Double Taxation Relief (Taxes on Income) (ln_2000_71) | MT

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Preamble — Double Taxation Relief (Taxes on Income) Open official source

L.N. 71 of 2000

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income)

(Republic of Croatia) Order, 2000

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

Tax Act, the Minister of Finance has made the following order:-

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Reg. 1 — Double Taxation Relief (Taxes on Income) Open official source

This order may be cited as the Double Taxation Relief (Taxes Citation.

on Income) (Republic of Croatia) Order, 2000.

Arrangements to

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Schedule — Double Taxation Relief (Taxes on Income) Open official source

AGREEMENT

BETWEEN THE REPUBLIC OF MALTA

AND THE REPUBLIC OF CROATIA

FOR THE AVOIDANCE OF DOUBLE TAXATION

WITH RESPECT TO TAXES ON INCOME

The Republic of Malta and the Republic of Croatia desiring to conclude an

Agreement for the avoidance of double taxation with respect to taxes on income have

agreed as follows

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 apply to taxes on income imposed on behalf of a

Contracting State or of its local authorities, irrespective of the manner in which they

are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income,

or on elements of income, including taxes on capital appreciation and taxes on gains

from the alienation of movable or immovable property, as well as taxes on the total

amounts of wages or salaries paid by enterprises.

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Reg. 2 — Double Taxation Relief (Taxes on Income) Open official source

It is hereby declared:-

have effect.

(a) that the arrangements specified in the Agreement set

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

of Croatia with a view to affording relief from double taxation in

relation to the following taxes imposed by the laws ofthe Republic

of Croatia

(i)

the profit tax; and

(ii)

the income tax;

(b)

that it is expedient that those arrangements should have

effect;

(c) that the Convention has entered into force on the 22nd

August, 1999.

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Schedule — Double Taxation Relief (Taxes on Income) Open official source

AGREEMENT

BETWEEN THE REPUBLIC OF MALTA

AND THE REPUBLIC OF CROATIA

FOR THE AVOIDANCE OF DOUBLE TAXATION

WITH RESPECT TO TAXES ON INCOME

The Republic of Malta and the Republic of Croatia desiring to conclude an

Agreement for the avoidance of double taxation with respect to taxes on income have

agreed as follows

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 apply to taxes on income imposed on behalf of a

Contracting State or of its local authorities, irrespective of the manner in which they

are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income,

or on elements of income, including taxes on capital appreciation and taxes on gains

from the alienation of movable or immovable property, as well as taxes on the total

amounts of wages or salaries paid by enterprises.

3. The existing taxes to which this Agreement shall apply are in particular

a)

in the Republic of Croatia

the profit tax, and

(i)

the income tax;

(ii)

(hereinafter referred to as "Croatian tax");

b)

in the Republic of Malta

the income tax;

(i)

(hereinafter referred to as "Malta tax").

4. The Agreement shall apply also to any identical or substantially similar taxes

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

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

notify each other of changes which have been made in their respective taxation laws.

Article 3

GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires

a) the term "Croatia", used in a geographical sense, means the territory of

the Republic of Croatia within its internationally recognised borders, as well as

any area beyond the territorial waters of the Republic of Croatia in which, in

accordance with international law and the laws of the Republic of Croatia, the

Republic of Croatia exercises its sovereign rights and jurisdiction;

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

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

islands of the Maltese archipelago including the territorial waters thereof, and

any area outside the territorial waters of Malta which has been or may hereafter

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

concerning the continental shelf, as an area within which the rights of Malta with

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

c) the terms "a Contracting State" and "the other Contracting State" mean,

as the context requires, Croatia or Malta;

d)

the term "tax" means, as the context requires, a Croatian or Malta tax;

e) the term "person" includes an individual, a company and any other body

of persons;

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

f)

treated as a body corporate for tax purposes;

g) the tenns "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;

h) the tenn "international traffic" means any transport by a ship or aircraft

operated by an enterprise of a Contracting State, except when the ship or aircraft

is operated solely between places in the other Contracting State;

i) the tenn "national" means any individual possessing the citizenship of a

Contracting State and any legal person, partnership or association deriving its

status as such from the laws in force in a Contracting State;

j)

the tenn "competent authority" means

in the case of Croatia, the Minister of Finance or his authorised

(i)

representative;

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

authorised representative.

