Communication from the Ministry of Foreign Affairs No 5 / 2017 Coll.

5

COMMUNICATION

Ministry of Foreign Affairs

The Ministry of Foreign Affairs announces that on 2 December 2015 a Treaty was signed in Santiago de Chile between the Czech Republic and the Republic of Chile to avoid double taxation and prevent tax evasion in the field of income tax and property.

The Parliament of the Czech Republic gave its assent to the Treaty and the President of the Republic ratified it.

The Treaty entered into force on 21 December 2016 pursuant to Article 29 (1) thereof and its provisions shall be implemented in accordance with points (a) and (b) of that Article.

The Czech version of the Treaty and the English text which is relevant for its interpretation are hereby published simultaneously.

TREATY

INTERI

CZECH REPUBLIC

A

THE REPUBLIC OF CHIL

ON THE TERMINATION OF DOUGH REVENUE

_

IN THE FIELD OF TAXATION FROM REVENUE AND PROPERTY

THE CZECH REPUBLIC AND THE REPUBLIC OF CHIL,

Desiring to conclude a contract to avoid double taxation and prevent tax evasion in the field of income and property taxes,

agree as follows:

SCOPE OF THE TREATY

PERSONS CONCERNING THE TREATY

This Agreement shall apply to persons resident in one or both Contracting States.

TAXES TO WHICH THE TREATY IS RELATING

1. This Treaty shall apply to income and property taxes levied on behalf of each of the Contracting States or its lower administrative departments or local authorities, whatever the method of collection.

2. All taxes levied on total income, on total assets, or on parts of income or assets, including taxes on the proceeds from the disposal of movable or immovable property, taxes on total wages or salaries paid by undertakings, as well as taxes on the increase of assets, shall be regarded as income and property taxes.

3. The current taxes to which the Treaty applies are in particular:

(a) in the Republic of Chile, taxes levied under the Income Tax Act (hereinafter referred to as "Chilean Tax"); and

(b) in the Czech Republic,

(i) income tax on natural persons;

(ii) corporation tax;

(iii) real estate tax;

(hereinafter referred to as the "Czech tax ').

4. The contract will also apply to any tax of the same or essentially similar kind and to property taxes to be imposed after the date of signature of the Treaty in addition to or instead of the current taxes. The competent authorities of the Contracting States shall communicate to each other any substantial changes to be made to their tax laws.

DEFINITIONS

GENERAL DEFINITIONS

1. For the purposes of this Treaty, unless the link requires a different interpretation:

(a) the term "Republic of Chile" means the territory of the Republic of Chile;

(b) the term "Czech Republic" refers to the territory of the Czech Republic in which, under Czech law and in accordance with international law, the sovereign rights of the Czech Republic are exercised;

(c) the terms "one Contracting State" and "the other Contracting State" indicate, as appropriate, the Czech Republic or the Republic of Chile;

(d) the term "person" includes a natural person, a company and any other association of persons;

(e) the term "company" refers to any legal person or any rightholder regarded as a legal person for taxation purposes;

(f) the terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" indicate, according to the context, an undertaking operated by a resident of one Contracting State and an undertaking operated by a resident of the other Contracting State;

(g) the term "international transport" means any transport by ship or aircraft operated by a resident of a Contracting State, except where such transport is only between points in the other Contracting State;

(h) the term "competent authority" shall mean:

(i) in the case of the Republic of Chile, the Minister of Finance or the Commissioner of the Tax Administration or their authorised representative;

(ii) in the case of the Czech Republic, the Minister of Finance or his authorised representative;

(i) the term "national" means:

(i) any natural person who is a national citizen of a Contracting State;

(ii) any legal person or association established or established under the legislation in force in a Contracting State.

2. With regard to the implementation of the Treaty at any time by any of the Contracting States, any expression which is not defined therein, unless the link requires a different interpretation, shall have the meaning which it has at that time under the legislation of that State for the purposes of the taxes to which the Treaty applies, and any meaning under the tax laws of that State shall prevail over the meaning of that State's other legislation.

RESIDENT

1. For the purposes of this Treaty, the term "resident of a Contracting State" shall mean any person who, under the law of that State, is subject to taxation in that State because of his residence, permanent residence, place of administration, place of establishment or any other similar criterion, and shall also include that State and any lower administrative department or local authority of that State. However, this term does not include any person who is subject to taxation in that State solely because of income from resources in that State or of assets placed there.

