a 

Reporting Hungarian Financial Institution and retains documentation 

collected with respect to the Financial Institution for a period of six years; 
44

c) The sponsoring entity identifies the Financial Institution in all reporting 

completed on the Financial Institution’s behalf; and 

d) The sponsoring entity has not had its status as a sponsor revoked. 

D. Investment Advisors and Investment Managers. An Investment Entity 

established in Hungary that is a Financial Institution solely because it (1) renders 

investment advice to, and acts on behalf of, or (2) manages portfolios for, and acts on 

behalf of, a customer for the purposes of investing, managing, or administering funds 

deposited in the name of the customer with a Financial Institution other than a 

Nonparticipating Financial Institution.

E. Collective Investment Vehicle. An Investment Entity established in Hungary that is 

regulated as a collective investment vehicle, provided that all of the interests in the 

collective investment vehicle (including debt interests in excess of $50,000) are held 

by or through one or more exempt beneficial owners, Active NFFEs described in 

subparagraph B(4) of section VI of Annex I, U.S. Persons that are not Specified U.S. 

Persons, or Financial Institutions that are not Nonparticipating Financial Institutions. 

F. Special Rules. The following rules apply to an Investment Entity: 

1. With respect to interests in an Investment Entity that is a collective investment 

vehicle described in paragraph E of this section, the reporting obligations of any 

Investment Entity (other than a Financial Institution through which interests in 

the collective investment vehicle are held) shall be deemed fulfilled.

2. With respect to interests in: 

a) An Investment Entity established in a Partner Jurisdiction that is regulated as 

a collective investment vehicle, all of the interests in which (including debt 

interests in excess of $50,000) are held by or through one or more exempt 

beneficial owners, Active NFFEs described in subparagraph B(4) of section 

VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial 

Institutions that are not Nonparticipating Financial Institutions; or

b) An Investment Entity that is a qualified collective investment vehicle under 

relevant U.S. Treasury Regulations; 

the reporting obligations of any Investment Entity that is a Hungarian Financial 

Institution (other than a Financial Institution through which interests in the 

collective investment vehicle are held) shall be deemed fulfilled.

3. With respect to interests in an Investment Entity established in Hungary that is 

not described in paragraph E or subparagraph F(2) of this section, consistent with 

paragraph 3 of Article 5 of the Agreement, the reporting obligations of all other 

Investment Entities with respect to such interests shall be deemed fulfilled if the 

information required to be reported by the first-mentioned Investment Entity 

pursuant to the Agreement with respect to such interests is reported by such 

Investment Entity or another person.
45

V. Accounts Excluded from Financial Accounts. The following accounts are excluded 

from the definition of Financial Accounts and therefore shall not be treated as U.S. 

Reportable Accounts.

A. Certain Savings Accounts.

1. Retirement and Pension Account. A retirement or pension account maintained in 

Hungary that satisfies the following requirements under the laws of Hungary.

a) The account is subject to regulation as a personal retirement account or is part 

of a registered or regulated retirement or pension plan for the provision of 

retirement or pension benefits (including disability or death benefits);

 

b) The account is tax-favored (i.e., contributions to the account that would 

otherwise be subject to tax under the laws of Hungary are deductible or 

excluded from the gross income of the account holder or taxed at a reduced 

rate, or taxation of investment income from the account is deferred or taxed at 

a reduced rate);

c) Annual information reporting is required to the tax authorities in Hungary 

with respect to the account;

d) Withdrawals are conditioned on reaching a specified retirement age, 

disability, or death, or penalties apply to withdrawals made before such 

specified events; and

e) Either (i) annual contributions are either limited to $50,000 or less or do not 

exceed $50,000, or (ii) there is a maximum lifetime contribution limit to the 

account of $1,000,000 or less, in each case applying the rules set forth in 

Annex I for account aggregation and currency translation. 

2. Non-Retirement Savings Accounts. An account maintained in Hungary (other 

than an insurance or Annuity Contract) that satisfies the following requirements 

under the laws of Hungary.

a) The account is subject to regulation as a savings vehicle for purposes other 

than for retirement;

b) The account is tax-favored or state-subsidized (i.e., contributions to the 

account that would otherwise be subject to tax under the laws of Hungary are 

deductible or excluded from the gross income of the account holder or taxed 

at a reduced rate, or taxation of investment income from the account is 

deferred or taxed at a reduced rate);

c) Withdrawals are conditioned on meeting specific criteria related to the 

purpose of the savings account (for example, the provision of educational or 

medical benefits or residential or social purposes), or penalties apply to 

withdrawals made before such criteria are met; and
46

d) Annual contributions are either limited to $50,000 or less or do not exceed 

$50,000, applying the rules set forth in Annex I for account aggregation and 

currency translation.

