Oo ubl e TaJt:8tion H.elier (I'axes on Income)

L.N. 228 or 1997

INCOME T AX ACT

(C AP. 123)

Oo ubl e TaJt:8tion H.elier (I'axes on Income)

(Czech Republic) O rd er. 1997

IN exercise of the powers conferred by section 76 of the Income

Tax Act,the Minister of Finance and Commerce has made the following

order:-

This order may be cited liS the Double Taxmion Relief (faxes Ci ...... .

on Inco me) (Czech Republic) Order. 1997.

CONVENTION

BETWEEN JI,'lALT,\ AND THE CZECIIREPUULlC

FOR THE AVOIOANCE OF nOUHLE TA XATION

AND THE PR EVENTION OF n SCAL EVASION

WITH RESI' ECT TO TAXES ON I NCOME

ANI) ON CAPITAL

Malia and the Cz&h Republi c.desiring IOconci ude a Convention for thc avoidance

of double laxalion und Ihe prevention of fiscu l evasion with respect to tax es on illcome

and on capital. have agreed as follows

ARTICLE l

I'crS(J II;t! Scope

This Convention shall app ly 10 persons who are residents o f one or both of the

Contracting States.

AM TlCLE 2

Taxes CO\'ered

I . This Convention shall appl y to taxcs on incomc and on capital imposed on

be hal f o f a Comr"J.cting State or of its political su bclivisions or local authori ties .

irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital a1\ taxes imposed

on 100ai income. on tOlal capital. or on elements of income oror ca pi tal includ ing luxes

on gains from the alienation o f movable or immovable prope rty. taxes on the total

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

It is hereby declared: -

"" ... rr..".

(a) that tile IUTilngeme ms specified in the Agreement set

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

Government of the Czech Republic wi th a vie w to afford ing rel ief

from double taxation in relat ion 10 the fol lowing taxes imposed by

the laws o f the Czech Republic

the tax on income of ind ividuals;

(i)

the [aX on income of legal persons;

(if)

the tax on immovable property;

(iii)

(b)

that it is e xpedient that those arrange ments shou ld have

effect ;

(c) that the Conve ntion has entered into force on the 6th

June , 1997 .

The ex isting laxcs to which the Co nvention shall apply are

(a)

in the Czech Republic

the tax o n income o f ind;";duals

(i )

the tax on income of legal persons

(ii )

the tax on immovable propen y

(iii;

(hereinafter referred to as ··Czech la x")

(b)

in Malia

the income tax

(hereinafter referred to as "Malta tax").

4 . TIle Conven ti()fl shall apply also to any identica l or suDstamially similartaxcs

which are imposed after the date of signature of the Convemion in additi on 10, or in

place of, the existing taxes. The com petcnt authorities of the Contracting Statcs shall

IJotify cach other of any Significant changes which havc been made in their respective

taxation laws.

N()(wi thslandi ng the other provisions of th is Article. this Convention shall

not apply lotax paid or payable in Malta in accordance with the provisions o f subsection

(1 3) of $Cction 56 of the Income Tax Act (Cap. 123).conceming the chargeablc income

of any person engaged in the producti on of petroleum produced in Malta or any

substantially similar provision which is imposed after the date of signal ure of th is

Convention.

ARTICLE)

General Definitions

I.

For the purposes of this Convention , unless the context otherwise requires

(a) the lenn "Czech Republic", when used in a geographical sense, means

tile territory over which the Czech Republic, under the Czech legislation and in

accordance with intemationallaw. may exercisc its sovereign rights;

(b) the tenn " Malta" means the Republic of Malta and, when used in a

geographical sense, means the Island of Malta, the Island of 007.0 and the other

islands of the Mal tese Archipelago including the territori al waters thereof, and

any area outside the territori al waters of Malta wh ic h has been or may hereafter

be designatcd, in accordance with international law and under the law of Malta

concernin g the continental shelf. as an area within which the ri ghts of Malta with

respect to the seabed and subsoil and their natural resources may be exercised;

(c) the tenns " a Contracting State~ and "the ()(hcr Contracting State" mean

the Czech Republic or Mal ta , as the context requi res

(d) the tenn "person'" includes an individu al. a company and any other

body of persons;

(e) the tenn ··company" means any body corporate or any entity which is

treated as a body corporate for tax purposes

(f) the tenns "enterprise of a Cootr.lcting State" ami "entcrprise of the other

Co ntracting StalC" mean respecth·ely an cntcrprise carried on by a resident o f a

Contractin g State and an cntcrprise carried on by a resident of tile (lfher Controcting

State;

(g)

the term "national" means

any individual possessing the nationali ty of a Contracti ng State

(i)

any legal person. pa rt nership or association deriving ilS status as

(ii}

such from the laws in force in a Con tracting State;

(h) the tenn " international troHic" means an y t .... nsport by a ship, ai rc .... n

or road vehicle operoted by an enterprise of a Contracti ng St3te, e,;.ccpt when the

ship, aircraft or road ve hicle is operoted solely between places in the other

Cont racti ng Sl3te;

0)

the teml "competent authority" means

in the case of tile Cl.o.>ch Republic. the Minister of Fina nce or his

(i}

authori zed re presentali ve

in the case of Malt3 . lhe l\'linister respons ible for fi nance or his

(ii}

authorized representalive.