2. Where, pursuant to paragraph 1, a natural person is resident in both Contracting States, his status shall be determined as follows:

(a) it is assumed that this person is resident only in the State in which he has a permanent flat; if it has a permanent apartment in both States, it is assumed that it is only resident in the State to which it has closer personal and economic relations (centre of life interests);

(b) if it cannot be determined in which State the person has a centre of his or her life interests or if he / she does not have a permanent residence in any State, he / she shall be presumed to be resident only in the State in which he / she normally resides;

(c) if the person normally resides in both States or in none of them, he shall be presumed to be resident only in the State of which he is a national;

(d) where that person is a national of both States or none of them, the competent authorities of the Contracting States shall amend the matter by mutual agreement.

3. Where, pursuant to paragraph 1, a person other than a natural person is resident in both Contracting States:

(a) it is assumed that that person is only resident to the State of which he is a national;

(b) where a person is not a national of any State, the competent authorities of the Contracting States shall endeavour to adapt this matter by mutual agreement and to determine the way in which the Treaty is implemented in relation to such a person. In the absence of such an agreement, a person shall not be entitled to any relief or exemption provided for by the Treaty.

STANDING OPERATIONS

(1) For the purposes of this Treaty, the term "permanent establishment" shall mean a permanent place of business through which the business of the undertaking is to be carried out in whole or in part.

2. the term "permanent establishment" includes in particular:

(a) the place of management;

(b) the plant;

(c) an office;

(d) the factory;

(e) workshop; and

(f) mine, oil or gas site, quarry or any other site related to the exploration or extraction of natural resources.

3. the term "permanent establishment" also covers:

(a) a construction site or construction, assembly or installation project or supervision associated with it, where such construction site, project or surveillance lasts more than 183 days;

(b) the provision of services, including consultancy or management services, by an undertaking of one contracting State through employees or other persons hired by the undertaking for that purpose, provided that the activities of that nature persist within the territory of the other contracting State for one or more periods exceeding 183 days in total in any 12-month period.

For the purposes of calculating the time limits in this paragraph, activities carried out by an undertaking which is combined in accordance with Article 9 of this Treaty with a second undertaking shall be considered as activities carried out by an undertaking with which the undertaking is associated if the activity concerned:

(a) are essentially the same as the activities carried out there by the latter undertaking; and

(b) relate to the same project;

where such activities are not carried out simultaneously.

4. Notwithstanding the previous provisions of this Article, the term "permanent establishment 'shall not include:

(a) an establishment which is used only for the purpose of storing, issuing or delivering goods belonging to the undertaking;

(b) the supply of goods belonging to an undertaking which is maintained only for storage, display or delivery;

(c) a stock of goods belonging to an undertaking which is maintained only for the purpose of processing by another undertaking;

(d) a permanent place of activity which shall be maintained only for the purpose of purchasing goods or collecting information for the undertaking;

(e) a permanent place of activity which is maintained for an undertaking solely for the purpose of advertising, providing information, carrying out scientific research or similar activities;

provided that the activities referred to in points (a) to (e) are of a preparatory or auxiliary nature.

5. Where, notwithstanding the provisions of paragraphs 1 and 2 of this Article, a person (other than an independent representative, to whom paragraph 6 of this Article applies) acts in a Contracting State on the behalf of an undertaking and has and normally exercises the right to conclude contracts on the behalf of an undertaking, that undertaking shall be deemed to have a permanent establishment in that State in respect of all activities undertaken by that person for the undertaking, provided that the activities of that person are not limited to the activities referred to in paragraph 4, which, if they were carried out through a permanent place of business, would not be based on that permanent place of activity by a permanent establishment in accordance with the provisions of this paragraph.

6. An undertaking shall not be considered to have a permanent establishment in a Contracting State only because it carries out its business in that State through a broker, a general agent or any other independent agent, where such persons act in the course of their proper activities. However, where the undertaking and its representatives are bound in their commercial and financial relations by conditions which have been negotiated or imposed on them and which differ from those which would have been negotiated between independent undertakings, that representative shall not be considered as independent within the meaning of this paragraph.

7. The fact that a company which is a resident of one Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries out its activities in that other State (whether through a permanent establishment or otherwise) does not in itself constitute a permanent establishment of any other company.

TAXATION OF REVENUE

REVENUE FROM IMMOVABLE PROPERTY

1. Revenue received by a resident of one Contracting State from immovable property (including agricultural or forestry income) located in the other Contracting State may be taxed in that other State.

2. For the purposes of this Treaty, the term "immovable property" shall have such meaning as it may have under the law of the Contracting State in which the property is located. The term covers, in any case, real estate accessories, live and dead inventories used in agriculture and forestry, rights to which the provisions of civil law applicable to land, the right to use real estate and the right to variable or fixed payments for mining or to be authorised to mine mineral deposits, springs and other natural resources apply. Ships and aircraft shall not be considered property.

