Communication from the Ministry of Foreign Affairs No. 31 / 1998 Coll.
Communication from the Ministry of Foreign Affairs on the Treaty between the Government of the Czech Republic and the Government of the Republic of Belarus on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes
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Effective from 15.01.1998
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31
COMMUNICATION
Ministry of Foreign Affairs
The Ministry of Foreign Affairs states that on 14 October 1996 a Treaty was signed in Prague between the Government of the Czech Republic and the Government of the Republic of Belarus to avoid double taxation and prevent tax evasion in the field of income and property taxes.
The Parliament of the Czech Republic gave its assent to the Treaty and the President of the Republic ratified it. The instruments of ratification were exchanged in Minsk on 15 January 1998.
The Treaty entered into force on 15 January 1998 pursuant to Article 28 (2) thereof. In accordance with paragraph 3 of that Article, the following shall cease to apply on 1 January 1999 in relations between the Czech Republic and the Republic of Belarus:
Treaty on the prevention of double taxation of income and property of natural persons, signed in Miskovci on 27 May 1977, published under No 30 / 1979 Coll.,
and
Treaty on the prevention of double taxation of corporate income and property, signed at Ulanbatar on 19 May 1978, published under No 49 / 1979 Coll.
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 Government of the Czech Republic and the Government of the Republic of Belarus
on the avoidance of double taxation and avoidance of tax evasion in the field of income and property taxes
The Government of the Czech Republic and the Government of the Republic of Belarus,
Desiring to conclude a contract to avoid double taxation and prevent 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 Agreement shall apply to income and property taxes imposed on behalf of each of the Contracting States or its local authorities, 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 proceeds from the disposal of assets, 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 in particular:
(a) in the Czech Republic:
(i) income tax on natural persons;
(ii) corporation tax;
(iii) real estate tax;
(hereinafter referred to as the "Czech tax ');
(b) in the Republic of Belarus:
(i) corporate income and profits tax;
(ii) income tax on natural persons;
(iii) real estate tax;
(iv) land tax;
(hereinafter referred to as "Belarusian tax ').
4. The Treaty will also apply to any tax of the same or essentially similar kind which will be imposed upon signature of the Treaty in addition to or instead of current taxes. The competent authorities of the Contracting States shall communicate to each other any substantial changes to be made to their respective tax laws.
General definitions
1. For the purposes of this Treaty, unless the link requires a different interpretation:
(a) the term "Czech Republic", when used in geographical sense, indicates the territory of the Czech Republic in which, under Czech law and in accordance with international law, the sovereign rights of the Czech Republic may be exercised;
(b) the term "Belarus" refers to the Republic of Belarus and, where it is used in geographical importance, indicates the territory in which the Republic of Belarus exercises, under the legislation of Belarus and in accordance with international law, sovereign rights and jurisdiction;
(c) the terms "one Contracting State" and "the other Contracting State" indicate, as appropriate, the Czech Republic or the Republic of Belarus;
(d) the term "person" includes a natural person, a company and any other association of persons;
(e) the term "company" refers to any legal person or rightholder considered to be a legal person for taxation purposes;
(f) the terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" 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;
(g) the term "national" means:
(i) any natural person who is a national citizen of a Contracting State;
(ii) any legal person, personal company or association established under the legislation in force in a Contracting State;
(h) the term "international transport" shall mean any transport of ships, boats, aircraft, road or railway vehicles operated by an undertaking resident in one Contracting State, except where a ship, boat, aircraft, road or railway vehicle is operated only between points in the other Contracting State;
(i) the term "competent authority" shall mean:
(i) in the case of the Czech Republic, the Minister of Finance or his authorised representative;
(ii) in the case of the Republic of Belarus, the principal state tax office in the Cabinet of Ministers of the Republic of Belarus or its authorised representative.
2. With regard to the application of the Treaty by a Contracting State, any expression not defined therein shall have the meaning which it has under the law 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 any person who, under the legislation of that State, is subject to taxation in that State on account of his residence, permanent residence, place of establishment, 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. Where, pursuant to paragraph 1, a natural person is resident in both Contracting States, its status shall be determined as follows:
(a) that person is presumed to be resident in the State in which he has a permanent residence; if it has a permanent residence in both States, it is assumed to be resident in the State to which it has closer personal and economic relations (centre of life interests);
(b) if it cannot be determined in which State the person has a centre of his life interests, or if he does not have a permanent residence in any State, he shall be presumed to be resident in the State in which he 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) if the position of that person cannot be determined in accordance with the provisions of the preceding points, 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 the provisions of paragraph 1, the competent authorities of the Contracting States shall amend the matter by mutual agreement.
Permanent establishment
1. For the purposes of this Treaty, the term "permanent establishment" shall 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; and
(f) mine, oil or gas site, quarry or any other place where natural resources are extracted.
