Double Taxatron Relief (Taxes on Income) (Republic of FinJand) (republicoffinjand)

L.N. 109 of 1981

INCOME TAX ACT, 1948

(ACT NO. LIV OF 1948)

Double Taxatron Relief (Taxes on Income) (Republic of FinJand)

Order, 1981

IN exercise of the powers conferred by section 68A of the Income

Tax Act, 1948, the Minister of Finance, Customs and People's Financial

Investments has made the following order:-

This Order may be cited as the Double Taxation Relief (Taxes

Citation.

on Income) (Republic of Finland) Order, 1981.

Arrangements

It is hereby declared -

AGREEMENT

BETWEEN MALTA AND FINLAND

FOR THE AV OIDANCE OF DOUBLE TAXATION

WITH RESPECT TO TAXES ON INCOME

AND ON CAPIT AL

THE GOVERNMENT OF MALTA AND THE GOVERNMENT OF FINLAND

DESIRING to conc1ude an Agreement for the avoidance of double taxation with

respect to taxes on income and on capital, have agreed as follows

ARTICLE 1

Personal Scope

This Agreement sha11 apply to persons who are residents of one or both of the

Contracting States.

ARTICLE 2

Taxes Covered

(1) This Agreement shaH apply to taxes on income and on capital imposed

_

on behalf of each Contracting State or of its statutory public communities or local

authorities, irrespective of the manner in which they are levied.

(2) There shaH be regarded as taxes on income and on capital all taxes im­

posed or total income,on total capital, or on elements of income or of capital in­

c1uding taxes on gains from the alienation of movable 01' immovable propeliy as

well as taxes on capital appreciation.

The existing taxes to which the Agreement shall apply are

(3)

(a)

in Finland

the state income and capital tax;

(i)

(ii)

the communal tax;

(iii)

the church tax; and

(iv)

the saiior's tax

(hereinafter referred to as "Finnish tax").

In Malta

(b)

the income tax and surtax. including prepayments of

tax

whether

made by deduction at source or otherwise.

M a l t a tax").

(hereinafter referred to as

"

(4) This Agreement shaH a1so app1y to any identical or substantially similar

taxes which are imposed after the date of signature of this Agreement in addition

tO,or in place of, the existJng taxes. The competent authorities of the Contracting

States shaH notify to each other any significant changes which have been made in

their respective taxation laws .

B

ARTICLE 3

General Definitions

(1)

In this Agreement, unless the context otherwise requires:-

(a) the terms "a Contracting State" and "the other Contracting State"

mean Finland or Malta as the context requires;

(b) the term "Finland", when used in a geographical sense, means the

territory of the Republic of Finland, and any area adjacent to the territorial

vmters of the Republic of Finland within which, under the laws of Finland

and in accordance with international law, the rights of Finland with respect to

the exploration and exploitation of the natural resources of the sea bed and

its subsoil may be exercised; as regards the communal tax the term does not

inc1ude the County of Aland;

(c) the term "Malta", when used in a geographical sense, means the

Island of Malta. the Island of Gozo and the other islands of the Maltese archi­

peJago. including the territorial waters thereof, and any area outslde the ter­

ritorial waters which, in accordance with international law, has been or may

hereafter be designated, under the laws of Malta concerning the Continental

She1f, as an area within which the rights of Malta with respect to the sea bed

and subsoil and their natura l resources may be exercised;

(d) the term "person" comprises an individual, a company and any other

body of persons;

(e) the term "company" means any body corporate 01' any entity which

is treated as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and "enterprise of the

other Contracting State" mean, respectively, an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;

(g)

the term "national" means

(i) in respect of Finland, any individual possessing the nationa1ity

of the Republic of Finland, and any legal person, partnership and as­

sociation deriving its status as such from the laws in force in Finland;

(ii) in respect of Malta, any citizen of Malta as provided for by

the laws of Malta, and any lega1 person, partnership and association de­

riving its status as such from the laws in force in Malta;

(h) the term "international traffic" means any transport by a ship or

.

alrcra � t operated by: an enterprise which has its place of effective manage­

ment 10 a Contractmg State, except when the ship or aircraft is operated

solely between places in the other Contracting State;

(i)

the term "competent authority" means

(i) in the case of Finland, the Ministry of Finance 01' its authoris­

ed representative;

(ii) in the case of Malta, the Minister responsible for

finance

or

his authorised representative.

(2) In the application of this Agreement by a Contracting State, any term

.

�ot ot � erw!se

defmed shall, unless the context otherwise requires, have the mean­

mg whIch It has �nder the Iaws of that Contracting State reIating to

the

taxes

. Agreement.

WhICh

are the subJect of thIS

ARTICLE 4

Fiscal Domicile

(1) For the purposes of this Agreement, the term "resi � en � of a Contr�ct­

ina State" means any person who, under the law of that State, IS liable to taxatlOn

th � rein by reason of his domicile, residence, plac� of management or an� �ther

criterion of a similar nature. The term does not mcIude any person who IS hable

to tax in that Contracting State in respect only of income from sources therein or

capital situated in that State.

(2) Where by reason of the provisions of paragraph (1) an individual is a

resident of both Contracting States, then his case shaH be determined in accord­

ance with the following rules

(a) He shall be deemed to be a resident of the Contracting State in

which he has a permanent home available to him. If he has a permanent

home availabJe to him in both Contracting States, he shaH be deemed to be a

resident of the Contracting State with which his personal and economic rela­

tions are cIosest (centre of vital interests).

