Communication from the Ministry of Foreign Affairs No. 5 / 1996 Coll.
Communication from the Ministry of Foreign Affairs on the Treaty between the Czech Republic and Australia on the avoidance of double taxation and the prevention of tax evasion in the field of income taxes
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Effective from 27.11.1995
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5
COMMUNICATION
Ministry of Foreign Affairs
The Ministry of Foreign Affairs states that on 28 March 1995 a Treaty was signed in Canberra between the Czech Republic and Australia to avoid double taxation and prevent tax evasion in the field of income tax.
The Parliament of the Czech Republic gave its assent to the Treaty and the President of the Republic ratified it.
The Treaty entered into force on 27 November 1995 pursuant to Article 27 thereof.
The Czech version of the Treaty is hereby published at the same time.
TREATY
between the Czech Republic and Australia on the avoidance of double taxation and tax evasion in the field of income tax
Czech Republic and Australia,
Desiring to conclude a double taxation contract and prevent tax evasion in the field of income tax,
agree as follows:
Persons to whom the Treaty applies
This Agreement shall apply to persons resident in one or both Contracting States.
Taxes to which the Treaty applies
1. the current taxes to which the Treaty applies are:
(a) in Australia:
income tax and tax on the rental of natural resources in relation to offshore projects, relating to the exploration and exploitation of oil resources, imposed on the basis of Australia's federal laws;
(b) in the Czech Republic:
income taxes.
2. This Treaty will also apply to all taxes of the same or essentially similar kind, which will be imposed according to the federal laws of Australia or the laws of the Czech Republic after the signature of this Treaty alongside or in place of the current taxes. The competent authorities of the Contracting States shall communicate to each other the substantial changes to be made to their respective tax laws relating to the taxes to which this Treaty applies within a reasonable period of time following those changes.
General definitions
1. In this Treaty, unless the link requires a different interpretation:
(a) the term "Australia," used in the geographical sense, does not cover external territory except:
(i) the territory of Norfolk;
(ii) the territory of the Christmas island;
(iii) the territory of the Coconut Islands (Keeling);
(iv) the territory of Ashmore and Cartier;
(v) the territory of the island of Head and the islands of Mc Donald; and
(vi) the territory of the Coral Sea Islands,
and includes any area adjacent to Australia's territorial borders (including the territory specified in this point) for which, in accordance with international law, the current law of Australia on the exploration or exploitation of any natural resources of the seabed and subsoil of the mainland is currently in force;
(b) the term "Czech Republic," used in the geographical sense, indicates the territory over which the Czech Republic exercises its sovereign rights under Czech law and in accordance with international law;
(c) the terms "one Contracting State" and "the other Contracting State" refer to Australia or the Czech Republic as appropriate;
(d) the term "person" includes a natural person, a company and any other association of persons;
(e) the term "company" refers to a legal person or rightholder treated as a company or a legal person for taxation purposes;
(f) the terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" refer to an undertaking operated by an Australia resident or an undertaking operated by a Czech resident;
(g) the term "tax" refers to Australian tax or Czech tax, but does not include any periodic penalty payments or interest imposed under the laws of each of the Contracting States relating to its taxes;
(h) the term "Australian tax" shall refer to the tax levied by Australia to which this Treaty applies pursuant to Article 2;
(i) the term "Czech tax" shall mean the tax levied by the Czech Republic to which this Treaty applies pursuant to Article 2;
(j) the term "competent authority" shall mean:
(i) in the case of Australia, the Tax Commissioner or his authorised representative;
(ii) in the case of the Czech Republic, the Minister of Finance or his authorised representative.
2. Any term which is not otherwise defined shall have the meaning of the Contracting State for the application of this Treaty, which falls under the law of that State in force at the relevant time, which regulates the taxes covered by this Treaty, unless the link requires a different interpretation.
Resident
1. For the purposes of this Treaty, a person shall be resident in one Contracting State if he is resident in that State for the purposes of his tax.
2. A person is not a resident of a Contracting State for the purposes of this Treaty if he is subject to taxation in that State only because of income from resources in that State.
3. Where, pursuant to the previous provisions of this Article, a natural person is resident in both Contracting States, that person shall be deemed to be resident only in the Contracting State in which he has a permanent residence or, if he has a permanent residence in both Contracting States or in none of them, that person shall be regarded as resident only in the Contracting State to which he has closer personal and economic relations.
