Decree of the Minister for Foreign Affairs No. 30 / 1981 Coll.
Decree of the Minister for Foreign Affairs on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Cyprus on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
Valid
Effective from 30.12.1980
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30
DECLARATION
Minister for Foreign Affairs
of 26 January 1981
on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Cyprus on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
On 15 April 1980, the Treaty between the Czechoslovak Socialist Republic and the Republic of Cyprus on the prevention of double taxation and the prevention of tax evasion in the field of income and property taxes was signed in Prague.
The Treaty was approved by the Federal Assembly of the Czechoslovak Socialist Republic and ratified by the President of the Republic.
The Treaty entered into force pursuant to Article 29 thereof on 30 December 1980.
The Czech translation of the text of the Treaty is announced simultaneously.
Minister:
Ing. Chupek v. r.
TREATY
between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Cyprus on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
Government of the Czechoslovak Socialist Republic and Government of the Republic of Cyprus,
awareness of the need to facilitate trade and promote economic cooperation in accordance with the Final Act of the Conference on Security and Cooperation in Europe,
Decided to conclude a Double Taxation Treaty and prevent tax evasion in the field of income and property taxes. To this end, they have agreed as follows:
Persons to whom the Treaty applies
This Treaty shall apply to persons residing or having their registered office in one or both Contracting States.
Taxes to which the Treaty applies
1. This Agreement shall apply to income and property taxes levied on each Contracting State, its lower administrative departments or local authorities, whatever the method of collection.
2. All taxes levied on total income, on all or part of the income or assets, including taxes on profits arising from the disposal of movable or immovable property and taxes on the total amount of wages paid by undertakings, shall be regarded as income and property taxes.
3. The current taxes to which the Treaty applies are:
(a) in Czechoslovakia:
profit payment and profit tax
payroll tax,
income tax on literary and artistic activities,
agricultural tax,
population income tax,
home tax; and
capital contribution
(hereinafter referred to as "Czechoslovak Tax ');
(b) in Cyprus:
income tax; and
special contribution
(hereinafter referred to as "Cyprus tax ').
4. The contract will also apply to all identical or substantially similar taxes which will be imposed upon signature of the contract in addition to or in place of current taxes. The competent authorities of the Contracting States shall notify each other of any significant changes to be made to their respective tax laws.
General definitions
1. In this Treaty, unless the link requires a different interpretation:
(a) The term "Czechoslovakia" refers to the Czechoslovak Socialist Republic.
(b) The term "Cyprus" shall refer to the Republic of Cyprus and shall include any area adjacent to the territorial waters of Cyprus which has been or may be designated in accordance with international law under the laws of Cyprus on the mainland as an area above which the rights of Cyprus to the seabed and its subsoil and their natural resources may be exercised.
(c) The terms "one Contracting State" and "the other Contracting State" refer to the context of Czechoslovakia or Cyprus.
(d) The term "person" includes natural persons, companies and any other association of persons.
(e) The term "company" shall refer to any legal person or substance considered to be a legal entity for tax purposes.
(f) The terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" shall refer to an undertaking operated by a person resident or established in one Contracting State or, where appropriate, an undertaking operated by a person residing or having its registered office in the other Contracting State.
(g) The term "member" shall mean:
(i) any natural person who is a national citizen of a Contracting State;
(ii) any legal person, company and association established under the law in force in a Contracting State.
(h) The term "international transport" shall mean any transport carried out by a ship or aircraft operated by an undertaking the actual management of which is located in a Contracting State, unless the ship or aircraft is used only between places situated in the other Contracting State.
(i) The term "competent authority" shall mean:
(i) in the case of Czechoslovakia, the Minister of Finance of the Czechoslovak Socialist Republic or his authorised representative;
(ii) in the case of Cyprus, the Minister for Finance or his authorised representative.
2. Any expression which is not defined in the contract shall have meaning for its application by the contracting State, which shall belong to it under the law of that contracting State governing the taxes which are the subject of the contract, unless the link requires a different interpretation.
Tax domicile
1. For the purposes of this Treaty, the term "resident or registered in a Contracting State 'shall mean any person who, under the law of that State, is subject to taxation in that State by reason of his residence, residence, place of administration or any other similar criterion.
