Double Taxation Relief (Taxes on Income)

L.N. 322 of 2012

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income)

(The Swiss Confederation) 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) (The Swiss Confederation) Order, 2012.

(Article 2)

BETWEEN

MALTA

AND

THE SWISS CONFEDERATION

FOR THE AVOIDANCE OF DOUBLE TAXATION

WITH RESPECT TO TAXES ON INCOME

THE GOVERNMENT OF MALTA

AND

THE SWISS FEDERAL COUNCIL

DESIRING to conclude a Convention for the avoidance of double taxation

with respect to taxes on income

HAVE AGREED as follows

Article 1

Persons covered

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

the Contracting States.

Article 2

Taxes covered

1. This Convention shall apply to taxes on income imposed on behalf of a

Contracting State or of its political subdivisions or 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 gains from the alienation of

movable or immovable property and taxes on the total amounts of wages or

salaries paid by enterprises.

It is hereby declared

(a) that the arrangements specified in the Convention

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

Swiss Confederation with a view to affording relief from double

taxation in relation to the following taxes imposed by the laws

of the Swiss Confederation

the federal, cantonal and communal taxes on

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income (total income, earned income, income from capital,

industrial and commercial profits, capital gains, and other

taxes on income);

(b) that it is expedient that those arrangements should

have effect;

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

July 2012.

The existing taxes to which the Convention shall apply are

a)

in Malta

the income tax;

(hereinafter referred to as "Malta tax");

in Switzerland

the federal, cantonal and communal taxes on income (total

income, earned income, income from capital, industrial and

commercial profits, capital gains, and other items of income);

(hereinafter referred to as "Swiss tax").

The Convention shall apply also to any identical or substantially similar

taxes which are imposed after the date of signature of the Convention in addition

to, or in place of, the existing taxes. The competent authorities of the Contracting

States shall notify each other of any substantial changes which have been made in

their respective taxation laws.

The Convention shall not apply to taxes withheld at the source on prizes

Article 3

General definitions

1. For the purposes of this Convention, unless the context otherwise

(i) 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, as well as any area of the sea-bed, its sub-soil

and the superjacent water column adjacent to the territorial waters,

wherein Malta exercises sovereign rights, jurisdiction, or control in

accordance with international law and its national law, including its

legislation relating to the exploration of the continental shelf and

exploitation of its natural resources;

(ii) the term "Switzerland" means the Swiss Confederation;

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

mean Malta or Switzerland, as the context requires;

the term "person" includes an individual, a company and any

other body of persons;

the term "company" means any body corporate or any entity that

is treated as a body corporate for tax purposes;

the terms "enterprise of a Contracting State" and "enterprise of

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

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

the other Contracting State;

f)

the term "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;

the term "competent authority" means

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

his authorised representative;

(ii) in the case of Switzerland, the Director of the Federal Tax

Administration or his authorised representative;

h)

the term "national" means

(i)

any individual possessing the nationality of a Contracting

State;

(ii) any legal person, partnership or association deriving its

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

2. As regards the application of the Convention 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 law of that State for the

purposes of the taxes to which the Convention 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 4

Resident

1. For the purposes of this Convention, the term "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, and also includes that State and any political subdivision or local

authority thereof. This term, however, 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 only of the State in which he

has a permanent home available to him; if he has a permanent home available

to him in both States, he shall be deemed to be a resident only 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 permanent home available to him in either

State, he shall be deemed to be a resident only 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 only 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 only of the State in which its place of effective management is situated.

Article 5

Permanent establishment

1. 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 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. A building site, a construction or installation project, or a supervisory

activity in connection therewith, constitutes a permanent establishment but only

where such site, project or activity continues for a period of more than nine

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 activity of a preparatory or

auxiliary character;

f)

the maintenance of a fixed place of business solely for any

combination of activities mentioned in subparagraphs 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.

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.

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, mineral deposits, sources and other natural resources; ships

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 determine the

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

apportionment of the total profits of the enterprise to its various parts, nothing in

paragraph 2 shall preclude that Contracting State from determining 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 determined 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 Convention, then the provisions of those Articles shall not

be affected by the provisions of this Article.

Article 8

Shipping and air transport

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, if it agrees that the

adjustment made by the first-mentioned State is justified both in principle and as

regards the amount, shall 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 Convention 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 if the beneficial owner of the dividends is a resident of the other

Contracting State, the following provisions shall apply

a)

Where dividends are paid by a company which is a resident of

Malta, Malta tax on the gross amount of the dividends shall not exceed the

tax chargeable on the profits out of which the dividends are paid.

b)

In the case of dividends paid by a company which is a resident of

Switzerland, the Swiss tax so charged shall, without affecting the taxation of

the Swiss company in respect of profits out of which the dividends are paid,

not exceed

(i)

15 per cent of the gross amount of the dividends.