4. For the purposes of paragraph 3, the nationality of a natural person to a Contracting State shall be a factor in determining the degree of his personal and economic relations with that State.
5. Where a person other than a natural person is resident in both Contracting States pursuant to paragraph 1, he or she shall be deemed to be resident only in the Contracting State in which his or her place of effective management is situated.
Permanent establishment
1. For the purposes of this Treaty, the term "permanent establishment" means a permanent establishment for the business in which the undertaking carries out its activities in whole or in part.
2. the term "permanent establishment" includes in particular:
(a) the place of management;
(b) the plant;
(c) an office;
(d) the factory;
(e) workshop;
(f) mine, oil or gas extraction site, quarry or any other place where natural resources are extracted;
(g) agricultural, pasture or forestry assets; and
(h) construction site or construction, installation or assembly project lasting more than 12 months.
3. An undertaking shall not be considered to have a permanent establishment solely because of:
(a) an establishment which is used only for the storage, display or supply of goods belonging to the undertaking; or
(b) stocks of goods belonging to an undertaking which are maintained only for the purpose of storage, display or delivery; or
(c) stocks of goods belonging to an undertaking which are maintained only for the purpose of processing by another undertaking; or
(d) a permanent establishment for business which is maintained only for the purpose of purchasing goods or collecting information for the undertaking; or
(e) permanent establishment for business which is maintained only for the purpose of activities which have a preparatory or ancillary character for the undertaking, such as advertising, the provision of information or scientific research or similar activities.
4. An undertaking shall be deemed to have a permanent establishment in a Contracting State and conduct business through that permanent establishment if:
(a) carry out surveillance in that State for more than 12 months in relation to the construction site or construction, installation or installation project carried out in that State; or
(b) provide services, including consultancy and management services in that Contracting State, through staff or other personnel hired by an undertaking for those purposes, but only if such activities are maintained in that State within the same or related project for one or more periods exceeding a total of more than six months in any 12-month period; or
(c) heavy equipment is used in that State by an undertaking, for an undertaking or by contract with an undertaking.
5. A person acting in a Contracting State on behalf of an undertaking of the other Contracting State - other than an independent representative to whom paragraph 6 applies - shall be regarded as a permanent establishment of that undertaking in the former State if:
(a) that person has at his disposal and usually uses the power of attorney in that State to conclude contracts on behalf of an undertaking where the activities of that person are not limited to the purchase of goods for an undertaking; or
(b) in so doing, the person shall produce or process for an undertaking in that State goods belonging to that undertaking.
6. It is not assumed that an undertaking in one Contracting State has a permanent establishment in the other Contracting State only because it carries out its business in that State through a person who is a broker, a general agent or an independent representative and acts as a broker or agent in the course of its proper business.
7. The fact that a company that is resident in one Contracting State controls a company or is controlled by a company that is resident in the other Contracting State or that carries on its activities in that other State (whether through a permanent establishment or otherwise) does not in itself make it a permanent establishment of any other company.
8. The principles set out in the previous paragraphs of this Article shall apply for the purposes of this Treaty in determining whether there is a permanent establishment outside both Contracting States and whether an undertaking which is not an undertaking of a Contracting State has a permanent establishment therein.
Revenue from immovable property
1. Revenue from immovable property may be taxed in the Contracting State in which the immovable property is situated.
2. The term "immovable property" in this Article in relation to a Contracting State shall be of such importance as it is under the laws of that State and shall include:
(a) land lease and any other participation in land, whether or not cultivated, including the right to explore mineral, oil or gas deposits or other natural resources and to benefit from such deposits or resources; and
(b) the right to variable or fixed payments either for use or for the right to be surveyed for the purpose of exploiting mineral, oil or gas deposits, quarries or other extraction or exploitation sites.
3. The provisions of paragraph 1 shall apply to revenue from direct use, hire or any other use of immovable property.
4. Any participation or right referred to in paragraph 2 shall be deemed to be located where land, mineral deposits, oil or gas, quarries or natural resources are located as appropriate or where a survey is carried out.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to income from the property of the undertaking and to income from immovable property used for the exercise of the 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. 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 on its activities in the other Contracting State through a permanent establishment situated there, it shall, subject to the provisions of paragraph 3 in each Contracting State of that State, be attributed to the profits which it could have achieved if, as a separate undertaking, it had been engaged in the same or similar activities under the same or similar conditions and was wholly independent in contact with an undertaking of which it is a permanent establishment or with other undertakings with which it is engaged.
