Communication from the Ministry of Foreign Affairs No. 229 / 1995 Coll.

Q: Is Communication from the Ministry of Foreign Affairs No. 229 / 1995 Coll. still valid?

Yes, Communication from the Ministry of Foreign Affairs No. 229 / 1995 Coll. is still valid and effective.

229

COMMUNICATION

Ministry of Foreign Affairs

The Ministry of Foreign Affairs states that on 12 February 1994 a Treaty was signed in Bangkok between the Government of the Czech Republic and the Royal Government of the Kingdom of Thailand to avoid double taxation and prevent tax evasion in the field of income tax.

The Parliament of the Czech Republic gave its assent to the Treaty and the President of the Republic ratified it. The instruments of ratification were exchanged in Prague on 14 August 1995.

The Treaty entered into force on 14 August 1995 pursuant to Article 28 (2) thereof.

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

TREATY

between the Government of the Czech Republic and the Royal Government of the Kingdom of Thailand on the avoidance of double taxation and tax evasion in the field of income taxes

Government of the Czech Republic and Royal Government of the Kingdom of Thailand,

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

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 Agreement shall apply to income taxes imposed on behalf of the Contracting State or its lower administrative departments or local authorities, whatever the method of collection.

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

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

(a) for the Czech Republic:

- income tax on natural persons; and

- corporation tax;

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

(b) in the case of Thailand:

- income tax; and

- fuel income tax;

(hereinafter referred to as "Thai tax ').

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

General definitions

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

(a) the term "Czech Republic" means the territory of the Czech Republic which, under Czech laws and in accordance with international law, falls under the legislature of the Czech Republic;

(b) the term "Thailand" shall mean the Kingdom of Thailand and shall cover any area adjacent to the sovereign waters of the Kingdom of Thailand which, under Thai law and in accordance with international law, falls under the legislation of the Kingdom of Thailand;

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

(d) the term "person" includes a natural person, a company and any other association of persons, as well as any entity considered to be a tax entity under the applicable tax law of each Contracting State;

(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" shall indicate, depending on the situation, 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 "tax" shall refer to Czech or Thai tax as appropriate;

(h) the term "national" means:

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

(ii) any legal person, personal company, association or any entity established under the law in force in a Contracting State;

(i) the term "international transport" shall mean any transport carried out by a ship or aircraft operated by an undertaking of a Contracting State where such transport is not carried out only between points in the second Contracting State; and

(j) in the case of the Czech Republic, the term "competent authority" refers to the Minister of Finance or his authorised representative and, in the case of Thailand, the Minister of Finance or his authorised representative.

2. Any term which is not otherwise defined shall have a Contracting State's meaning for the application of this Treaty 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 one 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, residence, place of registration, place of administration or any other similar criterion. However, this term does not include a person subject to taxation in that State solely because of income from resources 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 it is to be permanent in both States, it is assumed to be resident in the State to which it has closer personal and economic relations (centre of life interests);

(b) if it cannot be determined in which State the person has a centre of his or her life interests, or if he or she does not have a permanent residence in any State, 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 none of them, the competent authorities of the Contracting States shall amend the matter by mutual agreement.

3. Where, pursuant to paragraph 1, a person other than a natural person is resident in both Contracting States, the competent authorities of the Contracting States shall amend the matter by mutual agreement.

Permanent establishment

1. For the purposes of this Treaty, the term "permanent establishment 'shall refer to 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) the place of management;

(b) the plant;

(c) an office;

(d) the factory;

(e) workshop;

(f) mine, oil or gas site, quarry or other place where natural resources are extracted;

(g) a farm or plantation;

(h) a warehouse belonging to a person providing storage facilities for others;

(i) construction site or construction, assembly or installation project or monitoring activities linked thereto, if such site, project or activity persists for one or more periods exceeding six months in total;

(j) the provision of services, including consultancy, resident of one Contracting State through staff or other personnel, where activities of such a nature persist within the territory of the other Contracting State for one or more periods exceeding six months in total in any 12-month period.

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

(a) an establishment which is used only for the storage or display of goods belonging to the undertaking;

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

(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.