(b) If the Contracting State in which he has his centre of vital interests

cannot be determined, or .if he has no permanent home available to him in

either Contracting State, he shaH be deemed to be a resident of the Contract­

ing State in which he has an habitual abode.

(c) 1f he has an habitual abode in both Contracting States or in neither

of them, he shall be deemed to be a resident of the Contracting State of

which he is a national.

(d) If he is a national of both Contracting States or of neither of them,

the competent authorities of the Contracting

States shall settle the

question by mutual agreement.

(3) Where by reason of the prcvisions of paragraph (1) a person other than

an individ�al is a resident of both Contracting States, then it shalI be deemed

to be a resldent of the Contracting State in which its place of effective manage­

ment is situated.

(4) An undivided estate shall for the purposes of taxation in Finland be

deemed to be a resident of the Contracting State of which the deceased was a

resident at the time of his death according to the provisions of paragraphs (1) and

ARTICLE 5

Permanent Establishment

(1) For the purposes of this Agreement the term "permanent estab1ish­

.

ment" means a flxed place of business in which the business of the enterprise is

'

whol1y or partly carned

on.

The term "permanent establishment" shaH incIude especial1y

(2)

a place of management;

(a)

(b)

a branch;

(c)

an office;

(d)

a factory;

(e)

a workshop;

a mine, quarry or other place of extraction of natura

(f)

l resources;

B

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(g) a bu il d i ng site or construction or assembly project which exists for

more than twelve months.

The term "permanent establishment" shall not be deemed to include

(3)

the use of facilities solely for the purpose of storage,

disp\ay

or

(a)

d elivery of goods or merchandise belonging to the enterprise;

(b)

the maintenance of a stock of goods or merchandise belonging

to

the enterp r ise solely for the purpose of storage, d isplay or delivery;

the maintenance of a stock of goods or merchandise belonging

to

(c)

the enterprise solcly for the purpose of processi ng by another e n terp r ise;

(cl) the maintenan.ce of a fixed place of business solely fer the purpose

of purchasing goods or merchandise, or for collecting information, for the

enterprise;

(e)

the maintenance of a fixed place of business solely for the purpose

of advertisir;g, for the supply of information, for scientific research or for

similar activities wh i ch have a preparatory or a ux i l ia r y character for the en­

terprise.

(4) A persoi1 acting in a C o n t ra c t in g State on behalf of an enterprise of the

other Contracting State - other t h an an agent of an independent status to whom

pa rag rap h (5) applies

shall be deemed to be a perm8nent estab1ishment in the

-

first-mentioned State if h e has, and habitually exercises in t ha t State, an authority

to conc1ude contracts in the nmne of the enterprise, unless his activities are

limited to the purchase of goods or merchandise for the enterprise.

(5) An enterprise of a Contracting State shall not be deemed to have a per­

manent establish;:ncnt in the other Con tr a c t in g State merely because it carries

on business in that other State through a broker, general commission

agent 01'

any other agent of an independent status, where such persons a r e acting in the

ordinary COUl'se of their business.

(6) The f(Jct that a company which is a resident of a Contracting State

contro]s or is c or. t roll e c1 by a company which is a resident of the other Con­

trac(-ing State, or which c a r rie s on business in that other State (whether through

a permal1ent establishment or otherwise), shall not of itself make

either

com­

pany a permanent establishment of the other.

(7) All enterprise of a Contracting State shaB be deemed to have a per­

manent establishment in the other Contracting State if it c a r ri e s O'n supervisory

a ctivities in that other State for more than twelve months in ċonnection with a

construction or assem bJy project.

ARTICLE (i

lmtnovable Property

(1) Income from immovable property may be taxed in the Contracting State

In which such property is situated.

(2) «(1) The term ·'immovable property" shall be defined ln accordance

with t h e law of the Contracting Statc i n which the property Jn question IS

-

situated;

(b)

the term shaH in any case incJude property accessory to immovable

pl"operty, l ights to w hi c h �he provislons of general law respecting immov­

'

able property apply, and nghts to variable or fixed payments as considera-

B

tion for the working of, 01' the right to work, mineraI depos i ts , sources and

other natura l resources;

s h i ps and aircraft sha11 not be regarded as immovable property.

(c)

(3) The provisiol1s of paragraph (1) sha11 apply to i n c ome derived from the

direct use, letting, or use in any other form of immovable property.

(4) Where the ownership of shares or o the r corporate r i g hts in a company

entitle the holder of the shares or r ig h t s to the enjoyment of immovable property

owned by the company, the income from the d i rect use, l e t t i n g, or use in any

other form of such right to enjoyment may be taxed in the Contracting State in

which the immovable p rop e r t y is situated.

(5) The provisions of p a r ag r aphs (1), (3) and (4) sha11 also a pply to th e in­

come from immovable property of an e n t e r prise and to income from immovable

property used for the performance of professional services.

ARTICLE 7

Business Profits

(1) The profits of an en t erp r i se of a C o ntr ac t i n g State shaH be taxable on]y

in that State unless the e nt e r p r i s e carries on bus i n e s s in t he other Contracting

State through a permanent establishment situat e d therein. If the enterpris e

carries on business as aforesaid, the profits of the ent e r p r i s e may be taxed in the

other State but only sa much of them as is a tt r i b u tab l e to that permanent es­

tablishment.

(2) Where an enterprise of a C ontr a c ting State carries on business in th e

situated ther e in ,

other Contracting State through a permane n t

establishment

there shaH in each Contracting State be attributed to that p e r m a n e nt establish­

ment the profits which it might be expected to make jf it were a distinct and

separate enterprise engaged in the same or similar activities u:1der the sa me or

similar conditions and dealing whoHy independently with the enterprise of which

it is a permanent establishment.

