Double Taxation Relief (Taxes on Income)

L.N. 134 of 1981

INCOME TAX ACT, 1948

(ACT NO. LIV OF 1948)

Double Taxation Relief (Taxes on Income)

(RepublicofFrance)�er,I981

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 France) Order, 1981.

Arrangernents

AGREEMENTBETWEEN

THE GOVERNMENT OF THE REPUBLIC OF MALTA

AND

THE GOVERNMENT OF THE FRENCH REPUBLIC

FOR THE A VOIDANCE OF DOUBLE TA..XA TION AND

THE PREVENTION OF FISCAL EVASION

WITH RESPECf TO T AXES ON INCOME

The Govemment of the Republic of Malta and the Govemment of the French

Republic desiring to conclude an Agreement for the avoidance of double taxation and

the prevention of fiscal evasion with respect to taxes on income have agreed as follows

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CHAPTER I

Scope of the Agreement

ARTICLE 1

Personal Scope

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

Contracting States.

ARTICLE 2

Taxes Covered

(1) This Agreement shall appIy to taxes on income and on capital imposed on

behalf of each Contracting State or of its political subdivisions or Iocal authorities,

irrespective of the manner in which they are levied.

(2) There shall be regarded as taxes on income and on capital all taxes imposed on

total income, on total capital, or on elements of income or of capital, including taxes on

gains from the alienation of movabIe or immovabIe property, taxes on the total amounts

of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

The existing taxes to which the Agreement shall apply are

(3)

(a)

in the case of France

0) the income tax;

(ii) the corporation tax; including any withholding tax, prepayment

(precompte) or advance payment with respect to the aforesaid taxes;

(hereinafter referred to as "French tax");

(b)

in the case of Malta

the income tax and surtax including prepayments of tax whether made by

deduction at source or otherwise,

(hereinafter referred to as "Malta tax")

(4) The Agreement shaH apply also to any identical or substantiaHy similar taxes

which are imposed after the date of signature of this Agreement, in addition to, or in

place of, the existing taxes. The competent authorities of the Contracting States shaH

notify to each other any substantial changes which have been made in their respective

taxation laws.

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CHAPTER II

Definitions

ARTICLE 3

General Definitions

In this Agreement

(1)

(a)

the term "France" means the European and overseas departments

(Guadeloupe, Guyane, Martinque and Reunion) of the French Republic, and any

area outside the territorial sea of those departments which is, in accordance with

international law, an area within which France may exercise rights with respect to

the sea-bed and subsoil and their natural resources;

(b) the term "Malta" means the Republic of Malta and inc1udes in addition

to the Island of Malta, the Island of Gozo and the other islands of the Maltese

Archipelago, together with the territorial waters thereof, and any area outside the

territorial sea of Malta which, in accordance with international law, has been or

may hereafter be designated, under the law of Malta concerning the Continental

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

subsoil and their natural resources may be exercised;

(c)

the term "person" means an individual, a company and any other body of

persons;

(d)

the term "company" means any body corporate or any entity which is

treated as a body corporate for tax purposes;

(e) 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;

(f)

the term "nationals" means

(i)

in respect of France, all individuals possessing the nationality of

France;

(ii) in respect of Malta, all citizens of Malta as provided for in Chapter

III of the Constitution of Malta and in the Maltese Citizenship Act, 1965, and

any legal person, partnership or association deriving its status as such from the

law in force in Malta;

(iii) all legal persons, partnerships and associ a

. tions

as such from the law in force in a Contracting State;

(g)

the term "international traffic" means any transport by ship or aircraft

operated by an enterprise which has its place of effective management in a

Contracting State, except when the ship or aircraft is operated solely between

places in the other Contracting State;

(h)

the term "competent authority" means

(i)

in the case of France. the Minister of Economy and Finance of his

authorised representative;

(ii)

in the case of Malta, the Minister responsible for finance or his

authorised representative.

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(2) As regards the application of the Agreement by a Contracting State any term

not otherwise defined shall, unless the context otherwise requires, have the meaning

which it has under the laws of that Contracting State relating to the taxes which are

subject to the Agreement.

ARTICLE 4

Fiscal Domicile

(1) For the purpose of this Agreement, the term "resident of a Contracting State"

means any person who, under the law of that State, is liable to taxation therein by reason

of his domicile, residence, place of management of any other criterion of a similar

nature. But this term does not include any person who is liable 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 status shall be determined as follows

(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

available to him in both Contracting States, he shall be deemed to be a resident

of the Contracting State with which his personal and economic relations are

closest (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 not a permanent home available to him in

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

ing State in which he has a habitual abode;

( c) if he has a habitual abode in both Contracting States or in neither of

them, he shall be deemed to be 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 provisions of paragraph (1) a person other than an

individual is a resident of both Contracting States, then it shall be deemed to be a

resident of the Contracting State in which its place of effective management is situated.

ARTICLE 5

Permanent Establishment

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

means a fixed place of business through which the business of an enterprise is wholly or

partly carried on.