2. Where, pursuant to paragraph 1, a natural person resides in both Contracting States, the case shall be decided in accordance with the following rules:
(a) It is assumed that that person is resident in the Contracting State in which he has a permanent residence. If it has a permanent residence in both Contracting States, it is assumed to reside in the Contracting State with which its personal and economic ties are the narrowest (centre of life interests).
(b) If the Contracting State in which that person has a centre of his life interests cannot be designated or if he does not have a permanent residence in any Contracting State, he shall be presumed to reside in the Contracting State in which he normally resides.
(c) If the person normally resides in the two Contracting States or if he normally does not reside in any of them, he shall be presumed to reside in the Contracting State of which he is a national.
(d) Where that person is a member of both Contracting States or is not a member of any of them, the competent authorities of the Contracting States shall adjust the matter by common accord.
3. Where a person other than a natural person has its registered office in both Contracting States in accordance with the provisions of paragraph 1, it shall be presumed to have its registered office in the Contracting State in which the place of its effective management is situated.
Permanent establishment
1. For the purposes of this Treaty, the term "permanent establishment" shall mean 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) place of management;
(b) the race;
(c) an office;
(d) the factory,
(e) workshop,
(f) mine, quarry, or other place where natural resources are extracted;
(g) construction sites or installations lasting more than six months but not the installation referred to in paragraph 3 (f).
3. the term "permanent establishment" does not cover:
(a) an establishment which is used only for the storage, issue or supply of goods to the undertaking;
(b) the supply of goods to an undertaking which is maintained only for storage, display or delivery;
(c) the supply of goods 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 solely for the purpose of advertising, information, scientific research or similar activities for an undertaking having a preparatory or auxiliary character;
(f) assembly by an undertaking of one Contracting State in conjunction with the supply of machinery or equipment from that State to the other Contracting State.
4. An undertaking of one Contracting State shall be presumed to have a permanent establishment in the other Contracting State if:
(a) carry out surveillance in that other Contracting State for more than six months in conjunction with the installation carried out in that other Contracting State; However, this shall not apply where the activities referred to in paragraph 3 (f) of this Article are concerned;
(b) carry out in that second Contracting State an activity which remains the provision of the services of public performing artists and athletes referred to in Article 17.
5. A person acting in one Contracting State as an undertaking of the other Contracting State shall, subject to paragraph 6 of this Article, be regarded as a permanent establishment in the first Contracting State if:
(a) it has and usually has the power to conclude contracts on behalf of an undertaking in that first Contracting State, unless its activities are limited to the purchase of goods for an undertaking; or
(b) maintain in the first Contracting State a supply of goods for an undertaking from which it regularly handles orders for an undertaking.
6. In the other Contracting State, the mere fact that an undertaking in that other State carries out its business through a broker, a general agent or any other representative having an independent position shall not be regarded as a permanent establishment of an undertaking of one Contracting State where such persons act in the proper framework of their business.
7. The fact that a company which has its registered office in one Contracting State controls a company or is controlled by a company which has its registered office in the other Contracting State or which carries out its business in that other State (whether through a permanent establishment or otherwise) does not in itself make that company a permanent establishment of the other company.
Revenue from immovable property
1. Revenue from immovable property, including income from agricultural or forestry holdings, may be taxed in the Contracting State in which such property is located.
2. (a) Subject to paragraphs (b) and (c), the term "immovable property" shall be defined in accordance with the law of the Contracting State in which such property is located.
(b) The term "immovable property" shall in any case include accessories for immovable property, a live and dead inventory of agricultural and forestry holdings, rights to which the provisions of civil law applicable to immovable property, the consumption of immovable property and the right to variable or fixed salaries for mining or the right to mine mineral deposits, springs and other natural resources apply.
(c) Ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to revenue from direct use, rental and any other use of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to income from the immovable property of an undertaking and to income from immovable property used for the exercise of a professional profession.
Profits of enterprises
1. The profits of an undertaking of one Contracting State shall be subject to taxation only in that State if the undertaking does not carry out its business in the other Contracting State through a permanent establishment located there. Where an undertaking carries out its activities in this way, the profits of the undertaking may be taxed in that other State, but only to the extent that they can be attributed to that permanent establishment.