3. In determining the profits of a permanent establishment, it is permitted to deduct the costs incurred by an undertaking for the objectives pursued by that permanent establishment (including the management costs and general administrative expenses thus incurred) which would be deductible if the permanent establishment were an independent body which paid these expenses, whether they arose in the State in which the permanent establishment is located or elsewhere.
4. A permanent establishment shall not make any profits on the basis that it only purchased goods for the undertaking.
5. Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person where the information available to the competent authorities of that State is insufficient to determine the profits to be added to a permanent establishment, provided that that law applies in accordance with the principles of this Article where the information available to the competent authority so permits.
6. 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.
7. Nothing in this Article shall affect the operation of any law of a Contracting State relating to a tax levied on profits arising from non-resident insurance, provided that the relevant law in force in each of the Contracting States at the date of signature of this Treaty is amended (other than in a negligible manner, without prejudice to its general nature), the Contracting States shall consult each other in such a way as to agree on any amendment to this paragraph which would be appropriate.
8.
(a) a resident of one Contracting State shall have the immediate right, whether directly or through one or more of the assets entrusted, to shares in the business profits of an undertaking operated in the other Contracting State by the trustee of the assets entrusted other than those deemed to be a company for taxation purposes; and
(b) in relation to that undertaking, that AIFM, in accordance with the principles of Article 5, would have a permanent establishment in that other State, an undertaking operated by that trustee would be regarded as operating in that other State by that resident through a permanent establishment located in that other State, and that share of profits from the business shall be added to that permanent establishment.
Ships and aircraft
1. The profits accruing from the operation of ships or aircraft by a resident of a Contracting State shall be taxed only in that State.
2. Notwithstanding the provisions of paragraph 1, such profits may be taxed in the other Contracting State in so far as they are profits from the operation of ships or aircraft limited only to places in the other State.
3. The provisions of paragraphs 1 and 2 shall apply in respect of the share of profits arising from the operation of ships and aircraft of a resident Contracting State from participation in a pool, a joint organisation operating transport or an international operational organisation.
4. For the purposes of this Article, profits arising from the carriage of passengers, live inventory, mail or goods carried in one Contracting State for unloading at another in that State shall be deemed to be profits from the operation of ships or aircraft limited to those of that State only.
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 as well as of an undertaking of the other Contracting State and, in any of these cases, if both undertakings are bound in their commercial or financial relations by conditions different from those which would be negotiated between independent undertakings acting together completely independently, any profits which, if not for those conditions, would have been achieved by one of the undertakings but have not been achieved, may be included in the profits of that undertaking and subsequently taxed.
2. Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including in cases where information is available to the competent authority of that State not sufficient to determine the income to be attributed to an undertaking, provided that that law applies, where possible, in accordance with the principles of this Article.
3. Where the profits from which an undertaking of a Contracting State has been taxed in that State are also included, pursuant to paragraph 1 or 2, in the profits of the undertaking of the other Contracting State and taxed in that State, and the profits thus included are profits which would have been achieved by that other State's undertaking if the conditions agreed between the undertakings were such as would have been negotiated between independent undertakings acting together completely independently, the former State shall adjust accordingly the amount of tax levied on those profits in the former State. When establishing such an adjustment, due account shall be taken of other provisions of this Treaty and, if necessary, the competent authorities of the Contracting States shall consult each other for that purpose.
4. Paragraph 3 shall not apply in the case of fraud.
Dividends
(1) Dividends paid by a company resident in one Contracting State for the purposes of its tax to which the resident of the other Contracting State is entitled may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State in which the company which pays them is resident for the purposes of its tax, under the legislation of that State, but the tax thus determined shall not exceed:
(a) in Australia:
(i) five per cent of the part of the gross amount of dividends that has been remunerated (by paying the company's tax on profits) in accordance with the laws of Australia relating to taxes, provided that, under those laws, the rate of the tax on taxed dividends paid to a non-resident company resident for tax purposes does not exceed five per cent of the gross amount of dividends;
(ii) 15% of the gross dividend amount in all other cases; and
(b) in the Czech Republic:
(i) five per cent of the gross amount of dividends where dividends are paid to a company (excluding partnerships) which directly owns at least 20 per cent of the assets of the company paying dividends;
(ii) 15% of the gross dividend amount in all other cases.
