Decree of the Minister of Foreign Affairs No. 134 / 1976 Coll.
Decree of the Minister for Foreign Affairs on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Finland on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
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Effective from 24.07.1976
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134
DECLARATION
Minister for Foreign Affairs
of 29 September 1976
on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Finland on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
On 31 January 1975, the Treaty was signed in Helsinki between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Finland to avoid double taxation and prevent tax evasion in the field of income and property taxes. The Treaty was approved by the Federal Assembly of the Czechoslovak Socialist Republic and ratified by the President of the Republic.
Pursuant to Article 30 of the Treaty, the Treaty entered into force on 24 July 1976.
The Czech translation of the Agreement is announced simultaneously.
First Deputy Minister:
Krajčir v. r.
TREATY
between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Finland on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
Government of the Czechoslovak Socialist Republic and Government of the Republic of Finland,
Desiring to conclude a contract to avoid double taxation and prevent tax evasion in the field of income and property taxes,
agree as follows:
Persons covered by the contract
This Treaty shall apply to persons residing or having their registered office in one or both Contracting States.
Taxes covered by the contract
1. This Agreement shall apply to income and property taxes levied on each Contracting State, its public-law local corporations or its local authorities, whatever the method of collection.
2. Income and property taxes shall be regarded as taxes levied on total income, on all or individual items of income or assets, including taxes on profits arising from the disposal of movable or immovable property, taxes on the amount of wages paid by undertakings and taxes on the increase of value.
3. The current taxes covered by the contract are:
(a) Finland:
(i) State income and property tax,
(ii) municipal tax
(iii) church tax, and
(iv) tax on seafarers
(hereinafter referred to as "Finnish tax ').
(b) in Czechoslovakia:
(i) profit payment and profit tax,
(ii) payroll tax,
(iii) income tax on literary and artistic activities,
(iv) agricultural tax,
(v) population income tax,
(vi) domestic tax,
(vii) the capital contribution, and
(viii) payroll tax
(hereinafter referred to as "Czechoslovak Tax ').
4. The contract will also apply to all identical or substantially similar taxes which will be imposed upon signature of the contract in addition to or in place of current taxes. The competent authorities of the Contracting States shall notify each other of any significant changes to be made to their respective tax laws.
General definitions
1. In this Treaty, unless the link requires a different interpretation:
(a) "Finland" shall mean the Republic of Finland; used in the geographical sense denotes the territory of the Republic of Finland and any area adjacent to the territorial waters of the Republic of Finland over which, under Finnish law and in accordance with international law, the rights of Finland relating to the research and exploitation of the natural resources of the seabed and its subsoil may be exercised; as regards municipal tax, this term does not include the county of Aland.
b) The term "Czechoslovakia" refers to the Czechoslovak Socialist Republic.
(c) The terms "one Contracting State" and "the other Contracting State" refer to Finland or Czechoslovakia as relevant.
(d) The term "person" includes natural persons, companies and any other association of persons.
(e) The term "company" shall refer to any legal person or substance considered to be a legal entity for tax purposes.
(f) The terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" shall refer to an undertaking operated by a person resident or domiciled in one Contracting State or, where appropriate, an undertaking operated by a person domiciled or domiciled in the other Contracting State.
(g) The term "members" shall mean:
(i) all natural persons who are nationals of a Contracting State;
(ii) all legal persons, companies and associations established under the law in force in a Contracting State.
(h) The term "international transport" shall mean any transport carried out by a ship or aircraft operated by an undertaking the head office of which is situated in a Contracting State, unless the ship or aircraft is used only between places situated in the other Contracting State.
(i) The term "competent authority" shall mean:
(i) in the case of Finland, the Ministry of Finance or its authorised representative;
(ii) in the case of Czechoslovakia, the Minister of Finance of the Czechoslovak Socialist Republic or his authorised representative.
2. Any term which is not otherwise defined shall have a meaning for the application of this Treaty by the Contracting State which is addressed to it by the legislation of that Contracting State governing taxes which are the subject of this Treaty, unless the link requires a different interpretation.
Tax domicile
1. For the purposes of this Treaty, the term "resident or domiciled person 'shall mean any person subject to taxation under the laws of that State by reason of his residence, residence, place of administration or any other criterion of a similar nature.
