DOUBLE TAXATION RELIEF (TAXES ON INCOME) (THE SWISS CONFEDERATION) ORDER (theswissconfederation)

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE SWISS CONFEDERATION)

SUBSIDIARY LEGISLATION 123.136

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE SWISS CONFEDERATION) ORDER

28th September, 2012

LEGAL NOTICE 322 of 2012, as amended by Legal Notice 198 of 2021.

This title of this Order is the Double Taxation Relief (Taxes

on Income) (The Swiss Confederation) Order.

Amended by

L.N. 198 of 2021.

(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;

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 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

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 in a

Article 3

General definitions

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

a)

(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;

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;

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. 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.

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 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.

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 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

o n t h e c om pa n y’s u n d i s t r ib u t e d p r o f it s , e v e n i f t h e d i v i de n ds pa i d o r t he

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 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

-

under any double taxation agreement with any third State none of 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.

8. 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

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

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

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.

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

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 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 either Contracting State. 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

r e s o l v e b y m u t u a l a g r e e m e n t a n y d i ff i c u l t i e s o r d o u b t s a r i s i n g a s t o t h e

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

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE SWISS CONFEDERATION)

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

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

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.

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.

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.

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.

T h e n e w C o n v e n t i o n t h a t i s b e i n g s i g n e d t o d a y b e t w e e n t h e re s p e c t i v e

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