Communication from the Ministry of Foreign Affairs No. 163 / 1996 Coll.

Q: Is Communication from the Ministry of Foreign Affairs No. 163 / 1996 Coll. still valid?

Yes, Communication from the Ministry of Foreign Affairs No. 163 / 1996 Coll. is still valid and effective.

163

COMMUNICATION

Ministry of Foreign Affairs

The Ministry of Foreign Affairs announces that on 14 November 1995 the Treaty between the Czech Republic and Ireland was signed in Prague to prevent double taxation and prevent tax evasion in the field of income and property taxes.

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 April 1996 pursuant to Article 29 (1) thereof.

The Czech version of the Treaty is hereby published at the same time.

TREATY

between the Czech Republic and Ireland

on the avoidance of double taxation and avoidance of tax evasion

in the field of income and property taxes

Czech Republic and Ireland,

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 to whom the Treaty applies

This contract shall apply to persons resident in one or both Contracting States (residents).

Taxes to which the Treaty applies

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 property or on part or on income or property, including taxes on the proceeds of the disposal of movable or immovable property, shall be regarded as income and property taxes.

3. the current taxes to which the Treaty applies are:

(a) in Ireland:

(i) income tax;

(ii) corporation tax; and

(iii) capital gains tax;

(hereinafter referred to as "Irish tax ');

(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. This Treaty will also apply to taxes of the same or essentially similar kind which will be imposed upon signature of this Treaty in addition to or in place of current taxes. The competent authorities of the Contracting States shall communicate to each other significant changes to be made to their respective tax laws.

5. If an asset tax is introduced in Ireland, this contract will also apply to that tax.

General definitions

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

(a) the term "Ireland" shall also cover any area outside the territorial waters of Ireland which, in accordance with international law, has been or may be designated under the laws of Ireland relating to the continental shelf as the territory in which Ireland's rights relating to the seabed and subsoil and their natural resources may be exercised;

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

(c) the terms "one Contracting State" refer to the Czech Republic or Ireland as appropriate;

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

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

(f) the terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" refer to an undertaking operated by a resident of one Contracting State or an undertaking operated by a resident of the other Contracting State;

(g) the term "international transport" shall mean any transport carried out by a ship or aircraft operated by an undertaking whose place of effective management is situated in one Contracting State, unless such transport is carried out only between points in the other Contracting State;

(h) the term "national" means:

(i) in the case of Ireland, any Irish citizen and any legal person, association or other entity established under the law in force in Ireland;

(ii) for the Czech Republic

(i) any natural person who is a national citizen of the Czech Republic;

(ii) any legal person, personal company or association established under the law in force in the Czech Republic;

(i) the term "competent authority" means:

(i) in the case of Ireland, the Commissioner of the Tax Office or their authorised representative; and

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

2. Any term which is not defined here will be of importance to the application of this Treaty by the Contracting State under the law of that State, which regulates the taxes covered by this Treaty, unless the link requires a different interpretation.

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 on account of his residence, permanent residence, place of administration or any other similar criterion. However, this term does not include a person subject to taxation in that State solely for reasons of income from resources in that State or property situated in that State.

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

(a) that person is presumed to be resident in the State in which he has a permanent residence; if he has a permanent residence in both States, he is presumed to be resident in the State to which he 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 or she does not have a permanent residence in either of the two States, he / she shall be presumed to be resident in the State in which he / she normally resides;

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

(d) where that person is a national of both States or of any of them, the competent authorities of the Contracting States shall amend the matter by mutual agreement.

3. Where a person other than a natural person is resident in both Contracting States in accordance with paragraph 1, he shall be presumed to be resident in the State in which the place of his actual management is situated.

Permanent establishment

1. For the purposes of this Treaty, the term "permanent establishment 'shall refer to a permanent establishment for the business through which the undertaking carries out its activities 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 other place where natural resources are extracted.

3. the term "permanent establishment" also covers:

(a) construction site or construction, installation or installation project, or supervision thereof, but only if such construction, project or surveillance lasts for more than 12 months;

(b) the provision of services, including advisory or management services, by an undertaking of one contracting State through staff or other personnel hired by the undertaking for those purposes, but only where activities of such a nature persist within the territory of the other contracting State for one or more periods exceeding a total of more than six months in any 12-month period and the provision of services requires the use of facilities located in the other contracting State.