2. Where, pursuant to paragraph 1, a natural person resides in both Contracting States, the case shall be decided in accordance with the following rules:
(a) It is assumed that that person is resident in the Contracting State in which he has a permanent residence. If it has a permanent residence in both Contracting States, it is assumed to reside in the Contracting State with which its personal and economic ties are the narrowest (centre of life interests).
(b) If the Contracting State in which that person has a centre of his life interests cannot be designated or if he does not have a permanent residence in any Contracting State, he shall be presumed to reside in the Contracting State in which he normally resides.
(c) Where the person normally resides in both Contracting States or if he is not normally present in any of them, he shall be presumed to reside in the Contracting State of which he is a national citizen.
(d) Where that person is a national of both Contracting States or is not a national of any of them, the competent authorities of the Contracting States shall decide the matter by common accord.
3. Where a person other than a natural person has its registered office in both Contracting States in accordance with the provisions of paragraph 1, it shall be presumed to have its registered office in the Contracting State in which the place of its effective management is situated.
4. It is assumed that the undivided estate is located for taxation purposes in Finland in the Contracting State in which the deceased was resident at the time of his death within the meaning of paragraphs 1 and 2.
Permanent establishment
1. For the purposes of this Treaty, the term "permanent establishment" shall mean a permanent establishment for the business in which the undertaking carries out its activities in whole or in part.
2. the term "permanent establishment" includes in particular:
(a) place of management;
(b) the race;
(c) an office;
(d) the factory,
(e) workshop,
(f) mine, quarry, or other place where natural resources are extracted;
(g) construction sites or installations lasting more than 12 months.
3. the term "permanent establishment" does not cover:
(a) equipment used only for the storage, display or supply of goods belonging to the holding;
(b) goods belonging to an undertaking which is stored only as a stock for the purpose of exhibition or delivery;
(c) goods belonging to an undertaking which is stored only for processing by another undertaking;
(d) permanent establishment serving business which is used only for the purpose of purchasing goods or collecting information for the undertaking;
(e) permanent establishment serving business which is used for the purposes of advertising only, the provision of information, scientific research or similar activities of a preparatory or auxiliary nature;
(f) the assembly carried out by an undertaking of a Contracting State in conjunction with the supply of machinery or equipment from that State to the other Contracting State.
4. A person acting in one Contracting State for the account of an undertaking of the other Contracting State - other than a representative having an independent status as referred to in paragraph 5 - shall be considered to be a permanent establishment in the former State if he is equipped in that State with the full power that he normally uses there and allows him to conclude contracts on behalf of an undertaking, unless the activity of that person is limited to buying goods for an undertaking.
5. In the other Contracting State, the mere fact that an undertaking in that other State carries out its business through a broker, a general agent or any other representative having an independent position shall not be regarded as a permanent establishment of an undertaking of one Contracting State if such persons act in the proper course of their business.
6. The fact that a company which has its registered office in one Contracting State controls or is controlled by a company which has its registered office in the other Contracting State or which carries out its business in that other State (whether through a permanent establishment or not) does not in itself make it a permanent establishment of any other company.
Revenue from immovable property
1. Income from immovable property, including income from agricultural or forestry holdings, may be taxed in the Contracting State in which such property is located.
2.
(a) Subject to paragraphs (b) and (c), the term "immovable property" shall be defined in accordance with the law of the Contracting State in which the immovable property is located.
(b) The term "immovable property" shall in any case include accessories for immovable property, a live and dead inventory of agricultural and forestry holdings, rights covered by the provisions of civil law relating to the ownership of immovable property, the use of immovable property and the right to variable or fixed transactions, paid as compensation for mining or the right to mine mineral deposits, springs and other natural resources.
(c) Ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income from direct use, rental and any other use of immovable property.
4. Where the ownership of shares or other social rights to companies entitles the holders of shares or rights to use immovable property owned by the company, income from direct use, rental or any other such right of use may be taxed in the Contracting State in which the immovable property is located.
(5) The provisions of paragraphs 1, 3 and 4 shall also apply to income from the immovable property of an undertaking and to income from immovable property used for the exercise of a free profession.
