Communication from the Ministry of Foreign Affairs No. 275 / 1997 Coll.
Communication from the Ministry of Foreign Affairs on the Treaty between the Czech Republic and the Portuguese Republic on the avoidance of double taxation and the prevention of tax evasion in the field of income taxes
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17.11.1997
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275
COMMUNICATION
Ministry of Foreign Affairs
The Ministry of Foreign Affairs states that the Treaty between the Czech Republic and the Portuguese Republic on 24 May 1994 was signed in Lisbon to prevent 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 1 October 1997.
The Treaty entered into force on 1 October 1997 pursuant to Article 28 (2) thereof.
The Czech version of the Treaty is hereby published at the same time. The English version of the Treaty, which is relevant for its interpretation, can be consulted by the Ministry of Foreign Affairs and the Ministry of Finance.
TREATY
between the Czech Republic and the Portuguese Republic
on the avoidance of double taxation and avoidance of tax evasion in the field of income tax
the Government of the Czech Republic and the Government of the Portuguese Republic,
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 levied on behalf of the Contracting State or its lower administrative departments or local authorities, whatever the method of collection.
2. All taxes levied on total income or on part of income, including taxes on profits from the disposal of movable or immovable property, taxes on the volume of wages and wages paid by undertakings, as well as taxes on the increase of assets, shall be treated as income taxes.
3. the current taxes to which the Treaty applies are:
(a) for Portugal:
(i) personal income tax (Imposto sobre o Rendimento das Pessoas Singulares - IRS);
(ii) corporate tax (Imposto sobre o Rendimento das Pessoas Coletivas - IRC); and
(iii) the local corporate tax premium (Derrama);
(hereinafter referred to as "Portuguese tax ');
(b) for the Czech Republic:
(i) income tax on natural persons; and
(ii) corporation tax;
(hereinafter referred to as the "Czech 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 "Portugal" means the territory of the Portuguese Republic situated on the European continent, the Azores and Madeira archipelago, the relevant territorial waters and any area in which, in accordance with Portuguese law and international law, the Portuguese Republic exercises its legislation or sovereign rights relating to the research and exploitation of natural resources of the seabed and its subsoil and associated waters;
(b) the term "Czech Republic" means the territory in which the tax laws of the Czech Republic apply;
(c) the terms "one Contracting State" and "the other Contracting State" refer to Portugal or the Czech Republic as appropriate;
(d) the term "person" includes a natural person, a company and any other association of persons; and
(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 "international transport" shall mean any transport by ship or aircraft operated by an undertaking whose place of effective management is in one Contracting State, except where the ship or aircraft is operated only between locations in the other Contracting State;
(h) the term "competent authority" shall mean:
(i) in the case of Portugal, the Minister of Finance, the Head of Taxation (Director- Geral das Contribuicoes e Impostos) or his authorised representative;
(ii) in the case of the Czech Republic, the Minister of Finance or his authorised representative;
(i) the term "national" means:
(i) any natural person who is a national citizen of a Contracting State;
(ii) any legal person, association or any entity established under the law in force in a Contracting State.
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 a Contracting State" shall mean any person who, under the law of that State, is subject to taxation in that State on account of his residence, permanent residence, place of administration or any other similar criterion. However, this term does not include a person subject to taxation in that State solely 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 he has a permanent residence in both States, he is presumed to be resident in the State to which he has closer personal and economic relations (centre of life interests);
(b) if it cannot be determined in which State the person has a centre of his or her life interests or if he or she does not have a permanent residence in 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 a person other than a natural person is resident in both Contracting States in accordance with paragraph 1, he shall be presumed to be resident in the State in which the place of his actual management is situated.
Permanent establishment
1. For the purposes of this Treaty, the term "permanent establishment 'shall refer to a permanent establishment for the business 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; and
(f) mine, oil or gas site, quarry or other place where natural resources are extracted.
3. The construction site, construction, assembly or installation project or supervision associated with it shall be considered as a permanent establishment only if it lasts more than 12 months.
