DOUBLE TAXATION RELIEF ON TAXES ON INCOME WITH THE CZECH REPUBLIC ORDER

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH THE CZECH REPUBLIC

SUBSIDIARY LEGISLATION 123.43

DOUBLE TAXATION RELIEF ON TAXES ON

INCOME WITH THE CZECH REPUBLIC ORDER

6th June, 1997

LEGAL NOTICE 228 of 1997.

The title of this Order is Double Taxation Relief on Taxes

on Income with the Czech Republic Order.

CONVENTION

BETWEEN MALTA AND THE CZECH REPUBLIC

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

Malta and the Czech Republic, desiring to conclude a Convention for the

avoidance of double taxation and the prevention of fiscal evasion with respect to

taxes on income and on capital, have agreed as follows

ARTICLE 1

Personal Scope

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

Contracting States.

ARTICLE 2

Taxes Covered

1. This Convention shall apply to taxes on income and on capital 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 and on capital all taxes imposed

on total income, on total capital, or on elements of income or of capital including

taxes on gains from the alienation of movable or immovable property, taxes on the

total amounts of wages or salaries paid by enterprises, as well as taxes on capital

appreciation.

It is hereby declared -

(a) that the arrangements specified in the Agreement set

out in the Schedule to this Order have been made with

the Government of the Czech Republic with a view to

affording relief from double taxation in relation to the

following taxes imposed by the laws of the Czech

Republic

(i) the tax on income of individuals;

(ii) the tax on income of legal persons;

(iii) the tax on immovable property;

(b) that it is expedient that those arrangements should

have effect.

The existing taxes to which the Convention shall apply are

(a) in the Czech Republic

(i) the tax on income of individuals;

(ii) the tax on income of legal persons;

(iii) the tax on immovable property;

(hereinafter referred to as "Czech tax");

(b) in Malta

the income tax;

(hereinafter refereed to as "Malta 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 significant changes which have been made in their

respective taxation laws.

Notwithstanding the other provisions of this Article, this Convention shall

not apply to tax paid or payable in Malta in accordance with the provisions of sub-

article (13) of article 56 of the Income Tax Act, concerning the chargeable income of

any person engaged in the production of petroleum produced in Malta or any

substantially similar provision which is imposed after the date of signature of this

Convention.

ARTICLE 3

General Definitions

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

(a) the term "Czech Republic", when used in a geographical sense, means the

territory over which the Czech Republic, under the Czech legislation and in

accordance with international law, may exercise its sovereign rights;

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

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

islands of the Maltese Archipelago including the territorial waters thereof, and any

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

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

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

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

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

Czech Republic or Malta, as the context requires;

(d) the term "person" includes an individual, a company and any other body of

persons;

(e) the term "company" means any body corporate or any entity which is treated

as a body corporate for tax purposes;

(f)

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;

(g)

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;

(h) the term "international traffic" means any transport by a ship, aircraft or

road vehicle operated by an enterprise of a Contracting State, except when the ship,

aircraft or road vehicle is operated solely between places in the other Contracting

State;

(i)

the term "competent authority" means

(i)

in the case of the Czech Republic, the Minister of Finance or his

authorized representative;

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

authorized representative.

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

term not defined therein shall, unless the context otherwise requires, have the

meaning which it has under the law of that State concerning the taxes to which the

Convention applies.

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

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH THE CZECH REPUBLIC

reason of his domicile, residence, place of management or any other criterion of a

similar nature. But this term does not include any person who is liable to tax in that

State in respect only of income from sources in that State or capital situated therein.

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 solely 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 solely 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 permenent home available to him in either

State, he shall be deemed to be a resident solely 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 solely 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 solely 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" shall include 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 including an offshore drilling site.

3. The term "permanent establishment" likewise encompasses

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

supervisory activities in connection therewith, but only where such site,

project or activities continue for a period of more than nine months;

(b) the furnishing of services, including consultancy and managerial

services, by an enterprise through employees or other personnel

engaged by the enterprise for such purpose, but only where activities of

that nature continue within a Contracting State for a period or periods

aggregating more than six months within any twelve month period.