The term "permanent establishment" shall include especially

(2)

(a)

a place of management;

(b)

a branch;

an office;

(c)

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(d)

a factory;

a work shop ; and

( e )

(f) a mine, an oil or gas well, a quarry or any other place of extraction of

natural resources inc1uding an offshore drilling site.

(3) A building site or construction or installation project or supervisory activities

in connection therewith, shaH constitute a permanent establishment provided that such

site, project or activities last for more than twelve months

(4) Notwithstanding the preceding provisions of this Artic1e, the term "perma­

nent establishment" shaH be deemed not to inc1ude;

(a) the use of facilities solely for the purpose of storage, display or delivery of

goods or merchandise, belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise, Of for coHecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of

carrying on, for the enterprise, any other activity, if it has a preparatory or auxiliary

character;

(f) the maintenance of a fixed place of business solely for any combination of

activities mentioned in sub-paragraphs (a) to (e) of this paragraph, provided that

the overaH activity of the fixed place of business resulting from this combination is

of a preparatory or auxiliary character.

(5) Notwithstanding the provisions of paragraphs (1) and (2), if a person- other

than an agent of an independent status to whom paragraph (6) applies - is acting on

behalf of an enterprise and has, and habitually exercises, in a Contracting State an

authority to conc1ude contracts in the name of the enterprise, that enterprise shaH be

deemed to have a pennanent establishment in that State in respect of any activities

which that person undertakes for the enterprise, unless the activities of such person are

limited to those mentioned in paragraph (4) which, if exercised through a fixed place of

business, would not make this fixed place of business a permanent establishment by

virtue of that paragraph.

(6) An enterprise shaH not be deemed to have a permanent establishment in a

Contracting State merely because it carries on business in that State through a broker,

general commission agent or any other agent of an independent status, where such

persons are acting in the ordinary course of their business.

The fact that a company which is resident of a Contracting State controls or is

(7)

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), shaH not itself constitute either company a permanent establishmentof the

other.

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CHAPTER 111

Taxation of Income

ARTICLE 6

Income from Immovable Property

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

which such property is situated.

(2) The term "immovable property" shall be defined in accordance with the

taxation laws of the Contracting State in which the property in question is situated. The

term shall in any case inc1ude property accessory to immovable property, rights to which

the provisions of general law respecting landed property apply, usufruct of immovable

property and rights to variable or fixed payments as consideration for the working of, or

the right to work, mineral deposits, sources and other natural resources; ships, boats

and aircraft shall not be regarded as immovable property.

(3) The provisions of paragraph (1) shall apply to income derived from the direct

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

(4) The provisions of paragraphs (1) and (3) shall also apply to the income from

immovable property of an enterprise and to income from immovable property used for

the performance of professional services.

ARTICLE 7

Business Profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that

State unless the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carries on business as

aforesaid, the profits of the enterprise may be taxed in the other State but only so much

of them as is attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3), where an enterprise of a Con­

tracting State carries on business in the other Contracting State through a permanent

establishment situated therein, there shall in each Contracting State be attributed to

that permanent establishment the profits which it might be expected to make if it were a

distinct and separate enterprise engaged in the same or similar activities under the same

or similar conditions and dealing wholly independently with the enterprise of which it is

a permanent establishment.

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

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

establishment including executive and general administrative expenses so incurred,

whether in the State in which the permanent establishment is situated or elsewhere.

(4) Insofar as it has been customary in a Contracting State to determine the

profits to be attributed to a permanent establishment on the basis of an apportionment

of the total profits of the enterprise to its various parts, nothing in paragraph (2) shall

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preclude that Contracting State from determining the profits to be taxed by such an

apportionment as may be customary; the method of apportionment adopted shaH,

however, be such that the result shaH be in accordance with the principles embodied in

this Article.

(5) No profits shaH be attributed to a permanent establishment by reason of the

mere purchase by that permanent establishment of goods or merchandise for the

enterprise.

For the purposes of the preceding paragraphs, the profits to be attributed to

(6)

the perrnanent establishment shaH be deterrnined by the same method year by year

unless there is good and sufficient reason to the contrary.

(7) Where profits include items of income which are dealt with separately in other

Articles of this Agreement, then the provisions of those Articles shaH not be affected by

the provisions of this Article.

ARTICLE 8

Shipping and Air Transport

(1) Profits from the operation of ships and aircraft in international traffic shaH be

taxable only in the Contracting State in which the place of effective management of the

enterprise is situated.

If the place of effective management of a shipping enterprise is aboard a ship,

(2)

then it shaH be deemed to be situated in the Contracting State in which the home

harbour is situated, or if there is no such home harbour, in the Contracting State of

which the operator of the ship is a resident.

The provisions of paragraph (1) shaH also apply to profits derived from the

(3)

participation in a pool, a joint business or in an international operating agency.

ARTICLE 9

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 of 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 entcrprises, hut, hy reason of those conditions, have not so

accrued, may be included in the protits of that enterprise and taxed accordingly.