(3) In the determination of the profits of a permanent establishment, there

shaH be allowed as deductions expenses which are incurred for the purposes of

the permanent estab1ishment induding executive and general administratlve ex­

p ens e s so incurred. whether in the State in which the p e r m a n e n t establishment

is situated or elsewherc.

(4) In sa far as it has been customary in a Contracting State to determine

the p r o f i t s to be attributed to a permanent establishment on the basis of an ap­

portionment of the total profits of the enterprise to its varlous parts, nothing in

paragraph (2) shall precIude that C on tra ct ing State from determining the profits

to b� taxed by such an apportionment as may be customary. The method of ap­

portlOnment adopted sha 11 , however, be such that the resu1t shall be in ac­

cordance with the principJes la i d down in thi5 Art i c Je.

(5) No profits shalI be attributed to a pe rrn a n e n t establishment by reason

of the me re purchase by that pe r m a n en t establishment of goods or me"rchandise

'

for the enterprise.

(6). For the purpos,: of the preceding paragraphs, the profits to be attributed

to the permanent es ! abhshment, sha11 be determined by the same method . year

by year un l ess there IS good and sufficient reason to the contrary.

B

The provisions of this Article shall n ot affe�t the provisions of �he law

(7)

.

of

of either Contracting State regarding the taxatlOn of mcome from the busmess

insurance.

Where profits include items of income ",,:h } ch are dealt with separately

(8)

in other Articles of this Agreement, then the provlsl0ns of those Articles shaH

not be affected by the provisions of this Article.

ARTICLE 8

Shipping and Air Transport

Profits from the operation of ships or aircraft in international traffic

(1)

shaH be taxable only in the Contracting State in which the place of effeotive

management of the enterprise i s situated.

(2) If the place of effective management of a shipping enterprise is aboard

a ship, then it shaH be deemed to be situated in the Contracting State in which

the home harbour of the ship is situated, or, if there is no such home harbour,

in the Contracting State of which the operator of the ship is a resident.

(3) The provisions of paragraph (1) shaB also apply to profits derived from

the participation in a pool, in a joint business or in an international operations

agency.

ARTICLE 9

Associated Enterprises

Where-

(1)

(a) an enterprise of a Contracting State partiClpates directly 01' in­

directly in the management, control 01' capital of an enterprise of the other

Contracting State, or

(b) the same persons participate directly or indirectly in the manage­

ment, control or capital of an enterprise of a Contracting State and an en­

terprise 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 enterpl'ises, but, by reason of those

conditions, have l10t so accruec1, iT1C:Y be included in the profits of that enterprise

and taxed accordingly.

(2) Where profits on which an enterprise of a Contracting State have been

charged to tax iil that State are also included in the profits of an enterprise of the

other Con tracting State and taxed accordingly and the profits so included are

profits which would have accrued to that enterprise of the other State if the con­

ditions made between the enterprises had been those which would have been

made between independent enterprises, then the first-mentioned State shall make

al1 appropriate adjustment to the amount of tax charged on those profits in the

first-mentioned State. In determining such an adjustmen t due regard shaB be had

to the other provisions of this Agreement in relation to the nature of the income,

and for this purpose the competent authorities of the Contracting States shall if

necessary consult each other.

B

ARTICLE 10

Dividends

(1) D iv i dends paid by a com�any which is a resident . of a Contracting State

to a resident of the other Contractmg State may be taxed m that other State.

(2) However, such dividends may be taxed in the Contracting

State

of

which the company paying the dividends is a resident, as follows:-

(a) where dividends are paid by a company resident of Finland

to

a

resident of Malta, the tax so charged shall not exceed

(i) 5 per cent of the gross a�ount �f the divid� nds if the recipient

.

company (excludmg partnershIp) whl�h holds �l�'ectly at least 25

is

a

per cent of the capital of the c ompa n y paYll1g the dlvldends;

(ii)

in all other cases, 15 p er cent of the gross amount of the divi­

dends;

(b) where dividends are paid by a company resident of Malta to a resi

­

dent of Finland

(i) Malta tax shall not exceed that chargeable on the

company

paying the dividends in respect of the profits sa distributed;

(i i) notwithstanding the provisions of s ub paragraph (i), Malta tax

-

shall not exceed 15 per cent of the dividends if such dividends are paid

out of gains 01' profits earned in any year in respect of which the com­

pany is in 1'eceipt of any benefit under the provis i ons regulating aids to

industries in Malta, and the shareholder submits returns and accounts

to the taxation authorities of Malta in respect ·of his income liable to

Malta tax for the relative year of assessment.

The competent authorities af the C ont r acting States shall by mutual agree­

ment settle the mode of application of the 1 imitations provided for in this para­

graph.

This paragraph shali not affect the taxation of the company in respect of the

profits out of which the dividends are paid.

(3) The term "dividends" as used in this Article means income from

shares, 01' other rights, not bein g debt-claims, participating in profits as well as

,

income from other corporate rights which is subject to the same taxation treat­

ment as incame frvm shares by the taxation law of the State of which the Com­

pany making the distribution is a resident.

(4) The p r o v isio ns of p a ra g raphs (l) and (2) s hal l not apply if the recipient

of the dividends, being a resident of a Contracting State, carries on business in

the other Contracting State of which the company paying the d i vi d end s is a re s i

­

dent, through a permanent establishment situated therein, or performs in that

other State professional services from a fixed ha se situated therein and the holding in

respect of which the dividends are p a id is effectively connected with such p er

­

manent establishment 01' fixed base. In such a case, the provisions of Artic1e 7 or

of Article 14, as the case may b�, sha11 apply.