2. As regards the application of the Agreement by a Contracting State any tenn

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

it has under the law of that State concerning the taxes to which the Agreement applies.

Article 4

RESIDENT

1. For the purposes of this Agreement, the tenn "resident of a Contracting State"

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

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

But this tenn does not include any person who is liable to tax in that State in respect

only of income from sources 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 State in which he has a

pennanent home available to him; if he has a pennanent home available to him in

both States, he shall be deemed to be a resident of the State with which his personal

and economic relations are closer (centre of vital interests);

b) if the State in which he has his centre of vital interests cannot be

determined, or if he has not a pennanent home available to him in either State, he

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

c) if he has an habitual abode in both States or in neither of them, he shall

be deemed to be a resident of the State of which he is a national;

d) if he is a national of both 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 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.

2. The term "permanent establishment" includes especially

a)

a place of management,

b)

a branch,

c)

an office,

d)

a factory,

e)

a workshop, and

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

natural resources.

3. The term "permanent establishment" likewise encompasses

a) a building site or construction, assembly or installation project or

supervisory activities in connection therewith, but only where they last more than

9 months;

b) the furnishing of services, including consultancy services by an enterprise

of a Contracting State through employees or other engaged personnel in the other

Contracting State, provided that such activities continue for the same project or a

connected project for a period or periods aggregating more than 9 months.

4. Notwithstanding the preceding provisions of this Article, the term "permanent

establishment" shall be deemed not to include

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 or of collecting 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 of 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), provided that the overall 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, where 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 conclude contracts in the name of the enterprise, that enterprise shall be

deemed to have a permanent 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 under

the provisions of that paragraph.

6. An enterprise shall 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, provided that

such persons are acting in the ordinary course of their business. However, when the

activities of such an agent are devoted wholly or almost wholly on behalf of that

enterprise, he will not be considered an agent of an independent status within the

meaning of this paragraph.

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

is controlled by a company which is a resident of the other Contracting State, or which

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

otherwise), shall not of itself constitute either company a permanent establishment of

the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated in the other Contracting State

may be taxed in that other State.

2. The term "immovable property" shall have the meaning which it has under

the law of the Contracting State in which the property in question is situated. The term

shall in any case include property accessory to immovable property, livestock and

equipment used in agriculture and forestry, 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, or

to explore for, 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 independent personal 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 Contracting

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 determining 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 detennine 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 preclude

that Contracting State from detennining the profits to be taxed by such an apportionment

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

that the result shall be in accordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the

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

enterprise.

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

the permanent establishment shall be detennined 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 shall not be

affected by the provisions of this Article.

8. The provisions of this Article shall not affect the provisions of the law of a

Contracting State regarding the taxation of profits from the business of insurance.

Article 8

INTERNATIONAL TRAFFIC

1. Profits of an enterprise of a Contracting State from the operation of ships or

aircraft in international traffic shall be taxable only in that State.

2. The provisions of paragraph 1 shall also apply to profits from the participation

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

Article 9

ASSOCIATED ENTERPRISES

1. 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 or financial relations which differ from those which would be made

between independent enterprises, then any profits which would, but for those conditions,

have accrued to one of the enterprises, but, by reason of those conditions, have not so

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

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

State - and taxes accordingly - profits on which an enterprise of the other Contracting

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

which would have accrued to the enterprise of the first-mentioned State if the conditions

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

independent enterprises, then that other State may make an appropriate adjustment to

the amount of the tax charged therein on those profits. In determining such adjustment,

due regard shall be had to the other provisions of this Agreement and the competent

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

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 also be taxed in the Contracting State of which

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

but

.

a) where the dividends are paid by a company which is a resident of Croatia

to a resident of Malta who is the beneficial owner thereof, the Croatian tax so

charged shall not exceed 5% of the gross amount of the dividends;

b) where the dividends are paid by a company which is a resident of Malta

to a resident of Croatia who is the beneficial owner thereof, Malta tax on the gross

amount of the dividends shall not exceed that chargeable on the profits out of

which the dividends are paid.