Profits of enterprises
1. The profits of an undertaking of one Contracting State shall be subject to taxation only in that State if the undertaking does not carry out its business in the other Contracting State through a permanent establishment located there. Where an undertaking carries out its activities in this way, the profits of the undertaking may be taxed in that 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 out its activities in the other Contracting State through a permanent establishment situated there, it shall be attributed in each Contracting State to that permanent establishment the profits which it would expect to achieve if, as a separate undertaking, it performed identical or similar activities under the same or similar conditions and traded completely independently with the undertaking of which it is a permanent establishment.
3. In calculating the profits of a permanent establishment, it shall be permitted to deduct the costs incurred for the objectives pursued by that permanent establishment, including management expenses and general administrative expenses thus incurred, whether in the State in which that permanent establishment is located 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 prevent that Contracting State from determining the profits to be taxed by dividing it as normal. However, the method of division adopted shall be such that the result is consistent 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 attributed to a permanent establishment shall be calculated each year on the basis of the same method, unless there are serious and sufficient grounds for a different procedure.
7. Where profits include parts of income which are treated separately in other Articles of this Treaty, the provisions of this Article shall not affect the provisions of those Articles.
Sea and air transport
1. The profits arising from the operation of ships and aircraft in international transport shall be subject to taxation only in the Contracting State in which the actual management is situated.
2. Where the actual management of a maritime transport undertaking is on board a ship, it shall be deemed to be located in the Contracting State in which the home port of that ship is situated or, in the absence of such a home port, in the Contracting State in which the operator of the ship is domiciled.
3. The provisions of paragraph 1 shall also apply to profits from participation in a pool, joint operation or an international operational organisation.
Associate 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 are directly or indirectly involved in the management, control or capital of the undertaking of one Contracting State and of the undertaking of the other Contracting State;
and if, in one and the other cases, conditions have been negotiated or imposed between the two undertakings in their commercial or financial relations, which differ from those which would have been negotiated between independent undertakings, profits may be included in the profits of that undertaking and, consequently, profits which would have been achieved without these conditions by one of the undertakings which, however, were not achieved in view of those conditions.
2. If the profits from which an undertaking of one Contracting State has been taxed in that State are also included in the profits of the undertaking of the other Contracting State and those profits thus included are profits which would have been realised by that undertaking of that other State if the conditions negotiated between the undertakings were such as would have been agreed between the independent undertakings, the former State shall adjust, mutatis mutandis, the amount of tax levied on those profits in the former State. When establishing such an adjustment, due account shall be taken of other provisions of this Treaty according to the nature of the income and, if necessary, the competent authorities of the Contracting States shall consult each other for that purpose.
Dividends
1. Dividends paid by a company having its registered office in one Contracting State, to a person residing or having its registered office in the other Contracting State, may be taxed in that other State.
2. However, these dividends may be taxed in the Contracting State in which the company which pays them has its registered office, under the laws of that State. However, the tax thus determined shall not exceed:
(a) 5% of the gross amount of dividends where the beneficiary is a company (except for a company which is not a legal person) which owns directly at least 25% of the assets of the company paying dividends;
(b) 15% of the gross amount of dividends in all other cases.
The competent authorities of the Contracting States shall, by mutual agreement, adapt the method of application of this restriction. This paragraph shall not affect the taxation of the profits of the company on which dividends are paid.
3. The term "dividends" used in this Article shall refer to income arising from shares or other rights, with the exception of profit-participation claims, as well as income from other social rights which is subject to the same tax as income from shares by the tax rules of the State in which the dividend company is established.
4. The provisions of paragraphs 1 and 2 shall not apply where the beneficiary of dividends residing or having his registered office in one Contracting State has, in the second Contracting State in which the company paying dividends has its registered office, a gainful activity through a permanent establishment situated there, or has a free occupation in that other State by means of a permanent basis situated there, and where the ownership of the shares on the basis of which the dividends are paid is actually linked to such permanent establishment or permanent establishment. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Where a company having its registered office in one Contracting State achieves profits or income from the other Contracting State, that other State may not levy any tax on dividends paid by the company to persons residing or having their registered office in the former State, nor levy any tax on the company's undistributed profits in respect of the taxation of undistributed profits, even if the dividends paid or undistributed profits remain, in whole or in part, on profits or income derived from that other State. The provisions of this paragraph shall not prevent that other State from taxing dividends paid to persons resident in that other State or dividends relating to the ownership of shares which are actually linked to a permanent establishment or permanent base maintained in that other State by a person residing or having its registered office in the former State.