2. Where an undertaking of a Contracting State carries out its activities in the other Contracting State through a permanent establishment situated there, it shall be attributed in each Contracting State to that permanent establishment the profits which it would expect to achieve if, as a separate undertaking, it performed the same or similar activities under the same or similar conditions and traded completely independently with the undertaking of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, it shall be permitted to deduct the costs incurred for the objectives pursued by that permanent establishment, including management expenses and general administrative expenses thus incurred, whether in the State in which that 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 different parts of it, the provisions of paragraph 2 shall not preclude that Contracting State from determining the profits to be taxed by division as usual. However, the method of distribution of profits adopted shall be such that the result is consistent with the principles set out in this Article.
5. A permanent establishment shall not make any profits on the basis that it only purchased goods for the undertaking.
(6) For the purposes of the preceding paragraphs, the profits to be attributed to a permanent establishment shall be determined each year on the basis of the same method, unless there are serious and sufficient grounds for a different procedure.
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.
Sea and air transport
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 actual management of the undertaking is located.
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 ship has its home port, or if the ship does not have its home port, it shall be deemed to be located in the Contracting State in which the operator of the ship is domiciled.
3. The provisions of paragraph 1 shall also apply to profits 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 an undertaking of one Contracting State and of an undertaking of the other Contracting State,
and where, in one or the other cases, conditions have been negotiated or imposed between both undertakings in their commercial or financial relations, which differ from those which would have been negotiated between independent undertakings, profits which would have been achieved without such conditions may have been made by one of the undertakings, but which, in view of those conditions, have not been achieved, be incorporated into the profits of that undertaking and consequently taxed.
Dividends
1. Dividends paid by a company having its registered office in one Contracting State, to a person residing or having its registered office in the other Contracting State, may be taxed in that other State.
2. However, these dividends may be taxed in the Contracting State in which the company which pays them has its registered office, under the law of that State. However, the tax thus imposed shall not exceed 10% of the gross amount of dividends.
3. As long as Cyprus does not tax dividends in addition to the tax levied on profits or income of the company, dividends paid by a company having its registered office in Cyprus, to a person resident or registered in Czechoslovakia, will be exempt from any tax in Cyprus which may be levied on dividends in addition to the tax levied on profits or income of the company.
4. The competent authorities of the Contracting States shall, by mutual agreement, adapt the method of application of paragraphs 2 and 3.
5. Paragraphs 2 and 3 shall not affect the taxation of the profits of the company on which dividends are paid.
6. The term "dividends" used in this Article shall refer to income from shares or other rights, with the exception of receivables, with a profit participation, as well as income from other social rights, which, under the tax legislation of the State in which the company paying dividends is located, is subject to the same tax as income from shares.
7. The provisions of paragraphs 1, 2 and 3 shall not apply where the beneficiary of dividends residing or having his registered office in one Contracting State is engaged in an industrial or commercial activity in the second Contracting State in which the company which pays dividends is situated, through a permanent establishment situated there, or is engaged in a permanent establishment in that other State of the liberal profession, and where the participation on the basis of which the dividends are 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.
8. Where a company having its registered office in one Contracting State achieves profits or income from the other Contracting State, that other State may not tax dividends paid by that company to persons having their registered office or registered office in the first State or subject the company's undistributed profits to the tax on undistributed profits, even if the dividends paid or undistributed profits remain, in whole or in part, on profits or income obtained in that other State.
Interest
1. Interest having a source in one Contracting State and paid to a person domiciled or domiciled in the other Contracting State may be taxed in that other State.
2. Interest received from one Contracting State by a person resident or domiciled in the other Contracting State that is their beneficial owner may also be taxed in the first Contracting State at a rate not exceeding 10% of the gross amount of interest.
3. Interest on loans or loans granted by a government of a Contracting State or by a bank or other institution in the name or on behalf of that Government shall be subject to taxation only in that State.
4. The term "interest 'used in this Article refers to income from claims of any kind, secured or not secured by a lien on immovable property, which provides both the right to participate in the debtor's profits and, in particular, income from public bonds and bonds, including premiums and winnings associated with such bonds.