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

"permanent establishment" shall he 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 mainteance 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

advertising, for the supply of information, for scientific research or for

similar activities which have a preparatory or auxiliary character, for

the enterprise; and

(f)

the rnaintenance of a fixed place of business solely for any combination

of activities mentioned in sub-paragraphs (a) to (e), provided that the

overall activity of the fixed place of business resulting from this

combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -

other than an agent of an independent state 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 of a Contracting State shall not be deemed to have a

permanent establishment in the other Contracting State merely because it carries on

business in that other State through a broker, general commission agent or any other

agent of an independent status, provided that such persons are acting in the ordinary

course of their business. However, when the activities of such an agent are devoted

wholly or almost wholly on behalf of that enterprise, he shall not be considered an

agent of an independent status within the meaning of this paragraph.

The fact that a company which is a resident of a Contractig 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 7

Income from Immovable Property

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

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

Contracting State may be taxed in that other State.

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

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

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

and equipment used in agriculture and forestry, rights to which the provisions of

general law respecting landed property apply, usufruct of immovable property and

rights to variable or fixed payments as consideration for the working of, or the right

to work, or to explore for, mineral deposits, sources and other natural resources;

ships 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 perfomance 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 or with other associated

enterprises with which it deals.

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, and which would be deductible if the permanent establishntent were an

independent entity which paid those expenses, whether incurred in the Contracting

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.

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

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

ARTICLE 8

International Traffic

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

aircraft, or road vehicles in international traffic shall be taxable only in that State.

2. The provisions of paragraph 1 shall also apply to profits derived 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 change the profits of an enterprise in the

circumstances referred to in paragraph 2 after the expiry of the time limits provided

in its national laws.

4. The provisions of paragraph 2 shall not apply in the case of fraud, wilful

default or neglect.

ARTICLE 10

Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a

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

2. However, such dividends may also be taxed in the Contracting State of

which the company paying the dividends is a resident and according to the laws of

that State, but

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

Republic to a resident of Malta who is the beneficial owner thereof, the

Czech tax so charged shall not exceed five per cent of the gross amount

of the dividends;

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

resident of the Czech Republic who is the beneficial owner thereof, the

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

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

This paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.

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

other rights, not being debt-claims, participating in profits, as well as income from

other corporate rights which is subjected to the same taxation treatment as income

from shares by the taxation laws of the State of which the company making the

distribution is a resident.

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

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

other Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein, or performs in that other State

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

respect of which the dividends are paid is effectively connected with such permanent

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

the case may be, shall apply.

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

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

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

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

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

situated in that other State, nor subject the company’s undistributed profits to a tax

on the company’s undistributed profits, even if the dividends paid or the

undistributed profits consist wholly or partly of profits or income arising in such

other State.

ARTICLE 11

Interest

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

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

beneficial owner of that interest.

2. The term "interest" as used in this Articlc 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, bond, or debentures. Penalty charges for late payment

shall not be regarded as interest for the purpose of this Article.

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

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

Contracting State in which the interest arises, through a permanent establishment

situated therein, or performs in that other State independent personal services from a

fixed base situated therein, and the debt-claim in respect of which the interest is paid

is effectively connected with such permanent establishment or fixed base. In such

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

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

recipient who is 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

recipient 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 paid to a resident of the other

Contracting State may be taxed in that other State.

2. Howwer, such royalties may also be taxed in the Contracting State in which

they arise, and according to the laws of the State, but if the beneficial owner of the

royalties is a resident of the other Contracting State, the tax so charged shall not

exceed five per cent of the gross amount of the royalties.

3. The term "royalties" as used in this Article means payments of any kind

received as a consideration for the use of, or the right to use, any copyright of

literary, artistic or scientific work including cinematograph films, and films or tapes

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

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

for information concerning industrial, commercial or scientific experience.

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

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

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

establishment situated therein, 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.

5. Royalties shall be deemed to arise in a Contracting State when the payer is

that State itself, a political subdivision, a local authority or a resident of that State.