Interest
1. Interest, having a source in one Contracting State and paid to a person domiciled or domiciled in the other Contracting State, shall be subject to taxation only in that other State.
2. The term "interest" used in this Article shall refer to income on claims of any kind, secured or not secured by a lien on immovable property, whether or not providing the right to participate in the profits of the debtor, and in particular income on public bonds and bonds, including premiums and winnings associated with such securities. Penalties for late payment shall not be considered as interest for the purposes of this Article.
3. The provisions of paragraph 1 shall not apply where the recipient of interest residing or having his registered office in one Contracting State carries out a gainful activity in the other Contracting State in which the interest is received through a permanent establishment situated there or is engaged in a free employment in that other State by means of a permanent base situated there and where the claim on which the interest is paid is actually linked to such a permanent establishment or permanent base. In this case, the provisions of Article 7 or Article 14 shall apply depending on the case.
4. Where, in view of the claim on which it is paid, the amount of interest paid exceeds the amount which would have been agreed with the payee if it had not been for similar relationships, the provisions of this Article shall apply only to that last amount. In this case, the part of the interest exceeding that shall remain subject to taxation under the legislation of each Contracting State and under other provisions of this Treaty.
Licence fees
1. Licensing fees having a source in one Contracting State and paid to a person residing or having his registered office in the other Contracting State may be taxed in that other State.
2. However, the licence fees referred to in paragraph 3 (a) may be taxed in the Contracting State in which their source is located, under the laws of that State, but the tax thus charged shall not exceed 5% of the gross amount of the licence fee. The competent authorities of the Contracting States shall, by mutual agreement, adapt the method of application of this restriction.
3. The term "licence fees" used in this Article shall mean salaries of any kind, received by refund for use or right of use
(a) any patent, trade mark, design or model, plan, secret instruction or manufacturing process, industrial, commercial or scientific equipment and for information relating to experience acquired in the field of industrial, commercial or scientific;
(b) any copyright rights for the work of literary, artistic or scientific, including cinematographic films and films or tapes for television or radio broadcasting.
4. The provisions of paragraphs 1 and 2 shall not apply where the licensee of a licence fee residing or having his registered office in one Contracting State has a source in the other Contracting State in which the licence fee is paid, a gainful activity through a permanent establishment situated there, or has a free occupation in that other State, using a permanent basis situated there, and where the right or property in respect of which the licence fee is paid is actually linked to such a permanent establishment or permanent base. In this case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Licensing fees shall be presumed to have a source in one Contracting State if the payer is that Contracting State itself, a public-law local corporation or a local office of that Contracting State or a person domiciled in that Contracting State. However, where a person who pays royalties, whether or not he or she is domiciled in a Contracting State, has a permanent establishment in a Contracting State in conjunction with which an obligation to pay royalties has arisen and who bears such royalties at his or her expense, those royalties shall be presumed to have a source in the Contracting State in which the permanent establishment is situated.
6. Where the amount of royalties paid, assessed in the light of the use, right or information for which they are paid, exceeds the amount which the payer would have agreed with the payee if it were not for such relations, the provisions of this Article shall apply only to that last amount. In this case, part of the salaries exceeding it shall remain subject to taxation under the laws of each Contracting State and under other provisions of this Treaty.
Capital gains
(1) Profit from the disposal of immovable property the definition of which is set out in Article 6 (2) or social rights referred to in Article 6 (4) may be taxed in the Contracting State in which such immovable property is situated.
2. Proceeds from the disposal of movable property which is part of the operating property of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or of movable property belonging to a permanent base which a person resident in one Contracting State has in the other Contracting State for the purpose of carrying out a free occupation, including such profits arising 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. However, the proceeds from the disposal of movable property referred to in Article 22 (3) shall be subject to taxation only in the Contracting State in which such movable property is subject to taxation under that Article.
(3) Profit from the disposal of assets other than those referred to in paragraphs 1 and 2 shall be subject to taxation only in the Contracting State in which the transferee resides or resides.
Independent professions
1. The income which a person resident in one Contracting State receives for services rendered in the course of a professional activity or other independent activities of a similar nature shall be subject to taxation only in that State, unless that person regularly has a permanent base in the other Contracting State for the purpose of carrying out his activities. If it has such a permanent base, the income may be taxed in the other Contracting State, but only to the extent that it can be attributed to this still base.
