Double Taxation Relief (Taxes on Income) (Republic of Poland) (republicofpoland)

L.N. 14 of 2012

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income) (Republic of Poland)

(Amendment) Order, 2012

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

Tax Act, the Minister of Finance, the Economy and Investment has

made the following order:-

This title of this Order is the Double Taxation Relief

(Taxes on Income) (Republic of Poland) (Amendment) Order, 2012

and this Order shall be read and construed as one with the Double

Taxation Relief (Taxes on Income) (Republic of Poland) Order,

hereinafter referred to as "the principal Order".

(Article 2)

PROTOCOL

BETWEEN

THE GOVERNMENT OF MALTA

AND

THE GOVERNMENT OF THE REPUBLIC OF POLAND

amending the Agreement between the Government of Malta and the Government

of the Republic of Poland for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with Respect to Taxes on Income,

signed at Valetta on the 7th day of January 1994

The Government of Malta and the Government of the Republic of Poland

desiring to conclude a Protocol amending the Agreement between the Government

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

Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on

Income, signed at Valetta on the 7th day of January 1994 (hereinafter referred to as

"the Agreement"),

Have agreed as follows

ARTICLE 1

Paragraph 5 of Article 2 of the Agreement shall be deleted.

ARTICLE 2

Article 3 of the Agreement shall be amended as follows

(1) sub-paragraph (d) of paragraph 1 thereof shall be deleted and

replaced by the following

"(d) the term "person" includes an individual, a company, a

trust and any other body of persons;";

(2) paragraph 2 thereof

shall be deleted and replaced by the

following

"2. As regards the application of this Agreement at any time

by a Contracting State, any term not defined therein shall, unless the

context otherwise requires, have the meaning that it has at that time

under the laws of that State for the purposes of the taxes to which

Agreement applies, any meaning under the applicable tax laws of that

State prevailing over a meaning given to the term under other laws of

that State.".

ARTICLE 3

Article 5 of the Agreement shall be amended as follows

(1) sub-paragraph (g) of paragraph 2 thereof shall be deleted and

replaced by the following

"(g) a building site or construction or assembly or installation

project, where such site or project continues for more than twelve

months.";

(2) paragraph 4 thereof shall be deleted.

ARTICLE 4

Paragraph 4 of Article 6 of the Agreement shall be deleted and replaced by

the following

"4. The provisions of paragraphs 1 and 3 shall also apply to the

income from immovable property of an enterprise.".

ARTICLE 5

Paragraph 4 of Article 7 of the Agreement shall be deleted.

ARTICLE 6

In Article 8 of the Agreement immediately after paragraph 3 there shall be

added the following paragraph 4

"4. For the purposes of this Article, profits derived from the

operation of ships or aircraft in international traffic include profits derived

from the rental of ships or aircraft if such ships or aircraft are operated in

international traffic or if such rental profits are incidental to other profits

described in paragraph 1 of this Article. However, such profits do not include

profits from leasing ships or aircraft on a bare boat charter basis except when

it is an ancillary activity of an enterprise engaged in the international

operation of ships or aircraft.".

ARTICLE 7

Paragraph 2 of Article 9 of the Agreement shall be deleted.

ARTICLE 8

Article 10 of the Agreement shall be amended as follows

(1) paragraph 2 thereof shall be deleted and replaced by the

following

"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 the State, but

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

Poland to a resident of Malta, Poland shall exempt from tax the

dividends if the beneficial owner of such dividends is a company

resident in Malta that holds directly at least 10 per cent of the

capital of the company paying the dividends on the date the

dividends are paid and has done so or will have done so for an

uninterrupted 24-month period in which that date falls;

(b) except as provided in subparagraph (a), the tax so

charged by Poland shall not exceed 10 per cent of the gross

amount of the dividends where the beneficial owner of the

dividends is a resident of Malta;

(c) where the dividends are paid by a company which is a

resident of Malta to a resident of Poland which 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.";

(2) paragraphs 4 and 5 thereof shall be deleted and replaced by the

following

"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 and the holding in respect of which the

dividends are paid is effectively connected with such permanent

establishment. In such a case the provisions of Article 7 shall apply.