4. Notwithstanding the previous provisions of this Article, the term "permanent establishment 'shall not include:
(a) an establishment which is used only for the storage, display or supply of goods belonging to the undertaking;
(b) the supply of goods belonging to an undertaking which is maintained only for storage, display or delivery;
(c) a stock of goods belonging to an undertaking which is maintained only for the purpose of processing by another undertaking;
(d) permanent business equipment which is maintained only for the purpose of purchasing goods or collecting information for the undertaking;
(e) permanent business equipment which is maintained only for the purpose of any other activity of a preparatory or ancillary nature for the undertaking; and
(f) a permanent establishment for business which shall be maintained only for the exercise of any combination of the activities referred to in (a) - (e) where the total activity of the permanent establishment resulting from that concentration is of a preparatory or ancillary nature.
5. Where, notwithstanding the provisions of paragraphs 1 and 2, a person - other than an independent representative to whom paragraph 6 applies - acts on the behalf of an undertaking in a Contracting State and has at its disposal and normally has the power to conclude contracts on behalf of an undertaking, that undertaking shall be deemed to have a permanent establishment in that State in respect of all activities carried out by that person for the undertaking, provided that the activities of that person are not limited to the activities referred to in paragraph 4 which, if carried out through a permanent establishment, would not constitute the existence of a permanent establishment in accordance with the provisions of this paragraph.
6. Subject to the provisions of paragraphs 4, 7 and 8 of this Article, an undertaking of a Contracting State which carries on activities of a lasting nature consisting of the provision of services, including consultancy or management in the other Contracting State, through its own staff or other personnel hired by the undertaking for that purpose, shall be deemed to have a permanent establishment in that other State, but only if the activities of that nature continue there for one or more periods exceeding a total of 12 months in a 15-month period.
7. An undertaking shall not be deemed to have a permanent establishment in a Contracting State only because it carries on its business in that State through a broker, a general agent or any other independent agent, where such persons act in the course of their proper activities.
8. The fact that a company that is resident in one Contracting State controls the company or is controlled by a company that is resident in the other Contracting State or that carries out its activities there (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 for which the provisions of civil law applicable to land, buildings, the right to consume immovable property and the right to variable or fixed salaries for mining or for the admission to mining mineral deposits, springs and other natural resources; ships and aircraft shall not be considered immovable 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.
5. The previous provision also applies to income from movable property which, under the tax laws of the Contracting State in which the property in question is situated, belongs to income from immovable property.
Profits of enterprises
1. The profits of an undertaking of one Contracting State shall be subject to taxation only in that State if the undertaking does not carry out its activities in the other Contracting State through a permanent establishment situated there. Where an undertaking carries out its activities in this way, the profits of the undertaking may be taxed in that other State, but only to the extent that they can be attributed to that permanent establishment.
2. Where an undertaking of a Contracting State carries out 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 of that State, to profits which could have been achieved if, as a separate undertaking, it had been engaged in the same or similar activities under the same or similar conditions and was wholly independent in contact with the undertaking of which it is a permanent establishment.
3. In calculating the profits of a permanent establishment, the costs incurred by an undertaking for the objectives pursued by that permanent establishment, including management costs and general administrative expenses thus incurred, shall be deducted 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 various parts, the provisions of paragraph 2 of this Article shall not preclude that Contracting State from determining the profits to be taxed by this normal distribution; However, the method of distribution of profits used shall be such that the result complies with the principles set out in this Article.
5. A permanent establishment shall not make any profits on the basis that it only purchased goods for the undertaking.
(6) For the purposes of the preceding paragraphs, the profits to be attributed to a permanent establishment shall be determined in the same way each year, unless there are sufficient grounds for otherwise.
7. Where profits include revenue which is 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. Profit from the operation of ships or aircraft in international transport shall be subject to taxation only in the Contracting State in which the head office of the undertaking's actual management is located.
2. Where the head office of a shipping undertaking is on board a ship, it shall be deemed to be located in the Contracting State in which the home port of that ship is situated or, in the absence of such a home port, in the Contracting State in which the operator of the ship is resident.
3. Paragraph 1 shall also apply to profits arising from participation in a pool, joint operation or an international operational organisation.
Associate undertakings
1.