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

(a) an establishment which is used only for the storage, display or supply of 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) permanent business equipment which is maintained only for the purpose of purchasing goods or collecting information for the undertaking;

(e) permanent business equipment which is maintained only for the purpose of advertising, the provision of information, scientific research or similar activities which have a preparatory or ancillary character for the undertaking;

(f) a permanent establishment for business which is maintained only for the exercise of any combination of the activities referred to in (a) - (e) where the total activity of the permanent establishment for the business resulting from that concentration is of a preparatory or ancillary nature.

5. Where, notwithstanding the provisions of paragraphs 1 and 2, a person - other than an independent representative to whom paragraph 6 applies - acts on the behalf of an undertaking in a Contracting State and has at its disposal and normally has the power of attorney enabling it to conclude contracts on behalf of an undertaking, that undertaking shall be deemed to have a permanent establishment in that State in respect of all activities carried out 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, had been carried out through a permanent establishment, would not have made that permanent establishment a permanent establishment in accordance with the provisions of this paragraph.

6. An undertaking shall not be deemed to have a permanent establishment in a Contracting State if it carries on its business in that State only through a broker, a general agent or any other independent agent, where such persons act in the course of their proper activities.

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

Revenue from immovable property

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

2. The term "immovable property" shall have the meaning of the law of the Contracting State in which the property is located. The term covers, in any case, the accessories of immovable property, the live and dead inventory used in agriculture and forestry, the rights to which the provisions of civil law applicable to land, buildings, the right to consume immovable property and the right to variable or fixed payments for mining or authorising the extraction of mineral deposits, springs and other natural resources apply; ships, boats and aircraft shall not be considered property.

3. Paragraph 1 shall apply to income from direct use, rental 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 for the pursuit of an independent 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 activities in the other Contracting State through a permanent establishment situated 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 on its activities in the other Contracting State through a permanent establishment situated there, it shall be attributed, taking into account the provisions of paragraph 3 in each Contracting State of that State, to profits which could have been achieved if, as a separate undertaking, it had been engaged in the same or similar activities under the same or similar conditions and was wholly independent in contact with the undertaking of which it is a permanent establishment.

3. In calculating the profits of a permanent establishment, it is permitted to deduct the costs incurred by an undertaking for the purposes of that permanent establishment, including management expenses and general administrative expenses thus incurred, whether they arise 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, the provisions of paragraph 2 shall not preclude that Contracting State from determining the profits to be taxed by this normal distribution; However, the method of distribution of profits 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 attributed 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 or profits which are dealt with separately in other articles of this Treaty, the provisions of those articles shall not be affected by the provisions of this Article.

International transport

1. Profit from the operation of ships or aircraft in international transport shall be subject to taxation only in the Contracting State in which the head office of the undertaking's actual management is located.

2. Where the head office of a shipping 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 resident.

3. For the purposes of this Article, profits generated by the operation of ships or aircraft in international transport shall also include profits arising from the rental of ships or aircraft where such ships or aircraft are operated in international transport or where such profits are linked to other profits referred to in paragraph 1 of this Article.

4. Paragraph 1 shall also apply to profits arising 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 such cases, both undertakings are bound in their commercial or financial relations by conditions which have been agreed 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 taxes - 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 other State may adjust accordingly the amount of tax imposed by it on those profits. When establishing such an adjustment, due account shall be taken of other provisions of this Treaty and, if necessary, the competent authorities of the Contracting States shall consult each other for that purpose.

Dividends

1. Dividends paid by a company which is resident in one Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State in which the company which pays them is resident under the legislation of that State, but where the beneficiary is the beneficial owner of dividends, the tax shall not exceed:

(a) 5% of the gross amount of dividends where the beneficiary is a company which directly owns at least 25% of the shares in the voting right 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, lay down the arrangements for applying such restrictions.

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 from shares or other rights, with the exception of receivables, and shall include any income or distribution of profits, which, under the tax legislation of the Contracting State in which the company which pays dividends or differences in profits, is resident, is treated as income from shares.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of dividends resident in one Contracting State is engaged in a business activity through a permanent establishment located there in the other Contracting State in which the dividend company is resident, or is engaged in an independent occupation in that other State through a permanent base located there, and where the participation for which dividends are paid is actually linked to that permanent establishment or to that permanent base. 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 belongs to a permanent establishment or a permanent base located in that other State, or subject the company's undistributed profits to the tax on undistributed profits, even if the dividends paid or retained earnings are wholly or partly derived from profits or income obtained in that other State.

