Communication from the Ministry of Foreign Affairs No. 276 / 1997 Coll.

Q: Is Communication from the Ministry of Foreign Affairs No. 276 / 1997 Coll. still valid?

Yes, Communication from the Ministry of Foreign Affairs No. 276 / 1997 Coll. is still valid and effective.

276

COMMUNICATION

Ministry of Foreign Affairs

The Ministry of Foreign Affairs announces that on 30 September 1996 the Treaty between the Czech Republic and the United Arab Emirates was signed in Washington 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 Treaty entered into force on 9 August 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 United Arab Emirates on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes

the Czech Republic and the United Arab Emirates,

Desiring to promote and strengthen economic relations by concluding a double taxation agreement and preventing tax evasion in the field of income and property taxes,

agree as follows:

Persons to whom the Treaty applies

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

Taxes to which the Treaty applies

1. This Treaty shall apply to income and property taxes levied on behalf of each of the Contracting States or its lower administrative departments or local authorities or local governments, whatever the method of collection.

2. All taxes levied on total income, on total assets or on parts of income or on assets, including taxes on profits from the disposal of movable or immovable property, taxes on total wages or salaries paid by undertakings as well as taxes on the increase of assets, shall be regarded as income and property taxes.

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

(a) in the case of United Arab Emirates:

(i) income tax;

(ii) company tax;

(hereinafter referred to as "UAE tax ');

(b) for the Czech Republic:

(i) income tax on natural persons;

(ii) corporation tax;

(iii) real estate tax;

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

4. This Treaty shall also apply to any tax of the same or, in principle, similar kind which will be imposed upon signature of this Treaty in addition to or in place of the current taxes referred to in paragraph 3. The competent authorities of the Contracting States shall communicate to each other any substantial changes to be made to their respective tax laws within a reasonable period of time following such changes.

General definitions

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

(a) the terms "one Contracting State" and "the other Contracting State" refer to the Czech Republic or the United Arab Emirates as relevant;

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

(c) the term "United Arab Emirates," when used in geographical importance, means the territory of the United Arab Emirates, including its sovereign waters, islands, airspace, seabed, subsoil and their natural resources, in which the United Arab Emirates exercises its sovereign rights in accordance with international law;

(d) the term "tax" refers, as appropriate, to UAE or Czech tax;

(e) the term "person" shall include a natural person, company or any other association of persons established under the law of a Contracting State;

(f) the term "company" refers to any legal person or any rightholder considered to be a legal person for taxation purposes;

(g) the terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" shall indicate, according to the context, an undertaking operated by a resident of one Contracting State and an undertaking operated by a resident of the other Contracting State;

(h) the term "national" means:

all natural persons who are nationals of a Contracting State and all legal persons, personal companies and associations established under the legislation in force in a Contracting State.

2. The term "international transport" shall mean any transport of ships, boats or aircraft operated by an undertaking of one Contracting State, except where a ship, boat or aircraft is operated only between points in the other Contracting State.

3. the term "competent authority" shall mean:

(a) in the case of the UAE, the Minister for Finance and Industry or his authorised representative; and

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

4. In the implementation of this Treaty by one of the Contracting States, any term not defined therein shall have the meaning which it is entitled to under the legislation of that State, which regulates the taxes to which the Treaty applies, unless the link requires a different interpretation.

Resident

1. For the purposes of this Treaty, the term "resident of one Contracting State" shall mean a person who, under the legislation 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 any person who is subject to taxation in that State solely because of income from resources in that State or of assets placed there.

2. For the purposes of paragraph 1, the term "resident 'shall include:

(a) the Government of a Contracting State or any lower administrative department or local authority or local government of that State;

(b) any government body established under public law, such as the Central Bank, funds, associations, offices, foundations, agencies or any other similar organisation established in a Contracting State;

(c) any intergovernmental organisation established in a Contracting State whose assets are shared by the Contracting State together with other States.

