Communication from the Ministry of Foreign Affairs No. 270 / 1996 Coll.
Communication from the Ministry of Foreign Affairs on the Treaty between the Czech Republic and the Republic of Albania on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
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International Treaty
Effective from 10.09.1996
Text versions:
22.10.1996
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270
COMMUNICATION
Ministry of Foreign Affairs
The Ministry of Foreign Affairs announces that on 22 June 1995 a Treaty was signed in Tirana between the Czech Republic and the Republic of Albania to avoid 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 instruments of ratification were exchanged in Prague on 10 September 1996.
The Treaty entered into force on 10 September 1996 pursuant to Article 29 (2) thereof.
The Czech translation of the Treaty is announced simultaneously. The English version of the Treaty can be consulted at the Ministry of Foreign Affairs and the Ministry of Finance.
TREATY
between the Czech Republic and the Republic of Albania
on the avoidance of double taxation and avoidance of tax evasion in the field of income and property taxes
the Government of the Czech Republic and the Government of the Republic of Albania,
Desiring, in order to further develop and facilitate their economic relations, to conclude a contract to avoid double taxation and prevent tax evasion in the field of income and property taxes,
agree as follows:
Persons covered by the contract
This contract shall apply to persons resident in one or both Contracting States (residents).
Taxes covered by the contract
1. This Treaty shall apply to income and property taxes imposed on behalf of a Contracting State or its local authorities, regardless of the way in which they are collected.
2. All taxes levied on total income, on total property or on parts of property or on income, including taxes on profits from the disposal of movable or immovable property, as well as taxes on the addition of property, shall be treated as income and property taxes.
3. The current taxes covered by the contract are:
(a) in Albania:
(i) corporate profit tax;
(ii) taxes on small business and commercial activities;
(iii) income taxes on natural persons;
(iv) property taxes;
(hereinafter referred to as "Albanian 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. The contract will also apply to any tax of the same or essentially similar kind which will be imposed upon signature of the contract in addition to or instead of current taxes. The competent authorities of the Contracting States shall communicate to each other any substantial 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 "Albania" refers to the Republic of Albania and, where used in geographical importance, the territory of the Republic of Albania, including territorial waters and any area beyond the territorial seas of the Republic of Albania, which, in accordance with the international law and legislation of the Republic of Albania, is the area on which the Republic of Albania may exercise its rights in respect of the seabed and subsoil and its natural resources;
(b) the term "Czech Republic" refers to the territory of the Czech Republic in which the sovereign rights of the Czech Republic may be exercised under Czech law and in accordance with international law;
(c) the terms "one Contracting State" and "the other Contracting State" refer to Albania or the Czech Republic as appropriate;
(d) the term "person" includes a natural person, a company and any other association of persons;
(e) the term "company" refers to any legal person or rightholder considered to be 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 and an undertaking operated by a resident of the other Contracting State;
(g) the term "national" means:
(i) any natural person who is a national citizen of a Contracting State;
(ii) any legal person, personal company or association established under the law in force in a Contracting State;
(h) the term "international transport" shall mean any transport by ship, aircraft or road vehicle operated by an undertaking which, instead of its actual management in one Contracting State, does not operate between points in the other Contracting State;
(i) the term "competent authority" refers to:
(i) in the case of Albania, the Minister for Finance or his authorised representative;
(ii) in the case of the Czech Republic, the Minister of Finance or his authorised representative.
2. With regard to the application of the contract by the contracting State, any term which is not defined here will have the meaning which falls under the law of that State, which regulates the taxes to which the contract applies, 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.
2. Where, pursuant to paragraph 1, a natural person is resident in both Contracting States, its status shall be determined as follows:
(a) be regarded as resident in the State in which he has a permanent residence; if it has a permanent residence in both States, it will be considered as resident of the State to which it has closer personal and economic relations (the Centre of Life Interests);
(b) if the State in which the person has a centre of his / her life interests cannot be designated or if he / she does not have a permanent residence in any State, he / she shall be regarded as resident of the State in which he / she normally resides;
(c) if he normally resides in both States or in none of them, he shall be regarded as resident of the State of which he is a national;
(d) where he 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 pursuant to paragraph 1, he shall be deemed to be resident in the State in which he or she is located instead of his or her actual management.