Interest

1. Interest having a source in one Contracting State and paid to a person resident in the other Contracting State shall be taxed only in that other State if that resident is the beneficial owner of the interest.

2. The term "interest 'used in this Article shall refer to income from claims of any kind, secured or not secured by a lien on immovable property or a clause relating to the participation in the profits of the debtor and, in particular, income from government securities and income from bonds and bonds, including premiums and winnings related to such securities, bonds or bonds, as well as any other income which is included in the income from borrowed money under the law of the State where the source is, but does not include any income which is considered a dividend under Article 10.

3. The provisions of paragraph 1 shall not apply where the beneficial owner of interest resident in one Contracting State carries out a business activity through a permanent establishment situated there or carries out an independent occupation in that other State through a permanent base located there and where the claim on which 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 as appropriate.

4. Where the amount of interest, in view of the claim on which it is paid, exceeds, by reason of the special relations existing between the payer and the beneficial owner of the interest or which are maintained by one or the other with a third party, the amount which the payer would have agreed with the beneficial owner if it had not been for such relations, the provisions of this Article shall apply only to that last amount. In this case, the amount of payments exceeding it may be taxed under the law of each Contracting State and taking into account the other provisions of this Treaty.

Licence fees

1. Licensing fees having a source in one Contracting State paid by 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 their source is, under the legislation of that State, but if the beneficiary is the beneficial owner of the royalties, the tax thus determined shall not exceed 10% of the gross amount of the royalties. 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 refers to payments of any kind received as compensation for use or the right to use any copyright for a literary, artistic or scientific work (including cinematographic films or films and tapes or other media used for radio and television broadcasting), any patent, trademark, design or model, plan, secret formula or production process, or for information relating to industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of royalties resident in one Contracting State is engaged in a source, industrial or commercial activity through a permanent establishment located there, or an independent profession from a permanent base located there, and where the right or property giving rise to royalties is actually linked to that 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 are assumed to have a source in the Contracting State if the payer is the State itself, its administrative department, local authority or 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 charged to a permanent establishment or permanent base, it is assumed that such licence fees have a source in the Contracting State in which the permanent establishment or permanent base is located.

6. Where the amount of royalties relating to the use, right or information for which they are paid exceeds the amount which the payer would have agreed with the beneficial owner if it were not for such relationships, the provisions of this Article shall apply only to that last amount. In this case, the amount of remuneration exceeding it shall be subject to taxation under the legislation of each Contracting State, taking into account the other provisions of this Treaty.

Profit from disposal

(1) Profit accruing to a resident of a Contracting State from the disposal of immovable property referred to in Article 6, located in the other Contracting State, may be taxed in that other State.

2. Profit from the disposal of shares, rights or interests in a company, another legal person or a personal company whose assets remain mainly of immovable property or of rights in such property which is located in one Contracting State, or of shares in a company whose assets remain mainly of immovable property or of rights in such property which is located in one Contracting State, may be taxed in the State in which the immovable property is located if, under the law of that State, such profits are subject to the same tax rules as profits from the disposal of immovable property.

3. Proceeds other than those referred to in paragraph 2 of this Article from the disposal of movable property which is part of the operating property of a permanent establishment which is owned by an undertaking of one Contracting State in the other Contracting State or by a movable property belonging to a permanent base which a resident of one Contracting State has in the other Contracting State for the pursuit of an independent occupation, including such profits generated by the disposal of such permanent establishment (alone or together with the whole undertaking) or such permanent base, may be taxed in that other State.

4. Profit from the disposal of ships or aircraft operating in international transport or movable property serving the operation of such ships or aircraft shall be subject to taxation only in the Contracting State in which the head office of the undertaking's actual management is located.

5. Profit from the disposal of any assets other than those referred to in the preceding paragraphs of this Article shall be subject to taxation only in the Contracting State in which the extraneous is resident.

Independent professions

1. Revenue which a resident of a Contracting State receives from a professional or other independent activity of a similar nature shall be subject to taxation only in that State, except in the following cases where income may also be taxed in the other Contracting State:

(a) if it has a permanent base at its regular disposal in the other Contracting State for the purpose of carrying out its activities; in that case only that part of the income attributable to this permanent base may be taxed in that other State; or

(b) if his stay in the other State for one or more periods exceeds 183 days in total in any 12-month period in the relevant fiscal year of that other State; in that case, only that part of the income resulting from its activities in that other State may be taxed in that other State.