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

(a) it is assumed that this person is resident in the Contracting State in which he has a permanent residence. If it has a permanent residence in both Contracting States, it is assumed to be a resident of the Contracting State to which it has closer personal and economic relations (the Centre of Life Interests);

(b) where it cannot be determined in which Contracting State the person has a centre of his or her life interests, or where he or she does not have a permanent residence in any Contracting State, he / she shall be presumed to be resident in the Contracting State in which he / she normally resides;

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

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

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

Permanent establishment

1. For the purposes of this Treaty, the term "permanent establishment" shall mean a permanent place of business through which the business of the undertaking is wholly or partly carried on.

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 place where natural resources are extracted;

(g) a farm or plantation.

3. the term "permanent establishment" also covers:

(a) construction site, construction, assembly or installation project or supervision associated with it, but only if such construction, project or supervision lasts for more than 12 months;

(b) the provision of services, including advisory services, by an undertaking of one Contracting State through employees or other workers in the other Contracting State, but only where activities of that 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.

4. Notwithstanding the provisions of paragraphs 1 to 3, the term "permanent establishment 'shall not include:

(a) an establishment which is used only for the purpose of storing or issuing goods belonging to an 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) a permanent place of business which is maintained only for the purpose of purchasing goods or collecting information for the undertaking;

(e) a permanent place of business which is maintained solely for the purposes of advertising, the provision of information, scientific research or similar activities which are of a preparatory or ancillary nature to the undertaking;

(f) the sale of goods belonging to an undertaking issued within the framework of an occasional temporary trade fair or exhibition after the completion of such trade fair or exhibition, provided that the interested parties or companies have complied with all requirements in the relevant Contracting States;

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

5. Where, notwithstanding the provisions of paragraphs 1 and 2, a person - other than an independent representative to whom paragraph 6 applies - acts in one Contracting State on the behalf of an undertaking of the other Contracting State, that undertaking shall be deemed to have a permanent establishment in the former Contracting State in respect of all activities undertaken by that person for the undertaking if that person:

(a) has and usually uses an authorisation in that State to conclude contracts on behalf of an undertaking where the activities of such a person are not limited to the activities referred to in paragraph 4 which, if they were carried out through a permanent place of business, would not constitute a permanent establishment from that permanent place of business in accordance with the provisions of this paragraph; or

(b) it does not have such authorisation but normally maintains in the former State a supply of goods from which it regularly supplies the goods on behalf of the undertaking.

6. A broker, agent or other independent representative who merely acts as an intermediary between an undertaking of one Contracting State and any future customer in the other Contracting State shall not be regarded as a permanent establishment in that other Contracting State if such persons act in the course of their proper activities. However, where the activities of such a representative are wholly or almost entirely devoted 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 which is a resident of one Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries out its activities in that other State (whether through a permanent establishment or otherwise) does not in itself constitute a permanent establishment of any other company.

Revenue from immovable property

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

2. The term "immovable property" shall have such meaning as it may have under the law of the Contracting State in which such property is situated. The term covers, in any case, the accessories of immovable property, the live and dead inventory used in agriculture and forestry, the rights to which the provisions of civil law applicable to land, buildings, the right to consume immovable property and the right to variable or fixed payments for mining or 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 revenue received from direct use, hire or any other use of immovable property.

(4) Paragraphs 1 and 3 shall also apply to income from the company's immovable property and to income from immovable property used for the pursuit of an independent profession.

Profits of enterprises

1. The profits of an undertaking of one Contracting State shall be subject to taxation only in that State if the undertaking does not carry out its activities in the other Contracting State through a permanent establishment situated there. If an undertaking carries out its activities in this way, the profits of the undertaking may be taxed in the other State, but only to the extent that they can be attributed to this 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 of that permanent establishment, to profits which could have been achieved if it had been engaged in the same or similar activities as a separate undertaking under the same or similar conditions and was wholly independent in contact with the undertaking of which it is a permanent establishment.

3. In calculating the profits of a permanent establishment, it shall be permitted to deduct the costs incurred for the objectives pursued by the permanent establishment, including management costs and general administrative expenses thus incurred, whether they arise in the State where the permanent establishment is located or elsewhere.