3. Paragraph 1 shall apply to revenue received from direct use, hire or any other use of immovable property.

(4) Paragraphs 1 and 3 shall also apply to income from the company's immovable property and to income from immovable property used to pursue an independent profession.

PROFIT OF UNDERTAKINGS

1. The profits of an undertaking of one Contracting State shall be subject to taxation only in that State, provided that the undertaking does not or did not carry out its activities in the other Contracting State through a permanent establishment situated there. If an undertaking carries out or carries out its activities in this way, the profits of the undertaking may be taxed in the other State, but only to the extent that they can be attributed to that permanent establishment.

2. Where an undertaking of a Contracting State carries on or carries on its activities in the other Contracting State through a permanent establishment situated there, it shall be attributed, subject to the provisions of paragraph 3, in each Contracting State of that permanent establishment, to profits which it could have achieved had it been engaged as a separate undertaking in the same or similar activities under the same or similar conditions and been wholly independent in contact with the undertaking of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, it shall be permitted to deduct costs which are deductible in accordance with national law and incurred for the purposes of a permanent establishment, including management costs and general administrative expenses thus incurred, whether they arise in the State in which the permanent establishment is situated or elsewhere.

4. Where, in a Contracting State, it is customary to determine the profits to be added to a permanent establishment on the basis of the distribution of the company's total profits by its different parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by this normal division; However, the method of division used shall be such that the result complies with the principles set out in this Article.

5. A permanent establishment shall not make any profits on the basis that it only purchased goods for the undertaking.

(6) For the purposes of the preceding paragraphs, the profits to be added to a permanent establishment shall be determined in the same way each year, unless there are sufficient grounds for otherwise.

7. Where profits include parts of income which are dealt with separately in other Articles of this Treaty, the provisions of those Articles shall be without prejudice to the provisions of this Article.

8. Nothing in this Treaty shall affect the taxation of a resident of the Czech Republic in the Republic of Chile in respect of profits attributable to a permanent establishment located in the Republic of Chile, both to first category taxes and additional taxes, but only if the first category tax is fully attributable to the calculation of the amount of tax additional.

9. Nothing in this Article shall affect any provision of the legislation of each Contracting State relating to the taxation of the income or profits of an insurance undertaking which provides any kind of insurance.

AQUATIC AND AVIATION TRANSPORT

1. The profits of a resident of a Contracting State from the operation of ships or aircraft in international transport shall be subject to taxation only in that State.

2. Profit from the operation of ships or aircraft in international transport for the purposes of this Article shall include:

(a) profits from the hire of ships and aircraft without crew; and

(b) profits from the use, maintenance or hire of containers (including container transport equipment) used for the transport of goods;

where such leasing activities or such use or maintenance, whichever case they are, are random in relation to the operation of ships or aircraft in international transport.

3. Paragraph 1 shall also apply to profits arising from participation in a pool, joint operation or an international operational organisation.

ASSOCIATED UNDERTAKINGS

1.

(a) the undertaking of one Contracting State participates, directly or indirectly, in the management, control or capital of the undertaking of the other Contracting State; or

(b) the same persons participate, directly or indirectly, in the management, control or capital of an undertaking of one Contracting State and of an undertaking of the other Contracting State;

and if, in such cases, both undertakings are bound in their commercial or financial relations by conditions which have been negotiated or imposed on them and which differ from those which would have been negotiated between independent undertakings, any profits which, if not for those conditions, would have been achieved by one of the undertakings but have not been achieved, may be included in the profits of that undertaking and subsequently taxed.

2. If one contracting State includes in the profits of the undertaking of that State - and subsequently taxed - the profits which the undertaking of the other contracting State has been taxed in that other State and the profits thus included are profits which would have been realised by the undertaking of the first State, if the conditions negotiated between the two undertakings were such as would have been agreed between the independent undertakings, the latter State shall adjust the amount of tax levied on those profits accordingly if it agrees that the adjustment made by the former State is justified, both in principle and in terms of the amount. The other provisions of this Treaty shall be taken into account in determining such an adjustment and, if necessary, the competent authorities of the Contracting States shall consult each other for that purpose.

3. It is understood that the provisions of paragraph 2 shall not apply in the case of fraud, gross negligence or conscious negligence.

DIVIDENDS

1. Dividends paid by a company resident in one Contracting State, resident in 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 which pays them is resident under the law of that State, but where the beneficial owner of dividends is resident in the other Contracting State, the tax thus imposed shall not exceed 15% of the gross amount of dividends. The provisions of this paragraph shall not affect the taxation of the profits of the company on which dividends are paid. The provisions of this paragraph shall not restrict the application of an additional tax due in the Republic of Chile, provided that the first category tax is entirely attributable to the calculation of the additional amount of tax.