3. The term "permanent establishment 'also includes a construction site or construction, installation or installation project or supervision associated with it, but only if such construction, project or supervision lasts for 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 purpose of storing, issuing or delivering 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) 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) 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 (e) where the total activity of the permanent place of business resulting from that concentration is of a preparatory or auxiliary nature.
5. Where, notwithstanding the provisions of paragraphs 1 and 2, a person - other than an independent representative to whom paragraph 6 applies - acts on the behalf of an undertaking in a Contracting State and has and usually uses an authorisation 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 they were carried out through a permanent place of business, would not be taken from that permanent establishment in accordance with the provisions of this paragraph.
6. An undertaking shall not be considered to have a permanent establishment in a Contracting State only because it carries out 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.
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 one Contracting State from immovable property (including agricultural or forestry income) located in the other Contracting State may be taxed in that other 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. Ships, boats and aircraft shall not be considered immovable 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 paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by this normal division; 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.
International transport
1. The profits of an undertaking of a Contracting State from the operation of ships, boats, aircraft, road or rail vehicles in international transport shall be subject to taxation only in that State.
2. Paragraph 1 shall also apply to profits received from participation in a pool, joint operation or an international operational organisation.
Associate undertakings
If
(a) the undertaking of one Contracting State participates, directly or indirectly, in the management, control or capital of the undertaking of the other Contracting State; or
(b) the same persons 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 may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company which pays them is resident under the law of that State, but where the beneficial owner of dividends is resident in the other Contracting State, the tax thus imposed shall not exceed 10% of the gross amount of dividends.
The competent authorities of the Contracting States shall, by mutual agreement, adapt the method of application of this restriction.
This paragraph shall not affect the taxation of the profits of the company on which dividends are paid.
3. The term "dividends" used in this Article refers to income from shares or other rights, with the exception of receivables, with a share in profits as well as income from other rights which are subject to the same tax regime as income from shares under the tax legislation of the State of which the company which divides profits is resident.
4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial holder of dividends resident in one Contracting State is engaged in an industrial or commercial activity in the other Contracting State of which the dividend company is resident through a permanent establishment situated there or in that other State of an independent profession from a permanent base located there, and where the participation for which dividends are paid is actually linked to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Where a company which is resident in one Contracting State achieves profits or income from the other Contracting State, that other State may not tax dividends paid by the company unless such dividends are paid to the resident of that other State or that the participation for which dividends are paid actually relates to a permanent establishment or a permanent base located in that other State, or to subject the company's undistributed profits to 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 the 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 they have a source, under the law of that State, but where the beneficial owner of the interest is resident in the other Contracting State, the tax thus imposed shall not exceed 5% of the gross amount of interest.
3. Notwithstanding the provisions of paragraph 2, interest having a source in one Contracting State which is acquired and actually owned by the Government of the other Contracting State or the Central Bank of that State shall be exempt from taxation in the former State.
The competent authorities of the Contracting States shall, by mutual agreement, lay down the arrangements for applying such restrictions.
4. 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 profit, and in particular to income from government securities and income from bonds or bonds, including premiums and winnings relating to such securities, bonds or bonds.
5. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of interest resident in a Contracting State is engaged in an industrial or commercial activity in the second Contracting State in which the interest is received through a permanent establishment situated there or 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.
6. Interest shall be assumed to have a source in the Contracting State if the payer is that State itself, the local office or resident of that State. However, if the interest payer, whether or not he is resident in a Contracting State, has a permanent establishment or a permanent base in the Contracting State in conjunction with which the debt on which the interest is paid has been incurred and such interest is charged to such a permanent establishment or permanent base, such interest shall be assumed to have a source in the State in which the permanent establishment or permanent base is located.
7. If the amount of interest relating to the claim on which it is paid exceeds, due to 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 had not been 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.
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.
The competent authorities of the Contracting States shall, by mutual agreement, adapt the method of application of this restriction.
3. The term "licence fees' used in this Article refers to payments of any kind received as compensation for use or as a right to use any copyright for the work of literary, artistic or scientific, including cinematographic films and films or recordings for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or production process, or any industrial, commercial or scientific establishment or any means of transport, or for information relating to experience acquired in the field of industrial, commercial or scientific.
4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of 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 local authority or the resident of that State. However, where a licence fee payer, whether or not resident in a Contracting State, has a permanent establishment or permanent base in a Contracting State in conjunction with which a licence fee has been paid and such royalties are charged to such a permanent establishment or permanent base, 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 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.
Profit from disposal
(1) Profit received by a resident of one Contracting State from the disposal of immovable property referred to in Article 6 and located in the other Contracting State may be taxed in that other State.
(2) Profit from the disposal of assets other than immovable property which is part of an operating property of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or property other than immovable property belonging to a permanent base held 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 (on its own 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, aircraft, road or rail vehicles operating in international transport by an undertaking of a Contracting State or from the disposal of assets other than immovable property which serve to operate such ships, boats, aircraft, road or railway vehicles shall be subject to taxation only in that State.