This paragraph shall 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 or

other rights, not being debt-claims, 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 laws of the State of which the company making the distribution is a

resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner

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 permanent establishment situated therein, or performs in that other State independent

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

which the dividends are paid is effectively connected with such permanent establishment

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

shall apply.

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

or income from the other Contracting State, that other State may not impose any tax on

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

resident of that other State or insofar as the holding in respect of which the dividends

are paid is effectively connected with a permanent establishment or a fixed base situated

in that other State, nor subject the company's undistributed profits to a tax on the

company's undistributed profits, even if the dividends paid or the undistributed profits

consist wholly or partly of profits or income arising in such other State.

Article 11

INTEREST

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

Contracting State shall be taxable only in that other State.

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 to

participate in the debtor's profits, and in particular, income from government securities

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

such securities, bonds or debentures. Penalty charges for late payment shall not be

regarded as interest for the purpose of this Article.

3. The provisions of paragraph 1 shall not apply if the beneficial owner 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 independent personal 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 case the provisions

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

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

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

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

have been agreed upon by the payer and the beneficial owner in the absence of such

relationship, the provisions of this Article shall apply only to the last-mentioned amount.

In such case, the excess part of the payments shall remain taxable according to the

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

Agreement.

Article 12

ROYALTIES

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

Contracting State shall be taxable only in that other State if such resident is the beneficial

owner of the royalties.

2. 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, films or tapes or other means

for radio or television broadcasting, any patent, trade mark, design or model, plan,

secret formula or process, or industrial, commercial or scientific equipment, or for

information concerning industrial, commercial or scientific experience (know-how).

3. The provisions of paragraph 1 shall not apply if the beneficial owner of the

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

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

situated therein, or performs in that other State independent personal 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 case the provisions of Article 7 or Article 14, as the case may be, shall apply.

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

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

having regajrd to the use, right or information for which they are paid, exceeds the

amount whith wpuld have been agreed upon by the payer and the beneficial owner in

the absence of such relationship, the provisions of this Article shall apply only to the

last-mentioned amount. In such case, the excess part of the payments shall remain

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

other provisions of this Agreement.

Article 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of

immovable property referred to in Article 6 and situated in the other Contracting State

may be taxed in that other State.

2. Gains from the alienation of shares or comparable interests in a company, the

assets of which consist wholly or principally of immovable property, may be taxed in

the Contracting State in which the assets or the principal assets of the company are

situated.

3. 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 independent personal services, including such gains from the alienation of

such a permanent establishment (alone or with the whole enterprise) or of such fixed

base, may be taxed in that other State.

4. Gains from the alienation of ships or aircraft operated in international traffic

by an enterprise of a Contracting State, or movable property pertaining to the operation

of such ships or aircraft shall be taxable only in that State.

5. Gains from the alienation of any property other than that referred to in

paragraphs 1 to 4 shall be taxable only in the Contracting State of which the alienator

is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

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

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

State except in one of the following circumstances, when such income may also be

taxed in the other Contracting State

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

State for the purpose of performing his activities. In that case only so much of the

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

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

exceeding in the aggregate 183 days in any 12-month period commencing or

ending in the calendar year concerned. In that case only so much of the income

may be taxed in that other State as is derived from his activities performed in that

other State.

2. The term "professional services" includes especially independent scientific,

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

1. Subject to the provisions of Articles 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 State unless the employment is exercised in

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

derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a

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

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

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

exceeding in the aggregate 183 days in any 12-month period commencing or

ending in the calendar year concerned, and

b) the remuneration is paid by, or 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 which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived

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

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

Article 16

DIRECTORS' FEES

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

State in his capacity as a member of the board of directors of a comlJany which is a

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

Article 17

ARTISTES AND SPORTSMEN

Notwithstanding the provisions of Articles 14 and 15, income derived by a

1. resident of a Contracting State as an entertainer, such as a theatre, motion picture,

radio or television artiste, or a musician, or as a sportsman, from his personal activities

as such exercised in the other Contracting State, may be taxed in that other State.

