S.I. No. 18/2011 - Double Taxation Relief (Taxes on Income) (Montenegro) Order 2011.

1. The Contracting States shall notify each other in writing, through diplomatic channels, that the procedures required by their domestic laws for entry into force of this Convention have been complied with.

2. This Convention shall enter into force on the date of the later of these notifications and its provisions shall have effect

1) in Montenegro

in respect of the taxes on income derived in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which this Convention enters into force;

2) in Ireland

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

(2) in respect of corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following the year in which this Convention enters into force.

Article 28

Termination

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

1) in Montenegro

in respect of the taxes on income derived in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice of termination has been given;

2) in Ireland

(1) in respect of income tax, the income levy and capital gains tax, for any year of assessment 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;

(2) in respect of 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.

IN WITNESS WHEREOF the undersigned, being duly authorized thereto, have signed this Convention.

DONE at Podgorica this 7th day of October 2010 in two originals, in the English and Montenegrin languages, both originals being equally authentic.

For the Government

of Ireland

For the Government

of Montenegro

John Deady

Milan Roen

Protocol

At the time of signing of the Convention between Ireland and Montenegro for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have agreed that the following shall form an integral part of the Convention

With reference to paragraph 3 of Article 10, it is understood that the term “Government” includes

1) in the case of Ireland

(1) the Central Bank of Ireland;

(2) the National Treasury Management Agency;

(3) the National Pension Reserve Fund; and

(4) a statutory body or any institution wholly or mainly owned by the Government of Ireland as may be agreed from time to time between the competent authorities of the Contracting States;

2) in the case of Montenegro

(1) the Central Bank of Montenegro;

(2) The National Pension Fund, and

(3) a statutory body or any institution wholly or mainly owned by the Government of Montenegro as may be agreed from time to time between the competent authorities of the Contracting States.

With reference to Article 25, it is understood that the competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the provisions of this Article.

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, have signed this Convention.

DONE at Podgorica this 7th day of October 2010 in two originals, in the English and Montenegrin languages, both originals being equally authentic.

For the Government

of Ireland

For the Government

of Montenegro

John Deady

Milan Roen

GIVEN under the Official Seal of the Government,

11 January 2011.

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 Convention between Ireland and Montenegro for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, which is set out in the Schedule to the Order. The effect of the Convention is summarised below.

This Convention with Montenegro, which was signed in Podgorica on 7th October 2010 is comprehensive in scope and is based on the OECD Model Convention.

The taxes covered by the Convention are, for Ireland, Income Tax, Income Levy, Corporation Tax and Capital Gains Tax: for Montenegro, the Corporate Profit Tax, and the Personal Income Tax.

The Convention provides for the allocation of taxing rights between Ireland and Montenegro 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 Montenegro, may under the terms of the Convention be taxed in both countries.

Where both countries continue to have taxing rights, for example in the case of certain dividend, interest and royalty payments, 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 Convention provides that the country of residence of the recipient of the income or gain will give relief 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 10% or more of the capital of the paying company) in receipt of dividends from a Montenegrin company are granted credit for the tax paid by the Montenegrin company on the profits out of which the dividends are paid (known as credit for underlying tax).

Source State taxation of dividends (depending on the ownership interest in the paying company) is restricted to 5% or 10% of the gross dividend. Source State taxation of interest to 10% and Source State taxation of royalties is restricted to 5% and 10% depending on the type of royalty. Exemptions from Source State taxation include dividends paid to and interest derived and beneficially owned by the Government, the Central Bank or any financial institution wholly owned or almost wholly owned by the Government.

The Convention 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 Convention and for the exchange of such information between these authorities as is foreseeably relevant for carrying out the provisions of the Convention or of the domestic law of either country in relation to the taxes of every kind.

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

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

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

2) 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;

3) 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 26

Members of Diplomatic Missions and Consular Posts

Nothing in this Convention 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 27

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 five years immediately preceding the alienation of the property.

Article 14

Independent Personal Services

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debtclaim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12

Royalties

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

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of

21

st January

, 2011.

WHEREAS it is enacted by

section 826

(1) (as substituted 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 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 that 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 substituted by

section 35

of the

Finance Act 2007

) of the

Taxes Consolidation Act 1997

, hereby order as follows