Where, however, the person paying the royalties, whether he is a resident of a

Contracting State or not, has in a Contracting State a permanent establishinent or a

fixed base in connection with which the liability to pay the royalties was incurred,

and such royalties are borne by such permanent establishment or fixed base, then

such royalties shall be deemed to arise in the Contracting State in which the

permanent establishment or fixed base is situated.

6. 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

Alienation of Property

1. Income or 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. Income or 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 income or

gains from the alienation of such permanent establishment (alone or with the whole

enterprise) or of such fixed base, may be taxed in that other State.

3. Income or gains from the alienation of shares or comparable interests in 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.

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

operated in international traffic by an enterprise of a Contracting State, or from the

alienation of movable property pertaining to the operation of such ships, aircraft or

road vehicles shall be taxable only in that State.

5. Income or 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. However, such income may be taxed in the other Contracting State

in the following circumstances

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

State for the purpose of performing his activities; in that case, only so

much of the income as is attributable to that fixed base may be taxed in

that other Contracting State; or

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

amounting to or exceeding in the aggregate 120 days during any twelve-

month period commencing or ending in the fiscal year concerned; in

that case, only so much of the income as is derived from the activity

exercised in the other Contracting State may be taxed in that other State.

2. In the computation of the periods mentioned in paragraph 1(b) the

provisions of paragraph 3 of Article 15 shall apply.

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

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

activities of physicians, surgeons, 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-mentioend State if all the

following conditions are fulfilled

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

exceeding in the aggregate 183 days in any twelve-month period

commencing or ending in the fiscal year concerned, and

(b) the remuneration is paid by, or on behalf of an employer who is not a

resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed

base which the employer has in the other State.

3. In the computation of the periods mentioned in paragraph 2(a), the

following days shall be included

(a) all days of physical presence including days of arrivals and departures,

and

(b) days spent outside the State of activity such as Saturdays and Sundays,

national holidays, holidays, connected business trips after which the

activity was resumed on the territory of that State.

4. The term employer mentioned in paragraph 2(b) means the person having

right on the work produced and bearing the responsibility and risk connected with

the performance of the work.

5. Notwithstanding the preceding provisions of this Article, renumeration

derived in respect of an employment exercised aboard a ship, aircraft, or road

vehicle 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 or any other similar organ

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

other State.

ARTICLE 17

Artistes and Athletes

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 an athlete, 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

an athlete in his capacity as such accrues not to the entertainer or athlete 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

athlete are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2, income derived from

such activities, as defined in paragraph 1, performed within the framework of

cultural exchange between the Governments of both States, shall be exempt from tax

in the Contracting State in which these activities are exercised.

ARTICLE 18

Pensions

1. 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.

2. Notwithstanding the provisions of paragraph 1, pensions paid and other

payments made under the social security legislation of a Contracting State 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 local

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 Statc 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 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.

4. Where salaries, values, and other similar remuneration are paid under a

development assistance programme of a Contracting State, out of funds exclusively

supplied by that State to a specialist or volunteer seconded to the other Contracting

State with the consent of that other State, such remuneration shall be taxable only in

the first-mentioned State.

ARTICLE 20

Students and Business Apprentices

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

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

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

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

for the purposes of his maintenance, education or training.

ARTICLE 21

Other Income

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

dealt with in the foregoing Articles of this 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 he, shall apply.

ARTICLE 22

Capital

1. Capital represented by inmovable property referred to in Article 6, owned by

a resident of a Contracting State and situated in the other Contracting State, may be

taxed in that other State.

2. Capital represented by 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 by 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, may be taxed in that other

State.

3. Capital represented by ships, aircraft and road vehicles operated by an

enterprise of a Contracting State in international traffic and by movable property

pertaining to the operation of such ships, aircraft and road vehicles, shall be taxable

only in that State in which the enterprise is situated.

4. All other elements of capital of a resident of a Contracting State shall be

taxable only in that State.