(5) Where a company which is a resident of a Contracting State derives

pi'ofits or income from the other Contracting State, that other State may not im­

pose any tax on dividends paid by the company to residents of the fi r st mention­

-

ed State, or subject the company's undistributed profits to a tax on u n dist r ib uted

profits, even !f the . dividends l?aid, or the undistributed prof i ts consist wholly Of

.

.

partly of proflts 01' 111come anslllg

111 that other State. The provisions of this para-

fi

graph shaH not prevent that o.ther State fr?m ta� ing dividen

.

.

of that Statc or dividends relatmg to a holdwg which [s efiectlvely connected W[t�

a permanent e�tablishment or fixed base maintained in that other State by a reSt­

dent of the first-mentioned State.

ARTICLE lI

Interest

(1) Interest arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

(2) However, such interest may be taxed in the Contracting State in which

it arises, and according to the law of that State, but the tax sa charged shaH not

exc e ed 10 per cent of the amount of the interest. The competent authorities of the

Contracting States shall by mutual agreement settle the made of application of this

limitation.

Notwithstanding the pro v i sions of para g ra p h (2)

(3)

(a) interest arising in Malta and paid to the Government of Finland

or

the Bank of Finland sha11 be exempt from Malta tax;

(b)

interest arising in Fin l a n d and pa.id

Ce ntral Bank of Malta or the J\·1alta DeveJopment Corp;)ration shall be exempt

from Finnish tax;

(c) the exemptions granted by this paragraph shall a1so a pp ly to any

other statutory body of a public character of either Contracting State if such

body possesses a clistinct legal personality .

(4) The term "intc!'cst" as used in this Article means income from debt­

c1aims of every kind, whether or not secured by mortgage and whether or not

carrying a right to p a rticipat e in the debtor's profits, and, i11 particular, income

from Government securities and ir:come from bonds or debentures, inc1uding pre­

miums and prizes attaching to bonds or debentures. Pena1ty charges for Iate pay­

ment shaH not be regarded as interest for the purpose of this Article.

(5) The provisions of p a ra g r aph s (1) a n d (2) shaH not apply if the recipient

of the interest, being a resident of a Contracting State, ca r ries on business in the

other Contracting State in which the interest arises. through a permanent estab­

lishment situated therein, or performs in that other State professional services

from a fixed base situated therein and the debt-claim in respect of which the in­

terest is paid is effectively connected with such permanent establishment or fixed

base. In such a case, the provisions of ArticJe 7 or Article 14, as the case may be,

shal1 a pply.

(6)

Interest shall be deemed to arise in a Contracting State when the

payer

is that State itself, a statutory public community, a Iocal authority or a resident of

that State. Where, however, the person paying the interest whether he is a resident

of a Contracti n g State or not, has in a Cont r acting State a permanent establish­

ment in connection.with which the indebtedness on which the interest is paid was

in curred , and such interest i s bome by such permanent estabJishment, then sueh

interest shaH be deemed to arise in the Contracting State in which the permanent

establishment is situated.

(7) Where, owing to a special relationship between the payer and the reci­

pient or between both of them and some other person, the amount of the interest

paid, having regard to the debt-claim for which it is paid, exceeds the amount

B

�

which would h a v e been agreed upon by l e pa�er and the recipient in the absence

of such relationship, the provisions of thlS Artlc1e sha11 ap pl y o � ly to the last­

.

mentioned amount. In that case, the excess part of the payments �hall remam tax­

able according to the law of each Contracting State, due regard bemg had to the

other p r o v isi on s of this Agreement.

ARTICLE 12

Royalties

(l) Royalties arising in a Contracting State and paid to a

r es i d en t

of

the

other Contracting State may be taxed in that other State.

(2) H o w e ve r , royalties of the kind referred to in sub-paragraph (a) of p �ra ­

graph (3) m a y be taxed in the Contraci:ing S t a te in which they arise, and accordmg

to the law of t h at State, b u t the tax so c ha r g e d sha11 not exceed 10 pe r cent of the

g ros s amount of the royalties. The competent authc:riti�s of the .Co?t�act!ng States

sha11 by mutual agreement settle the mode of a p p l ! cat l O n of thlS lImltatlOn.

(3) The term " ro y a 1 t ie s " as used in this Article means payments of any kind

received as a consideration for the use of, or the right to use,

(a) any patent, trade mark, design or mode!, plan, secret formula or pro­

cess, Dr any industrial, commercial, or scientific e q u i p m ent, or for information

concerning industrial, c om me r c i al or scientific experience;

(b) any c o py r i g ht of 1iterary, artistic or scientific work inc1uding

cinematograph films, and films 01' tapes for tel e v i s io n or r a d io broadcasting.

(4) The provisions of paragraphs (1) and (2) shall !lat apply if the r ec i p ie n t of

the royalties, being a resident of a C o n t ract ing State, carries on business in the

other Contracting State in which the roya1ties a r ise, through a p erma n e nt estab­

lishment situated therein, or performs in that o t he r State professional services

from a fixed base situated therein, and the r ig h t or property in respect of which

the r o yal t i es are paid is effectively c o nnec t ed with such permanent establishment

or fixed base. In such a case, the provisions of Article 7 or Artic1e 14, as the case

may be, shall ap p ly .

