Decree of the Minister for Foreign Affairs No. 18 / 1984 Coll.
Decree of the Minister for Foreign Affairs on the Treaty between the Czechoslovak Socialist Republic and the Federal Republic of Germany on the avoidance of double taxation in the field of income and property taxes
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Effective from 17.11.1983
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18
DECLARATION
Minister for Foreign Affairs
of 9 December 1983
on the Treaty between the Czechoslovak Socialist Republic and the Federal Republic of Germany on the avoidance of double taxation in the field of income and property taxes
On 19 December 1980 the Treaty between the Czechoslovak Socialist Republic and the Federal Republic of Germany on the avoidance of double taxation in the field of income and property taxes was signed in Prague.
The Treaty was approved by the Federal Assembly of the Czechoslovak Socialist Republic and ratified by the President of the Czechoslovak Socialist Republic. The instruments of ratification were exchanged in Bonn on 18 October 1983.
The Treaty entered into force on 17 November 1983 pursuant to Article 29 (2) thereof.
The Czech version of the Treaty is hereby published at the same time.
Minister:
Ing. Chupek v. r.
TREATY
between the Czechoslovak Socialist Republic and the Federal Republic of Germany on the avoidance of double taxation in the field of income and property taxes
Czechoslovak Socialist Republic
and
Germany,
Desiring to conclude a double taxation contract in the field of income and property taxes,
they have agreed 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 Treaty applies to income and property taxes collected in one of the two Contracting States, whatever the method of collection.
(2) All taxes, levied on total income, on all or part of the income or property, including taxes on the loss of movable or immovable property, taxes on the volume of wages and taxes on the increase in value shall be regarded as income and property taxes.
(3) The current taxes covered by the contract are in particular:
(a) in the Federal Republic of Germany:
income tax (die Einkommensteuer),
the tax on legal persons, including the additional levy on legal persons (die Körperschaftsteuer einschliesslich der Ergänzungsabgabe zur Körperschaftsteuer),
property tax (die Vermögensteuer),
land tax (die Grundsteuer); and
business tax (die Gewerbesteuer);
(b) in the Czechoslovak Socialist Republic:
profit payment and profit tax,
payroll tax,
income tax on literary and artistic activities,
agricultural tax,
population income tax,
domestic tax; and
a contribution from a fortune.
(4) The provisions of this Treaty on the taxation of income or property shall apply mutatis mutandis to trade tax, not to income or property collected in the Federal Republic of Germany.
(5) This agreement will also apply to all identical or similar taxes which will be levied in the future in addition to or in their place. The competent authorities of the Contracting States shall communicate at the end of each year, where necessary, the changes made to their tax laws.
General definitions
(1) Within the meaning of this Treaty, where the link does not require a different interpretation:
(a) The terms "one Contracting State" and "the other Contracting State" refer to the Federal Republic of Germany or the Czechoslovak Socialist Republic as appropriate.
(b) The term "person" shall include natural persons and companies.
(c) The term "company" refers to legal persons or rightholders treated as legal persons for taxation purposes.
(d) The terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" refer to an undertaking operated by a person residing or having his registered office in one Contracting State or, where appropriate, an undertaking operated by a person residing or having his registered office in the other Contracting State.
(e) In the case of the Federal Republic of Germany, the term "competent authority" refers to the Federal Minister of Finance and, in the case of the Czechoslovak Socialist Republic, the Minister of Finance of the Czechoslovak Socialist Republic or his authorised representative.
(2) Any term which is not otherwise defined shall have meaning for the application of this Treaty by the Contracting State, which shall be addressed to it by the legislation of that State governing taxes which are the subject of this Treaty, unless the link requires a different interpretation.
Tax domicile
(1) The term "resident or domiciled in one Contracting State" refers, within the meaning of this Treaty, to a person subject to taxation under the legislation of that State on account of his residence, permanent residence, place of administration or other similar criteria.
(2) Where, pursuant to paragraph 1, a natural person resides in both Contracting States, the following procedure shall apply:
(a) It is assumed that this 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 to which it has closer personal and economic relations.
(b) If it cannot be determined to which Contracting State that person has closer personal and economic relations 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.
(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.