4. Where, notwithstanding the provisions of paragraphs 1 and 2, a person - other than an independent representative to whom paragraph 6 applies - acts in a Contracting State on the behalf of an undertaking of the other Contracting State, the undertaking shall be deemed to have a permanent establishment in the former Contracting State, provided that:

(a) it has at its disposal and normally uses the power of attorney in the former State, which allows it to conclude contracts on behalf of the undertaking, provided that the activities of that person are not limited to the purchase of goods for the undertaking;

(b) it does not have such power of attorney but normally maintains in the former State a supply of goods belonging to an undertaking from which it regularly carries out orders or carries out deliveries on behalf of an undertaking; or

(c) it does not have such a power of attorney, but normally provides orders in the former State exclusively or almost exclusively for the undertaking or for the undertaking and other undertakings controlled by it or having a decisive interest therein.

5. An undertaking of one Contracting State shall not be considered to have a permanent establishment in the other Contracting State only because it carries out its activities in that other State through a broker, a general agent or another independent representative, where such persons act in the course of their proper activities. However, where the activity of such a representative is carried out solely or almost exclusively on behalf of that undertaking or on behalf of that undertaking and of other undertakings controlled by it or having a decisive interest in it, it shall not be considered as an independent representative within the meaning of this paragraph.

6. 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 on 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 relating to immovable property apply, the right to ingest immovable property and the right to variable or fixed payments for mining or to be authorised to mine mineral deposits, springs and other natural resources; 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 income or profits of an undertaking of one Contracting State shall be subject to taxation only in that State, unless the undertaking carries out its activities in the other Contracting State through a permanent establishment situated there. If an undertaking carries out its activities in this way, the income or 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, subject to the provisions of paragraph 3 in each Contracting State, to revenue or 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 were wholly independent in contact with an 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 objectives pursued by that permanent establishment, including management expenses and general administrative expenses thus incurred, whether they arise in the State in which the permanent establishment is located or elsewhere. However, amounts which have been paid (other than as compensation for actual expenses) by the permanent management of the undertaking or by some of its other offices in the form of royalties, refunds or other similar salaries for the use of patents or other rights, or in the form of commission for specific services provided, for administration and management, or, in the case of a banking undertaking, in the form of interest on money lent to a permanent establishment shall not be allowed. Similarly, when determining the profits of a permanent establishment, the amounts by which a permanent establishment incurs (other than actual expenses) on the management of an undertaking or any other office in the form of royalties, refunds or other similar salaries for the use of patents or other rights, or in the form of commission for specific services rendered, for administration and management, or, in the absence of a banking undertaking, in the form of interest on the money lent to the management of the undertaking or some of its other offices.

4. Where, in a Contracting State, it is customary to determine the profits to be added to a permanent establishment on the basis of a certain percentage commission on the gross income of an undertaking or a permanent establishment or the distribution of the total profits of an undertaking by its various parts, the provisions of paragraph 2 shall not preclude that Contracting State from determining the profits to be taxed by this normal division; However, the method of distribution of profits used shall be such that the result complies with the principles set out in this Article.

5. No revenue or profits shall be added to the permanent establishment on the basis that it only purchased goods for the undertaking.

6. For the purposes of the preceding paragraphs, the revenue or profits to be attributed to a permanent establishment shall be determined in the same manner each year, unless there are sufficient grounds for otherwise.

7. Where revenue or profits include parts of income 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.

Transport by ship and air

1. The income or profits of an undertaking of a Contracting State on the operation of aircraft in international transport shall be subject to taxation only in that Contracting State.

2. The income or profits of an undertaking of one Contracting State on the operation of ships in international transport may be taxed in the other Contracting State, but the tax imposed in that other State shall be reduced to an amount equivalent to 50% of that tax.

3. The provisions of paragraphs 1 and 2 shall also apply to revenue or profits from participation in a pool, joint operation or an international operational organisation.

Associate undertakings

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 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 income or 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 income or profits of that undertaking and subsequently taxed.