5. Interest shall be assumed to have a source in one of the Contracting States where the payer is himself, his lower administrative department or local office or the person residing or having his registered office in that State. However, where a person who pays interest, whether or not he is domiciled in a Contracting State, has a permanent establishment in a Contracting State, in conjunction with which an obligation arises, on which interest is payable, and if that permanent establishment bears such interest, that interest shall be presumed to have a source in the Contracting State in which the permanent establishment is situated.
6. The provisions of paragraph 1 shall not apply where the recipient of interest residing or having his registered office in a Contracting State is engaged in an industrial or commercial activity in the other Contracting State in which the interest has a source, an industrial or commercial activity, through a permanent establishment situated there, or in that other State of a free profession, by means of a permanent base situated there, and where the claim on which the interest is paid is actually linked to such a permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
7. Where the amount of interest paid, in view of the claim on which it is paid, exceeds, by reason of the special relations existing between the payer and the payee or between the two and the third parties, the amount that the payer would have agreed with the payee if it had not been for such relations, the provisions of this Article shall apply only to that last amount. In this case, the part of the salary exceeding it shall remain subject to taxation under the law of each Contracting State and taking into account other provisions of this Treaty.
Licence fees
1. Licensing fees having a source in one Contracting State and paid to a person residing or having his registered office in the other Contracting State may be taxed in that other State.
However, the licence fees referred to in paragraph 3 (a) may be taxed in the Contracting State in which their source is located, under the law of that State. However, the tax thus imposed may not exceed 5% of the gross amount of royalties. The competent authorities of the Contracting States shall, by agreement, adapt the method of applying this restriction.
3. The term "licence fees" used in this Article refers to salaries of any kind paid for use or for the right to use
(a) any patent, trade mark, model or model, plan, secret formula or procedure or industrial, commercial or scientific establishment and for information relating to experience acquired in the field of industrial, commercial or scientific;
(b) any copyright rights for the work of literary, artistic or scientific, including cinematographic films and films or tapes for television or radio broadcasting.
4. The provisions of paragraphs 1 and 2 shall not apply where the licensee of a licence fee residing or having his registered office in a Contracting State is engaged in a source, industrial or commercial activity, through a permanent establishment situated there, or in that other State, by means of a permanent establishment situated there, and where the right or property for which the licence fee is paid is actually linked to such a 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 shall be presumed to have a source in one Contracting State where the payer is the latter himself, the lower administrative department or local office of that Contracting State or the person residing or having his registered office in that Contracting State. However, where a person who pays royalties, whether or not he is domiciled in a Contracting State, has a permanent establishment in a Contracting State in conjunction with which an obligation to pay royalties has arisen and that permanent establishment bears such royalties at its expense, those royalties shall be presumed to have a source in the Contracting State in which the permanent establishment is situated.
6. Where the amount of royalties paid, assessed in the light of the use, right or information for which they are paid, exceeds, as a result of the special relations existing between the payer and the payee or between the two and a third party, the amount which the payer would have agreed with the payee if it had not been for such relations, the provisions of this Article shall apply only to that last amount. In this case, the part of the salary exceeding it shall remain subject to taxation under the law of each Contracting State and taking into account other provisions of this Treaty.
Capital gains
1. Profit from the disposal of immovable property the definition of which is set out in Article 6 (2) may be taxed in the Contracting State in which such immovable property is located.
2. Proceeds from the disposal of movable property forming part of the operating property of a permanent establishment held 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 person resident in one Contracting State in the other Contracting State for the pursuit of a free occupation, including profits from the disposal of such permanent establishment (alone or together with the whole undertaking) or such permanent bases, may be taxed in that other State. However, profits from the disposal of movable property referred to in Article 22 (3) shall be subject to taxation only in the Contracting State in which such movable property is subject to taxation under that Article.
(3) Profit from the disposal of assets other than those referred to in paragraphs 1 and 2 shall be subject to taxation only in the Contracting State in which the transferee resides or resides.
