Confederation) (Amendment) Order, 2021

L.N. 198 of 2021

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income) (The Swiss

Confederation) (Amendment) Order, 2021

IN EXERCISE of the powers conferred by article 76 of the

Income Tax Act, the Minister for Finance and Employment has made

the following order:-

The title of this order is the Double Taxation Relief (Taxes

on Income) (The Swiss Confederation) (Amendment) Order, 2021 and

it shall be read and construed as one with the Double Taxation Relief

2012. (Taxes on Income) (The Swiss Confederation) Order, 2012, hereinafter

referred to as "the principal order".

(Article 2)

PROTOCOL BETWEEN MALTA AND THE SWISS

CONFEDERATION AMENDING THE CONVENTION OF 25

FEBRUARY 2011 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 Protocol to amend the Convention of 25

February 2011 between Malta and the Swiss Confederation for the

Avoidance of Double Taxation with Respect to Taxes on Income

(hereinafter "the Convention");

Have agreed as follows

ARTICLE I

The preamble of the Convention shall be deleted and replaced by

the following

"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;

Desiring to further develop their economic relationship and

to enhance their cooperation in tax matters;

Intending to eliminate double taxation with respect to taxes

on income without creating opportunities for non-taxation or

reduced taxation through tax evasion or avoidance (including

through treaty-shopping arrangements aimed at obtaining reliefs

provided in this Convention for the indirect benefit of residents

of third States);

Have agreed as follows:".

ARTICLE II

1. The existing paragraph 7 of Article 7 "Business Profits" of

the Convention shall be renumbered as paragraph 8.

2. The following new paragraph 7 shall be added to Article 7

of the Convention

"7. A Contracting State shall make no adjustment to the

profits that are attributable to a permanent establishment of an

enterprise of one of the Contracting States after five (5) years

from the end of the taxable year in which the profits would have

been attributable to the permanent establishment. The provisions

of this paragraph shall not apply in the case of fraud, gross

negligence or wilful default.".

ARTICLE III

1. Paragraph 2 of Article 9 "Associated Enterprises" of the

Convention shall be deleted and replaced by the following

"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 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.".

2. The following new paragraph 3 shall be added to Article 9

"Associated Enterprises" of the Convention

"3. A Contracting State shall not include in the profits of

an enterprise, and tax accordingly, profits that would have

accrued to the enterprise but by reason of the conditions referred

to in paragraph 1 have not so accrued, after five (5) years from

the end of the taxable year in which the profits would have

accrued to the enterprise. The provisions of this paragraph shall

not apply in the case of fraud, gross negligence or wilful

default.".

ARTICLE IV

Article 23 "Anti-abuse" of the Convention shall be deleted and

replaced by the following

"Article 23

Entitlement to benefits

Notwithstanding the other provisions of this Convention, a

benefit under this Convention shall not be granted in respect of

an item of income if it is reasonable to conclude, having regard

to all relevant facts and circumstances, that obtaining that benefit

was one of the principal purposes of any arrangement or

transaction that resulted directly or indirectly in that benefit,

unless it is established that granting that benefit in these

circumstances would be in accordance with the object and

purpose of the relevant provisions of this Convention.".

ARTICLE V

The first sentence of paragraph 1 of Article 25 "Mutual

Agreement Procedure" of the Convention shall be deleted and replaced

by the following

"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

either Contracting State.".

ARTICLE VI

1. Each of the Contracting States shall notify to the other via

diplomatic channels the completion of the procedures required by its

law for the bringing into force of this Protocol.

2. The Protocol shall enter into force on the date of the receipt

of the later of these notifications and shall thereupon have effect

(a) in the case in respect of taxes withheld at source, for

amounts paid or credited on or after the first day of January of

the year next following the date on which the Protocol enters into

force;

(b) in respect of other taxes, for taxation years beginning

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

date on which the Protocol enters into force.

It is hereby declared

(a) that the amendments to the principal order, as

specified in the Protocol set out in the Schedule to this order

(hereinafter referred to as "the Protocol"), have been made with

the Swiss Confederation;

(b) that it is expedient that those amendments should

have effect following the entry into force of the Protocol and in

accordance with the relevant provisions of the Protocol;

(c) that the Protocol shall enter into force on such date as

may be announced by notice in the Gazette.

Notwithstanding the provisions of paragraph 2, the

amendments made by Article II and Article III paragraph 2 of this

Protocol, shall have effect from the date of entry into force of this

Protocol, without regard to the taxable period to which the matter

relates.

In witness whereof the undersigned, duly authorised thereto,

have signed this Protocol.

Done in duplicate at Rome this 16 July 2020 in the French and

English languages, both texts being equally authentic.

For the Government of Malta

For the Swiss

Federal

Council

Carmel Vassallo

Rita Adam

€0.45