(a) the undertaking of one Contracting State participates, directly or indirectly, in the management, control or capital of the undertaking of the other Contracting State; or
(b) the same persons are directly or indirectly involved in the management, control or capital of the undertaking of one Contracting State and of the undertaking of the other Contracting State;
and if, in such cases, both undertakings are bound in their commercial or financial relations by conditions which have been agreed or imposed on them and which differ from those which would have been negotiated between independent undertakings, any profits which, if not for those conditions, would have been achieved by one of the undertakings but have not been achieved, may be included in the profits of that undertaking and subsequently taxed.
2. If one contracting State includes in the profits of the undertaking of that State - and subsequently taxes - the profits from which the undertaking of the other contracting State was taxed in that other State, and the profits thus included are profits which are considered by the former State as profits which would have been achieved by the undertaking of the first State if the conditions agreed between the undertakings were such as would have been agreed between the independent undertakings, the latter State may 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.
Dividends
1. Dividends paid by a company resident in one Contracting State to a resident in the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State in which the company which pays them is resident under the legislation of that State, but where the beneficiary is the beneficial owner of dividends, the tax thus determined shall not exceed 15% of the gross amount of dividends.
This paragraph shall not affect the taxation of the profits of the company on which dividends are paid.
3. Notwithstanding the provisions of paragraph 2, where the beneficial owner of dividends is a company which, for a continuous period of two years prior to the payment of dividends, owns directly at least 25% of the capital of the company paying dividends, the tax thus determined shall not exceed 10% of the gross amount of dividends in respect of dividends paid after 31 December 1996.
4. The term "dividends' used in this Article refers to income from shares, profit participation certificates or other rights of incorporation or other rights, with the exception of receivables, with a share in profit, as well as income from other rights in companies subject to the same taxation as income from shares under the tax legislation of the State in which the company which divides profits is resident. The term also includes profits due under the profit participation agreement.
5. 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.
6. Where a company which is resident in one Contracting State achieves profits or income from the other Contracting State, that other State may not tax dividends paid by the company, unless such dividends are paid to the resident of that other State, or that the participation for which dividends are paid actually belongs to a permanent establishment or a permanent base located in that other State, or subject the company's undistributed profits to the tax on undistributed profits, even if the dividends paid or retained earnings are wholly or partly derived from profits or income obtained in that other State.
Interest
1. Interest having a source in one Contracting State 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, under the law of that State, but if the recipient of interest is its beneficial owner, the tax thus calculated shall not exceed 10% of the gross amount of interest.
3. Notwithstanding the provisions of paragraph 2, interest which a source has in one Contracting State shall be exempt from taxation in that State:
(a) where the government of that State or its local office is the debtor of that interest; or
(b) where interest is paid to the Government of the other Contracting State or its local office or other institution (including the financial institution) in conjunction with its supported financing by agreement between the Governments of the Contracting States; or
(c) for loans or loans granted:
(i) for the Czech Republic
- Czech National Bank,
- a consolidation bank; and
(ii) for Portugal
- Caixa Geral de Depositos,
- Banco Nacional Ultramarino (BNU),
- Banco de Fomento e Exterior (BFE),
- Banco Borges & Irmao, and
- ICEP - Investimentos, Comércio e Turismo de Portugal.
4. The term "interest 'used in this Article refers to income on 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 debtor's profit, 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) Paragraphs 1, 2 and 3 shall not apply where the beneficial owner of interest resident in one Contracting State is engaged in an industrial or commercial activity in the other 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, where a person paying interest, whether or not resident in a Contracting State, has a permanent establishment or a permanent base in the Contracting State in respect of which the interest is paid has been incurred and such interest is borne by 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, as a result of the special relations existing between the payer and the beneficial owner of the interest, or which are maintained by one or the other with a third party, the amount which the payer would have agreed with the beneficial owner if it had not been for such relations, the provisions of this Article shall apply only to that 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 paid by a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which their source is located and in accordance with the legislation of that State, but if the beneficiary is the beneficial owner of the royalties, the amount of tax thus determined shall not exceed 10% of the gross amount of the royalties.