It is hereby declared

(a)

that the amendments to the principal Order, as

specified in the Schedule to this Order, have been made with the

Government of the Republic of Poland with a view to affording

relief from double taxation and preventing fiscal evasion in

relation to the following taxes imposed by the laws of the

Republic of Poland

(i)

the personal income tax;

(ii)

the corporate income tax;

(b) that it is expedient that those amendments should

have effect;

(c)

that the Protocol specified in the Schedule to this

order has entered into force on the 22 November 2011.

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

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.";

(3) the following paragraph 6 shall be added immediately after

paragraph 5

"6. The benefits of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with

the creation or assignment of the shares or other rights in respect of

which the dividend is paid to take advantage of this Article by means of

that creation or assignment.".

ARTICLE 9

Article 11 of the Agreement shall be amended as follows

(1) paragraph 2 thereof shall be deleted and replaced by the following

"2. However, such interest may also be taxed in the

Contracting State in which it arises and according to the laws of that

State, but if the recipient is the beneficial owner of the interest the tax so

charged shall not exceed 5 per cent of the gross amount of the interest.";

(2) paragraphs 5 and 6 thereof shall be deleted and replaced by the

following

"5. The provisions of paragraphs 1 and 2 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, and the debt-

claim in respect of which the interest is paid is effectively connected

with such permanent establishment. In such case the provisions of

Article 7 shall apply.

Interest shall be deemed to arise in a Contracting State

when the payer is that State itself, a political subdivision, a local

authority 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 establishment 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

shall be deemed to arise in the State in which the permanent

establishment is situated.";

(3) the following paragraph 8 shall be added immediately after

paragraph 7

"8. The benefits of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with

the creation or assignment of the debt-claim in respect of which the

interest is paid to take advantage of this Article by means of that

creation or assignment.".

ARTICLE 10

Article 12 of the Agreement shall be amended as follows

(1) paragraphs 2, 3, 4 and 5 thereof shall be deleted and replaced by

the following

"2. However, such royalties may also be taxed in the

Contracting State in which they arise and according to the laws of that

State, but if the recipient is the beneficial owner of the royalties the tax

so charged shall not exceed 5 per cent of the gross amount of the

royalties.

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, patent, trade mark, design or model, plan,

secret formula or process, or for the use of, or the right to use any

industrial, commercial, or scientific equipment or for information

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

the term shall also include payments of any kind related to

cinematograph films, and films or tapes for radio or television

broadcasting.

4. The provisions of paragraphs 1 and 2 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 and the right

or property in respect of which the royalties are paid is effectively

connected with such permanent establishment. In such case the

provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State

when the payer is that State itself, a political subdivision, a local

authority 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 establishment in connection with

which the liability to pay the royalties was incurred, and such royalties

are borne by such permanent establishment, then such royalties shall be

deemed to arise in the State in which the permanent establishment is

situated.";

(2) the following paragraph 7 shall be added immediately after

paragraph 6

"7. The benefits of this Article shall not apply if it was the

main purpose or one of the main purposes of any person concerned with

the creation or assignment of the rights in respect of which the royalties

are paid to take advantage of this Article by means of that creation or

assignment.".

ARTICLE 11

Article 13 of the Agreement shall be deleted and replaced by the following

"ARTICLE 13

Capital Gains

1. Gains from the alienation of immovable property, as defined in

paragraph 2 of Article 6, may be taxed in the Contracting State in which such

property is situated.

2. Gains derived by a resident of a Contracting State from the

alienation of shares deriving more than 50 per cent of their value directly or

indirectly from immovable property situated in the other Contracting State

may be taxed in that other State.

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, including such gains

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

the whole enterprises) may be taxed in that other State.

4. Gains from the alienation of ships, aircraft or road vehicles

operated in international traffic or movable property pertaining to the

operation of such means of transportation shall be taxable only in the

Contracting State in which the place of effective management of the

enterprise is situated.

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

to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of

which the alienator is a resident.".

ARTICLE 12

Article 14 of the Agreement shall be deleted.

ARTICLE 13

Paragraph 2 of Article 15 of the Agreement shall be deleted and replaced by

the following

"2. Notwithstanding the provisions of paragraph 1, salaries, wages

and other similar 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 twelve month

period commencing or ending in the fiscal 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 which the employer has in the other State.".