(ii) Notwithstanding the provisions of clause (i), dividends

beneficially owned by a company (other than a partnership) the capital

of which is wholly or partly divided into shares and which holds

directly at least 10 per cent of the capital of the company paying the

dividends for at least one year, shall be exempt from Swiss tax if both

companies are subject to and not exempted from the taxes covered by

Article 2, if under any double taxation agreement with any third State

neither company is a resident for tax purposes of such third State and if

both companies have adopted the form of a limited company.

3. The term "dividends" as used in this Article means income from shares,

mining shares, founders’ 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 may be taxed in that other State.

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 beneficial owner

of the interest is a resident of the other Contracting State, the tax so charged shall

not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a

Contracting State and paid to a resident of the other Contracting State who is the

beneficial owner thereof shall be taxable only in that other State to the extent that

such interest is paid

a)

in connection with the sale on credit of any industrial,

commercial or scientific equipment;

b)

in connection with the sale on credit of any merchandise by one

enterprise to another enterprise; or

c)

on any loan of whatever kind granted by a bank.

4. Notwithstanding the provisions of paragraph 2, interest arising in a

Contracting State and paid between associated companies shall not be subject to

taxation in the source State, where

such companies are affiliated by a direct minimum holding of 10

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per cent for at least one year or are both held by a third company which has

directly a minimum holding of 10 per cent both in the capital of the first

company, and in the capital of the second company for at least one year; and

such companies are resident in a Contracting State; and

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under any double taxation agreement with any third State none of

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the companies is resident in that third State; and

all companies are subject to corporation tax without being

-

exempted in particular on interest payments and each adopts the form of a

limited company.

5. 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. The term "interest"

shall not include any item which is treated as a distribution under the provisions of

Article 10. Penalty charges for late payment shall not be regarded as interest for

the purpose of this Article.

6. The provisions of paragraphs 1, 2, 3 and 4 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.

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

is 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 or a fixed base in connection with which the

indebtedness on which the interest is paid was incurred, and such interest is borne

by such permanent establishment or fixed base, then such interest shall be deemed

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

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 Convention.

Article 12

Royalties

1. Royalties arising in a Contracting State and beneficially owned by a

resident of the other Contracting State shall be taxable only in that other State.

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 cinematograph films, any patent, trade

mark, design or model, plan, secret formula or process, or for information

concerning industrial, commercial or scientific experience.

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

exceeds the amount which would have been agreed upon by the payer and the

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 Convention.

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 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.

3. Gains derived by an enterprise of a Contracting State from the

alienation of ships or aircraft operated in international traffic or from movable

property pertaining to the operation of such ships or aircraft, shall be taxable only

in that State.

4. Gains from the alienation of shares of the capital stock of a company the

assets of which consist directly or indirectly principally of immovable property

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

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 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 unless he has a fixed base regularly available to him in

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

such a fixed base, the income may be taxed in the other State but only so much of

it as is attributable to that fixed base.

2. The term "professional services" includes especially independent

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

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 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

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

other State.

Article 17

Artistes and sportsmen

1. Notwithstanding the provisions of Articles 14 and 15, income derived

by a 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.

3. Paragraphs 1 and 2 shall not apply to income from activities performed

by entertainers or sportsmen if such income is derived directly or indirectly in a

substantial manner from public funds of the other Contracting State, a political

subdivision or a local authority thereof.

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)

Salaries, wages and other similar remuneration, other than a

pension, paid by a Contracting State or a political subdivision or a local authority

thereof to an individual in respect of services rendered to that State or subdivision

or authority shall be taxable only in that State.

b)

However, such salaries, wages and other similar 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

(i)

is a national of that State; or

(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 political subdivision or a local authority thereof to an individual in

respect of services rendered to that State or subdivision or 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, 17 and 18 shall apply to salaries,

wages and other similar remuneration, and to pensions, in respect of services

rendered in connection with a business carried on by a Contracting State or a

political subdivision or a local authority thereof.

Article 20

Students and business apprentices

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

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

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

or training receives for the purpose of his maintenance, education or training shall

not be taxed in that State, provided that such payments arise from sources outside

that State.

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

Article 22

Elimination of double taxation

In the case of Malta, double taxation shall be avoided as follows

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

credit against Malta tax in respect of foreign tax (which shall not affect the general

principles hereof), where in accordance with the provisions of this Convention,

there is included in a Malta assessment income from sources within Switzerland,

the Swiss tax on such income shall be allowed as a credit against the relative Malta

tax payable thereon.