(5) Royalties sha11 be deemed to arise in a Con t r ac t in g State when the payer

is that State itself, a statutory public c o m m u n i t y, a Iocal authority or a residen t of

that State. Where, however, the person paying the roya1ties, whether he is a resi­

dent of the Contracting State or not, has in a Contracting S t a t e a permanent es­

tabIishment in con n e c t i o n with which the liability to pay the royalties was incurr­

ed, and such royaIties are borne by such permanent estabIishment, then s u c h

royalties shal1 be deemed to ari se in the Contracting State in which the permanent

estab1ishment is situated.

(6) Where, owing to a s p e c i a l relationship between t h e payer and the reci­

pl . �nt or � etween both of them and some other person, the amount of the royalties

pald, havmg regard t� the use, right or information for which they are paid, ex­

c� ed s the amount whIch would ha v e been agreed upon by the payer and the reci­

.

plent m the absence of such relationship, the provisions of this Article shaH apply

only to th� last-mentioned �mount. In that case, the excess par t of the payments

sh�H remam taxable accordmg to the law of each Contracting State, due regard

bemg had to the other provisions of this Agreement.

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ARTICLE 13

Capital Gains

(1) Gains from the alienation of immovable property, as defined in para­

graph (2) of ArticIe 6, may be taxed in the Contracting State in which such pro­

perty is situated.

(2) Gains from the alienation of movable property forming part of the busi­

ness property of a permanent establishment which an enterprise of a Contracting

State has in the other Contracting State or of movable property pertaining to a fix­

ed base available to a resident of a Contracting State in the other Contracting

State for the purpose .of performing professional service, including such gains from

the alienation of such a permanent establishment (alone or together with the

whole enterprise) or of such a fixed base, may be taxed in the other State. Row­

ever, gains from the alienation of movable property of the kind referred to in

paragl-aph (3) of ArticIe 22 shall be taxable only in the Contracting State in which

such movable property is taxable according to the said Article.

(3) Gains from the alienation of any property other than those mentioned in

paragraphs (1) and (2) shaH be taxable only in the Contracting State of which the

alienator is a resident.

(4) Notwithstanding the provisions of paragraph (3), gains derived by a resi­

dent of Malta from the alienation of shares in a company which is a resident of

Finland may be taxed in the latter State unless the said gains are subjeot to tax in

Malta.

ARTICLE 14

Independent Personal Services

(1) Income derived by a resident of a Contracting State in respect of profes­

sional services or other independent activities of a similar character shall be tax­

able only in that State unless he has a fixed base regularly available to him in the

other Contracting State for the purpose of performing his activities. If he has such

a fixed base, the income may be taxed in the other Contracting State but only

much of it as is attributable to that fixed base.

(2) The term "professional services" includes, especially, independent

scientific, literary, artistic, educational or teaching activities as well as the in­

dependent activities of physicians, lawyers, engineers, architects, dentists and ac­

countants.

ARTICLE 15

Dependent Personal Services

(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages

and other similar remuneration derived by a resident of a Contracting State in res­

pect of an eJ?ployment shall be t�xable only in that State unless the employment

.

IS exerclsed lil the other Contractmg State. If the

employment is so exercised '

such remuneration as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1), remuneration derived

by a resident of a Contracting State in respect of an employment exercised in the

other Contracting State shall be taxable only in the first-mentioned State if:-

(a) the recipient is p r esen t in the other State for a period or periods not

exceeding in the a gg re g a t e 183 d::lYs in the caiendar year concerned, and

(b)

the remuneration is paid by, 01' on behalf of, &n e m ployer who is n.ot

a resident of the other State, and

(c)

the remu n era t i o n is DOt bome by a permanent establishment

or

a

fixed base which the employer has in the other State.

Notwithstanding the preceding provisions of t hi� Articl�, remuneration

(3)

,

internationu I

in respect of an employmen t exercis�d aboard a Shlp,o r alfcraft I n

,

,

of effeetive

place

the

whtCD

In

State

mg

Contract

the

in

taxed

be

may

traffie,

management of the enterprise is situated.

ARTICLE 16

Directors' Fees

Directors' fees and similar payments derived by a resident of a Contracting

State in his cap a city as a member of the board of directors or anather similar

organ of a compar.y which is a resident of the other Contracting State may be tax­

ed in that other State.

ARTICLE 17

Artisles and Athletes

(1) Notwithstanding the provisions of Articles 14 and 15, income derived by

public entertainers, such as theatre, mation picture, radio or television artistes,

and musicians, and by athletes from their personal a ct ivit i es as sueh may be taxed

in the Contracting State in w hich these aetivities are exercised.

(2)

Where income in respect of personal activities as such of an entertainer

Of athlete accrues no t to that en t erta i ner 01' athlete hi m se 1 f but to another person,

that income may, n o tw i t h st andi n g the p r ovi s i on s of Articles 7, 14 and 15, be tax­

ed in the Contracting State in which the activity of the entertainer or athlete is

exercised.

ARTICLE 18

Government Service

(1) (a) Remuneration, other th a n a pension, paid by a Contracting State or

� st atu t ory publi� communitY or a lacal a uth o rity thereof to any individual

In respect of services rendered to that State or community or Iocal authority

thereof shall be taxable only in that State;

(b) however, such remuneration shall be taxabIe only in the other Con­

tra �ti n g State if the services are rendered in that State and the recipient is a

resldent of that other Co n tracting State who

is a national of tha t State; or

(i)

(ii) did not become a resident of that State sole l y for the purpose

of performing the services,

(2) (a) Any pension p�id by, or ?ut of funds created by, a Contracting

S � a � e or � statutory publiC commul1lty or a local authority thereof to any in­

.

dlvlduaI tn res p ect of serVIces

rendered to that State or community or Iocal

a u tho r I ty thereof shaH be taxable onlv in that State"

-

,

B

(b) however, such pension shall be taxable only in the other Con­

tracting State if the recipient is a national of and a resident of that State.

