DOUBLE TAXATION RELIEF ON TAXES ON INCOME WITH THE REPUBLIC OF LITHUANIA ORDER

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH THE REPUBLIC OF LITHUANIA

SUBSIDIARY LEGISLATION 123.76

DOUBLE TAXATION RELIEF ON TAXES ON

INCOME WITH THE REPUBLIC OF LITHUANIA

ORDER

2nd February, 2004

LEGAL NOTICE 337 of 2004, as modified by S.L.123.183 * .

The title of this order is the Double Taxation Relief on

Taxes on Income with the Republic of Lithuania Order.

CONVENTION BETWEEN THE GOVERNMENT OF MALTA

AND THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME

The Government of Malta and the Government of the Republic of Lithuania,

Desiring to conclude a Convention for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income, have agreed as follows

Article 1

PERSONS COVERED

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

Contracting States.

Article 2

TAXES COVERED

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

Contracting State or of its 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.

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 Republic of Lithuania with a view to affording

relief from double taxation in relation to the following

taxes imposed by the laws of the Republic of

Lithuania

(i)

the tax on profits of legal persons (juridiniu

asmenu pelno mokestis);

(ii) the tax on income of natural persons (fiziniu

asmenu pajamu mokestis);

(b) that it is expedient that those arrangements should

have effect;

(c) that the Convention has entered into force on the 2nd

February, 2004.

*https://cfr.gov.mt/en/inlandrevenue/itu/Documents/Malta%20-%20Lithua-

nia%20DTA%20(synthesised%20text).pdf

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

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The existing taxes to which the Convention shall apply are in particular

(a) in Lithuania

(i)

the tax on profits of legal persons (juridiniu asmenu pelno

mokestis);

(ii) the tax on income of natural persons (fiziniu asmenu pajamu

mokestis);

(hereinafter referred to as "Lithuanian tax");

(b) in Malta

the income tax;

(hereinafter referred 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.

Article 3

GENERAL DEFINITIONS

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

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

the geographical sense, means the territory of the Republic of Lithuania

and any other area adjacent to the territorial sea of the Republic of

Lithuania within which under the laws of the Republic of Lithuania and

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in accordance with international law, the rights of Lithuania may be

exercised with respect to the sea bed and its sub-soil and their natural

resources;

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

superjacent water column adjacent to the territorial waters, wherein the

Republic of 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;

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

Lithuania 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 "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;

(h) the term "competent authority" means

(i)

in Lithuania, the Minister of Finance or his authorised

representative;

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

representative;

(i)

the term "national" means

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person, partnership, association or other entity 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, place of incorporation or

any other criterion of a similar nature, and also includes that State and any 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.

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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, the competent authorities of the

Contracting States shall endeavour to settle the question by mutual agreement. In the

absence of such agreement, for the purposes of the Convention, the person shall not

be entitled to claim any benefits provided by this Convention.

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. 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 six months;

(b) the furnishing of services, including consultancy services, by an

enterprise of a Contracting State through employees or other personnel

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

that nature continue 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 be deemed not to include

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(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 other activity of a preparatory or

auxiliary character;

(f)

the maintenance 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.

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.

However, when the activities of such an agent are devoted wholly or almost wholly

on behalf of that enterprise, he will 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 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

provisions of this Convention relating to immovable property shall apply also to

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, any option or similar right to acquire immovable property,

usufruct of immovable property and rights to variable or fixed payments as

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consideration for the working of, or the right to work, or to explore for, mineral

deposits, sources and other natural resources. Ships, boats 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. Where the ownership of shares or other corporate rights in a company

entitles the owner of such shares or corporate rights to the enjoyment of immovable

property held by the company, the income from the direct use, letting, or use in any

other form of such right to enjoyment may be taxed in the Contracting State in which

the immovable property is situated.

5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from

immovable property of an enterprise and to income from immovable property used

for the performance of independent personal services.

Article 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in

that State unless the enterprise carries on business in the other Contracting State

through a permanent establishment situated therein. If the enterprise carries on

business as aforesaid, the profits of the enterprise may be taxed in the other State but

only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a

Contracting State carries on business in the other Contracting State through a

permanent establishment situated therein, there shall in each Contracting State be

attributed to that permanent establishment the profits which it might be expected to

make if it were a distinct and separate enterprise engaged in the same or similar

activities under the same or similar conditions and dealing wholly independently

with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be

allowed as deductions expenses which are incurred for the purposes of the

permanent establishment, including executive and general administrative expenses

so incurred, whether in the State in which the permanent establishment is situated or

elsewhere.