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

a sportsman in his capacity as such accrues not to the entertainer or sportsman 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

sportsman are exercised.

Article 18

PENSIONS

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

remuneration paid to a resident of a Contracting State in consideration of past

employment shall be taxable only in that State.

Article 19

GOVERNMENT SERVICE

1. a) Remuneration, other than a pension, paid by a Contracting State or a

local authority thereof to an individual in respect of services rendered to that

State or local authority shall be taxable only in that State.

b) However, such remuneration shall be taxable only in the other

Contracting State if the services are rendered in that State and the individual is a

resident of that State who

is a national of that State; or

(i)

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

rendering the services.

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

local authority thereof to an individual in respect of services rendered to that

State or local authority shall be taxable only in that State.

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

State if the individual is a resident of, and a national of, that State.

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

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

Contracting State or a local authority thereof.

Article 20

STUDENTS AND BUSINESS APPRENTICES

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

the purpose of his education or training and who is, or immediately before being so

present was, a resident of the other Contracting State shall be exempt from tax in the

first-mentioned State on payments received from outside that first-mentioned State for

the purposes of his maintenance, education or training.

Article 21

OTHER INCOME

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

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

State.

2. The provisions of paragraph 1 shall not apply to income, other than income

from immovable property as defined in paragraph 2 of Article 6, if the recipient of

such 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 independent personal 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 case the provisions ofArticle

7 or Article 14, as the case may be, shall apply.

Article 22

AVOIDANCE OF DOUBLE TAXATION

In the case of a resident of Croatia, double taxation shall be avoided as follows

1. Where a resident of Croatia derives income which, in accord8nce with the

provisions of this Agreement, may be taxed in Malta, Croatia shall allow as a

deduction from the tax on the income of that resident an amount equal to the

income tax paid in Malta. Such deduction shall not, however, exceed that part of

the income tax, as computed before the deduction is given, which is attributable

to the income which may be taxed in Malta.

2. In the case of a resident of Malta, double taxation shall be avoided as follows

a) 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 included in a Malta assessment income

from sources within Croatia, the Croatian tax on such income shall be allowed as

a credit against the relative Malta tax payable thereon;

b) where a company which is a resident of Croatia pays a dividend to a

resident of Malta, the Croatian tax payable by the company paying the dividend

in respect of the profits out of which such dividend is paid shall be allowed as a

credit against -the Malta tax payable in respect of that dividend.

3. Where in accordance with any provision of the Agreement income derived

by a resident of a Contracting State is exempt from tax in that State, such State may

nevertheless, in calculating the amount of tax on the remaining income of such resident,

take into account the exempted income.

Article 23

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other Contracting

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

burdensome than the taxation and connected requirements to which nationals of that

other State in the same circumstances, in particular with respect to residence, are or

may be subjected. This provision shall, notwithstanding the provisions of Article 1,

also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a

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

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

the same activities.

3. This provision shall 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.

4. Except where the provisions of paragraph 1 ofArticle 9, paragraph 4 ofArticle

11, or paragraph 4 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

shall, for the purpose of determining the taxable profits of such enterprise, be deductible

under the same conditions as if they had been paid to a resident of the first-mentioned

State.

5. Enterprises of a Contracting State, the capital of which is wholly or partly

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

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

mentioned State are or may be subjected.

6. The provisions of this Article shall, notwithstanding the provisions ofArticle

2, apply to taxes of every kind and description which are the subject of this Agreement.

Article 24

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with the provisions of

this Agreement, he may, irrespective of the remedies provided by the domestic law of

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

which he is resident or, if his case comes under paragraph 1 ofArticle 23, to that of the

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

years from the first notification of the action resulting in taxation not in accordance

with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be

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

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

a view to the avoidance of taxation which is not in accordance with the Agreement.