2. As regards the application of thc Convention by a Contracting State any lenn

not defined therein shall . unl ess the co nte .... t ot!Jern'isc requires. have the meaning whi ch

it has under the law orthat State conce rn ing the taxes to which the Conve nt ion ap plies.

ARTIn.E'

Resident

I . For the purposes oflhis COIl\'enrion.lhe tenn "resident of a Contracting State"

means an y person who. under the laws o f thai State. is liable to lax therein by reason of

his domicile . residence . place of ma nagement or any other crilerion of a similar nature.

But this te nn does not include any person who is liable 10 ta x in th at State in res pect

only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragrap h I an indi vidual is a residen t

of both Con tracting Stales, then his stal US shall be dctemli ned as follo .... ·s

(a) he shall be deemed 10 be a residem solely of lhe State in which he has

a pcnnancnt home available 10 him: if he has a permanent horne available to him

in boih Slates. he shall be deemed to he a resident solely orthe State with whic h

his personal and economic relations arc closer {cemre of vital intcrcstsJ

(b) if the State in which he hilS hi s centre of vital in terests cannot be

detemlined. or if he has not a permanent horne available to him in either State. he

shall be deemed to he a resident solely of the State in which he has an habitual

abode

(c) if he has an habitual abode in both States o r in neither of them . he shall

be deemed to be a resident solely o f the State of which he is a national

(d) if he is a nati onal ofboi h States or of neither of them , the competent

au thorities orthe Contracting SIllies shall SCttle the queslion by mutua l agreement.

3, Where by reason of the provisions of paragraph I a person other than an

individual is a resident of both Contracting States , then it shall be dc:c:med to be a

resident solely of the Slale in which its place of erfec1ive management is situated.

Permanent Establishmen t

I . For the purposes of this Convention. the term " permanent establishment"

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

or panly carried on.

2. lbe term " pemlanent estllblishmcnt" shall incl ude especially

(.) a place of management

(b)

a branch

Iln office

(0)

(d)

a factory

(,) a workshop: and

(0 a mine. an oil or gas well. a quarry or any other place of extraction of

natural re sources including an offshore drilling site.

111e term "pemlanenl esmbJishment"' likewise encompasses

3. (a) a building site, a construc tion , asse m bly or installation project or

supervisory activities in connection therewith . but only where such site, project

or activities con tinue for a period of more than nine months

• 1800

(b) the furni shing of se rvices. including consullancy and mana ge rial

services. by an enterprise through employees or other person[)(:1 engaged by the

clllcrprisc fOf such purpose. but only where activities ohh.al naturecOlllinue wilhin

a Contmcting State for a period or periods :aggregating more than six months

within Ilny '2~momh period.

4 . N()(wilhstanding the preceding pro ... ision~ of this Article.the tenn"permanent

establishme n(' shall be deemed 1101: 10 include

the useorfocilities solely for the purpose of storage, di splayordelivery

(3)

of goods Of merchandise belonging (0 the ente rprise

(b) the maintenance o f a Stoc k o f goods or merchandise belonging to the

elllc rprise solely for the purpose of storage. display or delivery

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

enterprise solely for the purpose of processing by another ente rprise

(d) the maintenance of a fixed place o f busi ness solel y for the purpose of

pun:hasing goods or merchandise. or of COllecting infonn:lIion. for lhe emerprise

(e) lhe mainlen:mce of a fixed place of business solely for the purpose of

oo\'ertisi ng. for the supply of information, for scientific research or for similar

activities which have a preparatory or auxil iary character. for the enterprise: and

(f) the mainlenanceof a fixed place of business solely for anyeombinill ion

of activities mentioned in sub-paragraphs (a) 10 (e) . ;novided lhat the overall acti\'ity

of the fixed place of busi ness resulting from this combination is of II preparatory

or auxi liary charac ter,

5. Notwithstanding the provisions of paragraphs I and 2, .... 'here a person . other

th3n an agent of an independem status to whom paragraph 6 applies' is acting on

bch31f of an emerp ri se and has, and h3bitually exercises, in a Con tracting State an

authority to conclude contracts in the name of the enterprise. thai enterprise shall be

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

which that person undertakes for the enterpri se, 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 th is fixed place of business a pennanent establishment

under the provisions of that pamgraph.

An enterprise ora Cont racti ng State shall not be deemed to have a pennanent

establishment in the other Contracting State merely because it carries on business in

thai other State through a broker. general commission agent or any OIher agent of an

indcpendent status. provided that such persons are acting in the ordinary course of

their business. However. whe n the activities of suc h an age nt are devoted wholly or

B 180 1

a lmost w holly on behal f of that e nterpri se. he sha ll fIOt be considered an agent of an

independent status within the meaning o f this paragrap h.

The fact that a co mpany which is a resident of a Contrnct ing State controls or

is controlled by a company which is a resident of the mher Contracting Slate,or which

carries on business in that other State (whether through a permanent establishment or

otherwise) , shall nOI of itSe lf conslitute either company a pennanen t establishment of

the mher.