4. Where, in a Contracting State, it is customary to determine the profits to be added to a permanent establishment on the basis of the distribution of the company's total profits by its different parts, nothing in this Article shall preclude that Contracting State from determining the profits to be taxed by this normal distribution; However, the method of division 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 added to a permanent establishment shall be determined in the same way each year, unless there are sufficient grounds for otherwise.

7. Where profits include parts of income 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.

Transport by ship and air

1. The profits of an undertaking of a Contracting State from the operation of ships, boats or aircraft in international transport shall be subject to taxation in that State only, notwithstanding the provisions of Article 7.

2. The profits of an undertaking of a Contracting State from the accidental use, maintenance or hire of containers, including towing boats and related container transport equipment used for the carriage of goods, shall be subject to taxation in that State only, irrespective of the provisions of Article 7, except where such containers are used for the carriage of goods only between points in the other Contracting State.

(3) Paragraphs 1 and 2 shall also apply to profits arising from participation in a pool, joint operation or an international operational organisation.

4. For the purposes of paragraph 1:

(a) the term "profits" includes:

(i) profits, net profits, gross revenue and revenue directly resulting from the operation of ships, boats or aircraft in international transport; and

(ii) interest on the amounts accruing directly from the operation of ships, boats or aircraft in international transport where such interest is incidental to the operation,

and received by a person operating ships, boats or aircraft;

(b) the term "operation of ships, boats or aircraft" includes:

(i) hire or hire of ships, boats or aircraft,

(ii) renting of containers and related equipment; and

(iii) the disposal of ships, boats, aircraft or containers and associated equipment;

that person, if such rental, hire or disposal is accidental in relation to the operation by that person of ships, boats or aircraft in international transport.

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 participate, directly or indirectly, 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 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.

Dividends

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

2. However, such dividends may also be taxed in the Contracting State of which the company which pays them is resident under the legislation of that State, but where the beneficial owner of dividends is resident in the other Contracting State, the tax thus imposed shall not exceed 5% of the gross amount of dividends.

3. Notwithstanding the provisions of paragraphs 1 and 2, dividends paid by a company resident in a Contracting State shall not be subject to taxation in that State if the beneficial owner of the dividends is:

(a) the Government of the second Contracting State or any government or organisation of that State;

(b) a company resident in a second Contracting State whose property is owned, directly or indirectly, by at least 25% of the government or government of that other Contracting State.

4. The provisions of paragraphs 2 and 3 shall not affect the taxation of the profits of the company on which dividends are paid, taking into account the Foreign Investment Act.

5. The term "dividends" used in this Article refers to income from shares, profit or loss shares, coupons, founding shares or other rights, with the exception of receivables, with a profit participation, as well as income from other rights in companies subject to the same tax regime as income from shares under the legislation of the State of which the company which differentiates profits is resident.

(6) Paragraphs 1, 2 and 3 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 located there in the other Contracting State of which the dividend company is resident, or where the participation for which the dividends are paid is actually linked to that permanent establishment or permanent establishment located in that other State of residence. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

7. 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 a 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 a resident of the other Contracting State shall be subject to taxation only in that other Contracting State if that resident is the beneficial owner of the interest.

2. The term "interest 'used in this Article shall refer to income from claims of any kind, 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 winnings related to such securities, bonds or bonds. Penalties imposed as late payments shall not be considered interest for the purposes of this Article.

3. The provisions of paragraph 1 shall not apply where the beneficial owner of interest resident in a 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 in that other State in an independent profession from a permanent base situated there, and where the claim on which interest is paid actually relates to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.

4. Where the amount of interest relating to the claim on which it is paid exceeds, as a result of special relations between the payer and the beneficial owner or between both of them and any other person, 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 payments 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 beneficial owner of the royalties is resident in the other Contracting State, the tax thus imposed shall not exceed 10% of the gross amount of royalties.