2. In the case of Switzerland, double taxation shall be avoided as follows

a)

Where a resident of Switzerland derives income, other than

income falling under Article 10, which, in accordance with the provisions of

this Convention, may be taxed in Malta, Switzerland shall, subject to the

provisions of subparagraph b), exempt such income from tax but may, in

calculating tax on the remaining income of that resident, apply the rate of tax

which would have been applicable if the exempted income had not been so

exempted. However, such exemption shall apply to gains referred to in

paragraph 4 of Article 13 only if actual taxation of such gains in Malta is

demonstrated.

b)

Where a resident of Switzerland derives interest which, in

accordance with the provisions of Article 11, may be taxed in Malta,

Switzerland shall allow, upon request, a relief to such resident. The relief

may consist of

(i) a deduction from the tax on the income of that resident of

an amount equal to the tax levied in Malta in accordance with the

provisions of Article 11; such deduction shall not, however, exceed that

part of the Swiss tax, as computed before the deduction is given, which

is appropriate to the income which may be taxed in Malta; or

(ii)

a lump sum reduction of the Swiss tax; or

(iii) a partial exemption of such interest from Swiss tax, in any

case consisting at least of the deduction of the tax levied in Malta from

the gross amount of the interest.

Switzerland shall determine the applicable relief and regulate the

procedure in accordance with the Swiss provisions relating to the carrying

out of international conventions of the Swiss Confederation for the avoidance

of double taxation.

(c)

Notwithstanding the provisions of sub-paragraph a) of paragraph

2 hereof, a company which is a resident of Switzerland and which derives

dividends from a company which is a resident of Malta shall be entitled, for

the purposes of Swiss tax with respect to such dividends, to the same relief

which would be granted to the company if the company paying the dividends

were a resident of Switzerland.

Article 23

Anti-abuse

Notwithstanding the provisions of any Article of this Convention, no

reduction or exemption of tax provided for in this Convention shall be granted in

connection with a wholly artificial arrangement. An arrangement shall not be

considered as wholly artificial if it corresponds to an economic reality, which is in

particular reflected by a business or management activity. This provision does not

prevent the application of Articles 24 (Non-discrimination), 25 (Mutual agreement

procedure) and 26 (Exchange of information) of the Convention.

Article 24

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. 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.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 8 of

Article 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.

4. 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.

5. The provisions of this Article shall apply to the taxes which are the

subject of this Convention.

Article 25

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 Convention, 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 a resident or, if his case comes under paragraph 1

of Article 24, 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 Convention.

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 Convention.

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 Convention. They may also consult together for

the elimination of double taxation in cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicate

with each other directly, including through a joint commission consisting of

themselves or their representatives, for the purpose of reaching an agreement in the

sense of the preceding paragraphs.

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

Convention or to the administration or enforcement of the domestic laws

concerning taxes covered by the Convention insofar as the taxation thereunder is

not contrary to the Convention. The exchange of information is not restricted by

Article 1.

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, or the determination of

appeals in relation to the taxes referred to in paragraph 1. 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. Notwithstanding

the foregoing, information received by a Contracting State may be used for other

purposes when such information may be used for such other purposes under the

laws of both States and the competent authority of the supplying State authorises

such use.

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. In

order to obtain such information, the tax authorities of the requested Contracting

State, if necessary to comply with its obligations under this paragraph, shall have

the power to enforce the disclosure of information covered by this paragraph,

notwithstanding paragraph 3 or any contrary provisions in its domestic laws.

Article 27

Members of diplomatic missions and consular posts

1. Nothing in this Convention 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.

2. Notwithstanding the provisions of Article 4, an individual who is a

member of a diplomatic mission, consular post or permanent mission of a

Contracting State which is situated in the other Contracting State or in a third State

shall be deemed, for the purposes of this Convention, to be a resident of the

sending State if

a)

in accordance with international law he is not liable to tax in the

receiving Contracting State in respect of income from sources outside that

State situated outside that State, and

b)

he is liable in the sending State to the same obligations in relation

to tax on his total income as are residents of that State.

3. The Convention shall not apply to international organisations, to organs

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

consular post or permanent mission of a third State, being present in a Contracting

State and not treated in either Contracting State as residents in respect of taxes on

income.

Article 28

Entry into force

1. Each Contracting State shall notify to the other, through diplomatic

channels, the completion of the procedures required by its law for the bringing into

force of this Convention. The Convention shall enter into force on the date on

which the later of those notifications has been received.