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ARTICLE 10

Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a

resident of the other Contracting State may be taxed in that other State.

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

company paying the dividends is a resident, and according to the law of that State, but

(a) where the dividends are paid by the company resident of France to a

resident of M al t a who is the beneficial owner thereof, the French tax so charged

shaH not exceed

(i) 5 per cent of the gross amount of the dividends if the recipient is a

company which holds directly at least 10 per cent of the capital of the company

paying the dividends;

(ii) in all otħer cases, 15 per cent of the gross amount of the dividends;

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

resident of France who is the beneficial owner thereof

(i) Malta tax shaH not exceed that chargeable on the company paying the

dividends in respect of the profits so distributed;

(ii) notwithstanding the provisions of sub-paragraph (i), Malta tax shall not

exceed 15 per cent of the gross amount of the dividends if such dividends are paid

out of gains or profits earned in any year in respect of receipt of tax benefits under

the provisions regulating aids to industries in Malta, and the shareholder submits

retums and accounts to the taxation authorities of Malta in respect of his income

liable to Malta tax for the relative year of assessment.

This paragraph shaH 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,

"jouissance" sh.ares or "jouissance" rights, rnining shares, founders' shares of other

rights, not being debt-daims, participating in profits, as well as income from other

corporate rights which is subjected to the same taxation treatment as income from

shares by the taxation law of the State of which the company making the distribution is a

resident.

(4) The provisions of paragraphs (1) and (2) shaH 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 dividends is a resident, through a

pennanent establisħment situated therein, or performs in that other State professional

services from a fixed base situated therein and the holding in respest of which the

dividends are paid is effectively connectep with such pennanent establishment of fixed

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

apply.

(5) (a) A resident of Malta who receives from a company which is a resident of

France dividends which, if received by a resident of France, would entitle such

resident to a fiscal credit (avoir fiscal), shaH be entitled to a payment from the

French Treasury equal to such credit (avoir fiscal) subject to the deduction of the

tax provided for in sub-paragraph (a)(ii) of paragraph (2) of this Article;

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(b) the provisions of sub-paragraph (a) of this paragraph shaH apply only to a

resident of Malta, being either

(i)

an individual; or

(ii) a company to which the provisions of sub-paragraph (a)(i) of para­

graph (2) do not apply;

(c)

the provisons of sub-paragraph (a) of this paragraph shaH not apply if the

recipient of the payment from the French Treasury provided for under sub-para­

graph (a) of this paragraph is not subject to Malta tax in respect of that payment;

(d)

Payments from the French Treasury provided for under sub-paragraph

(a) of this paragraph shaH be deemed to be dividends for the purposes of this

Agreement.

(6) (a) Where the prepayment (precompte) is levied in respect of dividends

paid by a company which is a resident of France to a resident of Malta who is not

entitled to the payment from the French Treasury referred to in paragraph (5) of

this Article with respect to such dividends, that resident of Malta shaH be entitled to

the refund of the prepayment, subject to the deduction of tax with respect to the

refunded amount in accordance with paragraph (2) of this Article;

(b) amounts refunded under the provisions of sub-paragraph (a) of this

paragraph shaH be deemed to be dividends for the purposes of this Agreement.

(7) Where a company resident of Malta has in France a permanent establishment,

the profits of this permanent establishment shaH, after having bome the French corpor­

ation tax, be liable to a tax the rate of which shaH not exceed 10 per cent, according to

the law of France.

ARTICLE 11

Interest

(l)

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 if the recipient is the beneficial owner

of the interest, the tax so charged shall not exceed \0 per cent of the gross amount of the

interest.

(3)

Notwithstanding the provisions of paragraph (2), any such interest as is

mentioned in paragraph (1) shaH be taxable only in the Contracting State of which the

hcnenciary is a rcsident. i f such interest is payable on loans granted or guaranteed by the

State or a statutory body thereof.

(4) T he term "interest" as used in this Article means income from debt-c\aims of

every kind, whether of not secured by mortgage, and whether or not carrying a right to

p arti c i p a t e in the debtor's pronts, and in particular, income from govemment securities

and income from bonds or debentllres. inclllding premillms and prizes attaching to

honds or dehentllres. Penalty chargcs for late payment shall not be regarded as interest

for the purpose of this Articlc.

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(5)

The provisions of paragraphs (1) and (2) shaB not apply if the recipient of the

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

Contracting State in which the interest arises, through a permanent establishment

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 interest is paid is effectively

connected with such permanent establishment or fixed base. In such a case, the

provisions of Article 7 or Article 14, as the case may be, shaB apply.

(6)

Interest shaB be deemed to arise in a Contracting State when the payer is that

State itself, a political subdivision, a local authority, a statutory body thereof or a

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

resident of a Contracting State or not, has in a Contracting State a permanent establish­

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

and such interest is borne by such permanent establishment, then such interest shaB be

deemed to ari se in the Contracting State in which the permanent establishment is

situated.