3. The term "dividends" used in this Article shall refer to income from shares or other rights, with the exception of receivables, with a share in profits, as well as other income which is subject to the same tax regime as income from shares under the legislation of the State of which the company which differentiates profits or makes payments is resident.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of dividends resident in one Contracting State carries out his activity in the other Contracting State of which the dividend company is resident through a permanent establishment which is located there or where the participation for which the dividends are paid is actually linked to that permanent establishment or permanent base in that other State. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

5. Where a company which is resident in one Contracting State achieves profits or income from the other Contracting State, that other State may not tax dividends paid by the company, unless such dividends are paid to the resident of that other State or that the participation for which dividends are paid actually relates to a permanent establishment or a permanent base located in that other State, nor may it subject the company's undistributed profits to the tax on undistributed profits, even if the dividends paid or earnings distributed are wholly or partly derived from profits or income having a source in that other State.

INTEREST

1. Interest having a source in one Contracting State and paid to the 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 they have a source under the law of that State, but if the beneficial owner of the interest is resident in the other Contracting State, the tax thus imposed shall not exceed:

(a) 5% of the gross amount of interest received on loans or loans granted by banks or insurance companies;

(b) 15 per cent of the gross amount of interest in all other cases.

3. The term "interest 'used in this Article refers to income from claims of any kind, whether secured or not by a mortgage on immovable property, and in particular, income from government securities and income from bonds or bonds, as well as income which is subject to the same tax regime as income from borrowed money under the legislation of the State in which the income is sourced. The term" interest' shall not include the income referred to in Article 10.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of interest resident in a Contracting State carries out his activity in the other Contracting State in which the interest is due through a permanent establishment situated there or carries out an independent occupation in that other State from a permanent base situated there and where the claim on which the interest is paid actually relates to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

5. Interest is assumed to have a source in the Contracting State if the payer is a resident of that State. However, if the interest payer, whether or not he is resident in a Contracting State, has a permanent establishment or permanent base in the Contracting State in conjunction with which the debt on which the interest is paid has been incurred and such interest is charged to such a permanent establishment or permanent base, it is assumed that such interest shall have a source in the State in which the permanent establishment or permanent base is located.

6. Where there is a special relationship between the payer and the beneficial owner or between both of them and any other person, and the amount of interest exceeds, for any reason, the amount which the payer would have agreed with the beneficial owner if it were not for such a relationship, the provisions of this Article shall apply only to that latter amount. In this case, the amount of payments exceeding it shall be taxed in accordance with the laws of each Contracting State, taking into account the other provisions of this Treaty.

7. Where Chile agrees, in any agreement or agreement between Chile and a third State which is a member of the Organisation for Economic Cooperation and Development, to exempt interest (whether in general or in the light of certain categories of interest) having a source in Chile or to limit the rate of tax to such interest (whether in general or in the light of certain categories of interest) to a rate lower than that provided for in Article 11 (2) of this Treaty, such exemption or such lower rate shall be applied automatically (whether in general or in the light of certain categories of interest) under this Treaty as if such exemption or such a lower rate were fixed or was fixed by this Treaty, with effect from the date on which such provisions of such agreement or contracts become effective. The competent authority of Chile will inform the competent authority of the Czech Republic without delay that the conditions for implementing this provision are fulfilled.

LICENCES

1. Licensing fees having a source in one Contracting State and paid to the 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 have a source under the legislation of that State, but if the beneficial owner of the royalties is resident in the other Contracting State, the tax thus imposed shall not exceed:

(a) 5 per cent of the gross amount of licence fees for use or for the right to use any industrial, commercial or scientific establishment;

(b) 10% of the gross amount of royalties in all other cases.

3. The term "licence fees' used in this Article refers to payments of any kind received as compensation for use or as a right to use any copyright for the work of literary, artistic or scientific, including cinematographic films, or films, tapes and other means of image or sound reproduction, patent, trade mark, design or model, plan, secret formula (including payments for use or for the right to use custom software) or any other similar right or property, or for use or for the right to use industrial, commercial or scientific equipment or for information that relates to industrial, commercial or scientific experience. However, the term" licence fees' does not include revenue from the hire of ships, aircraft and containers (including container transport facilities), if they are dealt with in Article 8.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of a licence fee resident in one Contracting State carries out his activity in the other Contracting State in which the licence fee is granted, through a permanent establishment which is located there, or has an independent profession in that other State from a permanent base situated there, and where the right or property giving rise to the licence fee is actually linked to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

5. Licensing fees are assumed to have a source in a Contracting State if the payer is a resident of that State. However, where a licence fee payer, whether or not resident in a Contracting State, has a permanent establishment or permanent base in a Contracting State, in conjunction with which a licence fee has been paid, and such royalties are charged to such a permanent establishment or permanent base, those royalties shall be presumed to have a source in the State in which the permanent establishment or permanent base is located.