Permanent establishment
(1) The term "permanent establishment" refers, within the meaning of this Treaty, to a permanent establishment for a business in which an 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 following shall not be considered a permanent establishment:
(a) equipment used only for the storage, display or supply of goods belonging to the undertaking;
(b) supplies of goods belonging to an undertaking which are kept only for storage, display or delivery;
(c) the supply of goods belonging to an undertaking which is maintained only for the purpose of 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 for business which is used for the purposes of advertising, information, scientific research or similar activities of a preparatory or auxiliary nature.
(4) A person acting in one Contracting State as an undertaking of the other Contracting State - other than an independent representative within the meaning of paragraph 5 - shall be deemed to be a permanent establishment in the former State if he is equipped with the full authority to conclude contracts on behalf of an undertaking which he normally uses in that State, unless his activity is limited to the purchase of goods for an undertaking.
(5) It is not assumed that an undertaking of one Contracting State has a permanent establishment in the other Contracting State only because it carries out its activities there through a broker, agent or other independent agent, if those persons act in the course of their proper activities.
(6) The fact that a company which has its registered office in one Contracting State controls a company 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 otherwise) does not in itself make it a permanent establishment of any other company.
Revenue from immovable property
(1) Revenue from immovable property may be taxed in the Contracting State in which such property is located.
(2) The term "immovable property" is defined in accordance with the law of the Contracting State in which the property is located. This term covers, in any case, accessories for immovable property, a live and dead inventory of agricultural and forestry holdings, rights to which the provisions of civil law applicable to land, the consumption of immovable property and the right to variable or fixed benefits, paid for mining or the right to mine mineral deposits, springs and other natural resources apply. Ships, boats and aircraft shall not be considered property.
(3) The provisions of paragraph 1 shall apply to revenue from direct use, rental, payment and any other use of immovable property.
(4) The provisions of paragraphs 1 and 3 shall also apply to income from the immovable property of an undertaking and to income from immovable property used for the exercise of a professional profession.
Profits of enterprises
(1) The profits of an undertaking of one Contracting State may be taxed 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 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 could have achieved if it had been engaged as a separate undertaking in the same or similar conditions and was fully 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 for the objectives pursued by that permanent establishment, including management costs and general administrative expenses, whether they arise in the State in which the 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 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) Profit to be attributed to a permanent establishment shall be calculated annually for the application of the preceding paragraphs in accordance with the same method, unless there are additional reasons for a different procedure.
(7) Where profits include revenue covered by other articles of this Treaty, the provisions of those articles shall not be affected by the provisions of this Article.
Transport by ship and air
(1) The profits arising from the operation of seagoing ships or aircraft in international transport may be taxed only in the Contracting State in which the place of effective management is situated.
(2) Profit from the operation of boats used in inland navigation can only be taxed in the Contracting State where the actual management is located.
(3) Where the actual management of a maritime or inland waterway undertaking is on board a ship or a boat, it shall be deemed to be located in the Contracting State in which the home port of that ship or boat is situated or, in the absence of a home port, in the Contracting State in which the operator of the ship or boat is domiciled.
(4) The provisions of paragraphs 1 to 3 shall apply mutatis mutandis to the participation of a maritime, inland waterway or air transport undertaking in a pool, joint operation or another international operating association.
Associate undertakings
(1) If
(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 where, in such 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 which, without such conditions, would have been achieved by one of the undertakings which, however, were not achieved, may be included in the profits of that undertaking.
(2) Where, pursuant to paragraph 1, the profit from which an undertaking of one Contracting State has been taxed in that State has been included in the profits of the undertaking of the other Contracting State and has been adequately taxed and where the profit thus included is a profit that would have been achieved by that undertaking of that other Contracting State if the conditions agreed between the two undertakings were identical to those agreed between the independent undertakings, the former State shall make an appropriate correction to the profit thus included in order to avoid double taxation. This correction shall be made taking into account the other provisions of this Treaty, taking into account the type of income and, if necessary, the competent authorities of the Contracting States shall consult 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 may not exceed:
(a) 5% of the gross amount of dividends if the beneficiary is a company which directly owns at least 25% of the assets of the dividend-paying company;
(b) 15% of the gross amount of dividends in all other cases.
