S.I. No. 463/2008 - Double Taxation Relief (Taxes on Income) (Republic of Macedonia) Order 2008

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

(

a

) in Macedonia

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

(ii) in respect of other taxes on income, to taxes chargeable for any tax year beginning on or after 1st January of the calendar year next following the year in which this Agreement enters into force.

(

b

) in Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 1st January of the calendar year next following the year in which this Agreement enters into force;

(ii) in respect of corporation tax, for any financial year beginning on or after 1st January of the calendar year next following the year in which this Agreement enters into force.

Article 27

TERMINATION

This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of this Agreement. In such event, the Agreement shall cease to have effect

(

a

) in Macedonia

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

(ii) in respect of other taxes on income, to taxes chargeable for any tax year beginning on or after 1st January of the calendar year next following the year in which the notice of termination is given;

(

b

) in Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the 1st January next following the date on which the period specified in the said notice of termination expires;

(ii) in respect of corporation tax, for any financial year beginning on or after the 1st January next following the date on which the period specified in the said notice of termination expires.

IN WITNESS WHEREOF

the undersigned, duly authorised thereto, have signed this Agreement.

DONE

in duplicate at Dublin this 14th day of April 2008 in the English and Macedonian languages, both texts being equally authentic.

FOR THE GOVERNMENT OF IRELAND

FOR THE GOVERNMENT OF THE REPUBLIC OF MACEDONIA

Dick Roche

Antonio Milososki

PROTOCOL

At the time of signing the Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, this day concluded between Ireland and the Republic of Macedonia, both sides have agreed upon the following provisions, which shall form an integral part of the Agreement

Ad Article 4

It is understood that a recognised pension fund established in a Contracting State shall be regarded as a resident of that State notwithstanding that the income of the fund is not taxed in that State. There shall be regarded as a recognised pension fund any fund that is established for the purpose of providing retirement benefits.

It is understood that a Common Contractual Fund (CCF) established in Ireland shall not be regarded as a resident of Ireland and shall be treated as fiscally transparent for the purposes of granting tax treaty benefits.

Ad Articles 4 and 10

It is understood that a recognised pension fund includes, in the case of Ireland, the National Pensions Reserve Fund.

IN WITNESS WHEREOF

the undersigned, duly authorised thereto, have signed this Protocol.

DONE

in duplicate at Dublin this 14th day of April 2008 in the English and Macedonian languages, both texts being equally authentic.

FOR THE GOVERNMENT OF IRELAND

FOR THE GOVERNMENT OF THE REPUBLIC OF MACEDONIA

Dick Roche

Antonio Milososki

GIVEN under the Official Seal of the Government,

29 October 2008

BRIAN COWEN,

Taoiseach.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

This Order gives the force of law to the Agreement between Ireland and the Republic of Macedonia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes and income, which is set out in the Schedule to the Order. The effect of the Agreement is summarised below.

This Agreement with the Republic of Macedonia, which was signed in Dublin on 14 April 2008, is comprehensive in scope and is based on the OECD Model Convention.

The taxes covered by the Agreement are, for Ireland, Income Tax, Corporation Tax and Capital Gains Tax: for Republic of Macedonia, the Personal Income Tax and the Profit Tax.

The Agreement provides for the allocation of taxing rights between Ireland and the Republic of Macedonia and for the granting of relief from double taxation with regard to items of income and capital gains which, under the laws of Ireland and the laws of the Republic of Macedonia, may under the terms of the Agreement be taxed in both countries.

Where both countries continue to have taxing rights, for example in the case of dividend income, business profits arising through a permanent establishment which a person resident in one country has in the other country, or in the case of capital gains arising from the disposal of immovable property, the Agreement provides that the country of residence of the recipient of the income or gain will give credit against its tax on the income or gains for the tax paid in the other country on the same income or gains. Irish direct investors (i.e. Irish companies holding 5% or more of the voting power of the paying company) in receipt of dividends from a Macedonian company are granted credit for the tax paid by the Macedonian company on the profits out of which the dividends are paid (known as credit for underlying tax).

With respect to dividend income, the Agreement provides for a reduced rate of 5% of the gross dividend where the recipient is a company that owns at least 10% of the voting power of the company paying the dividends; and 10% otherwise.

With respect to interest and royalty income, the Agreement provides for exemption at source.

The Agreement also provides for safeguarding nationals and enterprises of one country against discriminatory taxation in the other country, for consultation between the competent authorities of the two countries for the purpose of resolving any doubts or difficulties arising as to the interpretation or application of the Agreement and for the exchange of such information between these authorities as is necessary for carrying out the provisions of the Agreement or of the domestic law of either country in relation to the taxes covered by the Agreement.

The Agreement will enter into force when each country notifies the other of the completion of its procedures for bringing the Agreement into force. It will thereupon have effect in both countries for tax periods beginning in the following year.

2. Any information received under paragraph 1 by a Contracting State 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) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or persons responsible for the oversight of the aforementioned persons, authorities or activities. 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.

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

(

a

) to carry out administrative measures at variance with the laws and the 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).

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Article 25

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

Article 26

ENTRY INTO FORCE

6. The provisions of paragraph 5 shall not affect the right of a Contracting State to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the three years immediately preceding the alienation of the property.

Article 14

INCOME FROM EMPLOYMENT

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

Article 8

SHIPPING AND AIR TRANSPORT

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

S.I. No. 463 of 2008

DOUBLE TAXATION RELIEF (TAXES ON INCOME) (REPUBLIC OF MACEDONIA) ORDER 2008

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of

4

th November

, 2008.

WHEREAS it is enacted by section 826(1) (as amended by

section 35

of the

Finance Act 2007

(No. 11 of 2007)) of the

Taxes Consolidation Act 1997

(No. 39 of 1997) that where 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 in respect of income and chargeable gains, capital gains tax or any taxes of a similar character imposed by the laws of the State or by the laws of that territory and, in the case of taxes of any kind or description imposed by the laws of the State or by the laws of that territory, in relation to exchanging information for the purposes of the prevention and detection of tax evasion or granting relief from taxation under the laws of that territory to persons who are resident in the State for the purposes of tax, and that it is expedient that those arrangements should have the force of law, and the order so made is referred to in Part 1 of Schedule 24A of the

Taxes Consolidation Act 1997

, then subject to section 826 of that Act the arrangements shall, notwithstanding anything in any enactment, have the force of law as if such order were an Act of the Oireachtas on and from the date of the insertion of a reference to the order into Part 1 of Schedule 24A

AND WHEREAS it is further enacted by section 826(6) of the

Taxes Consolidation Act 1997

that where such an order is proposed to be made, a draft of the order 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 the following 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 826(1) (as amended by

section 35

of the

Finance Act 2007

(No. 11 of 2007)) of the

Taxes Consolidation Act 1997

(No. 39 of 1997) hereby order as follows