"RTICLE6

Income Crom Immovabl e Property

I. Income derived by a resident of a ContnlCling State from immovable property

(i ncluding ioconte from agricu lture or forestry) situated io the OIher Cootr3Cting State

may be taxed in that other State.

2. The term '"i mmovable property" shall have the meaning which it has under

the law of the Contrncting State in whi ch lhe property in question is situated. The lerm

shall in any case include property accessory to immovable property,livestock an d

equipment used in agriculture and forestry, ri ghtS to which the provisions of general

law respecting landed propert y apply. usufruct of immovable property and rights to

variable or fixed payments as co nsiderati on for the working of, or the ri ght to work, or

to explore for, mineral depositS. sources and other natural re sources; ships and ai rcra ft

shall not be regarded as immovable prope rty.

3. The provisions of paragra ph I shall appl y to income derived from the direct

use,letling, or use in any oc:her form of immovable property.

4 . The provisions of paragraphs I and 3 shall also appl y to Ihe income from

immovable property of an en terprise and to income from immovable property used for

the performance of independent personal services.

ARTfCLE 7

Business Proli ts

I . The profits of an enterprise of a Contractin g 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 e nterprise carries on business as

afore said. the profits o f tile enterprise may be taxed in the othe r State but only so much

of them as is attributable to that pcnnanent establishment.

2. Subject to the provisions of paragraph 3. where an enterprise of a Contracting

Stale carries on busi ne ss in the othe r C OllIract in g State through a permanent

establishmen t situated therein. there shall in each Contracling State be anributed to

that permanent establishmeot the profits which it might be expected to make if il were

a distinct and separate enterprise e ngaged in the S3 me or simil3r activities under the

S31lle or similar conditions and dealing wholly independeruly with the enterprise of

whi ch it is a p.:nnanent establi shment or with ot her llSsoc iated enterprises with which

it deals.

3. In detennining the profits of a pemlanent establishmeru, there shall be al lowed

as deductions expenses which are inCllrred for the purposes of the pennanent

establishment, including executive and ge neral 3dmini~trative C:l:pe nses so incurred,

and which would be deductible if the pennanent establishme nt were an independen!

entity which paid those e:l:penses, whether incurred in the Contr3cting State in which

the pennanent establishment is situated or elsewhere.

4. Insofar as it has been customary in 3 Contracting State to detcmline the pro fits

to be attributed to a pcnnaneru eSlllblishmen! on the basis of an apporti onmeru of the

tmal profi ts of the enterprise to its various parts . nothing in paragraph 2 shall preclude

that COntracting Stme from determin ing the profits 10 be ta:l:ed by such an apportionment

as may be customary: the method of apportionment adopted shall, however, be such

thm the result shall he in accord3nce with the principles contained in thi s Article.

5. No profits sh311 be attributed to a pemlanent establishment by reason of the

mere purchase by Ihm pemlanent establishment of goods or merchandi se for the

enterprise.

6. For the purposes of the preceding par3g ntphs, the profits to be attributed to

the permanent establishment shall be detennined by the same method year by year

unle ss there is ~ood and sufficient reason to the contrary.

7. Where profits include items of income which 3re de31t with se parately in

other Articles of thi s Con ention, then the pro\lision~ of those Articles shall not be

affected by the provisions of this Article .

T he provisions of this Article shall not affect the provisions of the law of a

Contracting State reg3rding the ta:tation of profits from the business of insurance.

ARTICLE 8

Internation al Traffie

I. Profits of an enterprise of a Contracting State from the operation of ships,

aircraft, or road veh icles in intemational traffic shall be taxable only in that State.

2. The provisiolls of paragraph 1 shall also apply to profits derived from the

participation ill a pool. a joint business or an international operating agency.

As.~ lated ":ntcrprises

1. When

(a ) an enterprise of a Contractiog State panicipatcs di n:ctl y or indin:ctly in

the managcment.control oreapital of an enterprise of the other Cont racting State.

n<

(b . the same perso ns pani ci patc direclly or indi;ectly in the man agement,

control or capital of an enterprise of a Contracting State and an enterprise of the

other Contracting State,

and in eit her case conditions are made or imposed betwee n the two enterprises in :heir

commercial or financial relations whieh diffe r from those which would be made between

independent enterprises. then any profits which would, but for those cond itions, have

accrued to one of the enterpri ses, but, by rcason of those conditions. have not so

accrued, may be included in the profits of thai enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an en terprise of that

State - and taxes accord ingly - profi ts on which an enterprise of the ()(he r Contracting

State has been charged to tax in that othe r State and the profits so included are profits

wh ich would have accrued to the en terprise of the first·mentioned State if the co nditions

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

independent ent erprises. then that other State shall make an appropriate adjustment to

the amount of the tax charged therein on those profi ts. In detconining such adjustment.

due regard shall be had to the other provisions of thi s Conventi on and the com petent

authorities of the Contracting Stales shall if necessary consult each other.

3. A Contracting State shall not cha nge the profits of an enterpri se in the

circumstances referred to in paragraph 2 after the expiry of the time limits provided in

its nalionallaw5.