ARTICLE 14

Article 21 of the Agreement shall be deleted and replaced by the following

"ARTICLE 21

Students

Payments which a student, pupil 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 State solely for

the purpose of that individual’s education or training receives for the purpose

of that individual’s maintenance, education or training shall not be taxed in

that State, provided that such payments arise from sources outside that

State.".

ARTICLE 15

Paragraph 2 of Article 22 of the Agreement shall be deleted and replaced by

the following

"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 and the right or property in respect of which

the income is paid is effectively connected with such permanent

establishment. In such case, the provisions of Article 7 shall apply.".

ARTICLE 16

Article 23 of the Agreement shall be amended as follows

(1) paragraph 1 thereof shall be deleted and replaced by the

following

"1.

In the case of Poland, double taxation shall be avoided as

follows

(a) where a resident of Poland derives income which, in

accordance with the provisions of this Agreement may be taxed in

Malta, Poland shall, subject to the provisions of sub-paragraph

(b), exempt such income from tax;

(b) where a resident of Poland derives income or capital

gains which, in accordance with the provisions of Articles 10, 11,

12 or 13, may be taxed in Malta, Poland shall, subject to the

provision of subparagraph (c), allow as a deduction from the tax

on the income or capital gains of that resident an amount equal to

the tax paid in Malta. Such deduction shall not, however, exceed

that part of the tax, as computed before the deduction is given,

which is attributable to such income or capital gains derived from

Malta;

(c) a deduction, granted according to the provision of

subparagraph (b), to a company which is a resident of Poland and

which derives dividends from a company which is a resident of

Malta shall not, for the purposes of Polish tax with respect to such

dividends, exceed 10 per cent of the gross amount of the dividend;

(d) where in accordance with any provision of this

Agreement, income derived by a resident of Poland is exempt

from tax in Poland, Poland may nevertheless, in calculating the

amount of tax on the remaining income of such resident, take into

account the exempted income.";

(2)

paragraphs 3 and 4 thereof shall be deleted.

ARTICLE 17

Article 26 of the Agreement shall be deleted and replaced by the following

"ARTICLE 26

Exchange of Information

1. The competent authorities of the Contracting States shall

exchange such information as is foreseeably relevant for carrying out the

provisions of this Agreement or to the administration or enforcement of the

domestic laws concerning taxes of every kind and description imposed on

behalf of the Contracting States, or of their political subdivisions or local

authorities, insofar as the taxation thereunder is not contrary to the

Agreement. The exchange of information is not restricted by Articles 1 and

2.

2. Any information received under paragraph 1 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) concerned with

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

the determination of appeals in relation to the taxes referred to in paragraph

1, or the oversight of the above. 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.

3. In no case shall the provisions of paragraphs 1 and 2 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 of 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).

4. If information is requested by a Contracting State in accordance

with this Article, the other Contracting State shall use its information

gathering measures to obtain the requested information, even though that

other State may not need such information for its own tax purposes. The

obligation contained in the preceding sentence is subject to the limitations of

paragraph 3 but in no case shall such limitations be construed to permit a

Contracting State to decline to supply information solely because it has no

domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to

permit a Contracting State to decline to supply information solely because

the information is held by a bank, other financial institution, nominee or

person acting in an agency or a fiduciary capacity or because it relates to

ownership interests in a person.".

ARTICLE 18

Each of the Contracting States shall notify in writing through diplomatic

channels to the other the completion of the procedures required by its law for the

bringing into force of this Protocol. The Protocol shall enter into force on the date

of receipt of the latter of the notifications referred to above and shall have effect in

both Contracting States

(a)

in respect of the taxes withheld at source - to amounts of income

derived on or after the first of January of the calendar year next following the

year in which the Protocol enters into force;

(b) in respect of other taxes on income, to such taxes chargeable for

any taxable year beginning on or after the first of January of the calendar

year next following the year in which the Protocol enters into force.

In witness whereof, the undersigned, duly authorized thereto, have signed

this Protocol.

Done in duplicate at Warsaw, this 6th day of April 2011 in the English and

Polish languages, all two texts being equally authentic.

For the Government of

For the Government of

Malta

the Republic of Poland

Tonio Borg

Radoslaw Sikorski

B

B

€1.08