(7) Where, owing to a special relationship between the payer and the recipient 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 which would have been

agreed upon by the payer and the recipient in the absence of such relationship, the

provisions of this Article shaB apply only to the last -mentioned amount. In that case, the

ex cess part of the payment shaH remain taxable according to the law of each Contracting

State, due regard being had to the other provisions of this Agreement.

ARTICLE 12

Royalties

Royalties arising in a Contracting State and paid to a resident of the other

(1)

Contracting State may be taxed in that other State.

(2) However, such roya1ties may be taxed in the Contracting State in which they

arise and according to the law of that State, but if the recipient is the beneficial owner of

the royalties, the tax so charged shaB not exceed 10 per cent of the amount of the

royalties.

(3) Notwithstanding the provlslons of paragraph (2), payments of any kind

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

artistic or scientific work, including works recorded for broadcasting or television, shaH

be taxable only in the Contracting State of which the beneficiary is a resident, if such

resident is the beneficial owner of the payments.

(4) The term "royalties" as used in this Article means payments of any kind

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

artistic or scientific work including cinematographic films and works recorded for

broadcasting Of television, any patent, trade mark, design or model, plan, secret

formula Of process or for information concerning industrial, commercial or scientific

expenence.

(5)

The provisions of paragraphs (1), (2) and (3) shaH not apply if the recipjent of

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

Contracting State in which the royalties arise, through a permanent establishment

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situated therein, or performs in that other State professional services from a fixed base

situated therein, and the right or property in respect of which the royalties are paid is

effectively connected with such permanent establishment or fixed base. In such a case,

the provisions of Article 7 or Article 14, as the case may be, shaH apply.

(6)

Royalties shaH be deemed to ari se in a Contracting State when the payer is

that State itself, a political subdivision, a local authority, a statutory body thereof or a

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

resident of a Contracting State or not, has in a Contracting State a permanent estab­

lishment with which the right or property in respect of which the royalties are paid is

effectively connected, and such royalties are bome by such permanent establishment,

then such royalties 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 recipient or

between both of them and some other person, the amount of the royalties paid, having

regard to the use, right or information for which they are paid, exceeds the amount

which would have been agreed upon by the payer and the recipient in the absence of

such relationship, the provisions of this Article shaH apply only to the last-mentioned

amount. In that case, the excess part of the payments shaH remain taxable according to

the law of each Contracting State, due regard being had to the other provisions of this

Agreement.

ARTICLE 13

Capital Gains

(1)

Gains from the alienation of immovable property, as defined in paragraph (2)

of Article 6 or from the alienation of shares or comparable interest in a real property

cooperative or in a company the assets of which consist principaHy of immovable

property, may be taxed in the Contracting State in which such property is situated.

(2)

Gains from the alienation of movable property forming part of the business

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 fixed base available

to a resident of a Contracting State in the other Contracting State for the purpose of

performing professional services, 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. However, gains from the alienation of

movable property pertaining to the operation of ships and aircraft operated in inter­

national traffic shaH be taxable only in the Contracting State in which the place of

effective management of the enterprise is situated.

(3) Gains from the alienation of shares forming part of a substantial interest in the

capital of a company which is a resident of a Contracting State may he taxed in that State

and according to the law of that State. For the purposes of this paragraph, a substantial

interest shaH be deemed to exist when the alienator, alone or together with associated or

related persons, holds directly or indirectly shares which together give right to 25 per

cent or more of the company profits.

(4)

Gains from the alienation of any propcrty other than those mentioned in

paragraphs (l), (2) and (3), shaH hc taxahlc only in the Contracting State of which the

alienator is a resident.

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ARTICLE 14

Independent Personal Services

Income derived by a resident of a Contracting State in respect of professional

(1)

services of other independent activities of a similar character shaH be ta'{able only in that

State. However, such income may be taxed in the otħer Contracting State in the

following circumstances

(a)

if ħe has a fixed base regularly available to him in the other Contracting

State for the purpose of performing his activities (in which case only so much of the

income as is attributable to that fixed base may be taxed in that other Contracting

State); of

(b)

if his stay in the other Contracting State is for a period or periods

amounting to or exceeding in the aggregate 183 days during any calendar year.

The tenn "professional services" includes, especially, independent scientific,

(2)

literary, artistic, educational or teaching activities as well as the independent activities

of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15

Dependent Personal Services

Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other

(1)

similar remuneration derived by a resident of a Contracting State in respect of an

employment shaH be taxable ol1ly in that State unless the employment is exercised in the

other Contracting State. If the employment is so exercised, such remuneration as is

derived there from 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 shaH be taxable only in the first-mentioned State if

(a) the recipient is present in the other State for a period or periods not

exceeding in the aggregate 183 days in the calendar year concerned; and

(0)

the remuneration is paid by, of on behalf of, an employer who is not a

resident of the other State; and

(c)

the remuneration is not borne by a permanent establishment or a fixed

base wh.ich the employer has in the other State.