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;
(f) mine, oil or gas site, quarry or any other site of extraction of natural resources; and
(g) farm, plantation, ororvineyard.
3. the term "permanent establishment" also covers:
(a) the construction site, construction, assembly or installation project, or the associated supervision, but only if the construction, project or supervision lasts for more than nine months in any 12-month period beginning or ending in the relevant calendar year; and
(b) the provision of services, including advisory services, by the undertaking through employees or other personnel hired by the undertaking for such purpose, but only if the activities of such a type persist (for the same or associated project) in the country for one or more periods exceeding six months in total in any 12-month period beginning or ending in the relevant calendar year.
4. Notwithstanding the previous provisions of this Article, the term "permanent establishment 'shall not include:
(a) an establishment which is used only for the purpose of storing, issuing or supplying 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 of a preparatory or auxiliary nature.
5. Where, notwithstanding the provisions of paragraphs 1 and 2, a person - other than an independent representative to whom paragraph 6 applies - acts in one Contracting State on the behalf of an undertaking of the other Contracting State and has at its disposal and normally uses the full authority in that State to conclude contracts on behalf of an undertaking, that undertaking shall be deemed to have a permanent establishment in the former State in respect of all activities undertaken by that person for the undertaking, provided that the activities of that person are not limited to the activities referred to in paragraph 4 which, if carried out through a permanent establishment for business, would not constitute the existence of a permanent establishment in accordance with the provisions of this paragraph.
6. 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 activities of such a representative are devoted wholly or almost entirely to the interests of that undertaking, that representative shall not be considered as independent within the meaning of this paragraph.
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 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, accessories for immovable property, live and dead inventory used in agriculture and forestry, rights for which the provisions of civil law relating to land, the right to consume immovable property and the right to variable or fixed payments for mining or for the admission to mining of mineral deposits, springs and other natural resources apply. Ships, aircraft and road vehicles shall not be regarded as immovable property.
3. Paragraph 1 shall apply to revenue arising from the 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 business in the other Contracting State through a permanent establishment situated there. If 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 are attributable to:
(a) this permanent establishment;
(b) the sale of goods in that other State which is of the same or similar type as goods sold through 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, subject to the provisions of paragraph 3 in each Contracting State of that State, be attributed to the profits which it could have 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 an undertaking of which it is a permanent establishment.
3. In calculating the profits of a permanent establishment, it shall be permitted to deduct the costs incurred by an undertaking for the purposes of the business of that permanent establishment, including management costs and general administrative expenses thus incurred, whether they arise in the State in which the permanent establishment is situated or elsewhere.
4. Where, in a Contracting State, it is customary to determine the profits to be added to a permanent establishment on the basis of the distribution of the company's total profits by its different parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by this normal division; However, the method of distribution of profits used shall be such that the result is consistent with the principles contained in this Article.
5. A permanent establishment shall not make any profits on the basis that it only purchased goods for the undertaking.
6. Where profits include parts of income which are dealt with separately in other Articles of this Treaty, the provisions of those Articles shall be without prejudice to the provisions of this Article.
International transport
(1) Profit from the operation of ships, aircraft or road vehicles in international transport shall be subject to taxation only in the Contracting State in which the place of effective management of the undertaking is situated.
2. Where the actual management 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, failing that, in the Contracting State in which the operator of the ship is resident.
3. 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 the conditions which they have negotiated or imposed on them and which differ from those which would have been negotiated between independent undertakings, any profits which, if not for those conditions, would have been achieved by one of the undertakings but have not been achieved, may be included in the profits of that undertaking and subsequently taxed.
2. If one contracting State includes in the profits of the undertaking of that State and subsequently tax-exempt profits from 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 those two undertakings had been such as would have been agreed between the independent undertakings, the other State shall adjust accordingly the amount of tax levied on those profits in that State. 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.