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

Employment

1. Salaries, wages and other similar remuneration received by a resident of a Contracting State on account of employment shall be subject, subject to the provisions of Articles 16, 18, 19 and 21, 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 for them may be taxed in that other State.

2. Rewards received by a resident of a Contracting State for 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 beneficiary shall stay in the other State for one or more periods not exceeding 183 days in total in the relevant fiscal year of that other State; and

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

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

3. Notwithstanding the previous provisions of this Article, the remuneration received from the employment carried out on board a ship or aircraft in international transport may be taxed in the Contracting State in which the head office of the undertaking is situated.

Tantiems

Tantiémes and other similar payments received by a resident of one Contracting State as a member of the Management Board or another similar body of a company resident in the other Contracting State may be taxed in that other State.

Artists and athletes

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 an athlete does not result from such an artist or athlete alone but from another person, that income may be taxed, irrespective of the provisions of Articles 7, 14 and 15, in the Contracting State in which the artist or athlete carries out his activity.

Pensions and annuities

1. Pensions and other similar salaries paid on account of former employment of a resident of a Contracting State and any annuity paid to that resident shall be subject to taxation only in that State, taking into account the provisions of Article 19 (2).

2. The term "annuity" shall mean a fixed amount paid repeatedly within the specified periods of life or within a certain or identifiable period of time on the basis of an obligation to pay compensation for the corresponding and full remuneration in cash or money, expressed.

Public functions

1. (a) Rewards, other than pensions, paid by one Contracting State or administrative department or local authority of that State to a natural person for services rendered to that State or administrative department or local authority in the performance of functions of a governmental nature 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 are demonstrated in that State and the natural person resident in that State:

(i) is a national of that State; or

(ii) has not become resident in that State solely for the purpose of providing such services.

2. (a) Penalties paid either directly or from funds set up by a Contracting State, an administrative department or a local authority of that State, to a natural person for services rendered to that State, an administrative department or a local authority in the performance of functions of a governmental nature shall be subject to taxation only in that State.

(b) Such pensions shall, however, be subject to taxation only in the second Contracting State where the natural person is resident and a national of that State.

(3) The provisions of Articles 15, 16 and 18 shall apply to the remuneration and pensions of services shown in connection with a business activity carried out by a Contracting State, an administrative department or a local authority of that State.

Students

Salaries received by a student or apprentice who is, or was, resident in a Contracting State immediately prior to his or her arrival in the other Contracting State and who resides in the former State for the sole purpose of study or training, shall not be taxed in that State for the cost of nutrition, study or training, provided that such salaries are paid to him from sources outside that State.

Professors and teachers

1. A professor or teacher who visits one of the Contracting States for a period not exceeding two years solely for the purpose of teaching or carrying out advanced studies (including research) at a university, university or other recognised research institution or higher education institution in that Contracting State and who was a resident of the other Contracting State immediately prior to such a visit shall be exempt from taxation in the former Contracting State from the remuneration for such teaching or research for a period not exceeding two years from the date on which that Contracting State first visits for that purpose. A natural person shall only be entitled to benefits under this Article once.

2. The previous provisions of this Article shall not apply to remuneration received by the professor or teacher for carrying out research where such research is carried out primarily for the private benefit of a person or persons.

Other revenue

1. Parts of the income of a person resident in one Contracting State, wherever a source is not covered by the preceding Articles of this Treaty, shall be subject to taxation only in that State.

2. Paragraph 1 shall not apply to income other than income from immovable property as defined in Article 6 (2), where the beneficial owner of such income resident in a Contracting State carries out industrial or commercial activities in the other Contracting State 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 right or property in respect of which the income is paid is actually linked to such permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

Property

1. Property represented by the immovable property referred to in Article 6 which is owned by a resident of one Contracting State and which is 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 is owned by an undertaking of one Contracting State in the other Contracting State or by a movable property which is owned by a resident of one Contracting State in the other Contracting State for the pursuit of an independent occupation may be taxed in that other State.

Citation	Communication from the Ministry of Foreign Affairs No. 163 / 1996 Coll., on the Agreement between the Czech Republic and Ireland on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
Regulation Type	International Treaty
Author	-
Collection	Code of Laws

Date of Promulgation	12.06.1996
Effective from	21.04.1996
Effective until	-
Status	Valid

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

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