6. Where there is a special relationship between the payer and the beneficial owner or between both of them and any other person, and the amount of royalties exceeds, for any reason, the amount which the payer would have agreed with the beneficial owner if it were not for such a relationship, the provisions of this Article shall apply only to that last amount. In this case, the amount of payments exceeding it shall be taxed in accordance with the laws of each Contracting State, taking into account the other provisions of this Treaty.

OWN FUNDS PROFIT

(1) Profit received by a resident of one Contracting State from the disposal of immovable property situated in the other Contracting State may be taxed in that other State.

(2) Profit from the disposal of movable property which is part of the operating property of a permanent establishment which is owned by an undertaking of a Contracting State in the other Contracting State, or of movable property which belongs to a permanent base which is available to a resident of a Contracting State in the other Contracting State for the purpose of carrying out an independent occupation, including profits from the disposal of such permanent establishment (alone or together with the whole undertaking) or such permanent base, may be taxed in that other State.

3. Profit received by a resident of a Contracting State from the disposal of ships or aircraft operating in international transport or movable property used to operate such ships or aircraft shall be subject to taxation only in that Contracting State.

(4) Profit received by a resident of one Contracting State from the direct or indirect disposal of shares, comparable shares or other rights in companies resident in the other Contracting State may be taxed in that other State.

(5) Profit from the disposal of any property other than those referred to in paragraphs 1, 2, 3 and 4 shall be subject to taxation only in the Contracting State of residence of which the transferee is resident.

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1. Revenue received by a natural person resident in a Contracting State of a professional or other activity of an independent nature shall be subject to taxation only in that Contracting State. However, such revenue may also be taxed in the second Contracting State if:

(a) that person shall have a permanent base at his / her disposal in the second Contracting State in order to carry out his / her activities; in that case only that part of the income attributable to this permanent base may be taxed in that other State; or

(b) that person stays in the other Contracting State for one or more periods exceeding 183 days in total in any 12-month period beginning or ending in the relevant tax year; in that case, only that part of the income received from activities carried out in that other State may be taxed in that other State.

2. The term "free profession" shall include the particular independent activities of scientific, literary, artistic, educational or teaching and the independent activities of doctors, lawyers, engineers, architects, dentists and accountants.

EMPLOYMENT

1. Rewards received by a resident of a Contracting State for employment purposes shall be subject, subject to the provisions of Articles 16, 18 and 19, to taxation in that State only if the employment is not carried out in the other Contracting State. If there is employment there, the remuneration received may be taxed in that other State.

(2) The remuneration received by a resident of a Contracting State on the grounds of employment in the other Contracting State shall be subject, notwithstanding the provisions of paragraph 1, to taxation only in the former State where:

(a) the consignee shall stay in the other State for one or more periods not exceeding 183 days in total in any 12-month period beginning or ending in the relevant tax year; and

(b) the remuneration is paid by a person or person who is an employer and who is not a resident of the other State; and

(c) the remuneration shall not be borne by a permanent establishment or a permanent base held by the employer in the other State.

3. It is understood that the term "employer 'is of such importance as falls within the law of the Contracting State in which the employment is carried out. In any case, the term shall include the person who has the right to work done and who bears responsibility and the risk associated with the performance of the work.

4. Notwithstanding the previous provisions of this Article, remuneration received for employment carried on board a ship or aircraft operated or operated in international traffic by a resident of a Contracting State may be taxed in that State.

TANTIES

Tantiéms and other similar remuneration received by a resident of a Contracting State as a member of the Management Board or a similar body of a company resident of a second Contracting State may be taxed in that other State.

Artists and SPORTS

1. Revenue received by a resident of a Contracting State as a public performer, such as a theatre, film, radio or television artist or musician or as an athlete from such personally performed activities in the other Contracting State may be taxed in that other State, irrespective of the provisions of Articles 14 and 15.

2. Where the income from activities personally carried out by an artist or athlete does not originate from artists or athletes themselves but from other persons, that income may be taxed, irrespective of the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of an artist or athlete are carried out.

PENZE

Pensions with a source in one Contracting State and paid by a resident of the other Contracting State may be taxed in that other State. However, such pensions may also be taxed in the Contracting State in which they have a source under the legislation of that State, but if the beneficial owner of the pensions is resident in the other Contracting State, the tax thus imposed shall not exceed 15 per cent of the gross amount of pensions.