3. Paragraph 2 shall not apply in the case of fraud, gross negligence or conscious negligence.
Dividends
1. Dividends paid by a company resident in one Contracting State 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 those dividends is resident, under the legislation of that State, but where the beneficiary is the beneficial owner of the dividends, the tax thus imposed shall not exceed:
(a) 5 per cent of the gross amount of dividends where the beneficial owner is a company (other than a personal company) which directly owns at least 25 per cent of the assets of the company paying dividends;
(b) 15 per cent 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, with a share in profits, as well as income from other rights to companies which, under the law of the State in which the company which differentiates profits is resident, are subject to the same tax 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 an industrial or commercial activity through a permanent establishment situated there or engaged in an independent occupation in that other State through a permanent base situated there and where the participation for which dividends are paid is actually linked to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Where a company which is resident in one Contracting State achieves profits or income from the other Contracting State, that other State may not tax dividends paid by the company, unless such dividends are paid to the resident of that other State or that the participation for which dividends are paid actually relates to a permanent establishment or a permanent base located in that other State, or to subject the company's undistributed profits to tax on the company's undistributed profits, even if the dividends paid or earnings distributed are wholly or partly derived from profits or income having a source in that other State.
Interest
1. Interest having a source in one Contracting State and paid to the resident of the other Contracting State shall be subject to taxation in that other State.
2. However, such interest may also be taxed in the Contracting State in which they have a source under the legislation of that State, but if the beneficiary is the beneficial owner of the interest, the tax thus imposed shall not exceed 5 per cent of the gross amount of interest.
The competent authorities of the Contracting States shall, by mutual agreement, adapt the method of application of this restriction.
3. Notwithstanding the provisions of paragraph 2, interest having a source in one Contracting State shall be exempt from taxation in that State if:
(a) the payment of interest shall be made by the Government of that Contracting State; or
(b) interest shall be paid to the Government of the other Contracting State or to any organisation, including banks and financial institutions, wholly owned by that other Contracting State.
4. The term "interest 'used in this Article shall refer to income on claims of any kind, whether secured or not by a lien on immovable property or having or not having the right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or bonds, including premiums and rewards associated with such securities, bonds or bonds. Penalties for late payment shall not be considered interest for the purposes of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply where the recipient of interest resident in a Contracting State is engaged in an industrial or commercial activity through a permanent establishment situated there or engaged in an independent occupation in that other State through a permanent base situated there and where the claim on which the interest is paid actually relates to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
6. Interest shall be assumed to have a source in the Contracting State if the payer is that State itself, the local office or resident of that State. However, where the interest payer, whether or not he is resident in a Contracting State, has a permanent establishment or a permanent base in the Contracting State, in conjunction with the debt on which the interest is paid, and such interest is charged to such a permanent establishment or permanent base, such interest shall be assumed to have a source in the State in which the permanent establishment or permanent base is located.
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 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.
Licence fees
1. Licensing fees having a source in one Contracting State and paid to the resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they have a source, under the legislation of that State, but where the beneficiary is the beneficial owner of the royalties, the tax thus imposed shall not exceed 10 per cent of the gross amount of 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 as a right to use any copyright for the work of literary, artistic or scientific including cinematographic films and films or recordings for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or production process, or for use or for the use of industrial, commercial or scientific equipment, or for 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 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 in that other State 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 that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Licensing fees are assumed to have a source in the Contracting State if the payer is the State itself, the local authority or the resident of that State. However, where a licence fee payer, whether or not resident in a Contracting State, has a permanent establishment or permanent base in a Contracting State, in conjunction with which a licence fee has been paid, and such royalties are charged to such a permanent establishment or permanent base, those royalties shall be presumed to have a source in the State in which the permanent establishment or permanent base is located.
6. Where the amount of royalties 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 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 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 received by 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 purpose of carrying out an independent occupation, including profits from the disposal of such permanent establishment (alone or together with the whole undertaking) or such permanent base, may be taxed in that other State.