2. The provisions of the Convention shall have effect

a)

with respect to taxes withheld at source on amounts paid or

credited on or after the first day of January of the year next following the

year of the entry into force of the Convention;

b)

with respect to other taxes for taxation years beginning on or after

the first day of January of the year next following the year of the entry into

force of the Convention;

c)

with respect to Article 26 of the Convention, for requests for the

exchange of information made on or after the date of entry into force to

information that relates to taxable periods beginning on or after the first day

of January of the year that follows the entry into force of this Convention.

3. The exchange of letters of 30 March 1987 between the Government of

Malta and the Swiss Federal Council relative to the taxation of profits derived

from the operation of ships or aircraft in international traffic shall cease to have

effect on the date on which this Convention shall take effect.

Article 29

Termination

This Convention shall remain in force until terminated by a Contracting

State. Either Contracting State may terminate the Convention, through diplomatic

channels, by giving notice of termination at least six months before the end of any

calendar year. In such event, the Convention shall cease to have effect

a)

in respect of taxes withheld at source on amounts paid or credited

on or after the first day of January of the calendar year next following that in

which the notice was given;

b)

in respect of other taxes for taxation years beginning on or after

the first day of January of the calendar year next following that in which the

notice was given.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have

signed this Convention.

Done in duplicate at Rome this 25th February 2011, in the English and

French languages, both texts being equally authentic.

For the Government of Malta

For the Swiss Federal Council

Leslie Agius

Bernardino Regazzoni

PROTOCOL

Malta

and

The Swiss Confederation

Have agreed at the signing at Rome on the 25th February 2011 of the

Convention between the two States for the avoidance of double taxation with

respect to taxes on income upon the following provisions which shall form an

integral part of the said Convention.

1. ad Article 7

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

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

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

permanent establishment shall not be determined on the basis of the total amount

received by the enterprise, but shall be determined only on the basis of that part of

the total receipts which is attributable to the actual activity of the permanent

establishment for such sales or business.

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

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

when the enterprise has a permanent establishment, the profits of such permanent

establishment shall not be determined on the basis of the total amount of the

contract, but shall be determined only on the basis of that part of the contract

which is effectively carried out by the permanent establishment in the State where

the permanent establishment is situated.

The profits related to that part of the contract which is carried out by the head

office of the enterprise shall be taxable only in the State of which the enterprise is

a resident.

2. ad Article 7 and 12

It is understood that payments received as a consideration for the use of, or

the right to use industrial, commercial or scientific equipment constitute business

profits covered by Article 7.

3. ad Articles 18 and 19

It is understood that the terms “pensions” and “pension” as used in Articles

18 and 19, respectively, cover periodic as well as lump sum payments paid under a

pension arrangement.

4. ad Article 25

In the event that pursuant to an Agreement or Convention concluded with

another third country after the date of signature of this Convention, Malta agrees to

introduce an arbitration clause, the following paragraph 5 will be added to the

present Convention and shall apply as from the date in which such Agreement or

Convention enters into force

“5.

Where,

a) under paragraph 1, a person has presented a case to the

competent authority of a Contracting State on the basis that the actions

of one or both of the Contracting States have resulted for that person in

taxation not in accordance with the provisions of this Convention, and

b) the competent authorities are unable to reach an agreement

to resolve that case pursuant to paragraph 2 within three years from the

presentation of the case to the competent authority of the other

Contracting State,

any unresolved issues arising from the case shall be submitted to arbitration

if the person so requests. These unresolved issues shall not, however, be

submitted to arbitration if a decision on these issues has already been

rendered by a court or administrative tribunal of either State. Unless a person

directly affected by the case does not accept the mutual agreement that

implements the arbitration decision or the competent authorities and the

persons directly affected by the case agree on a different solution within six

months after the decision has been communicated to them, the arbitration

decision shall be binding on both Contracting States and shall be

implemented notwithstanding any time limits in the domestic laws of these

States. The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of this paragraph.

The Contracting States may release to the arbitration board, established

under the provisions of this paragraph, all information which is necessary for

carrying out the arbitration procedure. The members of the arbitration board

shall be subject to the limitations of disclosure described in paragraph 2 of

Article 26 with respect to the information so released.”