4. 1be provisions o f paragraph 2 shall nOl apply in the case of fraud. wi lful

default or neglect.

~ RTl CU 10

Dividends

I.

Dividends paid by a company which is a resident of a Conlracting State to a

resident o f the ()(her Contracting Stale may be taxed in Ihat other State.

2. Howeve r, such dividends may a1so be taxed in the Contracting State of which

the company paying the dividends is a resident and according to the laws of that Slate.

but

(a) where lhe dividends are paid by a compan y resident of the Czech

Republic 10 a resident of Malta who is the beneficial owner thereof, the Czech

tax so charged shall nl}( exceed five per cerll orthe gross amount or lhc dividends

(b)

where Ihe dividends arc paid by a company residcm off\'lalta 10 a resident

ofthc Czech Republic who is the beneficial owner thereoLthe Malta tax on the

gross amou nt of tile diviucild s shall nOl exceed that chargeable on the profits ou t

of whic h the dividends are paid .

TIlis paragra ph shall niX affccllhe laxation of the company in rcSpec1 of rhe profits OUI

of which the dividends are paid.

3. lbc lenn "dividends" as used in this Article means income from shares, or

()(hcr ri ghts, nO( being dcbt -claims . participating in profits. as well as income from

other corporme rights which is s ubjected to the same taxation treatmc nt as income

from s hare s by the ta xation laws of the State of which the company making the

d istribution is a resident.

4. The provisions of parngr.lphs I and 2 shall not apply if the be neficial owncr

of the d iv id ends, being a residc nt of a Contracting State. carries on busin ess in the

other Contracting State of which the company paying the dividend s is a residen t, through

a permanent establishment situated therein.or pcrfonns in that other State independent

personal services from a fixed base situated therein , and the holding in respect of

whic h lhedividendsare paid iseffcctivelyconnccted with suc h pcm13nent establi shment

or fixed basc . ln suc h case the provisions of Art icle 7 o r Article 14 , as the case may be.

s hall a pply .

5. Where a company which is a resident of a Contracting State derives profits

or income from the OIherColllr.lc ting State. that other State may not im pose any tax o n

the dividends paid by the company , excepl insofar as such dividends are paid to a

resident of that other State or insofar as the holding in re spect of wh ic h the dividends

are paid is effectively connected with a pennanenl establishment or a fixed base silUated

in that other State. nor SUbject the company' s undistributed profits to a tax on the

com pany's undistributed profits.even if the dividends paid or the undistri buted profits

consist wholly or partly of profits o r income arisi ng in suc h o ther State .

~ R TlCLE 11

Inte rest

I . Interest aris in g in a Contr.lcting State and paid to a resident of the other

Contracti ng State shall be te nabl e onl y in that other State if suc h residen t is the beneficial

owner of that interest.

2. The term "interest" as used in this Article means income from debt-claims of

every kind . whether or not secured by mortgage and whether or not carrying a right tu

participate in the debtor'S profits. and in particular. income from govenllnent securities

and income from bonds or debentures, including premiums and prizes attaching to

such securities , bonds or debentures. Penalty charges for late payment sh::!ll not be

regarded as inte rest for the purpose of this Article .

3. The provisions of paragraph I shall not apply if th e benefi cial uwncr urlhe

interest, being a resident uf a Contracting State. carri es on business in the other

Contracting State in which the interest arises. through a pennanent establishmem situated

there in. or perfonns in that other State indepe ndent personal services from a fixed base

sitllated therein. and the debt -claim in respect of which the interest is paid is effectively

connected with such pemlanent establishment or fixed base . In such case the provisions

of Article 7 or Article 14 .as the case may be, shall appl y.

4. Where, by reason of a special relationship between the payer and the recipient

who is the beneficial owneror between both of them and some other person. the amount

of the interest. having regard to the debt-claim for which it is paid, exceeds the amoun t

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

suc h relationship. the provisions of this Article shall apply only 10 the last-mentioned

amount. In such case, the excess pan of th e paymcnts shall remain taxable according

to the laws of each Contracting State. due regard being had to the othe r provisions of

this Convention.

"'RT ICLE 12

Royalties

1. Royalt ies 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 royalties may also be taxed in the Contracting State in wh ich

they arise. and according to the laws of the State. but if the beneficial owner of the

royalties is a resident or the other Contracting State. the tax so charged shall not exceed

fi ve per cent of the gross amount of the roya lties.

3. 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,

anisticorscientific work inc1udingcincmatograph films . and fi lms or tapes for television

or radio broadcasting. any patent , trade mark. design or model. plan. secret fonnula or

process. or any industrial, commercial, or scientific equipment. or for infonnation

concerning industrial, commercial or scientific experience.

4. The provisions of parugr:Jphs I and 2 shall not apply if the beneficial owner

of the royahies. being a resident of a Contracting State , carrie.~ on business in the other

Contr:Jcting State in which the royalties arise. through a permanent establ ishmcnt

situated therein. or pcrfonns ill thai other State independent personal services from a

fixed base situated therein. and the right or propcny in respect of which the royalties

arc paid is effectively connocted wilh such pcnnanent establi shment (IT fi~ed base. In

such case, the provisions of Anicle 7 or Anicle 14, as the case l11.IIy be, shall apply .