PUBLIC FUNCTIONS

1. (a) Rewards, other than pensions, paid by one Contracting State or by a lower administrative department or local authority of that State to a natural person for services rendered to that State or branch or office shall be subject to taxation only in that State.

(b) Such remuneration shall, however, be subject to taxation only in the second Contracting State where the services are demonstrated in that State and the natural person resident in that State:

(i) is a national of that State; or

(ii) it did not become a resident of that State solely for the purpose of proving these services.

2. The provisions of Articles 15, 16 and 17 shall apply to the remuneration of services shown in connection with an industrial or commercial activity carried out by a Contracting State or a lower administrative department or local authority of that State.

STUDENTI

Payments received for the purpose of paying the cost of his or her diet, education or study by a student or student who is, or immediately before his or her arrival in a Contracting State, resident of the other Contracting State and who is present in the former State only for the purposes of his or her education or studies, shall not be subject to taxation in that State provided that such payments result from sources outside that State.

OTHER REVENUE

Parts of the income of a resident of one Contracting State not covered by the previous Articles of this Treaty and having a source in the other Contracting State may also be taxed in that other State.

TAXATION OF PROPERTY

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1. Property represented by immovable property owned by a resident of one Contracting State and located in the other Contracting State may be taxed in that other State.

2. Property represented by movable property which is part of the operating property of a permanent establishment which has an undertaking of one Contracting State in the other Contracting State, or movable property which belongs to a permanent base which is available to a resident of one Contracting State in the other Contracting State for the purpose of carrying out an independent occupation, may be taxed in that other State.

3. Property represented by ships and aircraft owned and operated by a resident of a Contracting State in international transport and by movable property used to operate such ships or aircraft shall be subject to taxation only in that Contracting State.

4. All other assets of a resident of a Contracting State shall be subject to taxation only in that State.

METHODS FOR DETERMINING DOUGH REVENUE

TERMINATION OF DOUGH REVENUE

1. In the Republic of Chile, double taxation will be avoided as follows:

(a) residents of the Republic of Chile who receive income which may be subject to taxation in accordance with the provisions of this Treaty in the Czech Republic may deduct the tax thus paid against the Chilean tax due in respect of the same income, subject to the applicable provisions of the legislation of the Republic of Chile. This paragraph shall apply in respect of all the revenue referred to in this Treaty;

(b) residents of the Republic of Chile who own assets which may be taxed in accordance with the provisions of this Treaty in the Czech Republic may include the tax thus paid against the Chilean tax (if any) due in respect of the same assets.

2. In the case of a resident of the Czech Republic, double taxation will be avoided as follows:

The Czech Republic may include in the tax base on which such taxes are levied parts of income or property which may also be taxed in the Republic of Chile in accordance with the provisions of this Treaty, but may allow the amount of tax calculated on such a basis to be reduced by an amount equal to that paid in the Republic of Chile. However, the amount by which the tax will be reduced will not exceed the part of the Czech tax calculated before its reduction, which is proportional to the income or property which may be taxed in the Republic of Chile in accordance with the provisions of this Treaty.

3. If, in accordance with any provision of the Treaty, income received or property owned by a resident of a Contracting State is exempt from taxation in that State, that State may nevertheless, when calculating the amount of tax on the remaining income or assets of that resident, take account of the income or property exempted.

4. The exemption method may also be applied in a Contracting State, irrespective of the provisions of paragraphs 1 and 2 of this Article, provided that its national legislation so permits and complies with it.

SPECIAL PROVISIONS

DISCRIMINATION PROHIBITION

1. Nationals of one Contracting State shall not be subject to any taxation in the other Contracting State or to any obligations associated with it which are different or more burdensome than the taxation and associated obligations which are or may be subject to nationals of that other State, who are, in particular with regard to residency, in the same situation. This provision shall also apply to persons not resident in one or both Contracting States, irrespective of the provisions of Article 1.

2. Taxation of a permanent establishment with an undertaking of one Contracting State in the other Contracting State or of a permanent base with a resident of one Contracting State in the other Contracting State shall not be more adverse in that other State than the taxation of undertakings or residents of that other State which carry out the same activities.

3. Nothing in this article shall be construed as an undertaking by one Contracting State to admit to the residents of the other Contracting State any personal relief, rebates and reductions due to the personal condition or obligations of the family which it grants to its own residents.