5. ad Article 26

It is understood that

a)

an exchange of information will only be requested once the

requesting Contracting State has exhausted all regular sources of information

available under the internal taxation procedure.

b)

the tax authorities of the requesting State shall provide the

following information to the tax authorities of the requested State when

making a request for information under Article 26 of the Convention

(i) the name and address of the person(s) under examination or

investigation and, if available, other particulars facilitating that persons

identification, such as date of birth, marital status, tax identification number;

(ii)

the period of time for which the information is requested;

(iii) a statement of the information sought including its nature

and the form in which the requesting State wishes to receive the

information from the requested State;

(iv) the tax purpose for which the information is sought;

(v) the name and address of any person believed to be in

possession of the requested information.

c)

It is understood that the standard of “foreseeable relevance” is

intended to provide for exchange of information in tax matters to the widest

possible extent and, at the same time, to clarify that the Contracting States

are not at liberty to engage in “fishing expeditions” or to request information

that is unlikely to be relevant to the tax affairs of a given taxpayer. While

subparagraph 5 b) contains important procedural requirements that are

intended to ensure that fishing expeditions do not occur, clauses (i) through

(v) of subparagraph 5 b) nevertheless are not to be interpreted in order to

frustrate effective exchange of information.

d)

It is further understood that Article 26 of the Convention shall not

commit the Contracting States to exchange information on an automatic or a

spontaneous basis.

e)

It is understood that in case of an exchange of information, the

administrative procedural rules regarding taxpayers’ rights provided for in

the requested Contracting State remain applicable before the information is

transmitted to the requesting Contracting State. It is further understood that

this provision aims at guaranteeing the taxpayer a fair procedure and not at

preventing or unduly delaying the exchange of information process.

6. Where under any provision of this Convention income or profits from a

source within Switzerland is relieved from Swiss tax and, under the laws in force

in Malta, a resident, in respect of such income or profits, is subject to tax by

reference to the amount thereof which is remitted or received in Malta and not by

reference to the full amount thereof, then the relief to be allowed under the

Convention in Switzerland shall apply only to so much of the income or profits as

are remitted to or received in Malta.

Done in duplicate at Rome this 25th February 2011, in the English and

French languages, both texts being equally authentic.

For the Government of Malta

For the Swiss Federal Council

Leslie Agius

Bernardino Regazzoni

EXCHANGE OF NOTES

Ministry of Foreign Affairs

Malta

The Ministry of Foreign Affairs of Malta presents its compliments to the

Federal Department of Foreign Affairs of the Swiss Confederation and has the

honour to refer to the Convention between Malta and the Swiss Confederation for

the avoidance of double taxation with respect to taxes on income signed in Valletta

on 18 December 2008.

Following the signature of the said Convention the two sides agreed that

there should be some important modifications to the text and that it would be

preferable to sign a new Convention in replacement of the 2008 one.

The new Convention that is being signed today between the respective

Ambassadors reflects the changes that were necessary and which are agreed to by

both countries.

This Note and the Swiss Government’s reply thereto shall therefore confirm

that the Convention signed today replaces the Convention signed in 2008 which is

thereby abrogated.

The Ministry of Foreign Affairs of Malta avails itself of this opportunity to

renew to the Federal Department of Foreign Affairs of the Swiss Confederation the

assurance of its highest consideration.

25th February 2011

The Federal Department of Foreign Affairs

Berne

Federal Department of Foreign Affairs FDFA

Swiss Confederation

The Federal Department of Foreign Affairs presents its compliments to the

Ministry of Foreign Affairs of Malta and has the honour to acknowledge receipt of

the Ministry’s note dated 25th February 2011 reading as follows

“Exchange of Notes

The Ministry of Foreign Affairs of Malta presents its compliments to the

Federal Department of Foreign Affairs of the Swiss Confederation and has the

honour to refer to the Convention between Malta and the Swiss Confederation for

the avoidance of double taxation with respect to taxes on income signed in Valletta

on 18 December 2008.

Following the signature of the said Convention the two sides agreed that

there should be some important modifications to the text and that it would be

preferable to sign a new Convention in replacement of the 2008 one.

The new Convention that is being signed today between the respective

Ambassadors reflects the changes that were necessary and which are agreed to by

both countries.

This Note and the Swiss Government’s reply thereto shall therefore confirm

that the Convention signed today replaces the Convention signed in 2008 which is

thereby abrogated.

The Ministry of Foreign Affairs of Malta avails itself of this opportunity to

renew to the Federal Department of Foreign Affairs of the Swiss Confederation the

assurance of its highest consideration.”

The Department has the honour to confirm that the Convention between the

Swiss Confederation and Malta for the avoidance of double taxation with respect

to taxes on income, signed in Rome on 25th February 2011, replaces the

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

signed between the two countries on 18 December 2008, which is thereby

abrogated.

The Department avails itself of this opportunity to renew to the Ministry the

assurances of its highest consideration.

Berne, 2nd March 2011

€2.43