(3) Where a company's profit tax rate in a Contracting State is lower for distributed profits than for retained earnings, and where the difference is 20% or more, the tax levied in that State on dividends may, by way of derogation from paragraph 2, amount to 25% of the gross amount of dividends plus or minus the additional levy, if the dividends originate from a company which has its registered office in that Contracting State and are received by a company which has its registered office in the other Contracting State, and if that company itself or jointly with other persons under control, or jointly controlled by it, belongs directly or indirectly to at least 25% of the shares of the company having its registered office in the former State.
(4) The term "dividends" used in this Article refers to income from shares, emoluments or profit participation certificates, coupons, profit participation shares or other rights - with the exception of claims - with a profit participation and income from other shares in a company which, under the tax rules of the State in which the company which pays dividends has its registered office, is equal to income from shares, including the silent partnership's income from participation in the business, the income from bonds or loans related to participation in profits, and to the share certificates of the company for capital storage (investfunds).
(5) The provisions of paragraphs 1 to 3 shall not apply where the beneficiary of dividends domiciled in one Contracting State has a permanent establishment in the other Contracting State in which the company paying dividends has its registered office and where the participation on the basis of which the dividends are paid actually belongs to that permanent establishment. In that case, the provisions of Article 7 shall apply.
(6) 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 that company to persons who are not resident in that other State, nor subject the company's profits to tax on undistributed profits, even if the dividends paid or undistributed profits remain wholly or partly on profits or income obtained in that other State.
Interest
(1) Interest having a source in one Contracting State and paid to a person domiciled or domiciled in the other Contracting State may be taxed only in that other State.
(2) The term "interest" used in this Article refers to income on public loans, on debits, even if they are secured by a mortgage on immovable property or grant a right to participate in profits, and on claims of any kind, as well as any other income which, under the tax legislation of the State in which their source is based, is equivalent to income on loans.
(3) The provisions of paragraph 1 shall not apply where the recipient of interest residing or having his registered office in one Contracting State has a permanent establishment in the other Contracting State in which the interest is due, and where the claims on which the interest is paid actually belong to that permanent establishment. In that case, the provisions of Article 7 shall apply.
(4) Where the amount of interest paid, in view of the claim on which it is paid, exceeds, by reason of the special relations existing between the debtor and the creditor or between the two and the third parties, the amount which the debtor would have agreed with the creditor if it had not been for such relations, the provisions of this Article shall apply only to that last amount. The amount of interest exceeding that may in this case be taxed 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 resident or established in the other Contracting State may be taxed in that other State.
(2) However, such royalties may be taxed in the Contracting State in which their source is, under the legislation of that State, but the tax may not exceed 5% of the gross amount of royalties.
(3) The term "royalties" used in this Article refers to salaries of any kind, paid for use or for the right to use copyright for the work of literary, artistic or scientific, including cinematographic films, patents, trademarks, designs or models, plans, secret formulas or procedures, or to the use or use of industrial, commercial or scientific equipment, or to information relating to experience acquired in the field of industrial, commercial or scientific.
(4) The provisions of paragraphs 1 and 2 shall not apply where the licensee of royalties residing or having his registered office in one Contracting State has a permanent establishment in the other Contracting State in which the royalties have a source, a permanent establishment and where the rights or assets for which the royalties are paid are indeed belonging to that permanent establishment. In that case, the provisions of Article 7 shall apply.
(5) Where the amount of the royalties paid, assessed in the light of the transactions for which they are paid, exceeds the amount which the debtor would have agreed with the creditor if it were not for such relations, the provisions of this Article shall apply only to that last amount. In this case, the amount of the salary exceeding it may be taxed under the legislation of each Contracting State and under other provisions of this Treaty.
Profit from disposal
(1) Profit from the disposal of immovable property within the meaning of Article 6 may be taxed in the Contracting State in which such property is located.
(2) Profit from the disposal of movable property which is the operating property of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or 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 an independent occupation, including such profits resulting 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, profits from the disposal of movable property referred to in Article 22 (3) may be taxed only in the Contracting State in which such movable property may be taxed in accordance with the provisions of that Article.
(3) Profit from the disposal of shares in companies established in a Contracting State may be taxed in that State.
(4) Profit from the disposal of assets not referred to in paragraphs 1, 2 and 3 may be taxed only in the Contracting State in which the transferee is domiciled or established.