(4) Profit from the disposal of any assets other than those referred to in paragraphs 1, 2 and 3 shall be subject to taxation only in the Contracting State of residence of which the extraneous is resident.
Independent professions
1. Revenue received by a resident of a Contracting State from a professional or other independent activity shall be subject to taxation only in that State, except in the following cases where such revenue may also be taxed in the other Contracting State:
(a) where it has a permanent base at its regular disposal in the second Contracting State in order to carry out its activities; in that case, only part of the income attributable to this permanent base may be taxed in that other State; or
(b) if his stay in the other State lasts for one or more periods exceeding 183 days in total in any 12-month period; in that case, only that part of the income resulting from its activities in that other State may be taxed in that other State.
2. Article 15 (3) shall apply when calculating the periods referred to in paragraph 1 (b).
3. 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, dentists and accountants.
4. For the purposes of this Treaty, the term "permanent base 'shall mean a permanent place through which the activity of an independent person is wholly or partly pursued.
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 16, 18 and 19, to taxation in that State only if the employment is not carried out in the other Contracting State. If there is employment there, the remuneration received 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 in the first State only if all the following conditions are met:
(a) the consignee shall stay in the other State for one or more periods not exceeding 183 days in total in any 12-month period; and
(b) the remuneration is paid by an employer or an employer who is not a resident of the other State; and
(c) remuneration shall not be borne by a permanent establishment or a permanent base held by an employer in the other State.
3. The following days shall be included in the calculation of the period referred to in paragraph 2 (a):
(a) all days of physical presence including days of arrival and departure; and
(b) days spent outside the State of activities such as Saturdays and Sundays, national holidays, holidays and business trips directly linked to the employment of the beneficiary in that State, after which the activity in that State continued.
4. The term "employer" referred to in paragraph 2 (b) shall refer to a person who has the right to work done and who bears the responsibility and risk associated with carrying out the work.
5. Notwithstanding the previous provisions of this Article, remuneration received from employment carried on board a ship, boat, aircraft and road or rail vehicle operated in international transport may be taxed by an undertaking of a Contracting State in that State.
Tantiems
Tantiéms and other similar payments received by a resident of a Contracting State as a member of the Management Board or any other similar body of a company resident in the other Contracting State may be taxed in that other State.
Artists and athletes
1. Revenue received by a resident of a Contracting State as a public performer, such as a theatre, film, radio or television artist or musician or as an athlete from such personally performed activities in the other Contracting State may be taxed in that other State, irrespective of the provisions of Articles 14 and 15.
2. Where the income from activities personally carried out by an artist or athlete does not originate from artists or athletes themselves but from other persons, that income may be taxed, irrespective of the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of an artist or athlete are carried out.
Pension
1. Pensions and other similar salaries paid to a resident of a Contracting State on account of former employment shall be subject to taxation in that State only, subject to the provisions of Article 19 (2).
2. Notwithstanding the provisions of paragraph 1, payments received by a natural person resident in one Contracting State shall be subject to taxation only in that other State from the statutory social insurance of the other Contracting State.
Public functions
1. (a) Rewards other than pensions paid by one Contracting State or a local authority of that State to a natural person for services rendered to that State or office 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 one Contracting State or local authority of that State or paid from the funds which they have set up shall be subject to taxation only in that State to a natural person for the services shown to that State or office.
(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, 16 and 18 shall apply to the remuneration and pensions of services demonstrated in connection with an industrial or commercial activity carried out by a Contracting State or a local authority of that State.
Students
Payments received by a student or apprentice who, or immediately before his or her arrival in a Contracting State, has been resident in a second Contracting State and who is resident in the former State only for the 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 result from sources outside that State.
Other revenue
1. Parts of the income of a resident of a Contracting State, wherever the source is not covered by the previous 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 a Contracting State carries out industrial or commercial 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 base situated there, and where the right or property for which the income is paid is actually linked to that permanent establishment or permanent base. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
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 property other than immovable property which is part of an operating property of a permanent establishment which has an undertaking of one Contracting State in the other Contracting State or property other than immovable 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.
3. Property represented by ships, boats, aircraft, road or rail vehicles operating in international transport by an undertaking of one Contracting State and property other than immovable property which serves to operate such ships, boats, aircraft, road or railway vehicles shall be subject to taxation only in that Contracting State.
4. All other assets of a resident of a Contracting State shall be subject to taxation only in that State.
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Regulation Information
| Citation | Communication from the Ministry of Foreign Affairs No. 31 / 1998 Coll., on the Agreement between the Government of the Czech Republic and the Government of the Republic of Belarus 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 | 10.03.1998 |
|---|---|
| Effective from | 15.01.1998 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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