Any agreement reached shall be implemented notwithstanding any time limits in the

domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve

by mutual agreement any difficulties or doubts arising as to the interpretation or

application of the Agreement. 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 directly for the purpose ofreaching an agreement in the sense of the preceding

paragraphs. When it seems advisable in order to reach agreement to have an oral

exchange of opinions, such exchange may take place through a Commission consisting

of representatives of the competent authorities of the Contracting States.

Article 25

EXCHANGE OF INFORMATION

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

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

domestic laws of the Contracting States concerning taxes coveredby the Agreement

insofar as the taxation thereunder is not contrary to the Agreement. The exchange of

information is not restricted by Article 1. Any information received by a Contracting

State shall be treated as secret in the same manner as information obtained under the

domestic laws of that State and shall be disclosed only to persons or authorities

(including courts and administrative bodies) involved in the assessment or collection

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

relation to, the taxes covered by the Agreement. Such persons or authorities shall use

the information only for such purposes. They may disclose the information in public

court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on

a Contracting State the obligation

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

administrative practice of that or of the other Contracting State;

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

normal course of the administration of that or the other Contracting State;

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

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

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

Article 26

ME:MBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of

diplomatic missions or consular posts under the general rules of international law or

under the provisions of special agreements.

Article 27

ENTRY INTO FORCE

1. The Contracting States shall notify each other, through diplomatic channels,

that the intemallegal procedures necessary for the entry into force of this Agreement

have been complied with.

2. This Agreement shall enter into force thirty days after the date of receipt of

the later of the notifications referred to in paragraph 1 and its provisions shall have

effect

a) in the case of Croatia, in respect of taxes on income derived during the

taxable years beginning on or after the first day of January immediately following

the date on which the Agreement enters into force;

b) in the case of Malta, in respect of taxes on income derived during any

calendar year or accounting period, as the case may be, beginning on or after the

first day of January immediately following the date on which the Agreement enters

into force.

Article 28

DENUNCIATION

This Agreement shall remain in force indefinitely but either of the Contracting

States may, on or before the 30th day of June in any calendar year beginning after the

expiration of a period of five years from the date of its entry into force, give written

notice of denunciation to the other Contracting State through diplomatic channels. In

such event this Agreement shall cease to have effect

a) in the case of Croatia, in respect of taxes on income derived during the

taxable years beginning on or after the first day of January immediately following

the date on which the notice of denunciation is given;

b) in the case of Malta, in respect of taxes on income derived during any

calendar year or accounting period, as the case may be, beginning on or after the

first day of January immediately following the date on which the notice of

denunciation is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have

signed this Agreement.

DONE at Rome, on the 21 st day of October, 1998 ,in duplicate in the Croatian

and English languages, both texts being equally authentic.

Henry G. De Gabriele

Dr Davorin Rudolf

For the Republic of Croatia

For the Republic of Malta

PROTOCOL

At the moment of signing the Agreement between the Republic of Croatia and

Malta for the Avoidance of Double Taxation with respect to Taxes on Income, the

undersigned have agreed that the following provisions shall form an integral part of

the Agreement.

Concerning Article 10, it is understood that dividends are not subject to Croatian

tax. Should there be any change in this system or in the full imputation system presently

applied in Malta regarding the taxation of company profits in Malta and the subsequent

distribution of such profits to the company's shareholders, the Contracting States shall

consult each other to reconsider the provisions of that Article.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto, have

signed this Protocol.

Done at Rome on the 21 st day of October 1998 in duplicate in the Croatian and

English languages, both texts being equally authentic.

Dr. Davorin Rudolf

Henry C. De Gabriele

For the Republic of Malta

For the Republic of Croatia

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Reg. 3 — Double Taxation Relief (Taxes on Income) Open official source

The existing taxes to which this Agreement shall apply are in particular

a)

in the Republic of Croatia

the profit tax, and

(i)

the income tax;

(ii)

(hereinafter referred to as "Croatian tax");

b)

in the Republic of Malta

the income tax;

(i)

(hereinafter referred to as "Malta tax").

Malta Government Gazette — Legal Notice 2000 71 — Double Taxation Relief (Taxes on Income)

Reg. 4 — Double Taxation Relief (Taxes on Income) Open official source

The Agreement shall apply also to any identical or substantially similar taxes