2. The term "free professions" shall include the particularly independent activities of scientific, literary, artistic, educational or teaching, as well as the independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Dependent employment
1. Wages, salaries and other similar remuneration which a person residing in one Contracting State receives on account of employment shall be subject to taxation in that State only, subject to the provisions of Articles 16, 18 and 19, if the employment is not carried out in the other Contracting State. If there is employment there, the remuneration received from that employment may be taxed in that other State.
2. Remuneration received by a person residing in one Contracting State as a result of employment in the other Contracting State shall be subject to taxation, notwithstanding the provisions of paragraph 1, 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 whole in the calendar year concerned;
(b) the remuneration shall be paid by the employer or in the name of an employer who is not domiciled in that other State; and
(c) the remuneration shall not be borne by a permanent establishment or permanent base held by an employer in that other State.
3. Notwithstanding the previous provisions of this Article, remuneration in respect of employment carried out on board a ship or aircraft in international transport may be taxed in the Contracting State in which the actual management of the undertaking is located.
Tantiems
1. Tantiems and other similar salaries which a person resident in one Contracting State receives as a member of the Administrative or Supervisory Board or another similar body of a company which has its registered office in the other Contracting State may be taxed in that other State.
Artists and athletes
1. The income received by publicly performing professionals, such as theatrical, film, radio or television artists, musicians and athletes from this personal activity, may be taxed in the Contracting State in which those activities are carried out, irrespective of the provisions of Articles 14 and 15.
2. The income obtained by a person residing in a Contracting State or having his registered office in a Contracting State by procuring in the other Contracting State the services of the persons referred to in paragraph 1, whether or not those persons reside in a Contracting State, may be taxed in the Contracting State in which those services are carried out, irrespective of other provisions of this Treaty.
Government services
1.
(a) Remuneration, other than pensions, paid by a Contracting State, a public-law local corporation or a local authority of that State to a natural person for services demonstrated to that State, to a corporation or local authority of that State shall be subject to taxation only in that State.
(b) However, such remuneration shall be subject to taxation only in the second Contracting State where the services have been carried out in that State, the beneficiary shall reside in that second Contracting State; and
(i) is a State citizen of that State; or
(ii) has not obtained residence in that State solely for the purpose of such services.
2.
(a) Any pension paid by a Contracting State, a public-law local corporation or a local authority of that State or paid from the funds they have set up to a natural person for services evidenced to that State, corporation or local office of that State shall be subject to taxation only in that State.
(b) However, such pensions shall be subject to taxation only in the second Contracting State where the beneficiary is a national of that State and is resident in that State.
3. The provisions of Articles 15, 16 and 19 shall apply to the remuneration and pensions of services shown in conjunction with a gainful activity carried out by a Contracting State, a public-law local corporation or a local authority of that State.
Pension
Pensions and other similar salaries referred to by reason of former employment to a person residing in a Contracting State shall be subject to taxation only in that State, subject to the provisions of Article 18 (2).
Study
1. Salaries which a student or a commercial, technical, agricultural or forestry apprentice who resides in a Contracting State for the sole purpose of his education or practice and who has or had his residence in the other Contracting State immediately prior to such a visit shall be paid for the purposes of his or her nutrition, education or practice, not being taxed in the former Contracting State, provided that such salaries have been shown to him from sources outside that State.
2. A student at a university or at another higher education institution in a Contracting State or a commercial, technical, agricultural or forestry apprentice who resides in the other Contracting State for one or more periods not exceeding 183 days in the relevant calendar year and who has, or had, his residence in the former State immediately prior to such visit shall not be taxed in the other Contracting State on the remuneration for services performed in that other State, provided that such services are linked to his studies or practice and the remuneration constitutes the earnings necessary for his nutrition.
Other revenue
Parts of the income of a person residing or having his registered office in a Contracting State not specifically mentioned in the preceding Articles of this Treaty shall be subject to taxation only in that State.
Property
1. The property remaining from immovable property as defined in Article 6 (2) or the social rights referred to in Article 6 (4) may be taxed in the Contracting State in which such immovable property is situated.
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Regulation Information
| Citation | Decree of the Minister of Foreign Affairs No. 134 / 1976 Coll., on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Finland on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 29.11.1976 |
|---|---|
| Effective from | 24.07.1976 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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