S.I. No. 321/1995 - Double Taxation Relief (Taxes on Income and Capital) (Czech Republic) Order, 1995.

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information so exchanged shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation

(

a

) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(

b

) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(

c

) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

ARTICLE 28

Diplomatic Agents and Consular Officers

Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.

ARTICLE 29

Entry into Force

Each of the Contracting States shall notify in writing to the other, through diplomatic channels, the completion of the procedures required by its law for the bringing into force of this Convention. The Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect

(

a

) in Ireland

(i) as respects income tax and capital gains tax, for any year of assessment beginning on or after the sixth day of April in the year next following the date on which this Convention enters into force;

(ii) as respects corporation tax, for any financial year beginning on or after the first day of January in the year next following the year in which this Convention enters into force;

(

b

) in the Czech Republic

(i) in respect of taxes withheld at source, to amounts derived on or after 1st January in the calendar year next following that in which the Convention enters into force;

(ii) in respect of other taxes on income, and taxes on capital, to taxes chargeable for any taxable year beginning on or after 1st January in the calendar year next following that in which the Convention enters into force.

ARTICLE 30

Termination

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention at any time after five years from the date on which the Convention enters into force provided that at least six months written notice of termination has been given through diplomatic channels.

In such event, this Convention shall cease to have effect

(

a

) in Ireland

(i) as respects income tax and capital gains tax, for any year of assessment beginning on or after the sixth day of April in the year next following the date on which the period specified in the said notice of termination expires;

(ii) as respects corporation tax, for any financial year beginning on or after the first day of January next following the date on which the period specified in the said notice of termination expires;

(

b

) in the Czech Republic

(i) in respect of taxes withheld at source, to income derived on or after 1st January in the calendar year next following that in which the notice is given;

(ii) in respect of other taxes on income, and taxes on capital, to income and capital chargeable for any taxable year beginning on or after 1st January in the calendar year next following that in which the notice is given.

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

Done at Prague on 14th day of November 1995, in duplicate, in the English and Czech languages, both texts being equally authentic.

MARIE CROSS

ING IVAN KOCÂRNÎK, CSc

For Ireland

For the Czech Republic

GIVEN under the Official Seal of the Government, this 5th

day of December, 1995.

JOHN BRUTON,

Taoiseach.

EXPLANATORY NOTE.

This Order gives the force of law to the Convention with the Czech Republic which is set out in the Schedule. The effect of the Convention is summarised below.

This Convention with the Czech Republic, which was signed in Prague on 14th November, 1995, is comprehensive in scope and is based on the OECD Model Convention.

It provides, with regard to income (which includes capital gains), which under the laws of Ireland and the laws of the Czech Republic may be taxed in both countries, for the allocation of taxing rights between the two countries and for the granting of relief from double taxation if under the Convention items of income continue to be taxable in both countries. It also provides for the allocation of taxing rights between the two countries with regard to capital, although at present only the Czech Republic imposes tax on capital.

For example, items such as business profits, gains on or capital represented by movable property (provided that none arises through or is connected with a permanent establishment or fixed base in the source state), interest, profits from the operation of ships or aircraft in international traffic and non-government pensions, are taxable only in the state of residence of the recipient.

Where both countries continue to have taxing rights, for example, with regard to business profits arising through a permanent establishment which an enterprise of one state has in the other state, or dividends or royalties received in one state from the other state, the Convention provides that the state of residence of the recipient will allow a credit against its own tax for the tax imposed on the same income by the state of source. Thus double taxation is relieved.

Capital gains arising from the disposal of immovable property, or of shares or interests in a company or partnership the assets of which consist principally of immovable property, may be taxed by the state in which the property is situated. Other gains, including gains arising from the disposal of ships or aircraft operated in international traffic, are normally taxable only in the state of residence of the taxpayer, unless they arise from the disposal of assets of a permanent establishment or fixed base which the taxpayer has in the other state.

The Convention preserves the taxation rights of a state in respect of income and capital gains arising from the extraction of natural resources in its territory.

In the case of dividends, the Convention provides for a withholding tax of 5 per cent of the gross amount of the dividends if the owner of the dividends is a company which holds at least 25 per cent of the voting power of the company paying the dividends; for other dividends the rate is 15 per cent of the gross amount. There is no withholding tax in the case of interest and the rate is 10 per cent in the case of royalties. Under current Irish domestic law no withholding tax is in fact levied on dividends flowing from Ireland to the Czech Republic.

The Convention also contains provisions for safeguarding citizens and enterprises of one state against discriminatory taxation in the other, for consultation between the competent authorities in both states for the purpose of resolving any difficulties or doubts arising as to the interpretation or application of the Convention and for the exchange of information between these authorities as is necessary for carrying out the provisions of the Convention or of the domestic laws of the Contracting States concerning the taxes covered by the Convention.

The Convention will become operative in both states for the tax periods beginning in the calendar year following the year in which the Convention is given force in law.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention.

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.

ARTICLE 27

Exchange of Information

5. Where, under any provision of this Convention, income or gains is or are wholly or partly relieved from tax in a Contracting State and, under the laws in force in the other Contracting State, an individual, in respect of the said income or gains, is subject to tax by reference to the amount thereof which is remitted to or received in that other State, and not by reference to the full amount thereof, then the relief to be allowed under this Convention in the first-mentioned State shall apply only to so much of the income or gains as is or are remitted to or received in that other State.

6. If, subsequent to the signature of this Convention, the Czech Republic provides relief from its tax on intercorporate dividends it shall immediately notify Ireland and enter into negotiations in order to establish new provisions concerning the credit to be allowed by the Czech Republic against its tax on dividends.

ARTICLE 25

Non-Discrimination

7. Where profits include items of income or gains 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 8

Shipping and Air Transport

S.I. No. 321 of 1995.

DOUBLE TAXATION RELIEF (TAXES ON INCOME AND CAPITAL) (CZECH REPUBLIC) ORDER, 1995.

WHEREAS it is enacted by

section 361

(1) of the

Income Tax Act, 1967

(No. 6 of 1967), as amended by

section 86

of the

Finance Act, 1974

(No. 27 of 1974),

section 38

(1) of the

Capital Gains Tax Act, 1975

(No. 20 of 1975),

section 166

of the

Corporation Tax Act, 1976

(No. 7 of 1976), and

section 47

(4) of the

Finance Act, 1983

(No. 15 of 1983), 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, corporation tax or capital gains 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 other than

section 47

of the

Finance Act, 1983

, 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), as amended by

section 86

of the

Finance Act, 1974

(No. 27 of 1974),

section 38

(1) of the

Capital Gains Tax Act, 1975

(No. 20 of 1975),

section 166

of the

Corporation Tax Act, 1976

(No. 7 of 1976), and

section 47

(4) of the

Finance Act, 1983

(No. 15 of 1983), hereby order as follows