(3) The provisions of Articles 15, 16 and 18 shall apply to remuneration

and pensions in respect of services rendered in connection with any business car­

ried on by a Contracting State or a statutory public community or a local

authority thereof.

(4) The provisions of paragraph (1) shall likewise apply in respect of remu­

neration paid, under a development assistance programme of a Contracting State,

a statutory public community or a local authority thereof, out of funds exclusive­

]y supplied by that State, those statutory public communities or local authorities

there of, to a specialist or volunteer seconded to the other Contracting State

with the consent of that other State.

ARTICLE 19

Pensions and Annuities

(1) Subject to the provisions of paragraph (2) of Article 18,

pensions and

other similar remuneration, and annuities, paid to a resident of

a Contracting

State sha 11 be taxa ble on]y in that State.

As used in this Article -

(2)

(a) the term "pensions and other similar remuneration" means periodic

payments made after retirement in consideration of past employment, or by

way of compensation for injuries received in connection with past employ­

ment;

(b) the term "annuity" means a stated sum paid periodically at stated times

during life, or during a specified or ascertainable period of time, under an obligation

to make the payments in return for adequate and full consideration in money Of

money's worth.

ARTICLE 20

Teachers, Students and Trainees

Remuneration which a professor 01' teacher who is, or immediately be­

(1)

fore was, a resident of a Contracting State and who visits the other Contracting

State for a period not exceeding two years for the purpose of carrying out advanc­

ed study 01' research 01' for teaching at a university, college, school or other edu­

cational institution receives for such work, shall not be taxed in that other State,

provided that such remuneration is derived by him from outside that other State.

(2) An individual who was a resident of a Contracting State immediately

before visiting the other Contracting State and is temporarily present in that

other State solely as a student at (1 university, college, school or other similar

educational institution in that other State or as a business apprentice shall, from

the date of his first arrival in that other State in connection with that visit, be

exempt from tax in that other State

(a) on all remittances from abroad for

purposes

of

his

maintenance,

education or training; and

(b) for a period not exceeding in the aggregate three years, on any remu­

neration not exceeding 8,000 Finnish Markkas or the equivalent in Malta cur­

rency, for each calendar year for personal services rendered in that other Con­

tracting State with a view to supplementing the resources available to him for

such purposes; however, the competent authorities of the Contracting States

B

may, by m utu a l agreement, change the above amount to take � nto account

significant ch a n g e s in the value of the currency or in t h e taxatlOn laws of

either or both C o ntra c ting States.

(3) An individual who was a resident of a Contracting S t at e immediately be­

fore visiting the o t her Contracting State and is t e mpor a ril y presen t in that other

State solely for the purpose of study, research or training as a recipient of a gr311t,

allowance or award from a sc i e nti f i c, educational, religious or charitable organisa­

tion or under a technical assistance p r o g ramm e entered into by th e Government of

a Contracting State shall, from the date of his first arrival in t h a t othcr

State in

connection with that visit, be exempt from tax in that other State

on the amount of such grant, allowance of award; and

(a)

(b) on all remittances from a b ro a d for the purposes of his maintenance,

education or tra i ni n g

.

ARTICLE 21

Income nof expressly mentioned

(1) Items of income of a resident of a Contracting State, wherever arismg,

not dea1t with in the foregoing Articles of th i s Agreement shall be taxable only in

that State.

The provisions of p a r a gr a p h (1) shaH not apply if the recipient of the in­

(2)

c o m e ,

being a re s ide nt of a Contracting State, car ri e d on b u s in e s s in the other Con­

tracting State through a permanent e sa b l i s h m e n t situated therein, or performs in

that o t h e r State professional services from a fixed base situated therein, and the

right or property in respect of which t h e income is paid is effectively connected

with such permanent estab1ishment or f ix ed base. In such a c a s e the provisions of

,

A rt ic le 7 or Article 14, as the case may be, shaH apply

.

ARTICLE 22

Capital

(1) C a p ita l represented by immovable property, as defined in paragraph (2)

o f Article 6, may be taxed in the C ontr act ing State in w h i ch such pr o p ert y IS

sI . tu ated

.

(2) Ca p it a l represented by movable property forming part of the business

pr o p �rt .Y of a pe�manent establishment of an enterprise, or by movable property

pertamrng to a fIxed base used for the p e r f or m an ce of professonal services, may

be t a x ed in the Co nt r a c ti n g State in which the permanent establishment or fixed

base is situated.

(3). Ships and airc�aft operated i� in t ern a ti o na l traffic, and movable property

pertamm� to the op e r a t I o n of such ShlPS and a i r craft sha11 be t ax a b l e only in the

,

.

Contractmg State In WhIch the place of effective management of the enterprise is

situated.

(4) All other e l e m e n t s of capital of a resident of a Contracting State shall be

taxable only in that State.

B

ARTICLE 23

Partnerships and Undivided Estates

(1) Income or capital of a partnership or an undivided estate of a deceased

person which is a resident of Finland and is treated as a body corporate for tax

purposes according to the law of Finland may be taxed in Finland, whether or not

one or more of the partners or the beneficiaries is a resident of that State.

(2) However, the partners or beneficiaries of the partnership or undivided es­

tate may be taxed in Malta, if they are resident in that State, on their relative share

of the income. In such a case, the appropriate part of the tax paid by the partner­

ship or undivided estate in Finland shall be deemed to be the tax paid on the rela­

tive share of the income which is charged in the hands of the partners or benefi­

ciaries in Malta.