4. Insofar as it has been customary in a Contracting State to determine the

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

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

paragraph 2 shall preclude that Contracting State from determining the profits to be

taxed by such an apportionment as may be customary; the method of apportionment

adopted shall, however, be such that the result shall be in accordance with the

principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the

mere purchase by that permanent establishment of goods or merchandise for the

enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to

the permanent establishment shall be determined by the same method year by year

unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in

other Articles of this Convention, then the provisions of those Articles shall not be

affected by the provisions of this Article.

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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.

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 which is a resident of

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

Lithuanian tax so charged shall not exceed

(i)

5 per cent of the gross amount of the dividends if the beneficial

owner is a company (other than a partnership) which holds

directly at least 25 per cent of the capital of the company paying

the dividends;

(ii) 15 per cent of the gross amount of the dividends in all other cases;

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

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

on the gross amount of the dividends shall not exceed that chargeable on

the profits out of which the dividends are paid.

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

profits out of which the dividends are paid.

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 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, derived and beneficially owned by the Government of the other

Contracting State, including its local authorities, the Central Bank or any financial

institution wholly owned by that Government, or interest derived on loans

guaranteed by that Government shall be exempt from tax in the first-mentioned

State.

4. 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 income which is treated as a dividend under the provisions of Article 10.

Penalty charges for late payment shall not be regarded as interest for the purpose of

this Article.

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial

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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.

6. 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.

7. 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 paid to a resident of the other

Contracting State may be taxed in that other State.

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

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

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

exceed 10 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

and other means of image or sound reproduction for radio or television broadcasting,

any patent, trade mark, design or model, plan, secret formula or process, or for the

use of, or the right to use, 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

oth er C ont racti ng State in whi ch t he r oyal ties ari se, t hroug h a perm anen t

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 a

resident of that State. Where, however, the person paying the royalties, whether he is

a resident of a Contracting State or not, has in a Contracting State a permanent

establishment or a fixed base in connection with which the liability to pay the

royalties was incurred, and such royalties are borne by such permanent

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establishment or fixed base, then such royalties shall be deemed to arise in the 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 or shares or comparable interests in a company the assets of which

consist directly or indirectly mainly of such property 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 operating ships or

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

international traffic or movable property pertaining to the operation of such ships or

aircraft, shall be taxable only in that State.

4. Gains from the alienation of any property other than that referred to in

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

alienator is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by an individual who is 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. If an individual who is a resident of a

Contracting State has no such a fixed base but he stays in the other Contracting State

for a period or periods exceeding in the aggregate 183 days in any twelve month

period commencing or ending in the fiscal year concerned, he shall be deemed to

have a fixed base regularly available to him in that other State and the income that is

derived from his activities referred to above that are performed in that other State

shall be 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.

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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 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. 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 remuneration 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 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. The provisions of paragraphs 1 and 2 shall not apply to income derived from

activities exercised in a Contracting State by an entertainer or a sportsman if the visit

to that State is wholly or mainly supported by public funds of one or both of the

Contracting States or local authorities thereof. In such case, the income shall be

taxable only in the Contracting State of which the entertainer or sportsman is a

resident.

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Article 18

PENSIONS AND SOCIAL SECURITY PAYMENTS

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 local authority thereof to an individual

in respect of services rendered to that State 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

local authority thereof to an individual in respect of services rendered to

that State 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 local authority

thereof.

Article 20

STUDENTS

A student, an apprentice or a trainee 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 purpose of his maintenance, education or training.

Article 21

OFFSHORE ACTIVITIES

1. The provisions of this Article shall apply notwithstanding the provisions of

Articles 4 to 20 of this Convention.

2. For the purposes of this Article, the term "offshore activities" means

activities carried on offshore in a Contracting State in connection with the

exploration or exploitation of the sea bed and sub-soil and their natural resources

situated in that State.