4. If the provisions of Article 9 (1), Article 11 (6) or Article 12 (6) are not applied, interest, licence fees and other expenses paid by an undertaking of one Contracting State to a resident of the other Contracting State shall be deductible for the purposes of determining the taxable profits of such an undertaking on the same terms as if they had been paid to a resident of the former State. Similarly, any debts owed by an undertaking of one Contracting State to a resident of the other Contracting State shall be deductible for the purposes of determining the taxable assets of such an undertaking under the same conditions as if they had been contracted against a resident of the former State.

5. Companies which are resident in one Contracting State and whose capital is wholly or partly, directly or indirectly owned or controlled by one or more residents of the other Contracting State shall not be subject in the former State to any taxation or any obligations associated with it which are different or more burdensome than that of taxation and which are or may be subject to other similar companies resident in the former State.

(6) The term "taxation" in this Article applies only to taxes to which the Treaty applies.

SOLIDATION OF THE CASES OF THE AGREEMENT

1. Where a person considers that a measure of one or both Contracting States leads or leads to taxation which does not comply with the provisions of this Treaty, he may, notwithstanding the remedies provided for by the national law of those States, refer his case to the competent authority of the Contracting State of residence or, where his case falls within the scope of Article 24 (1), to the office of the Contracting State of which he is a national. The case must be submitted within three years of the first notification of a measure leading to taxation which does not comply with the provisions of the Treaty.

2. If the competent authority considers the objection to be justified and is not able to find a satisfactory solution itself, it shall endeavour to resolve the case by common accord with the competent authority of the other Contracting State in such a way as to avoid taxation which does not comply with the Treaty.

3. The competent authorities of the Contracting States shall endeavour by mutual agreement to resolve any difficulties or doubts which may arise in the interpretation or implementation of the Treaty.

4. The competent authorities of the Contracting States may enter into direct contact in order to reach agreement within the meaning of the preceding paragraphs.

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as may be presumed to be relevant in relation to the implementation of the provisions of this Treaty or in relation to the implementation or enforcement of national laws which apply to taxes of all kinds and names imposed on behalf of the Contracting States or their lower administrative departments or local authorities, provided that the taxation they regulate is not contrary to the Treaty. The exchange of information shall not be limited to Articles 1 and 2.

2. Any information received by a Contracting State pursuant to paragraph 1 shall be kept confidential in the same way as that obtained under the national law of that State and shall be made available only to persons or authorities (including courts and administrative offices) dealing with the assessment or collection of taxes referred to in paragraph 1, the enforcement or prosecution of such taxes, the decision on appeals in respect of such taxes or supervision. Such persons or authorities shall use this information only for this purpose. They may communicate such information in public court proceedings or in judicial decisions. Information received by a Contracting State may be used for other purposes regardless of the above, provided that such information can be used for such other purposes under the legislation of both States and that the competent authority of the supplying State has given its consent to such use.

3. In no case shall the provisions of paragraphs 1 and 2 be interpreted as imposing an obligation on the Contracting State:

(a) to implement administrative measures which would infringe the laws, regulations and administrative practices of this or of the other Contracting State;

(b) to provide information which cannot be obtained under the law or in the ordinary administrative procedure of this or of the other Contracting State;

(c) provide information which would reveal any commercial, economic, industrial, commercial or professional secrecy or commercial practice, or information the disclosure of which would be contrary to public policy.

4. Where information is requested in accordance with this Article by one Contracting State, the other Contracting State shall apply its measures aimed at obtaining information in order to obtain the information required, even if the latter does not need such information for its own tax purposes. The obligation contained in the previous sentence shall be subject to the limitations of paragraph 3, but in no case shall those restrictions be interpreted as allowing the Contracting State to refuse to provide information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be interpreted as allowing the Contracting State to refuse to provide information solely because the information is held by the bank, other financial institution, delegate or person acting on behalf or as agent or because the information relates to ownership interests in the person.

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULARIES

Nothing in this Treaty shall affect the tax privileges of members of diplomatic missions or consular posts which they have under the general rules of international law or under the provisions of specific agreements.

JOINT PROVISIONS

1. The provisions of this Treaty shall not be interpreted as restricting the Republic of Chile to impose a tax on transfers to collective investment accounts or funds (such as an existing external equity fund) which are required to be managed by a resident of the Republic of Chile and to invest in assets in the Republic of Chile.

2. For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding this paragraph, any dispute between them as to whether a measure falls within the scope of this Treaty may be submitted to the Trade in Services Council, as provided for in this paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be dealt with in accordance with paragraph 3 of Article 25 or, in the event of failure to find an agreement on the basis of this procedure, any other procedure with which both Contracting States agree.

3. Nothing in this Treaty shall affect the implementation of the existing provisions of the Chilean Foreign Investment Statute as they apply at the time of signature of this Treaty and as may be amended from time to time without amending their general principle.