ARTICLE 24

Elimination of Double Taxation

In the case of Finland, double taxation shall be eliminated as follows

(1)

(a) Where a resident of Finland, derives income or owns capital which,

in accordance with the provisions of this Agreement, may be taxed in Malta,

Finland shall, where the provisions of sub-paragraph (c) are not applicable,

allow

(i) as a deduction from the taxes on the income of that person,

an

amaunt equal to the tax on incame paid in Malta;

(ii) as a deductian from the tax on capital

of

that

persan

an

amaunt equal to the tax on capital paid in Malta.

(b) The deduction in either case shall not, however, exceed that part of

the taxes on incame ar on capital, respectively, as camputed befare the deduc­

tian is given, which is apprapriate, as the case may be, to the incame ar the

capital which may be taxed in Malta.

(c) Notwithstanding the provisians of sub-paragraph (a), dividends paid

by a campany which is a resident of Malta to a campany which is a resident

of Finland shall be exempt from Finnish tax to the extent that the dividends

wauld have been exempt from tax under Finnish law if bath companies had

been residents of Finland. Where, however, the rate of Malta tax on the divi­

dends is lower than that set out in sub-paragraph (b) (ii) of paragraph (2) of

Artic1e 10, the pravisians of this sub-paragraph shall nat be applicable.

(d) Where in accordance with the pravisians of paragraph (2) of Artic1e

11 ar paragraph (2) of Artic1e 12, the rate of Malta tax charged on interest or

royalties, as the case may be, is levied at a rate of nat less than 10 per cent of

the amaunt of the incame, the Malta tax paid thereon shall, for the purpases

of sub-paragraph (a), be deemed to have been paid at a minimum rate of 25

per cent of the amaunt of the net income charged with tax in Finland.

In the case of Malta, double taxatian shall be eliminated as fallows

(2)

Subject to the pravisions of the law of Malta regarding the allowance of

a credit against Malta tax in respect of foreign tax, where, in accordance with

the pravisions of this Agreement, there is incIuded in a Malta assessment in­

oome from saurces within Finland ar elements of capital situated in Finland,

the Finnish tax on such incame ar elements of capital shall be allowed as a

credit against Malta tax payable thereon.

B

(3) Where the Agreement provides that income arising in a Contracting

State shall be relieved from tax in that State, either in full or in part, and, under

the law in Iorce in the other Contracting State, such income is subject to tax by re­

ference to the amount thereof which is remitted to or received in that other State

and not by reference to the IuH amount thereof, then the relief to � e allo�ed in the

.

first-mentioned State sha11 apply only to so much of the mcome as IS remltted to or

received in the other State.

ARTICLE 25

Non-discrimination

(l) N otwithstandinl! the provisions of Artic1e l, the nationals of a Contract­

ing State, w h e t he r or no t they are residents of one of the Contracting States, sha11

no-t be subjected in the other Contracting State to any taxation or any requirement

connected therewith which is other or more burdensome than the taxation and

connected requirements to which nationals of that State in the same circum­

stances are or may be subjected.

(2) The taxatiol1 on a permanent estab1ishment which an enterprise of a Con­

tracting State has in the other Contracting State shall not be less favourably levied

in that other State than t h e taxation levied on enterprises of tha t other State carry­

ing on the same activities.

This provision shall not b e construed as obtiging a Contracting State to grant

to residents of the other Contracting State any personal allowances, reliefs and re­

ductions for taxation purposes on account of civil status or family responsibilities

or any o t h e r personal circumstances which it grants to its own residents.

(3) Enterprises of a Contracting State, the capital of which is wholly or partly

owned 01' c o n t r o ll e d directly or indirectly, by one 01' ma re residents of the other

,

Contracting State, shall not be subjected in the first-mentioned Contracting State

to any taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which other similar

enterprises of that first-mentioned State are or may be subjected.

(4)

Except where the provisions of paragraph (1) of Article 9, paragraph (7)

of Article 11, or paragraph (5) of Article 12 apply, interest,

royalties and other

disbursements paid by an enterprise of a Contracting State to a resident of the

other Contracting State sha11, for the purpose of detennining the taxable profits of

such enterprise, be deductible under the same conditions as jf they had been paid

to a resident of the first-mentioned State.

SimilarIy, any debts of an enterprise of a Contracting State to a resident of

the other Contracting State, shall, for the purpose of determining the taxable capi­

tal of such enterprise, be deductible as if they had been contracted to a resident

of the first-mentioned State.

In this ArticJe the term "taxation" means taxes of every kind and

des­

(5)

cription.

ARTICLE 26

Mutual Agreement Procedure

(1) Where a resident of a Contracting State considers that the actions of

one or bo>th

in acoordance with this Agreement, he may, notwithstanding the remedies p r ov i d

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B

ed by the natiOnal laws of those States, present his case to the c o m p e t e n t authority

of the Contracting S ta t e of which h e is a resident.

(2) The competent authority shall e n d e a v o ur , if the abjection appears to it

to be justified and if it is not itself able to arrive at an appropriate solution, to re­

solve the case by m ut u a l agreement with the c o m p e t ent authority of the other

Contracting State, with a v i ew to the avoidance of taxation not in accordance with

this Agreement.

(3) The c o mpe t e n t authorities of the Contracting States sh a ll endeavour to

resolve by mutual agreement any difficulties or doubts arising as to the interpre­

tation 01' application of this Agreement. They may also consult together for the

eliminatian of double taxatiol1 in cases 110t provided for in this Agreement.