Independent professions
(1) The income which a person resident in a Contracting State receives from a liberal profession or other independent activities of a similar nature may be taxed only in that State, provided that such person does not regularly have a permanent basis in the other Contracting State to carry out his activities. If it has such a permanent base, income can be taxed in the other State, but only to the extent that it can be attributed to that permanent base.
(2) The term "free profession" includes the particularly independent activities of scientific, literary, artistic, educational or teaching and the independent activities of doctors, lawyers, engineers, architects and dentists.
Employment
(1) Salaries, wages and other similar remuneration received by a natural person residing in one Contracting State on account of employment may be taxed only in that State, subject to the provisions of Articles 16 to 20, 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 natural person residing in a Contracting State on account of employment in the other Contracting State may, notwithstanding the provisions of paragraph 1, be taxed only in the former State where:
(a) the consignee shall not stay in the other State for more than 183 days during the relevant calendar year;
(b) the remuneration shall be paid by a person or a person who is not domiciled in that other State; and
(c) the remuneration shall not be borne by a permanent establishment held by the person paying the remuneration in that other State.
(3) Notwithstanding the previous provisions of this Article, remuneration received on account of employment carried out on board a seagoing ship or aircraft in international transport or on board a boat used in inland navigation may be taxed in the Contracting State in which the place of effective management of the undertaking is situated.
Tantiems
The remuneration of members of the Supervisory and Management Board and similar salaries received by a person residing in one Contracting State as a member of the Supervisory or Management Board of a company having its registered office in the other Contracting State may be taxed in that other State.
Artists and athletes
(1) The income received by professional artists, such as theatrical, film, radio or television artists and musicians as well as athletes from their personal activities, may be taxed in the Contracting State in which such activities are carried out, irrespective of the provisions of Articles 14 and 15.
(2) If the income from this personal activity of an artist or an athlete is not attributable to the artist or athlete himself but to another person, the income may be taxed, irrespective of the provisions of Articles 7, 14 and 15, in the State in which the activity of an artist or athlete is carried out.
(3) The income referred to in paragraphs 1 and 2 may not, by way of derogation from the provisions of these paragraphs, be taxed in the State in which the activity of an artist or athlete is carried out if the artist or athlete acts in the framework of a cultural exchange agreed between the governments of the Contracting States.
Public functions
(1) Salaries, including pensions, paid by a Contracting State or a Territorial Corporation of that State directly or from a fund set up by that State or that Territorial Corporation to a natural person for services demonstrated by that State or that Territorial Corporation in the performance of public functions may be taxed in that State. However, this provision shall not apply where remuneration is paid to persons resident in the other State.
(2) The provisions of Articles 15, 16 and 19 shall apply to salaries or pensions for services which have been established in connection with the commercial or industrial activity of the Contracting State or its Territorial Corporation.
Pension
Pensions and 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 (1).
Teachers, students and other persons receiving education
(1) Higher education and other teachers residing in one Contracting State or residing in one Contracting State immediately before they have gone to the other Contracting State to continue their studies or research there for a maximum period of two years, or to teach there at a recognised university, university or other similar institution which does not pursue gainful objectives, will not be subject to a remuneration tax for that work in that other State if they receive such remuneration from places outside that other State.
(2) Where a natural person resides in one Contracting State immediately before leaving for the other Contracting State, and if in that other State he temporarily resides only as a student at a university, university or other school or similar educational institution of that other State, or as an apprentice (in the Federal Republic of Germany also as a volonter or practitioner), he shall be exempt from all payments from places outside that other State intended for his or her nutrition, education or education from the date of his or her first arrival in the other State in connection with that stay.
(3) Where a natural person resides in one Contracting State immediately before leaving for the other Contracting State, and if he temporarily resides in that other State only for the purposes of study, research or education as beneficiary of aid, food allowance or scholarship to a scientific, educational, religious or charitable organisation, he shall be exempt from tax in that other State for a maximum period of two years from the date of his first arrival:
(a) such support, nutrition or scholarship allowance; and
(b) all payments from places outside the latter State intended for its nutritional, education or education.
Revenue not explicitly mentioned
The income of a person residing or having his registered office in a Contracting State which is not expressly mentioned in the previous Articles may be taxed only in that State.
Property
(1) Real estate within the meaning of Article 6 (2) may be taxed in the Contracting State in which such property is located.