3. The term "licence fees' used in this Article refers to payments of any kind received as compensation for use or for the grant of the right to use the copyright for the work of literary, artistic or scientific including cinematographic films and films or recordings for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or production process or any industrial, commercial or scientific establishment, 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 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 this case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Licensing fees are assumed to have a source in the Contracting State if the payer is the State itself, its administrative department, local authority or resident of that State. However, where a licence fee payer, whether or not resident in a Contracting State, has a permanent establishment or a permanent base in a Contracting State, in conjunction with which a licence fee has been charged to a permanent establishment or permanent base, it is assumed that such licence fees have a source in the Contracting State in which the permanent establishment or permanent base is located.
6. Where the amount of royalties relating to the use, right or information for which they are paid exceeds the amount which the payer would have agreed with the beneficial owner if it were not for such relationships, the provisions of this Article shall apply only to that last amount. In this case, the amount of 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 from the disposal of ships or aircraft operating in international transport or movable property serving the operation of such ships or aircraft shall be subject to taxation only in the Contracting State in which the head office of the undertaking's actual management is located.
(4) Profit from the disposal of assets 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 person residing in one Contracting State from a liberal profession or other independent activities of a similar nature shall be subject to taxation only in that State, provided that the recipient does not normally have a permanent basis in the other Contracting State for the purpose of carrying out such activities. If such a permanent base is available, income may be taxed in the other Contracting 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 separate activities of doctors, lawyers, engineers, architects, dentists and accountants.
Employment
1. Salaries, wages and other similar remuneration received by a resident of a Contracting State on account of employment shall be subject, subject to the provisions of Articles 16, 18, 19, 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. 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) 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 may be taxed in the Contracting State in which the actual management of the undertaking is located.
Tantiems
Tantiéms and similar remuneration received by a resident of one Contracting State as a member of the Management Board or another similar body of a company resident in the other Contracting State may be taxed in that other State.
Artists and athletes
1. Revenue received by a resident of a Contracting State as a public performer, such as a theatre, film, radio or television artist or musician or as an athlete from such personally performed activities in the other Contracting State may be taxed in that other State, irrespective of the provisions of Articles 14 and 15.
2. Where the income from activities personally carried out by an artist or an athlete does not result from such an artist or athlete alone but from another person, that income may be taxed, irrespective of the provisions of Articles 7, 14 and 15, in the Contracting State in which the artist or athlete carries out his activity.
3. The revenue referred to in this Article, notwithstanding the provisions of paragraphs 1 and 2 of this Article, shall be exempt from taxation in the Contracting State in which the artist or athlete carries out his or her activity, provided that the activity is largely borne by the public funds of that State or of the other State or is carried out by a cultural agreement between the Contracting States.
Pension
Pensions and similar salaries 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 Article 19 (2).
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 for the purpose of proving these 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, to 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
Salaries received by a student or apprentice who is, or was, resident in a second Contracting State immediately prior to visiting a Contracting State and residing in the former State only for the purpose of study or training, shall not be taxed in that State for the purpose of their education or training, provided that such salaries have a source outside that State.
Professors and researchers
Remuneration for teaching or scientific research which a person who is, or was, a resident of one Contracting State in the other Contracting State, and who is present in the former State for a period not exceeding two years, for the purpose of scientific research or teaching at a university, university, higher education institution, research institute or other similar establishment, shall be exempt from taxation in the former State provided that the purpose of all these institutions is not to generate profits and that income comes from sources outside that State.
Other revenue
1. The income of a person resident in 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. The provisions of paragraph 1 shall not apply to income other than income from immovable property as defined in Article 6 (2), where the recipient of such income resident in one Contracting State carries out business activities in the other Contracting State through a permanent establishment situated there or carries out an independent profession in that other State from a permanent establishment situated there, and where the right or property for which the income is paid is actually linked to such permanent establishment or permanent establishment. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
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Regulation Information
| Citation | Communication from the Ministry of Foreign Affairs No. 275 / 1997 Coll., on the Agreement between the Czech Republic and the Portuguese Republic on the avoidance of double taxation and the prevention of tax evasion in the field of income tax |
|---|---|
| Regulation Type | International Treaty |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 17.11.1997 |
|---|---|
| Effective from | 01.10.1997 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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