(3) Notwithstanding the preceding provisions of this Artide, remuneration in

respect of an employment exercised aboard a ship or aircraft in international traffic may

be taxed in the Contracting State in which the place of effective 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 capacity as a member of the board of directors or other similar organ of a company

which is a resident of the otħer Contracting State may be taxed in that other State.

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ARTICLE 17

Artistes and Athletes

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

entertainers, such as theatre, motion picture, radio or television artistes, and musicians,

and by athletes, from their personal activities as such may be taxed in the Contracting

State in which these activities are exercised.

(2) Where income in respect of personal activities as such of an entertainer or

athlete accrues not to that entertainer or athlete himself but to another person that

income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the

Contracting State in which the activities of the entertainer or athlete are exercised.

(3) Notwithstanding the provisions of paragraph (1), remuneration or profits,

and wages, salaries and other similar income derived by entertainers and athletes from

their personal activities as such in a Contracting State shaH be taxable only in the other

Contracting State if their visit to the first Contracting State is supported substantially

from the public funds of that other Contracting State, one of its political subdivisions or

local authorities or of a statutory body thereof.

(4) Notwithstanding the provisions of paragraph (2), where income in respect of

personal activities as such of entertainers and athletes in a Contracting State aecrues not

to that entertainer or athlete himself but to another person, notwithstanding the

provisions of Articles 7, 14 and 15, that ineome shaH be taxable only in the other

Contracting State if this person is supported substaritially from the public funds of that

other Contracting State, one of its political subdivisions or loeal authorities or of a

statutory body thereof, or if this person is a non-profit organisation of that other State.

ARTICLE 18

Pensions

(1) Subject to the provisions of paragraph (2) of Article 19, pensions and other

similar remuneration, and annuities paid to a resident of a Contracting State in consi­

deration of past employment shal! be taxable only in that State.

(2) Notwithstanding the provisions of paragraph (1), pensions and other

payments made under the social security legislation of a Contracting State shaH be

taxable only in that State.

As used in this Article

(3)

(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 employment;

(b) the term "annuity" means a stated sum paid periodically 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 or money's worth.

B

ARTICLE

Government Service

(a)

Remuneration, other than a pension, paid by a Contracting State or a

( 1)

political subdivision or a local authority thereof to any individual in respect of

services rendered to that State or subdivision or local authority thereof shaH be

taxable only in that State;

(b) However, such remuneration shaH be taxable only in the other Contrac­

ting State if the services are rendered in that State and the recipient is a resident of

that other Contracting State who

(i)

is a national of thatState;or

(ii)

did not become a resident of that State solely for the purpose of

performing the services.

(a)

Any pension paid by, or out of funds created by, a Contracting State or a

(2)

political subdivision or a local authority thereof to any individual in respect of

services rendered to that State or subdivision or local authority thereof shaH be

taxable only in that State;

(b) However, such pension shaH be taxable only in the other Contracting

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

(3)

The provisions of Articles

15, 16 and 18 shaH apply to remuneration and

pensions in respect of services rendered in connection with any business carried on by

one of the Contracting States or a political subdivision or a local authority thereof.

ARTICLE 20

Students

(1)

Payments which a student or business apprentice who is or was immediately

before visiting a Contracting State a resident of the other Contracting State and who is

present in the first-mentioned Contracting State solely for the purpose of his education

or training receives for the purpose of his maintenance, education or training shaH not

be taxed in that State, provided that such payments are made to him from sources

outside that State.

Remuneration which a student or business apprentice who is or was

(2)

immediately before visiting a Contracting State a resident of the other Contracting State

and wħo is present in the first-mentioned Contracting State solely for the purpose of his

education or training derives from services rendered in that State shaH not be taxed in

that State provided that such services are in connection with his education or training or

that the remuneration of such services is necessary to supplement the resources

available to him for the purpose of his maintenance.

ARTICLE 21

Teachers and Researchers

(1) A teacher or researcher who is or was immediately before Vlsltmg a

Contracting State a resident of the other Contracting State, and who is present in the

B

first-mentioned Contracting State for the purpose of teaching or engaging in research

shaH be exempt from tax in that State for a period not exceeding two years on

remuneration in respect of such activities.

(2) This Article shaH not apply to income from research if such research is

undertaken not in the public interest but primarily for the private benefit of a specific

person or persons.

ARTICLE 22

Other Income

Items of income of a resident of a Contracting State, wherever arising, not

(l)

dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

(2)

The provisions of paragraph (1) shaH not apply if the recipient of the income,

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

State through a permanent establishment situated therein, or performs in that other

State professional services from a fixed base situated therein, and the right or property

in respect of which the income is paid is effectively connected with such permanent

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

case may be, shaH apply.

CHAPTER IV

Taxation of Capital

ARTICLE 23

Capital

(1) Capital represented by immovable property, as defined in paragraph (2) of

Article 6, may be taxed in the Contracting State in which such property is situated.