Independent professions
1. Revenue received by a person residing in one Contracting State for services rendered in the course of a professional or other independent activity of a similar nature shall be subject to taxation only in that State, provided that such person does not regularly have a permanent basis in the other Contracting State for the pursuit of his activities. If it has such a permanent base, such 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" shall include the particularly independent activities of scientific, literary, artistic, educational or teaching, as well as the independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Dependent employment
1. Wages, salaries and other similar remuneration which a person residing in one Contracting State receives from employment shall be subject to taxation in that State only, subject to the provisions of Articles 16, 18 and 19, if the employment is not carried out in the other Contracting State. If there is employment there, the remuneration received from that employment may be taxed in that other State.
2. Remuneration which a person residing in one Contracting State receives from employment in the other Contracting State shall be subject to taxation in the first State only if:
(a) the consignee shall stay in the other State for one or more periods which shall not exceed 183 days in whole in the calendar year concerned; and
(b) the remuneration shall be paid by the employer or on behalf of an employer who is not domiciled in that other State; and
(c) the remuneration shall not be borne by a permanent establishment or permanent base held by an employer in that other State.
3. Remuneration from the employment carried out on board a ship or aircraft in international transport may be taxed, notwithstanding the previous provisions of this Article, in the Contracting State in which the actual management of the undertaking is located.
Tantiems
Tantiéms and similar salaries which a person residing in one Contracting State receives as a member of the Administrative or Supervisory Board or another similar body of a company having its registered office in the other Contracting State may be taxed in that other State.
Artists and athletes
1. The income received by artists, such as theatre, film, radio or television artists, musicians and athletes as such from their personal activities, may be taxed in the Contracting State in which those activities are carried out, irrespective of the provisions of Articles 14 and 15.
2. Where the activities referred to in paragraph 1 of this Article are carried out in one Contracting State by an undertaking of the other Contracting State, revenue for the provision of such activities by such an undertaking shall be exempt from taxation in the first Contracting State if the undertaking is supported, directly or indirectly, wholly or substantially, by the government of that other Contracting State in connection with the provision of such activities.
Public functions
1. Salaries, other than pensions, paid by a Contracting State, by its lower administrative department or by a local authority to a natural person for services demonstrated to that State, its lower administrative department or local authority shall be subject to taxation only in that State.
2. However, the salaries referred to in paragraph 1 shall be subject to taxation in the second Contracting State only if the services have been demonstrated in that State, the natural person residing in that State, and
(a) is a national of that State; or
(b) has not obtained residence in that State solely for the purpose of proving such services.
3. The provisions of paragraphs 1 and 2 shall not apply to salaries for services shown in conjunction with industrial or commercial activities carried out by a Contracting State, its lower administrative department or local authority.
Pension
Pensions, pensions and other similar salaries paid to a person residing in a Contracting State shall be subject to taxation only in that State.
Study
1. Salaries which are paid for the purposes of nutrition, education or practice by students or apprentices who reside in a Contracting State only for the purpose of their education or practice and who have or have had their residence in the other Contracting State immediately prior to such a visit shall not be taxed in the first Contracting State if such salaries have been shown to them from sources outside that State.
2. Studying at a university or other higher education institution in a Contracting State or an apprentice who is resident in a second Contracting State for one or more periods not exceeding 183 days in the relevant calendar year and who have, or have, immediately prior to such a visit to the first State, no tax shall be paid in the second Contracting State on the remuneration for services performed in that other State, provided that such services are linked to their study or practice and the remuneration constitutes the earnings necessary for their nutrition.
Revenue not explicitly mentioned
The income of a person residing or having his registered office in a Contracting State which is not expressly mentioned in the preceding Articles of this Treaty shall be subject to taxation only in that State.
Property
1. Real estate within the meaning of Article 6 (2) may be taxed in the Contracting State in which such real estate is located.
2. Moved property which is part of the operating property of a permanent establishment of an undertaking, or movable property belonging to a permanent base used for the exercise of a professional profession, may be taxed in the Contracting State in which the permanent establishment or permanent base is situated.
3. Ships and aircraft used in international transport and movable property for the operation of such ships and aircraft shall be subject to taxation only in the Contracting State in which the actual management of the undertaking is located.
4. All other parts of the property of a person residing in a Contracting State shall be subject to taxation only in that State.
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Regulation Information
| Citation | Decree of the Minister for Foreign Affairs No. 30 / 1981 Coll., on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Cyprus on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 19.03.1981 |
|---|---|
| Effective from | 30.12.1980 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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