5. Royalties shall be deemed to arise in a Contracting State when the payer is

that State itself. a political su bdivision , a local authori ty or a resident of that State.

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

Contracting Stale or not , has in a Contracti ng State a pemJanent establishment or a

fixed base ill conne<;tion with which the liability 10 pay the royalties was illcurred. and

such royalties nre borne by such pemlanent establishment or fixed base , then such

royalties shall be deemed to arise in the Contracting State in which the pemlanelll

establishment or fixed base is situated .

6. Where. by reason ofaspecial relationship between the payer and the benerlCial

owner or between both of them and some other person. the amount o f the royalties,

having regard to the usc. righ t or infonnation for which they are paid. exceeds the

amount which would have been agreed UlJOn by the payer and the beneficial owner in

the absence of such relationship. the provisions of this Anicle shall apply only 10 the

last-mentioned amount. In such case. the e xcess pan of the payments shall remain

taxable accord ing to the laws of each Contracting State, due regard being had to the

OIhcr provisions of this Convention.

....nCl.E lJ

Alil! nalion or I'roperly

I . Income or gains derived by a resident of a Contracting State from the alienation

of immovable propen y rderred to in Anicle 6 and situated in the other Contracting

State may be tax ed in that other State .

2. Income or gains from the alienation of movable propeny fomling pan of the

business property of a pennanent establishment which an enterprise of a Contracting

State has in the OIher Contracting State or of movable propeny penaining to II fi .\ ed

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

purpose of performing independent personal services, incl udi ng such income or gains

from the alienation of such pennanen! establishment (alone Ofwith the whole enterprise)

or of such fi xed base. may be taxed in Ihat other State .

3. Income or gains from the alienation of shares or comparable interests in a

company . the assets of which consist direc tly or indin.'Ctly principally of immovable

propeny situated in a Contracting State may be taxed in that State.

4 . Incomcor gai ns from the alienation of ships. aircraft or road vehicles operated

in international tromc by an enterprise of II Contrncting Stale. or from the alienation of

movable propeny penaining to the operation of such ships. aircraft or road vehicles

shall be Hlllabic only in that State.

5. Income or gains from the alienation of any prnpcny Q(her than that re ferred

to in paragraphs 1,2. 3 and 4 shall be taxable on ly in the COnlracting St3teof which the

alienator is a resident.

Independent Personul Services

I.

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

services or other activi ties of an independent character shall be taxable only in that

State. However ,such income may be U1J(OO in theOlherContractingStare in the following

circumsl3nces

(8) if he has a fixed base regularly available to him in the OI:herContracting

State for the purpose of perfomling his act ivi ties; in that case , only so much o f

the income as is attributable tOthat fixed base may be taxed in that otherContract.ing

State; o r

(b) if his Stay in the OI:her Contracting State is for a period o r periods

amounting to or exceeding in the aggregate 120 days during any twelve· month

period commenci ng Of ending in the fi scal yearconcemed; in that case, onl y so

much of the iocome as is derived from the activityexercisc:d in IheOl.herConuacting

State may be taxed in that other Slate.

2 . In the com putation of the periods men tioned in paragraph I(b) the provisions

of paragraph 3 of Anide 15 shall apply.

3. 11te te nn "professional se rvices" includes especially independent scientific,

literary. anistic ,educational or teach ing activities as well as the independent activities

of physicians, surgeons, lawyers, engineers. architects, dentists and accounta nts.

ARTICLE 13

Ikpend cnt Personal Services

1. Subject to the provisions of Anicles 16, 18 and 19, salaries, wages and other

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

employment shall be taxable only in that Stare unless the employment is exercised in

the ()(herContrat.1ing State. If the employment is soexcrcised,such remuneration as is

deri ved therefrom ma y be taxed in that OIhcr State.

2. Notwithstanding the provisions of paragraph I, 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 all the following

conditions are fulfilled

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

exceeding in the aggregate 183 days in any twelve· month period commencing or

ending in the fiscal year concerned. and

(b) the remUllCI"'<ltion is paid by, or on behalf of, an employer who is not a

res ident of the other State, and

(c) the remuneration is not borne by a pennanent establishment or a fixed

base which the employer ha~ in the other State.

3. In t.he computation of the periods mentioned in paragraph 2(a), the following

days shall be included

(a)

all days of physical presence including days of arrivals and depanures,

"d

(b) days spent outside the State of activity sueh as Saturdays and Sundays,

national holidays, holidays. conneCied business trips after which the activity was

resumed on the territory of that State.

4 . The teml employer mentioned in pamgraph 2(b) means the person having

right on the work produced and bearing the responsibility and ris k connected with the

perfonnance of the work.

5. Notwi thstanding the preceding provisions of this Anicle. remuneration derived

in respect of an employment exercised aboard a ship. aircr<lft, or road vehicle operated

in international traffic by an enterprise of a Contracting State may be taxed in that

State.

"RTICLE 16

Oi rl'Ctors' F et'S

Directors· fees and other si milar payments derived by a resident of a Contracting

State in his eapacity as a member of the board of directors or any other simi lar organ of

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

State.