3. The term "dividends," used in this Article, refers to income from shares and other income comparable to income from shares under the tax legislation of the Contracting State in which the company which differentiates profits is resident for the purposes of its tax.
4. The provisions of paragraph 2 shall not apply where a person directly entitled to dividends who is resident in one Contracting State carries out an independent occupation in the other Contracting State in which a dividend company is resident, industrial or commercial activity through a permanent establishment located in that other State, or carries out an independent occupation in that other State through a permanent base located in that other State, and where the participation for which dividends are paid is actually linked to that permanent establishment or to that permanent establishment. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Dividends paid by a company which is resident in one Contracting State to which a person who is not resident in the other Contracting State is directly entitled shall be exempt from taxation in that other State, except where the participation for which dividends are actually paid relates to a permanent establishment or permanent base located in that other State. This paragraph shall not apply in respect of dividends paid by a company which is resident in Australia for the purposes of Australian tax and which is also resident in the Czech Republic for the purposes of Czech tax.
Interest
1. Interest having a source in one Contracting State to which the resident of the other Contracting State is entitled may be taxed in that other State.
2. Such interest may be taxed in the Contracting State in which they have the source and under the legislation of that State, but the tax thus imposed shall not exceed 10 per cent of the gross amount of interest.
3. The term "interest" in this Article shall include interest on government securities or bonds or bonds, whether or not secured by a lien on immovable property or having a right to participate in a profit, interest on any other form of debt and any other income comparable to that of borrowed money under the legislation relating to taxes of the State of origin.
4. The provisions of paragraph 2 shall not apply where a person who is directly entitled to interest and who is resident in a Contracting State is engaged in an industrial or commercial activity in the other Contracting State in which the interest is due through a permanent establishment situated in that other State or an independent profession through a permanent base situated in that other State and where the claim on which the interest is paid is actually linked to that permanent establishment or to that permanent establishment. In that case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Interest shall be assumed to have a source in one Contracting State if the payer is the latter himself, his lower administrative department or local office of that State, or the resident of that State for the purposes of his tax. However, if the person paying interest, whether or not resident in a Contracting State, has a permanent establishment or a permanent base in a Contracting State or outside both Contracting States in respect of which interest is payable and such interest is payable to such a permanent establishment or permanent base, the State in which the permanent establishment or permanent base is located shall be regarded as the source of such interest.
6. If, as a result of the special relations between the payer and the person having an immediate right to interest or between the two and a third party, the amount of interest paid relating to the claim on which it is paid exceeds the amount which the payer would have agreed with the person entitled to interest if it were not for such relations, the provisions of this Article shall apply only to that last amount. In this case, the amount of the above-paid salary will be taxed under the tax legislation of each Contracting State, taking into account the other provisions of this Treaty.
7. Interest arising from the investment of official foreign reserve assets by the government of one of the Contracting States, its monetary constitution or the bank performing central banking functions in that State shall be exempt from taxation in that other Contracting State.
Licence fees
1. Licensing fees, having a source in one Contracting State and to which the resident of the other Contracting State is entitled directly, may be taxed in that other State.
2. Such royalties may be taxed in the Contracting State in which their source is located and in accordance with the legislation of that State, but the tax thus determined shall not exceed 10 per cent of the gross amount of licence fees.
3. The term "licence fees' in this Article refers to payments or credited to an account, whether repeated or not, however described or calculated, to the extent that they are made as compensation for:
(a) the use or right of use of any copyright, patent, design or model, plan, secret formula or production process, trademark or other similar property or rights; or
(b) use or right to use any industrial, commercial or scientific establishment; or
(c) the provision of scientific, technical, industrial or commercial knowledge or information; or
(d) the provision of any assistance which is associated and complementary and which is provided as a means of enabling the use or operation of any property or right referred to in (a), any establishment referred to in (b) or any knowledge or information referred to in (c); or
(e) reception or right to receive image or sound, or both, transmitted to the public by:
(i) satellite; or
(ii) cable, optical fibre or similar technologies; or
(f) use or right of use of image or sound, or both, in connection with television or radio broadcasting, transmitted through:
(i) satellite; or
(ii) cable, optical fibre or similar technologies; or
(g) use or right of use:
(i) cinematographic films; or
(ii) films or video recordings for use in connection with television; or
(iii) audio recordings for use in connection with radio broadcasting; or
(h) the total or partial waiver of the use or supply of any property or right referred to in this paragraph.