Capital represented by movable property forming part of the business

(2)

property of a permanent establishment of an enterprise, or by movable property

pertaining to a fixed base used for the performance of professional services may be taxed

in the Contracting State in which the permanent establishment or fixed base is situated.

(3)

Ships and aircraft operated in international traffic and movable property

pertaining to the operation of such ships and aircraft shaH be taxable only in the

Contracting State in which the place of effective management of the enterprise is

situated.

(4) All other elements of capital of a resident of a Contracting State shaH be

taxable only in that State.

CHAPTER V

Elimination of Double Taxation

ARTICLE 24

Elimination of Double Taxation

In the case of France, double taxation shali be avoided as follows

(1)

(a) Income other than that referred to in sub-paragraph (b) below shall be

exempt from the French taxes referred to in sub-paragraph (a) of paragraph (3) of

Article 2 if the income is taxable in Malta under this Agreement.

(b) (i) Income referred to in Articles 10, 11, 12, 14, 16 and 17, received

from Malta may be taxed in France on the gross amount. The Malta tax levied

on such income entit1es residents in France to a tax credit corresponding to the

amount of Malta tax ievied but which shall not exceed the amount of French

tax levied on such income. Such credit shall be allowed against taxes referred

to in sub-paragraph (a) of paragraph (3) of Artic1e 2, in the bases of which such

income is included;

(ii) in the case of income referred to in Articles 10, 11 and 12 received

from Malta by a resident of France, Malta tax shall be deemed to have been

paid as follows

(aa) dividends, at the rate of 15 per cent as provided in paragraph

(2)(b )(ii) of Article 10;

(bb)

Interest at the rate of 10 per cent as provided in paragraph (2)

of Article 11; and

(cc) royalties, other than those referred to in paragraph (3) of

Artide 12, at the rate of 10 per cent as provided in paragraph (2) of the

said Article.

(c) Dividends distributed by a company which is a resident of Malta to a

company which is a resident of France shall be exempt from French tax to the

extent that the dividends would have been exempt from tax under French law if

both companies had been residents of France.

(d) Notwithstanding the provisions of sub-paragraph (a), French tax is com­

puted on income chargeable in France by virtue of this Agreement at the rate

appropriate to the total of the income chargeable in accordance with the French

taw.

(2)

In the case of Ma1ta, double taxation shall be eliminated as fol1ows

Subject to the provisions of the law of Malta regarding the allowance of a

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

provisions of this Agreement, there is induded in a Malta assessment income from

sources within France, or elements of capital situated in France, the French tax on

such income or elements of capital, as the case may be, shall be allowed as a credit

against the relative Malta tax payable thereon.

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

shaH be relieved from tax in that State, either in full or in paTt, and, under the law in

force in the other Contracting State, such income 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 fuU amount thereof, then the relief to be allowed in the first-mentioned State shall

apply onJy to so much of the income as is remitted to or received in the other State.

B

CHAYfER VI

Special Provisjons

ARTICLE 25

Non-Discrimination

The nationals of the Contracting State, whether or not they are residents of

(1)

one of the Contracting States, shaH not be subjected in the 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 other State in

the same circumstances are or may be subjected.

(2)

The taxation on a pennanent establishment which an enterprise of a

Contracting State has in the other Contracting State shaH not be less favourably levied in

that other State than the taxation levied on enterprises of that other State carrying on

the same activities.

This provision shaH not be construed as obliging a Contracting State to grant to

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

for taxation purposes on account of civil status or family responsibilities which it grants

to its own residents.

Except where the provisions of Article 9, paragraph (7) of Article 11, or

(3)

paragraph

(7)

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 shaH, for

the purpose of determining the taxable profits of such enterprise, be deductible under

the same condition as if they had been paid to a resident of the first-mentioned State.

Similarly, any debts of an enterprise of a Contracting State to a resident of the other

Contracting State shaH, for the purpose of detennining the taxable capital of such

enterprise, be deductible as if they had been contracted to a resident of the first­

mentioned State.

Enterprises of a Contracting State, the capitai of which is wholly or partly

(4)

owned or controlled, directly or indirectly by one of more residents of the other

Contracting State, shaH 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 of may be subjected.

In this Article, the tenn "taxation" means taxes of every kind and description.

(5)

ARTICLE 26

Mutual Agreement Procedure

(1) Where a resident of a Contracting State, con� id�rs that the acti

.

.

both of the Contracting States result or will result for hlm m taxatJ<:> n not m accor ance

�

with this Agreement, he may, notwithstanding the remedie� provlded by the .natlOnal

laws of those States, present his case to the competent authonty of the 0ntractmg State

C;

of which he is resident Of, if his case comes under paragraph (l) of Artlcle

to that of

25,

B

the Contracting State of which he is a national. This case must be presented within three

years of the first notification of the action giving rise to taxation not in accordance with

the Agreement.