ARTICLE 23

Elimination of Double Taxation

1. In the case of Malta, double taxation shall be eliminated 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, where, in accordance with the provisions

of this Convention, there is included in a Malta assessment income from sources

within the Czech Republic, the Czech tax on such income shall be allowed as a credit

against the relative Malta tax payable thereon.

2. In the case of the Czech Republic, double taxation shall be eliminated as

follows

The Czech Republic, when imposing taxes on its residents, may include in the tax

base upon which such taxes are imposed the items of income or capital which

according to the provisions of this Convention may also be taxed in Malta, but shall

allow as a credit against the amount of tax computed on such a base an amount equal

to the tax paid in Malta. Such credit shall not, however, exceed that part of the Czech

tax, as computed before the credit is given, which is appropriate to the income or

capital which, in accordance with the provisions of this Convention, may be taxed in

Malta.

3. Where the Convention provides that income arising in a Contracting State

shall be relieved from tax in that State, either in full or in part, and, under the law in

force in the other Contracting State, such income is subject to tax by reference to the

amount thereof which is remitted to or received in that other State and not by

reference to the full amount thereof, then the relief to be allowed in the frrst-

mentioned State shall apply only to so much of the income as is remitted to or

received in the other State.

4. For the purposes of allowance as a credit, the tax payable in the Czech

Republic or Malta, as the context requires, shall be deemed to include the tax which

is otherwise payable in a Contracting State but has been reduced or waived by that

State under its legal provisions for tax incentives.

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 4 of

Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other

disbursements paid by an enterprise of a Contracting State to a resicient 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. Similarly, any debts of an enterprise of a

Contracting State to a resident of the other Contracting State shall, for the purpose of

determining the taxable capital of such enterprise, be deductible under the same

conditions as if they had been contracted 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 that first-

mentioned State are or may be subjected.

5. The provisions of this Arrticle shall, notwithstanding the provisions of

Article 2, apply to taxes of every kind and description 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. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic law of the Contracting States.

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

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

interpretation or application of the 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 for the purpose of reaching an agreement in the sense of the

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

an oral exchange of opinions, such exchange may take place through a Commission

consisting of representatives of the competent authorities of the Contracting States.

ARTICLE 26

Exchange of Information

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

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

the domestic laws of the Contracting States 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. Any information received by a

Contracting State shall be treated as secret in the same manner as information

obtained under the domestic laws of that State and shall be disclosed only to persons

or authorities (inclucling courts and administrative bodies) involved in the

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

determination of appeals in relation to, the taxes covered by the Convention. 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.

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH THE CZECH REPUBLIC

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

on a Contracting State the obligation

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

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).

ARTICLE 27

Members of Diplomatic Missions and Consular Posts

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.

ARTICLE 28

Entry into Force

1. The Contracting States shall notify each other that the constitutional

requirements for the entry into force of this Convention have been complied with.

2. The Convention shall enter into force on the date of the later of the

notifications referred to in paragraph 1 and its provisions shall have effect

(a) in the Czech Republic

(i)

in respect of taxes withheld at source, to amounts derived on or

after 1st January in the calendar year next following that in which

the Convention enters into force;

(ii)

in respect of other taxes on income and taxes on capital, to taxes

chargeable for any taxable year beginning on or after 1st January

in the calendar year next following that in which the Convention

enters into force;

(b) in Malta

in respect of taxes on income derived during any calendar year or

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

day of January immediately following the date on which the Convention

enters into force.

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 beginning after the expiration of a period of five years from the date of

its entry into force. In such event, the Convention shall cease to have effect

(a) in the Czech Republic

(i)

in respect of taxes withheld at source, to amounts derived on or

after 1st January in the calendar year next following that in which

the notice is given;

(ii)

in respect of other taxes on income and taxes on capital, to taxes

chargeable for any taxable year beginning on or after 1st January

in the calendar year next following that in which the notice is

given;

(b) in Malta

in respect of taxes on income derived during any calendar year or

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

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

given.

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

signed this Convention.

DONE in duplicate at Crans Montana this 21st day of June, 1996 in the English

JOHN DALLI

IVAN KO C ÁRNIK

FOR MALTA

FOR THE CZECH REPUBLIC