ARTICU; 11

Artiste; and Athletes

I.

NOIWithslanding the provisions of An ic1es 14 and 15 , income derived by a

resident of a Contracti ng State as an elllenainer, such as a theatre, motion pictu re,

radio or television an islc,or a music ian,or as an athlete. from his persolla] activ ities as

such exercised in the othe r Contracting Slate. may be laxed in thaI OIhcr State.

2. Where income in respect of personal activities exercised by an entertaine r or

an athl ete in his capacity as such accrues not to the entertainer or athlete himsclfbul to

another person. thaI income may. nOlwithstanding the provis ions of Articles 7. 14 and

15, be taxed in the Contracting Stale in whic h the acti vi ties of the entertainer or ath lete

are exercised .

3. Notw ithstanding the provisions of paragraphs I and 2. income deri ved from

such activities . as defi ned in paragraph 1, performed wi th in the framework of cuitunl.l

exc hange between the Governme nts of both States, shall be exempt from tax. in the

Contracting State in whic h these act ivities are exerci sed.

ARTlct..E 18

Pensions

I.

SUbject to the provisions of paragraph 2 of Article 19 , pensions and other

similar remu neration paid to a resident of a Contracting State in consideration of past

employment shal1 be taxable only in that State.

2. Notwithstanding the provisions of paragraph I , pensions paid and Other

payments made under the social security legislation of a Contracting State shal1 be

taxable only in that State.

ARTICLE 19

Government Servi ce

I . (a) Salaries, wages and other similar remun eration, other than a pension,

paid by a Contracting State or a political sul:xlivision or a local authority thereof

to an individual in respect of services rendered to that State or subdivis ion or

local authority shall be taxable only in that State.

(b) However , such salaries, wages and other si milar remuneration shall be

taxable onl y in the other Cont ract ing Stille if the services are rendered in that

State and the indi vidual is a resident of that State who

is a nationa] of that State; o r

(i)

did nOI become a re sidelll of Ihal State solcly for the purpose of

(ii)

rendering the- services.

2. (a) Any pension paid by. Of OUT of funds created b),. a Conlra"Tin g State or

a political subdiv ision or a local aUThorit)' thereof to an indi\'idual in respect o f

services rendered to thaI STate or su bdivision or authority sha ll be la:l:abte only in

that State.

(b) However. suc h pension shall be taxable onl y in the other Contracting

State if the individual is a resident o f. and a national of. that Stille.

3. The provisions of Ankles 15. 16 and 18 shall appl)' 10 salaries. wages and

other sintilar remu nerat ion. and to pensions. in respect of services rendered in connection

with a business earried 011 by a Contract ing Stale or a political subdi vision or a local

authoriTY thereof.

Where salarics. wages . and other similar rem un eration are paid under a

4. development assistance progrmnme of a Contracting State. out of funds e:l:elusivel)'

su pplied b)' that State to a specialist or volunlea seconded to tile other Contractin g

State with the consent of that othe r State . such remulICration shall be taxable onl)' in

the first -mentioned State .

ARTIClE 10

Stud cnls a nd Business Apprentices

A student or business apprentice who is present in a Contracting Slate solely for

tile purpose of hiS educruion or tra ining and woo is . or immediately before being so

presen t was. a re side nt of the othe r Contracling State shall be exem pt from tax ill the

first-ment io ned State on payments received from oUlside thm first-mentioned Slme for

the purposes of his maintenance. education or training.

ARTICLE 21

Other Income

I . Items of income of a residen t of a Contmcting State, wheTCver arising. not

dealt with in the foregoing An icles of th is Convention shall be ta:l:able only in that

State.

2 . The provisions of paragraph I shall not app ly to income . ot her than income

from immovable propen y as defined in paragraph 2 o f Anicle 6. if the recipi ent of

such income, being a resident of a Conlracting Slate. carries on business in Ihe other

Contracting Stale through a pe nnan en t establishment si tuated there in. or perfonns in

thaI other Slate independent pe rsonal services from a fi:l:ed base situated therein . and

the right or propcn y in respect of whic h The income is paid is effectivel y cOflllccted

with such pennanen t establishmcnt or fixcd base. In such case . the pro\'isions of Anic le

7 or Anicle 14 . as the case may be . shall appl y.

ARTICLE 11

Cap ita l

I . Capi!.11 represented by immovable propeny referred to in Anicle 6, owned

by a resident of a Contracting State and sitU(lIed in the Other Contracting Suue. ma y be

taxed in that other State.

2. Capital represented by movable propeny forming pan ofthc business propeny

of a permanent establishment which an enterprise of a Contracting State has in the

othe r Contracting State or by movable propeny penalning to a Ii)(ed base available to

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

performing independent personal services, may be ta)(ed in that other Stale.

3. Capital represented by shi ps, aircraft and road vehicles operated by an

enterprise of a Contracting State in international traffic and by movable propen y

penaining to the operation of such ships, aircraft and road vehicles, shall be ta)(able

only in that State in wh ich the enterprise is situated

4 . All other clements of capital of a resident of a Contracting State shall be

ta)(able only in that State .