(2) Moved property which is the operating property of a permanent establishment of an undertaking or which belongs to a permanent base which serves to pursue a professional profession may be taxed in the Contracting State in which the permanent establishment or permanent base is situated.
(3) Ships and aircraft used in international transport and boats used in inland navigation as well as movable assets for the operation of such ships, boats and aircraft may be taxed only in the Contracting State in which the actual management of the undertaking is located.
(4) All other parts of the property of a person resident or domiciled in a Contracting State may be taxed only in that State.
Exclusion of double taxation
(1) The tax shall be fixed by the person domiciled in the Federal Republic of Germany as follows:
(a) If the provisions of point (b) do not apply, the income from resources in the Czechoslovak Socialist Republic and the assets of the Czechoslovak Socialist Republic, which may be taxed under this Treaty in the Czechoslovak Socialist Republic, shall be exempt from the tax base of the Federal Republic of Germany. However, the Federal Republic of Germany shall take into account the revenues and assets thus excluded when setting the tax rate. The first sentence shall apply to dividends only if dividends are paid to capital companies having their registered office in the Federal Republic of Germany by companies having their registered office in the Czechoslovak Socialist Republic and if at least 25% of the shares of that company associated with the right to vote belong to the first mentioned company. The tax base of the Federal Republic of Germany shall also exempt holdings whose dividends are excluded from the tax base according to the preceding sentence or should be exempt from the tax base on payment.
b) The tax payable under the legislation of the Czechoslovak Socialist Republic and in accordance with this Treaty on the following income from resources in the Czechoslovak Socialist Republic shall be charged on the tax levied on the following income in the Federal Republic of Germany under the tax legislation of the Federal Republic of Germany on the deduction of foreign taxes:
1. dividends not covered by point (a);
2. royalties within the meaning of Article 12;
3. revenue within the meaning of Article 13 (3);
4. revenue within the meaning of Article 16,
5. Revenue within the meaning of Article 17.
(c) Paragraph (a) shall apply to profits which may be added to a permanent establishment located in the Czechoslovak Socialist Republic and to assets which are the operating property of such a permanent establishment, as well as to dividends paid by a company having its registered office in the Czechoslovak Socialist Republic, and to participation in such a company only if the permanent establishment or company in which it participates receives its income exclusively or almost exclusively from the following activities carried out in the Czechoslovak Socialist Republic: the manufacture or sale of goods, technical services or banking or insurance business, as the case may be. If these conditions are not met, the provisions referred to in point (b) shall apply. Also, when taxing property, the tax collected in accordance with this Treaty in the Czechoslovak Socialist Republic on the assets placed in the Czechoslovak Socialist Republic shall be credited to the tax levied in the Federal Republic of Germany under the tax rules of the Federal Republic of Germany on the netting of foreign taxes.
(2) The tax on persons residing or residing in the Czechoslovak Socialist Republic shall be as follows:
(a) Revenue originating in the Federal Republic of Germany - with the exception of revenue falling under point (b) - and property value placed in the Federal Republic of Germany, which may be taxed under this Treaty in the Federal Republic of Germany, shall be exempt from taxation in the Czechoslovak Socialist Republic. However, the Czechoslovak Socialist Republic may apply the tax rate which would apply if the income or property in question had not been excluded from taxation when determining the tax on the other income or on the other property of that person.
(b) In assessing Czechoslovak taxes, revenue from the Federal Republic of Germany shall be included in the tax base which, pursuant to Articles 10, 12, 13 (3), 16 and 17, may be taxed in the Federal Republic of Germany. The tax paid in the Federal Republic of Germany pursuant to Articles 10, 12, 13 (3), 16 and 17 shall be credited to the tax levied in the Czechoslovak Socialist Republic on such income. However, the amount to be set off may not exceed that part of the tax calculated before the deduction, which is relatively attributable to such income subject to taxation in the Federal Republic of Germany.
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Regulation Information
| Citation | Decree of the Minister for Foreign Affairs No. 18 / 1984 Coll., on the Treaty between the Czechoslovak Socialist Republic and the Federal Republic of Germany on the avoidance of double taxation in the field of income and property taxes |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 28.02.1984 |
|---|---|
| Effective from | 17.11.1983 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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