Dividends

1. Dividends paid by a company resident in one Contracting State may be taxed in that other Contracting 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 thus determined shall not exceed 10% of the gross amount of dividends.

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, refers to income from shares or other rights, with the exception of receivables, with a share in profits, as well as income from other rights in companies subject to the same tax as income from shares under the laws of the State in which the company which differentiates profits is resident.

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 an industrial or commercial activity in the second Contracting State in which the dividend company is resident through a permanent establishment situated there or is engaged in an independent occupation in that other State through a permanent base situated there, and where the participation for which dividends are paid actually relates to that permanent establishment or to that permanent establishment. 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. Nothing in this paragraph shall prevent a Contracting State from imposing a tax under the law of that State on the transfer of profits by a permanent establishment situated there.

Interest

1. Interest having a source in one Contracting State which is received by a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which their source is in accordance with the law of that State, but where the recipient of interest is the beneficial owner of that State and the company resident in that other Contracting State, the tax thus charged shall not exceed 10% of the gross amount of interest when accepted by any financial institution (including the insurance company).

The competent authorities of the Contracting States shall, by mutual agreement, determine the method of applying this restriction.

3. Notwithstanding the provisions of paragraph 2, interest which a source has in one Contracting State and paid to the Government of the other Contracting State shall be exempt from tax in the former State.

For the purposes of this paragraph, the term "government"

(a) in the case of Thailand, means the Kingdom of Thailand's Royal Government and includes:

(i) Bank of Thailand;

(ii) Export-Import Bank of Thailand;

(iii) local authorities; and

(iv) such institutions whose capital is wholly owned by the Royal Government of the Kingdom of Thailand or by any local authority as may be agreed from time to time by the competent authorities of both Contracting States;

(b) in the case of the Czech Republic, means the Government of the Czech Republic and includes:

(i) the Czech National Bank;

(ii) a consolidation bank;

(iii) local authorities; and

(iv) institutions whose capital is wholly owned by the Government of the Czech Republic or by any local authority as may be agreed from time to time by the competent authorities of the Contracting States.

4. 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 having or not having the right to participate in the profits of the debtor and, in particular, income from government securities and income from bonds or bonds, including premiums and rewards associated with such securities, bonds or bonds, as well as income regarded by the tax laws of the Contracting State in which such income is sourced as similar to income from loans. Penalties for late payment shall also be considered interest for the purposes of this Article.

5. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of interest resident in a Contracting State is engaged in an industrial or commercial activity in the second Contracting State in which the interest is received through a permanent establishment situated there or through an independent profession located there, and where the claim on which the interest is paid actually relates to that permanent establishment or to that permanent establishment. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

6. Interest is assumed to have a source in one Contracting State, if the payer is the latter himself, its lower administrative department, the local office or resident of that State. However, if the person paying interest, whether resident in a Contracting State or not, has a permanent establishment or a permanent base in the Contracting State in respect of which the debt on which the interest is paid has been incurred and such interest is chargeable to such a permanent establishment or permanent base, the State in which the permanent establishment or permanent base is located shall be deemed to be the source of such interest.

7. Where the amount of interest relating to the claim on which it is paid exceeds the amount which the payer would have agreed with the beneficial owner if it were not for such a relationship, the provisions of this Article shall apply only to that last amount. In this case, the amount of the salary exceeding it shall be taxed under the legislation of each Contracting State, taking into account the other provisions of this Treaty.

Licence fees

1. Licensing fees having a source in one Contracting State paid to the resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which their source is located and in accordance with the legislation of that State, but if the beneficiary is the beneficial owner of the royalties, the amount of the tax thus determined shall not exceed:

(a) 5% of the gross amount of licence fees, where they are paid for the disposal or use or the provision of copyright rights for works of literary, artistic or scientific nature, other than cinematographic films, films or recordings used for radio or television broadcasting;

(b) 10% of the gross amount of licence fees, where they are paid for the disposal of patents, trade marks, designs or models, plans, secret formulas or procedures;

(c) 15% of the gross amount of royalties in other cases.

The competent authorities of the Contracting States shall, by mutual agreement, lay down the arrangements for applying such restrictions.