4. The provisions of Articles 10, 11 and 12 shall not apply where the main objective or one of the main objectives of any person associated with the creation or transfer of the right or claim for which dividends, interest or licence fees are paid has been to obtain the benefits of those articles through such creation or transfer.

5. Where an undertaking of a Contracting State receives income from a second Contracting State and that income is attributable to a permanent establishment which it has in a third State or jurisdiction, tax advantages which would otherwise have been applied under other provisions of the Treaty shall not apply to that income if the total tax actually paid in respect of such income in the former Contracting State and in a third State or jurisdiction is less than 60 per cent of the tax which would have been imposed in the former Contracting State if the income had been obtained or received by that State and would not be attributable to a permanent establishment in a third State or jurisdiction. Any income subject to the provisions of this paragraph shall be subject to tax in accordance with the provisions of national law of the other State, irrespective of any other provision of the Treaty.

6. Recognising that the main purpose of the Treaty is to avoid international double taxation, the Contracting States agree that, where the provisions of the Treaty are applied in such a way that benefits which were not considered or intended are granted, the competent authorities of the Contracting States shall recommend, in accordance with the case-resolution procedure under the agreement in Article 25, the specific arrangements to be made in the Treaty. Furthermore, the Contracting States have agreed that any such recommendation will be quickly considered and discussed in order, if necessary, to adapt the Treaty.

FINAL PROVISIONS

INSTALLATION IN FORCE

1. The Contracting States shall notify each other by diplomatic means of the completion of the procedures required by the legislation for the entry into force of this Treaty. This Treaty shall enter into force on the day of such notification.

2. The provisions of this Treaty shall be implemented:

(a) in the Republic of Chile,

(i) in respect of taxes on income obtained and the amounts paid, credited to the account, made available or accounted for as cargo on 1 January in the calendar year following the year in which this Treaty enters into force or later; and

(ii) in respect of property taxes, provided that and to the extent that such taxes are levied by the Republic of Chile, taxes levied in respect of assets owned on or after 1 January of the calendar year following the year in which this Treaty enters into force, or, if such taxes are imposed at that time, on or after 1 January of the year in which property taxes were introduced in the Republic of Chile; and

(b) in the Czech Republic,

(i) in respect of taxes levied by withholding at source, to revenue paid or credited on 1 January in the calendar year following the year in which this Treaty enters into force or later; and

(ii) as regards other taxes on income and property, income or property for each tax year beginning on or after 1 January in the calendar year following the year in which this Treaty enters into force.

3. As regards the exchange of information which is the subject of Article 1 of the DFL No 707 and Article 154 of the DFL No 3 in Chile, paragraph 5 of Article 26 shall apply to information on banking transactions carried out from 1 January 2010.

TERMINATION OF APPLICATION

1. This Treaty shall remain in force until it has been terminated by a Contracting State. Each Contracting State may, by diplomatic means, terminate the Treaty by giving notice at least six months before the end of each calendar year following a period of five years from the date of entry into force of the Treaty.

2. The provisions of this Treaty shall cease to apply:

(a) in the Republic of Chile,

(i) in respect of taxes on income obtained and amounts paid, credited to an account made available or booked as cargo on 1 January in the calendar year following the year in which the statement was given or later; and

(ii) in respect of property taxes, provided that and to the extent that such taxes are levied by the Republic of Chile, taxes levied on property owned on or after 1 January in the calendar year following the year in which the statement was given; and

(b) in the Czech Republic,

(i) in respect of taxes levied by withholding at source, on income paid or credited on 1 January in the calendar year following the year in which the statement was given or later; and

(ii) as regards other income and property tax, income or property for each tax year beginning on or after 1 January in the calendar year following the year in which the resignation was given.

3. Requests for information received before 1 January of the calendar year following the year of termination shall be treated in accordance with the terms of this Treaty. The Contracting States shall remain bound by the obligations relating to the confidentiality of information as set out in Article 26 as regards any information received under this Treaty.

To prove the signature, duly empowered to do so, they signed this contract.

Dane in Santiago de Chile on 2 December 2015 in two original copies, Czech, Spanish and English, all texts authentic. In the event of any difference, the English text will be decisive.

For the Czech Republic

Josef Rychtar

Exceptional and authorised

Ambassador of the Czech Republic

in the Republic of Chile

For the Republic of Chile

Rodrigo Osvaldo Valdés Pulido

Minister for Finance

Communication from the Ministry of Foreign Affairs on the Treaty between the Czech Republic and the Republic of Chile on the prevention of double taxation and the prevention of tax evasion in the field of income and property taxes

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