(2) The competent authority shaH endeavour, if the objection appears to it to be

justified and if it is not itself able to arrive at an appropriate solution, to resolve the case

by mutual agreement with the competent authority of the other Contracting State, with

a view to the avoidance of double taxation not in accordance with the Agreement. Any

agreement reached shaH be implemented notwithstanding any time limits in the

national laws of the Contracting State.

(3) The competent authorities of the Contracting States shaH endeavour to

resolve by mutual agreement any difficulties arising as to the application of the

Agreement.

In particular, the competent authorities of the Contracting States may consult

together to endeavour to agree;

(a) to the same attribution in both Contracting States of the profits

attributable to a permanent establishment situated in a Contracting State of an

enterprise of the other Contracting State;

(b) to the same aHocation of income between a resident of a Contracting

State and any associated person referred to in ArticIe 9.

They may also consult together for the elimination of double taxation in cases not

provided for in the Agreement.

(4) The competent authorities of the Contracting States may communicate with

each other directIy 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 ex change of opinions, such exchange may take place through a Commission

consisting of representatives of the competent authorites of the Contracting State.

(5) The competent authorities of the Contracting States may by mutual agree­

ment settle the mode of application of this Agreement and, especiaHy, the requirements

to which the residents of a Contracting State shaH be subjected in order to obtain the tax

reliefs or exemptions provided for by this Agreement.

ARTICLE 27

Exchangeoflnfonnation

(1) The comptent authorities of the Contracting States shaH exchange such

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

laws of the Contracting States concerning taxes covered by this Agreement in so far as

the taxation there under is not contrary to this Agreement. Any information received by

a Contracting State shaH be treated as secret in the same manner as information

obtained under domestic laws of that State and shaH be disclosed only to persons or

authorities (incIuding a court or administrative body) involved in the assessment or

collection of the enforcement of prosecution in respect of, or the determination of

appeals in relation to, the taxes which are the subject of this Agreement. Such persons

Of authorities shaH use the information only for such purposes. These persons or

authorities may discIose the information in public court proceedings or in judicial

decisions.

B

(2)

In no case shaB the provisions of paragraph (1) be construed so as to impose

on one of the Contracting States the obligation

(a) to carry out administrative measures at variance with the laws or the

administrative practice of that or of the other Contracting State;

(b)

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

norma} course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, indus­

trial, commercial or professional secret or trade process, or information, the

disclosure of which would contrary to public policy (ordre public).

ARTICLE 28

Diplomatic and Consular Officials

(1) Nothing in this Agreement shaH effect the fiscal privileges of members of

diplomatic missions and their personal domestics, of members of consular missions, or

of members of permanent missions to international organisations under the general

rules of international law or under the provisions of special agreements.

(2) Notwithstanding the provisions of Article 4, an individual who is a member of

a diplomatic or consular or permanent mission of a Contracting State which is situated in

the other Contracting State or in a third State shall be deemed for the purposes of this

Agreement to be a resident of the sending State if

(a) in accordance with international law, he is not taxable in the receiving

State on income from sources outside that State; and

(b) he is liable in the sending State to the same obligations in relation to tax

on his total world income as are residents of that sending State.

(3) This Agreement shall not apply to international organisations, to organs and

officials thereof and to persons who are members of a diplomatic or consular or

permanent mission of a third State, being present in a Contracting State and not treated

in either Contracting State as residents in respect of taxes on income and capital.

ARTICLE 29

Territorial Extension

(1) This Agreement may be extended, either in its entirety or with any necessary

modifications, to the overseas territories of the French Republic which imposes taxes

substantially similar in character to those to which the Agreement applies. Any such

extension shall take effect from such date and subject to such modifications and

conditions, including conditions as to termination, as may be specified and agreed

between the Contracting States in notes to be exchanged through diplomatic channels

or in any other manner in accordance with their constitutional procedures.

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

Agreement by one of them under Article 31 shaH also terminate, in the ma�n�r

.

provided for in that Article, the application of the Agreement to any temtory to whIch 1t

has been extended under this Article.

CHAYfER VII

Final Provisions

ARTICLE 30

Entry into Force

(1)

Each Contracting State shaH notify to the other the completion of the

procedure required by its law for the bringing into force of this Agreement. This

Agreement shaH enter into force on the first day of the second month following the

month in which the later of the se notificatio!ls has been given.

(2)

Its provisions shaH apply for the first time

( a )

as regards taxes withheld at source, to amounts payable on of after the

date of entry in to force of this Agreement;

(b)

as regards other taxes on income, to income derived during the calendar

year in which the Agreement entered in to force, or relating to the accounting

period ending during this year.

ARTICLE 31

Termination

(1) This Agreement shaH remain in force indefinitely. However, after 1981, each

Contracting State may terminate the Agreement by giving at least six months written

notice through diplomatic channels.

In such an event, its provisions shaH apply for the last time

(2)

( a )

as regards taxes withheld at source, the sums payable before or on the

31st December of the calendar year during which the termination has been notified;

(b)

as regards other taxes on income, to income derived during the calendar

year during which the termination has been notified or relating to the accounting

period ending during such year.