3. Profit from the disposal of ships, aircraft or road vehicles operating in international transport or movable property used for the operation of such ships, aircraft or road vehicles shall be subject to taxation only in the Contracting State in which the place of effective management of the undertaking is situated.
(4) Profit from the disposal of any property other than those referred to in paragraphs 1, 2 and 3 shall be subject to taxation only in the Contracting State in which the transferee is resident.
Independent professions
1. Revenue received by a natural person resident in a Contracting State, from a professional profession or other similar activities of an independent nature shall be subject to taxation only in that State, except where such income may also be taxed in the other Contracting State:
(a) where that person has a permanent base at his / her disposal in the other Contracting State for the purpose of carrying out his / her activities; in that case only that part of the income attributable to this permanent base may be taxed in that other State; or
(b) if the stay of that person in the other Contracting State continues or exceeds, for one or more periods, a total of 183 days in any 12-month period beginning or ending in the relevant calendar year; in that case, only part of the income it receives from its activities in that other State may be taxed in that other State.
2. The term "free profession" shall include the particular independent activities of scientific, literary, artistic, educational or teaching and the independent activities of doctors, dentists, lawyers, engineers, architects and accounting experts.
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, 20 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. The remuneration received by a resident of a Contracting State on the grounds of employment in the other Contracting State shall, notwithstanding the provisions of paragraph 1, be subject to taxation only in the former State where all the following conditions are met:
(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 beginning or ending in the relevant calendar year; and
(b) remuneration shall be paid by an employer or on behalf of an employer who is not resident in the other State; and
(c) remuneration shall not be borne by a permanent establishment or a 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, aircraft or road vehicle operating in international transport may be taxed in the Contracting State in which the place of effective management 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 athlete does not originate from artists or athletes themselves but from other persons, that income may be taxed, irrespective of the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of an artist or athlete are carried out.
Pension
The pensions and other similar remuneration paid by a resident of a Contracting State on account of former employment shall be subject, subject to the provisions of Article 19 (2), to taxation only in that State.
Public functions
1. (a) Rewards, other than pensions, paid by one Contracting State or its local authority to a natural person for services rendered to that State or to the Office 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 proving these services.
2. (a) Any pension paid by one Contracting State or local authority of that State or paid from the funds they have set up shall be subject to taxation only in that State to a natural person for the services demonstrated by that State or local authority.
(b) Such pensions shall, however, be subject to taxation only in the other Contracting State if the natural person is resident and a national of that other State.
3. The provisions of Articles 15, 16 and 18 shall apply to the remuneration and pensions of services demonstrated in connection with an industrial or commercial activity carried out by a Contracting State or its local authority.
Students and apprentices
1. If 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 only for the purpose of his or her education or training, receives payments for the cost of nutrition, education or training, such payments shall not be taxed in that State provided that such payments derive from sources outside that State.
2. In addition, the student or apprentice referred to in paragraph 1 shall be entitled, in the course of such studies or training, to the same exemptions, reductions or reductions in taxes as for students or apprentices resident in the State in which he resides.
Professors and researchers
1. If, for a period not exceeding two years, a professor, teacher or researcher who is, or was, resident in a Contracting State immediately prior to his arrival in the other Contracting State and who is present in the former State for the purpose of carrying out advanced studies or research or teaching at a university, faculty, school or other educational institution, any remuneration for such work, such remuneration shall not be taxed in the former State provided that such remuneration is derived from sources outside that State.
2. The previous provisions of this Article shall not apply to research revenue 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 resident of a 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 revenue, other than income from immovable property, as defined in Article 6 (2), where the recipient of such revenue resident in one Contracting State carries out industrial or commercial activities in the other Contracting State through a permanent establishment situated there or engaged in an independent occupation in that other State from a permanent base situated there, and where the right or property for which revenue 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.
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Regulation Information
| Citation | Communication from the Ministry of Foreign Affairs No. 270 / 1996 Coll., on the Agreement between the Czech Republic and the Republic of Albania 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 | 22.10.1996 |
|---|---|
| Effective from | 10.09.1996 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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