(4) Th e competent authorities of the Contracting States may communicate

with e ac h other directly for the purpose of applying the p r o v i s i o n s of this Agree­

ment.

ARTICLE 27

Exchal1ge of information

(1) The co m p e t e n t authorities of th e Contracting States shall exchange such

information as is necessary for the carrying out of this Agreement and of the domestic

laws of the Contracting States concerning taxes covered by this Ag r e eme n t

insofar as the taxation thereunder is in accordance with this Agreement. Any in­

formation so exchanged shall be treated as secret and shall not be discIosed to any

p e r s on s or authorities, including courts, other than tho s e concerned with the as­

sessment, collection, enforcement or prosecution in respect of taxes which are the

subject of the Agreement.

(2) In no case shall the provisions of paragraph (1) be construed so as t o im­

pose on one of the Contracting States the obligation

to carry out administrative measures at va r i a n c e with the Iaws or the

(a)

administrative practice of that 01' of the other Contracting State;

to supply particulars which are not obtainable under the laws or in

(b)

the norma! c o u r s e of the administration of t h a t or of the o t h e r Contracting

State;

to supply information which would d is c l o s e any trade, business, in­

(c)

dustrial, commercial or professional secret or trade p r o c e s s, 0)' information,

the discIosure of which would be contrary to public policy.

ARTICLE 28

Diplomatic and COf/sular Privileges

(1) Nothing in this Agreement shall affect diplomatic or consular privileges

under the general l'ules of international law 01' under the provisians of s p eci a l

agreements.

(2) . Insafar . as, due to such privileges granted to a p e rs o n under the general

rules of InternatIOnal 1aw or under t�e provisio�s of special international agree­

.

.

ments, mcome

or capltal

are not subJect to tax ID the receivina

b State ' the riaht

to

b

tax shal1 be reserved to the sending State.

B

(3) For the purposes of this Agreement, persons who are members of a dip­

.

lomatic or consular mission of a Contracting State in the other Contractmg State

or in a third State, as well as persons connected with such persons, and who �re

nationals of the sending State, shaH be deemed to be residents of the sendmg

State if they are subjected therein to the same obligations in respect of taxes on income

and capital as are residents of that State.

ARTICLE 29

Territorial Extension

(1) This Convention may be extended, either in its entirety of with any ne­

cessary modifications, to the County of Aland as regards also the communal tax.

Such extension shaH take effect from such date and subject to such modifications

and conditions, inc1uding conditions as to termination, as may be specified and

agreed between the Contracting States in notes to be exchanged through diploma­

tic channels.

(2) Unless otherwise agreed by both Contracting States, the denunciation of

the Convention by one of them under Artic1e 31 shaH terminate in the manner

pr v

o ided

as regards also communal tax.

ARTICLE 30

Entry into Force

(1) The Governments of the Contracting States shaH notify to each other

that the constitutional requirements for the entry in to force of this Agreement

have been complied with.

(2) The Agreement shaH enter into force thirty days after the date of the

later of the notifications referred to in paragraph (1) and its provisions shaH have

effect for the first time

(a)

in Finland

(i)

in respect of taxes withheld at source, to amounts derived on

1 J anuary in the calendar year next following

the year in which the

Agreement enters into force;

(ii) in respect of other taxes on income, and taxes on capital, to

taxes chargeable for the taxable year beginning on or after 1 January in

the calendar year next following the year in which the Agreement enters

into force;

(b) in Malta in respect of taxes which are levied for any year of assess­

ment beginning on or after 1 J anuary of the calendar year next following the

year in which the Agreement enters in to force.

ARTICLE 31

Termination

This Agreement shaH remain in force unti1 denounced by one of the Con­

tracting States. Either Contracting State may denounce the Agreement, through

diplomatic channels, by giving written notice of termination at least six months

before the end of any calendar year following after the period of three years from

B

the date on which the Agreement enters into force. In such event, the Agreement

shaH cease to have effect

(a)

in Finland

(i) in respect of taxes withheld at source, to amounts derived on or

after 1 J anuary in the calendar year next following the year in which

notice is given;

(ii) in respect of other taxes on income, and taxes on capital, to

taxes chargeable for any taxable year beginning on or after 1 January of

the calendar year next following the year in which notice is given.

(b) in Malta, in respect of taxes which are levied for the year of assess­

ment beginning on 1 January in the calendar year immediately following that

in which notice is given and for subsequent years of assessment.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their

respective Governments, have signed this Agreement.

DONE in duplicate at Helsinki this 24th day of March, 1975

the English

and Finnish languages, both texts being equally authoritative.

JOSEPH ATTARD KINGSWELL

MATTI TUOVINEN

Extraordinary and Plenipotentiary

Secretary General of the

Ambassador

Ministry of Foreign Affairs

For the Government of

For the Government of

Malta

Finland

Published

by ti7Ċ Information DivisiolJ

-

Kastilja

lppubblik:at

mit-Taqs.ima

Kastilja

tat-Taghrif

-

-

Printed

al the

Government

Printing

Press

Mitbugħ

fl-Istamperija

tal-Gvern

-

-

to have effect.

(a) that the arrangements specified in the Agreement set

out in the Schedule to this Order have been made with the

Government of the Republic of Finland with a view to afford­

ing relief from double taxation in relation to the following

taxes imposed by the laws of the Republic of Finland

(i)

the state income a n d capital tax;

(i i)

the communal tax;

(iii)

the Church tax; and

(iv)

the sailor's tax

(hereinafter referred to as "Finnish tax");

(b) that it is expedient that those arrangements

should

have effect.

B