""T1CLE 21

Elimination of Double Taxation

In the case of Malta. double ta)(ation shall be eliminated as follows

I.

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

against Malta tax in respect ofroreign la)(, where, in accordance with the provisions of

this Convention. there is included in a Malta assessment income from sources within

the Czech Republic , the Czech tax on such income shall be allowed as a credit against

the relative Malta tax payable thereon.

2. In the case of the Czech Republic, double taxation shall be eliminated as

follows

The Czech Republ ic. when imposing taxes on ils residents, may include in

the tax base upon which such taxes are imposed the items of income or capital

which according to the provisions of this Convention may also be ta~ed in Malta.

but shall allow as a credit against the amount of tax computed on such a base an

amoUn! equal to the tax paid in Malta. Such credit shall not , however ,exceed that

pan of tile Czech tax. as compUled before the credit is give n. which is appropriate

10 the income or capital which, in accordance with the provisions of this

Convention, may be taxed in Malta.

J.

Where the Conven tion provides that income arising in a Contracting State

shall be relieved from In:< in thm Stat e. ei ther in full or in pan . and. under the law in

fon.'C in the other COlllfllcling Slate, such income is subject to ta:< by refer"\!nce to Ihe

amount thereo F which is fCmitted to or fCce ived in that other State and not by reference

10 the full amoun t thereof, then the reli ef to be allowed in the first-ment ioned State

shall app ly only to so mueh of the income as is rem itted to or received in the other

Slate.

4 . Forthe purposes ofallowance as a credil.the tax payable in theC7.ech Republic

or MalIa . as the conte:<1 requi res, sl1.111 be dccmC(l IO incl ude lhe lax which is otherwise

payable in a Conlracting State bm has been reduced or waived by Ihat Slate unde r its

legal provisions for la:< incentives.

Non· l}jscriininalion

I. Nationals of a Contracti ng State shall not be subjected in the other COlllracling

Slate 10 any taxat ion or any requifCment connected therewith, which is other or more

burdensome than the ta:<ation and coo nectcd requ irements to wh ich nationals of thaI

other State in the same circumst.inces. in panicular with respecl to residence. are or

may be subjected. This pro\'ision shall. nOl:wilhsta nd ing the provisions o f Anicle I ,

also apply to persons who are not res idents o f one or both of the Contracling Stales.

2 . The laxation on a permane nt es tablis hment whi ch an e nterprise of a

Contracting State has in the other Contmcting State shall nOI be less favourably levierl

in that ot her State than the ta:tat ion levied on enterprises of that other State carrying on

the same activi ties. This provision shall not be construed as obliging a Contracting

State to grant to residents of the olher Contracting State any personal all owances,

rel iefs and reductions for ta:tati on pu rposes on account of civil status or family

responsibilities which it grams to its ow n residents.

3. Except where the provisions of paragraph I of Article 9. paragraph 40f Anicle

I I. or paragraph 6 of Anicle 12 apply. interest. royalties and O(her disbursements paid

by an enterprise of a Contracting State to a reSident o f the other Contracting Stale

shall, for the purpose of determining the taxable profits of suc h enterprise. be ded uctible

under the same condit ions as if they had been paid to a resident ofl he fi rst· mentioned

State . Similarly, any debts of an enterprise of a Contracting State to a re sident of the

other Contracting State shall. for Ihe purpose of determ :ning the tax able capital of

such enterprise, be dedu ctible under the same conditions as if they had been co ntracted

to a resident of the first·mcntioned State .

4 . Enterprises of a Comracting Slate. the capital of whict> is wholly or panly

owned or con trolled. directly or indirectly. by one or more res iden ts of the OIlier

Contrn<:ling State. shall nO( be subjected in the fir.>t -mentioned State to any 13xation or

any requirement connected there" it h whic h is OIher or more burdensome than the

B 18 13

ta)latjon and con nected requirements to whic h other similar enterprises of that first-

men tioned State are or may be subjecled .

5. The provisions of this Art icle sha ll, notwi thstanding the provisio ns of Art icle

2 . ap ply to lax es of every ki nd and description which are the subjcci ol lhis Conve nt io n.

Mutual Agr~m e n ll'l"()«d ure

I. Where a person co nsiders that the actions of one or both of the Contracting

States res ult or will result for him in laxation nOI in accorda nce wi th Ihe provis ions of

Ihis Convention . he may . irrespective of the remedies provided by lhe domestic law of

those States. present his case to lhe competent authority of the Contracting State of

which he is a residenl or, jf his case comes unde r paragraph I o f Art icle 24 , 10 that of

the Contracting State of which he is a nat ional. The case must be presented within

three years from the fi rst nOlification ort he action resulting in taxation not in accordance

with the provisions of the Convention.

2 . The competenl authority shall endeln 'our , if the objection appears to it to be

justified and if il is not itself able 10 arrive at a satisfactory solution. to resolve the case

by mutual agreemelll wit h the competent authority of the other Contracting State, with

a view to the avoidance of taxatio n which is not in accorda nce wi th the Con ve ntion.

Ally agreeme nt reached shall be implemented notwithsta nd ing any lime li mits in the

domestic law of the Contracting Stales.