3. A person who is a resident of a Contracting State and carries on offshore

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activities in the other Contracting State shall, subject to paragraph 4, be deemed to

be carrying on business in that other State through a permanent establishment or a

fixed base situated therein.

4. The provisions of paragraph 3 shall not apply where the offshore activities

are carried on for a period or periods not exceeding in the aggregate 30 days in any

twelve month period. For the purposes of this paragraph

(a) offshore activities carried on by a person who is associated with another

person shall be deemed to be carried on by the other person if the

activities in question are substantially the same as those carried on by

the first-mentioned person, except when those activities are carried on

at the same time as its own activities;

(b) a person shall be deemed to be associated with another person if one is

controlled directly or indirectly by the other, or both are controlled

directly or indirectly by a third person or third persons.

5. Salaries, wages and other similar remuneration derived by a resident of a

Contracting State in respect of an employment connected with offshore activities in

the other Contracting State may, to the extent that the duties are performed offshore

in that other State, be taxed in that other State. However, such remuneration shall be

taxable only in the first-mentioned State if the employment is carried on for an

employer who is not a resident of the other State and for a period or periods not

exceeding in the aggregate 30 days in any twelve month period.

6. Gains derived by a resident of a Contracting State from the alienation of

(a) exploration or exploitation rights; or

(b) property situated in the other Contracting State which is used in

connection with the offshore activities carried on in that other State; or

(c) shares deriving their value or the greater part of their value directly or

indirectly from such rights or such property or from such rights and

such property taken together;

may be taxed in that other State.

In this paragraph the term "exploration or exploitation rights" means rights to

assets to be produced by offshore activities carried on in the other Contracting State,

or to interests in or to the benefit of such assets.

Article 22

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. However, such items of income, arising in the other Contracting State, may

also be taxed in that other State.

2. The provisions of paragraph 1 shall not apply to income, other than income

from immovable property as defined in paragraph 2 of Article 6, if the recipient of

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

Contracting State through a permanent establishment situated therein, or performs in

that other State independent personal services from a fixed base situated therein, and

the right or property in respect of which the income is paid is effectively connected

with such permanent establishment or fixed base. In such case the provisions of

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

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WITH THE REPUBLIC OF LITHUANIA

Article 23

ELIMINATION OF DOUBLE TAXATION

1. In the case of a resident of Lithuania, double taxation shall be eliminated as

follows

Where a resident of Lithuania derives income which, in accordance with this

Convention, may be taxed in Malta, unless a more favourable treatment is provided

in its domestic law, Lithuania shall allow as a deduction from the tax on the income

of that resident an amount equal to the income tax paid thereon in Malta. Such

deduction shall not, however, exceed that part of the income tax in Lithuania, as

computed before the deduction is given, which is attributable to the income which

may be taxed in Malta.

2. In the case of a resident 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 Lithuania, the Lithuanian tax on such income shall be allowed as a credit

against the relative Malta tax payable thereon.

3. For the purpose of paragraphs 1 and 2 the terms "income tax paid thereon in

Malta" and "the Lithuanian tax on such income" shall for the first five years during

which this Convention is applicable, be deemed to include the Malta tax or the

Lithuanian tax which would have been paid but which has been reduced or waived

under incentive provisions of the Malta law or the Lithuanian law designed to

promote economic development to the extent that reduction or exemption is granted

for profits from industrial or manufacturing activities or from agriculture, fishing or

tourism provided that in the case of application of paragraph 1 the activities are

carried out within Malta and in the case of application of paragraph 2 the activities

are carried out within Lithuania.

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 7 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 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

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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

firstmentioned State are or may be subjected.

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

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 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 (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 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.

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

administrative practice of that or of the other Contracting State;

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(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

LIMITATION OF BENEFITS

1. Where under any provision of this Convention any income is relieved from

tax in a Contracting State and, under the law in force in the other Contracting State,

a person, in respect of that income, is subject to tax by reference to the amount

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

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

Convention in the first-mentioned Contracting State shall apply only to so much of

the income as is taxed in the other Contracting State.

2. The provisions of this Convention shall not apply to persons enjoying a

special fiscal treatment by virtue of the laws or the administrative practice of either

one of the Contracting States which are identified in a Protocol to this Convention.

Neither shall they apply to income derived from such persons by a resident of the

other Contracting State, nor to shares or other rights in such persons owned by such

a resident.