3. The term "licence fees' used in this Article refers to payments of any kind received as compensation for theft or use or for the grant of the right to use copyright for the work of literary, artistic or scientific, including cinematographic films and films or recordings for television or radio broadcasting, any patent, trademark, design or model, computer program, plan, secret formula or production process, or any industrial, commercial or scientific establishment, or to information which relates to experience acquired in the field of industrial, commercial or scientific.

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 situated there, or an independent profession through a permanent base situated there, and where the right or property giving rise to royalties is actually linked to that permanent establishment or permanent base. In such cases, 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 the licence fees relating to the use, right or information for which they are paid exceeds, as a result of the special relations existing between the payer and the beneficial owner, or which one or the other maintains with the third party, the amount which the payer would have agreed with the beneficial owner if it had not been for such relationships, the provisions of this Article shall apply only to that latter amount. In this case, the amount of the salary exceeding it shall be taxed 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 movable property which is part of the operating property of a permanent establishment held by an undertaking of a Contracting State in the other Contracting State or of 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 obtained from the disposal of such permanent establishment (alone or together with the whole undertaking) or such permanent base, may be taxed in that other State.

(3) Profit accruing to an undertaking of a Contracting State 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 that State.

4. Proceeds from the disposal of any property or property other than those referred to in paragraphs 1, 2 and 3 of this Article and in paragraph 3 of Article 12 shall be subject to taxation only in the Contracting State in which the transferee is resident. Nothing in this paragraph shall prevent the contracting States from taxing profits or income from the sale or transfer of shares or other securities.

Independent professions

1. Where a resident of a Contracting State receives income from a professional profession or other independent activities of a similar nature from a second Contracting State, he shall be liable to taxation in that other State, but only to the extent that such income can be attributed to services provided in that State. When determining the income attributable to these services, it shall be permitted to deduct the costs incurred for the provision of such services, including reasonable administrative expenses and management expenses incurred, whether they arise in the State in which the services are provided or elsewhere.

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 and 19, to taxation in that State only if the employment is not carried out in the other Contracting State. If there is employment there, the remuneration received 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 any 12-month period; 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, remuneration received on account of employment carried on board a ship or aircraft operating in international transport by an undertaking of one Contracting State shall be subject to taxation only in that Contracting State.

Tantiems

Tantiéms and other similar payments received by a resident of one Contracting State as a member of the board 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.

3. The provisions of paragraphs 1 and 2 of this Article shall not apply to the remuneration or profits, salaries, wages and other similar remuneration received from activities carried out in a Contracting State by an artist or athlete, provided that a visit to that Contracting State is, for a substantial part, paid from the public funds of the second Contracting State, including its local authorities and statutory bodies.

Pension

The pensions and other similar remuneration paid on account of former employment of a resident of a Contracting State shall be subject to taxation only in that State, subject to the provisions of paragraph 2 of Article 19.

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 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 because of the provision of such services.

2.

(a) Penalties paid either directly or from funds set up by a Contracting State, an administrative department or a local office of that State, a natural person for services rendered to that State, an administrative department or a local office 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 commercial or industrial activities carried out by a Contracting State, an administrative department or a local authority of that State.

Students and apprentices

1. A natural person who, immediately before visiting one Contracting State, was resident in the other Contracting State and whose visit in the former State takes place only for the purpose of:

(a) studies at a university or other recognised educational institution; or

(b) a teaching relationship with a view to the exercise of craft or trade; or

Citation	Communication from the Ministry of Foreign Affairs No. 229 / 1995 Coll., on the Agreement between the Government of the Czech Republic and the Royal Government of the Kingdom of Thailand on the avoidance of double taxation and the prevention of tax evasion in the field of income tax
Regulation Type	-
Author	-
Collection	Code of Laws

Date of Promulgation	13.10.1995
Effective from	14.08.1995
Effective until	-
Status	Valid

Communication from the Ministry of Foreign Affairs on the Treaty between the Government of the Czech Republic and the Royal Government of the Kingdom of Thailand on the avoidance of double taxation and the prevention of tax evasion in the field of income tax

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