3. 1be competent authorities ofl he Contracting States shall endeavourto resolve

by mut ual agree men t any diffic ulties or doubts arisi ng as to the interpretation or

applicati on of the Conve nt ion. They may also cons ult togethe r for Ihe elimination of

double taxatio n in cases not provided for in the Convention.

4 . 1bc compelen t aUlhorities of the Contracti ng States may communicale with

each other d irectly for the purpose of reaching an agreement in the sense ofme preceding

paragrap hs. When it seems ad visable in order to reac h agree ment to have an oral

e)lchange of opi nions, such exchange may take place through a Commission consisting

of re presentati ves of the competent authorities of the Contracti ng States.

AltTICl..E: :!6

Excha nge or Inrorma tion

I . The competent authorities of the Contracting States shall exchange such

information as is necessary for carrying OUI the provisions of th is Convention or of the

domestic laws of the Contracting States concerning taxes co\'ered by the Convention

insofar as the taxat ion thereunder is nO( co ntrary to the Convenlion . 1be exc hange of

informat ion is not restricted by An ide I. Any information received by a Contracting

State shall be tre ated as secret in the same manne r as infonnatio n obtained unde r the

domcstic laws of thut State an d shull be disdosed onl y to pe rsons or authorities

(including collns and administrative bodies) invol\'oo in the assessment or collection

of. the enforcement or prosecu tion in respeCt of. or the dCtemlination of appeals in

relmion to, the taxcs covered by the Convention. Such perso ns or authorities shall use

the infoml:ltiOfi only for such purposes. 111ey may disclose the infomuuion in public

coun proceedings or in judicial decisions.

2. III no ease shall the provisions of paragraph I be construed so as to impose on

a Contracting Stme the obligation

(a) to carry ou t administrative measures at variance with the laws and the

administrati\'e practice or that or o f the other Comracting State;

(b) to supply inromlation which is not obtainable under the laws or in the

nonn.11 course of the adminiSIr.Uion of th:lt or of the OIller Comracting State

(c) to su pply information which would di sclose any trade , business,

industrial. commercial or professional secret or trade process, or information. the

disclosure of which would be comrnry to public policy (ordre puhlic).

ARTlCl.E 27

Members of Diploma tic Missions and Consullir Posts

NOIhing in this Convention shall affect the fiscal privileges of mcmbe rs of

dipl omatic missions or consular posts under the general rules of intemationallaw or

under the provisions of special agreements.

ARTlCLE ;>t

Entry Inlo Force

I. The Contracting States shall notify each other that the constitutional

requirements for the entry into force of this Convention have been complied wilh.

2. The Convention shall ell!er inlO force on the dale oflhe late r ofthe notificalions

referred to in paragraph I and its provisions shall have ("ffect

(a)

in the Czech Repu blic

in respect of taxes withheld at source. to amoulI!s deri\'ed on or

(i}

after 1st January in the calendar year neAt following that in which the

Con\'ention enters into force

(ii} in respect of other taxes on income and ta~es on capital. to taxes

chargeable for any t a ~able year beginning 011 or after 1st January in Ihe

calendar year next following that ill which the Con\'entioo enters into force

B 18 15

(bJ

in Malta

in re spec t of ta xes on income de rived durin g any calend ar year or

accoun ting period , as the case may be , begi nning OIl or after the first da y of

January immediately follow ing the date on which the Con\'ention enters into

force .

ART!CLE 19

T ermination

This Co nve nt ion shal l re main in force unti l tenninated by a Contnlcting State.

Eithe r COIlt ract ing State may tenninatc the Conven tion, through diplomatic chan ne ls,

by giving notice of tennination at least six mont hs before the e nt! of any cal endar year

begi nn ing after the expiration of a period of fi ve years from the date of its entry into

force . In such eve nt, the Con vent ion shall cease to have effect

(a)

in the Czech Republic

(i} in respect of taxes wit hhe ld al source, to amounts deri ved on or

after 1st January in the calendar year nex t following that in which the nOlice

IS gl\'en;

in respect of OIlier taxes on income and taxes on capital , to ta"'es

(ii)

charge able for any taxable ye ar beginning on or after 1st January in the

calendar year next foll owing that in whi ch the notice is given;

(b)

in Malta

in respect of taxes on income deri ved duri ng an y calendar year or

accounting period , as the case may be , beginni ng on or after the first da y of

January immediately following the date on which Ihe notice is given ,

IN WITNESS WHEREOF the undersigned , being dul y authorized thereto , have

signed this Conven tion,

DONE in duplicate at Cran s Montana this 21 Sl day of June , 1996 in the Engl ish

language .

JOHN DA LLJ

IVAN KOcARNtK

FOR MALTA

FOR THE CZECH REPUBLI C

lpuhbLiht mid-Dip3f1im""tt~' l-Informazzjoni - 3, Pj . zza Kasti1J~ - PubLishW by th~ OtpMlIDtnT or information - 3, Canill~ Placg

MiTbugh f1-I, tampt'fij. ul-G,'= - PrinleD aline Go,"ernme1l1 Prinling Pre"

Pr~z:z 44 c - Priel! 44 c