S.I. No. 81/1970 - Double Taxation Relief (Taxes on Income and Capital) (Finland) Order, 1970.

1. This Convention shall be ratified and the instruments of ratification shall be exchanged at Helsinki as soon as possible.

2. The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect

(

a

) in Ireland

(1) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April, 1969;

(2) as respects corporation profits tax for any accounting period beginning on or after the 1st April, 1969, and for the unexpired portion of any accounting period current at that date;

(

b

) in Finland

as respects taxes on income and capital for any year of assessment beginning on or after the 1st January, 1969, and chargeable on the income or capital of the year 1968 or thereafter.

3. The Agreement dated the 15th September, 1965, between the Government of Ireland and the Government of Finland for the avoidance of double taxation on income derived from the business of sea and air transport shall not have effect for any period for which the present Convention has effect.

ARTICLE 31.

TERMINATION.

This Convention shall remain in force indefinitely, but either of the Contracting States may terminate the Convention through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the year 1973. In such event the Convention shall cease to have effect

(

a

) in Ireland

(1) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April in the calendar year next following that in which such notice is given;

(2) as respects corporation profits tax for any accounting period beginning on or after the 1st April in the calendar year next following that in which such notice is given and for the unexpired portion of any accounting period current at that date;

(

b

) in Finland

as respects taxes on income and capital for any year of assessment beginning on or after the 1st January next following the date on which notice is given and chargeable on the income or capital of the year in which the notice is given or thereafter.

IN WITNESS WERE OF the undersigned, duly authorised thereto, have signed the Convention and have affixed thereto their seals.

DONE at Dublin, this twenty-first day of April, 1969, in duplicate.

PROINSIAS MAC AOGÁIN,

For the Government of Ireland.

SIGURD VON NUMERS,

For the Government of Finland.

GIVEN under the Official Seal of the Government, this 14th

day of April, 1970.

SEÁN Ó LOINSIGH,

Taoiseach.

EXPLANATORY NOTE.

This Order gives the force of law to the Convention with Finland which is set out in the Schedule.

Under the Convention certain classes of income derived from one country by a resident of the other country are (subject to certain conditions) to be exempt from tax in the former country. These classes are trading profits not arising through a "permanent establishment" [Article 6], shipping and air transport profits [Article 7], interest [Article 10], patent and copyright royalties [Article 11], profits from professional or other independent activities not attributable to a fixed base [Article 14], pensions (other than Government pensions) [Article 18], and certain earnings of temporary residents [Article 15, 20 and 21]. Government and local authority salaries and pensions may be taxed by the paying Government or authority [Article 18] and double taxation will be relieved by the country of residence of the recipient under Article 24.

In general dividends paid by Irish companies to Finnish residents are to be exempted from Irish sur-tax and dividends paid by Finnish companies to Irish residents are to be exempted from Finnish tax [Article 9].

Subject to certain exceptions (e.g., immovable property] property of an Irish resident situated in Finland is to be exempt from the annual taxes on capital imposed in that country [Article 23].

In the matter of personal allowances and reliefs for tax purposes, each country is to treat residents of the other in the same way as its own resident nationals [Article 25].

Where, under the Convention, income derived from one country by a person resident in the other may be taken into account for tax purposes in both countries, a measure of double taxation relief is to be granted by the latter country. In Ireland, relief is to be given by allowing against the Irish tax payable on Finnish income, a credit in respect of the Finnish tax which the income has borne, including in the case of dividends, other than fixed rate dividends, an appropriate proportion of the Finnish tax on the profits out of which the dividends are paid. In Finland, the Finnish tax otherwise payable on income (other than dividends) or capital which may be taxed in Ireland is to be reduced by an amount equal to the part of the tax appropriate to the Irish income or capital. In the case of Irish dividends relief from Finnish tax is to be given by way of credit against the Finnish tax otherwise payable of an amount equal to the lesser of the Irish tax or Finnish tax appropriate to the dividends and where, because of Irish tax incentive reliefs, the dividends may have borne no Irish tax or may have borne Irish tax at a reduced rate, a "matching credit" is to be given. Furthermore, a Finnish company is to be granted exemption from Finnish tax on Irish dividends if it would be entitled to such exemption had the dividends been Finnish dividends and not Irish dividends [Article 24].

As the reliefs from Finnish tax mentioned in the previous paragraph apart from the "matching credit" relief are allowable without regard to the amount of Irish tax paid on the relevant income, the circumstances that profits and dividends which are wholly or partially relieved from Irish tax by reason of the allowance of a tax incentive (e.g. "exports" relief) will not debar such profits or dividends from the benefits of the reliefs from Finnish tax.

Provision is made for the safeguarding of nationals and enterprises of one country against discriminatory taxation in the other country [Article 26], for consultation between the competent authorities of the two countries [Article 27] and for the exchange of information [Article 28] in order to carry out the provisions of the Convention whether generally or in specific cases.

The Convention takes effect as from the fiscal year 1969-70 [Article 30].

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

ARTICLE 28.

EXCHANGE OF INFORMATION.

5. The provisions of this Article shall not be construed as obliging Ireland to grant to any company other than a company incorporated in Ireland and resident therein for the purposes of income tax, any relief or exemption allowed in accordance with the provisions of

(i) the

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

(No. 8 of 1956), as subsequently amended, or

(ii) Part II of the

Finance (Miscellaneous Provisions) Act, 1956

(No. 47 of 1956), as subsequently amended, or

(iii) Chapter II or Chapter III of Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967), as subsequently amended.

6. In this Article the term "taxation" means taxes of every kind and description.

ARTICLE 27.

MUTUAL AGREEMENT PROCEDURE.

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

ARTICLE 7.

SHIPPING AND AIR TRANSPORT.

Profits of an enterprise from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

ARTICLE 8.

ASSOCIATED ENTERPRISES.

Where

(

a

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

(

b

) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

ARTICLE 9.

DIVIDENDS.

S.I. No. 81 of 1970.

DOUBLE TAXATION RELIEF (TAXES ON INCOME AND CAPITAL) (FINLAND) ORDER, 1970.

WHEREAS it is enacted by

section 361

(1) of the

Income Tax Act, 1967

(No. 6 of 1967), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, sur-tax or corporation profits tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment, have the force of law

AND WHEREAS it is further enacted by section 361 (6) of that Act that where such an order is proposed to be made, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of this Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

section 361

of the

Income Tax Act, 1967

(No. 6 of 1967), hereby order as follows