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 television or radio 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 that relates to experience acquired in the field of industrial, commercial or scientific, but does not include payments for mining or quarrying of natural resources.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of a licence fee resident in a Contracting State is engaged in a source, industrial or commercial activity through a permanent establishment situated there or in a permanent establishment situated there in that other State, and where the right or property giving rise to royalties is actually linked to that permanent establishment or permanent establishment. 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 lower administrative department, the local authority or local government of that State 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, such licence fees shall be presumed to 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, as a result of the special relationship between the payer and the beneficial owner or between both of them and any other person, 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 payments 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 (2) and 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 an operating property of a permanent establishment which is owned by an undertaking of one Contracting State in the other Contracting State, or of movable property belonging to a permanent base which is owned by a resident of one Contracting State 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, boats or aircraft operating in international transport and movable property used to operate such ships, boats or aircraft 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 assets other than those referred to in paragraphs 1 to 3 shall be subject to taxation only in the Contracting State of residence of which the transferee is resident.

Independent professions

1. Revenue received by a resident of a Contracting State of a professional or other activity of an independent nature shall be subject to taxation only in that State, provided that such resident does not regularly have a permanent basis in the other Contracting State to carry out his activities. If it has such a permanent base, income can be taxed in the other State, but only to the extent that it can be attributed to that permanent base.

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

Employment

1. Salaries, wages and other similar remuneration received by a resident of a Contracting State from employment shall be subject, subject to the provisions of Articles 18, 19 and 20, 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 may be taxed in that other State.

(2) The remuneration received by a resident of a Contracting State from 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 be employed in the other Contracting State for one or more periods not exceeding 183 days in total in any 12-month period beginning or ending in the relevant tax year; and

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

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

3. Notwithstanding the previous provisions of this Article, remuneration received by a resident of a Contracting State from an employment carried on board a ship, boat or aircraft operating in international transport shall be subject to taxation only in that Contracting State.

Students

Payments received by a student or apprentice who, or immediately before his or her arrival in a Contracting State, was resident in a second Contracting State and who is resident in the former State for the sole purpose of his or her education or training, shall not be subject to taxation in that State in order to compensate for the costs of his or her nutrition, education or training, provided that such payments originate from sources outside that law.

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, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of an artist or athlete are carried out.

Tantiems

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

Pensions and annuities

1. Pensions, annuities and other similar salaries paid to a resident of a Contracting State by reason of former employment shall, subject to the provisions of Article 20 (2), be subject to taxation only in that State.

2. The term "pensions, annuities and other similar salaries" used in this Article refers to repeated post-retirement payments due to former employment or to compensation for damage arising from former employment.

Public functions

1. (a) Rewards other than pensions paid by one Contracting State or by a lower administrative department or local authority or local government of that State to a natural person for services rendered to that State or branch or office or government shall be subject to taxation only in that State.

(b) Such remuneration shall, however, 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) it did not become a resident of that State solely because of the provision of such services.

2. (a) Any pension paid by a Contracting State or a lower administrative department or local authority or local government of that State or paid from the funds they have set up shall be subject to taxation only in that State for the services shown to that State or department or government.

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

3. The provisions of Articles 15, 18 and 19 shall apply to the remuneration and pensions of services shown in connection with an industrial or commercial activity carried out by a Contracting State or a lower administrative department or local authority or local government of that State.

Other revenue

Parts of the income of a resident of a Contracting State, wherever they have a source which is not specifically referred to in the previous Articles of this Treaty, shall be subject to taxation only in that State.

Property

1. Property represented by the immovable property referred to in Article 6 which is owned by a resident of one Contracting State and which is located in the other Contracting State may be taxed in that other State.

2. Property represented by movable property which is part of the operating property of a permanent establishment which has an undertaking of one Contracting State in the other Contracting State, or movable property which belongs to a permanent base which is owned by a resident of one Contracting State in the other Contracting State for the purpose of carrying out an independent occupation, may be taxed in that other State.

Citation	Communication from the Ministry of Foreign Affairs No. 276 / 1997 Coll., on the Agreement between the Czech Republic and the United Arab Emirates 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	17.11.1997
Effective from	09.08.1997
Effective until	-
Status	Valid

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

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