3. Notwithstanding any other provision of this Convention, a resident of a

Contracting State shall not receive the benefit of any reduction in or exemption from

taxes provided for in this Convention by the other Contracting State if the main

purpose or one of the main purposes of the creation or existence of such resident or

any person connected with such resident was to obtain the benefits under this

Convention that would not otherwise be available.

Article 28

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 29

ENTRY INTO FORCE

1. The Governments of the Contracting States shall notify each other, through

diplomatic channels, that the legal 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 Lithuania

(i)

in respect of taxes withheld at source, on income derived on or

after the first day of January in the calendar year next following

the year in which the Convention enters into force;

(ii) in respect of other taxes on income, for taxes chargeable for any

fiscal year beginning on or after the first day of January in the

calendar year next following the year in which the Convention

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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 30

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 written 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 Lithuania

(i)

in respect of taxes withheld at source, on income derived on or

after the first day of January in the calendar year next following

the year in which the notice has been given;

(ii) in respect of other taxes on income, for taxes chargeable for any

fiscal year beginning on or after the first day of January in the

calendar year next following the year in which the notice has been

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, duly authorised thereto, have signed this

Convention.

Done in duplicate at Vilnius this 17th day of May 2001, in the English and

Lithuanian languages, both texts being equally authentic.

JOE BORG

ANTANAS VALIONIS

For the Government of Malta

For the Government of the

Republic of Lithuania

PROTOCOL

At the signing of the Convention between the Government of the Republic of

Lithuania and the Government of Malta for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income (hereinafter referred to

as "the Convention") the undersigned have agreed upon the following provisions

which form an integral part of the Convention.

1. With reference to paragraph 3 of Article 4

It is understood that under the domestic legislation in Lithuania, a company may

only be considered resident for tax purposes if it is incorporated in Lithuania. Should

such legislation be changed to provide for tax residence to be established also on the

basis of the place of effective management of a company, then where a company is

considered to be a resident of both Contracting States, it shall be deemed to be a

resident only of the Contracting State in which its place of effective management is

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situated. This provision shall be applicable from the date from which the said change

in legislation shall have effect.

2. With reference to paragraph 1 of Article 7

It is understood that profits of an enterprise of a Contracting State derived from

the sale of goods or merchandise in the other Contracting State of the same or similar

kind as those sold, or from other business activities carried on in the other

Contracting State of the same or similar kind as those effected, through a permanent

establishment situated in that other State may be considered attributable to that

permanent establishment if it is established that such sales or activities were

structured in a manner intended to avoid taxation in that other State.

3. With reference to paragraph 3 of Article 7

It is understood that the expenses to be allowed as deductions by a Contracting

State shall include only expenses that are deductible under the domestic laws of that

State.

4. With reference to paragraph 2 of Article 27 it is understood that

(a) in the case of Lithuania, there is no legislation or administrative

practice under which persons may enjoy special fiscal treatment;

(b) in the case of Malta, the persons who enjoy a special fiscal treatment are

the following

(i)

persons entitled to a special tax benefit under the Malta Financial

Services Authority Act, except for those persons who opt to be

subject to the normal provisions of the Income Tax Act (Cap. 123)

and of the Income Tax Management Act; or

(ii) persons who and to the extent to which under the provisions of the

Merchant Shipping Act, are not subject to tax on the profits

derived from the operation of ships in international traffic; or

(iii) persons entitled to any special tax benefit in respect of

distributions by a trust subject to the provisions of the Trusts Act

given that a trust as laid down in that Act is not vested with legal

personality and therefore cannot benefit under this Convention in

its own right;

(c) if any law substantially similar to those indicated in sub-paragraph (b)

of this paragraph is enacted by either Contracting State and it is agreed

by the competent authorities of the Contracting States that it be included

within the terms of paragraph 2 of Article 27, persons entitled to any

special tax benefit thereunder shall likewise be excluded from the

provisions of this Convention.

In witness whereof, the undersigned, duly authorised thereto, have signed this

Protocol.

Done in duplicate at Vilnius this 17th day of May 2001, in the English and

Lithuanian languages, both texts being equally authentic.

JOE BORG

ANTANAS VALIONIS

For the Government of Malta

For the Government of the

Republic of Lithuania