B. Certain Term Life Insurance Contracts. A life insurance contract maintained in 

Hungary with a coverage period that will end before the insured individual attains 

age 90, provided that the contract satisfies the following requirements: 

1. Periodic premiums, which do not decrease over time, are payable at least 

annually during the period the contract is in existence or until the insured attains 

age 90, whichever is shorter;

2. The contract has no contract value that any person can access (by withdrawal, 

loan, or otherwise) without terminating the contract;

3. The amount (other than a death benefit) payable upon cancellation or termination 

of the contract cannot exceed the aggregate premiums paid for the contract, less 

the sum of mortality, morbidity, and expense charges (whether or not actually 

imposed) for the period or periods of the contract’s existence and any amounts 

paid prior to the cancellation or termination of the contract; and

4. The contract is not held by a transferee for value.

C. Account Held By an Estate. An account maintained in Hungary that is held solely 

by an estate if the documentation for such account includes a copy of the deceased’s 

will or death certificate.

D. Escrow Accounts. An account maintained in Hungary established in connection 

with any of the following: 

1. A court order or judgment.

2. A sale, exchange, or lease of real or personal property, provided that the account 

satisfies the following requirements:

a) The account is funded solely with a down payment, earnest money, deposit in 

an amount appropriate to secure an obligation directly related to the 

transaction, or a similar payment, or is funded with a financial asset that is 

deposited in the account in connection with the sale, exchange, or lease of the 

property; 

b) The account is established and used solely to secure the obligation of the 

purchaser to pay the purchase price for the property, the seller to pay any 

contingent liability, or the lessor or lessee to pay for any damages relating to 

the leased property as agreed under the lease;

c) The assets of the account, including the income earned thereon, will be paid 

or otherwise distributed for the benefit of the purchaser, seller, lessor, or 
47

lessee (including to satisfy such person’s obligation) when the property is 

sold, exchanged, or surrendered, or the lease terminates;

d) The account is not a margin or similar account established in connection with 

a sale or exchange of a financial asset; and

e) The account is not associated with a credit card account. 

3. An obligation of a Financial Institution servicing a loan secured by real property 

to set aside a portion of a payment solely to facilitate the payment of taxes or 

insurance related to the real property at a later time.

4. An obligation of a Financial Institution solely to facilitate the payment of taxes at 

a later time.

E. Partner Jurisdiction Accounts. An account maintained in Hungary and excluded 

from the definition of Financial Account under an agreement between the United 

States and another Partner Jurisdiction to facilitate the implementation of FATCA, 

provided that such account is subject to the same requirements and oversight under 

the laws of such other Partner Jurisdiction as if such account were established in that 

Partner Jurisdiction and maintained by a Partner Jurisdiction Financial Institution in 

that Partner Jurisdiction.

VI. Definitions. The following additional definitions shall apply to the descriptions above:

A. Reporting Model 1 FFI. The term Reporting Model 1 FFI means a Financial 

Institution with respect to which a non-U.S. government or agency thereof agrees to 

obtain and exchange information pursuant to a Model 1 IGA, other than a Financial 

Institution treated as a Nonparticipating Financial Institution under the Model 1 IGA. 

For purposes of this definition, the term Model 1 IGA means an arrangement 

between the United States or the Treasury Department and a non-U.S. government or 

one or more agencies thereof to implement FATCA through reporting by Financial 

Institutions to such non-U.S. government or agency thereof, followed by automatic 

exchange of such reported information with the IRS. 

B. Participating FFI. The term Participating FFI means a Financial Institution that has 

agreed to comply with the requirements of an FFI Agreement, including a Financial 

Institution described in a Model 2 IGA that has agreed to comply with the 

requirements of an FFI Agreement. The term Participating FFI also includes a 

qualified intermediary branch of a Reporting U.S. Financial Institution, unless such 

branch is a Reporting Model 1 FFI. For purposes of this definition, the term FFI 

Agreement means an agreement that sets forth the requirements for a Financial 

Institution to be treated as complying with the requirements of section 1471(b) of the 

U.S. Internal Revenue Code. In addition, for purposes of this definition, the term 

Model 2 IGA means an arrangement between the United States or the Treasury 

Department and a non-U.S. government or one or more agencies thereof to facilitate 

the implementation of FATCA through reporting by Financial Institutions directly to 

the IRS in accordance with the requirements of an FFI Agreement, supplemented by 
48

the exchange of information between such non-U.S. government or agency thereof 

and the IRS.