IN WITNESS WHEREOF the undersigned, duly autħorised thereto, have signed

this Agreem e nt .

DONE at Floriana this 23rd day of April 1976, in duplicate, in the French and

English languages, both texts bein g equally authentic.

For the Govemment of the

For the Govemment of the

French Republic

Republic of Malta

PIERRE KERLAN

CECIL BAKER

Directeur-Adjoint

Commissioner of Inland Revenue

Ministere de l'Economie et des Finances

(Direction generale des Impots)

B

PROTOCOL

At the time of signature of the Agreement between the Government of the

Republic of Malta and the Government of the French Republic for the Avoidance of

Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income,

the undersigned have agreed upon the following provisions.

In respect of Article 5, an insurance enterprise of a Contracting State shall be

I.

deemed to have a permanent establishrnent in the other Contracting State if it collects

premiums and insures risks therein.

In respect of paragraphs (1) and (2) of Article 7, where an enterprise of a

lI.

Contracting State sens goods or merchandise or carries on business in the other

Contracting State through a permanent establishment situated therein, the profits of

this permanent establishment are not deterinined on the basis of the total amount

received by the enterprise, but are detennined only on the basis of the remuneration

which is attributable to the actual activity of the permanent establishment for such sales

or business. In the case of contracts for the survey, supply, installation or construction

of industrial, commercial or scientific equipment or premises, or of public works, when

the enterprise has a permanent establishrnent the profits of such pennanent establish­

ment are not determined on the basis of the total amount of the contract, but are

determined only on the basis of that part of the contract which is effectively carried out

by the permanent establishment in the Contracting State where the permanent

estab1ishment is situated. The profits related to that part of the contract which is carried

out by the head office of the enterprise shall be taxable only in the Contracting State of

which the enterprise is a resident.

IIL In respect of paragraph (1) of Article 7, payments of any kind received as a

consideration for the use of, of the right to use, industrial, commercial or scientific

equipment shall be deemed to be profits of an enterprise to which the provisions of

Article 7 apply. Similarly, payments received as a consideration for studies or surveys of

a scientific, geologica! or technical nature, or for consultant or supervisory services shall

be deemed to be payments to which the provisions of Article 7 apply.

In respect of Article 8

IV.

(a) where profits derived from the operation of a ship in international traffic

by an enterprise whose place of effective management is situated in Malta are

exempt from tax under the provisions of section 86 of the Merchant Shipping A�t,

1973, of under any identical of similar provisions, such profits m a y be taxed In

France unless it is proved to the satisfaction of the competent authority of France

that not more than 25 per cent of the capital of the company owning the relative

ship is control1ed, directly or indirectly, by persons not residents of Malta;

(b) where a person who is a resident of France participates direcdy or

indirectly in the management, control or capital of such an enterprise, sucħ person

shall be taxable in France in respect of that part of the profits, derived by such

enterprise and exempt from tax in Malta as aforesaid, which is appropriate t o the

participation ofsuch person in the enterprise.

In respect of Articles 11 and 12, where any interest or royalties derived from

V.

Malta are received by a resident of France, tax in Malta is charged on the ammmt of the

�

interest or royalties as reduced by all expenses properly attributa le thereto. If the t ax

.

so charged is in excess of 10 per cent of the gross amount of the mterests or royaltles

(that is before the deduction of the aforesaid expense), the tax is reduced 50 as not to

exceed 10 per cent of the gross interests or royalties.

B

VI. In respect of paragraph (4) of Article 25, nothing in this paragraph shall be

construed as preventing France from applying the provisions of Article 212 of the "Code

general des Impots" as regards interest paid by a French company to a foreign mother

company.

IN WITNESS WHEREOF, the undersigned have signed the present Protocol

which shall have the same force and validity as if it were inserted word by word in the

Agreement.

DONE at Floriana this 23rd day of April 1976, in duplicate, in the French and

Eng1ish languages, both texts being equally authentic.

For the Government of the

For the Government of the

Republic of Malta

French Republic

CECIL BAKER

PIERRE KERLAN

Commissioner of Inland Revenue

Directeur-Adjoint

Ministere de l'Economie et des Finances

(Direction generaJe des Impots)

Ippubblikat mit-Taqsima tal-Tagħrif - Kastilja - Publirhed by the/nformation Divirion - Kastilja

Mitbugħ flwIstamperija tal-Gvern - Printed al the Government Printing Press

It is hereby declared-

to have

( a) that the arrangements specified in the Agreement set in effect.

the Schedule to this Order have been made with the Government of

the Republic of France with a view to affording relief from double

taxation and preventing fiscal evasion in relation to the following

taxes in1posed by the laws of the Republic of France

(i)

the income tax;

(ii) the corporation tax; including any withholding tax,

prepayment (precompte) or advanced payment with respect to

the aforesaid taxes;

that it is expedient that those arrangements should have

(b)

effect.