4. The provisions of paragraph 2 shall not apply where a person directly entitled to royalties resident in a Contracting State is engaged in a source, industrial or commercial activity through a permanent establishment located in that other State, or is engaged in an independent profession through a permanent base located in that other State, and where the property or law in respect of which royalties are paid or credited to an account is actually linked to that permanent establishment or permanent base. In this case, the provisions of Article 7 or Article 14 shall apply depending on the case.
5. Licensing fees are assumed to have a source in the Contracting State if the payer is the State itself, its administrative department or the local office of that State or the person resident for the purposes of its tax. 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 or outside both Contracting States, in conjunction with which a licence fee has been charged to a permanent establishment or permanent base, it is assumed that such licence fees have a source in the Contracting State in which the permanent establishment or permanent base is located.
6. If, as a result of the special relations existing between the payer and the person who is directly entitled to the licence fees or who is maintained by one or another with a third party, the amount of the royalties paid or credited, taking into account what they are paid or credited to the account, exceeds the amount that the payer would have agreed with the person entitled to the licence fees if it were not for such relationships, the provisions of this Article shall apply only to that last amount. In this case, the amount of salaries which exceeds the amount of fees paid or credited shall be taxed under the tax legislation of each Contracting State, taking into account the other provisions of this Treaty.
Transfer of assets
1. The income, profits or income accruing from the transfer of immovable property located in the other Contracting State by a resident of one Contracting State may be taxed in that other State.
2. The income, profits or income from the transfer of assets other than immovable property which is part of the operating property of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or which belongs to a permanent base which a resident of the former State has in the other Contracting State for the pursuit of an independent occupation, including income, profits or proceeds from the transfer of such permanent establishment (alone or together with the whole undertaking) or such permanent base, may be taxed in that other State.
3. The income, profits or income from the transfer of ships or aircraft operating in international transport or property (other than immovable property) serving the operation of such ships or aircraft shall be subject to taxation only in the Contracting State in which the undertaking operating those ships or aircraft is resident.
4. The income, profits or income received by a resident of a Contracting State from the transfer of shares or comparable interests to a company whose assets consist wholly or principally of immovable property situated in the other Contracting State may be taxed in that other State.
5. Nothing in this Treaty shall affect the application of the laws of the Contracting State relating to the taxation of capital gains arising from the transfer of assets other than those to which any of the preceding paragraphs of this Article apply.
6. The term "immovable property" shall have the same meaning in this Article as in Article 6.
7. The location of immovable property for the purposes of this Article shall be determined in accordance with Article 6 (4).
Independent professions
1. Revenue received by a natural person resident in one Contracting State, from a professional or other independent activity shall be subject to taxation only in that State, provided that such occupation is not pursued in the other Contracting State and:
(a) a natural person stays in the other State for one or more periods exceeding 183 days in total in any 12-month period beginning or ending in the tax year of that other State; or
(b) has a permanent base in the other State on a regular basis for the purpose of carrying out its activities, in which case the part of the income attributable to that permanent base may be taxed in that State.
2. The term "free profession" shall include services performed in the exercise of independent scientific, literary, artistic, educational or teaching activities, as well as in the exercise of independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Employment
1. Salaries, wages and other similar remuneration received by a natural person resident in a Contracting State on the basis of 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 for them may be taxed in that other State.
(2) Rewards received by a natural person resident in a Contracting State on account of employment in the other Contracting State shall be subject to taxation only in the former State, notwithstanding the provisions of paragraph 1, if:
(a) the beneficiary shall stay in the other State for one or more periods not exceeding 183 days in total in any 12-month period beginning or ending in the tax year of that other State; and
(b) remuneration shall be paid by an employer or on behalf of an employer who is not resident in the other State; and
(c) the remuneration is not deductible when determining the taxable profits of a permanent establishment or a permanent base held by an employer in that other State.
3. Notwithstanding the previous provisions of this Article, remuneration received on account of employment carried out on board a ship or aircraft operating in international traffic by a resident of a Contracting State may be taxed in that State.
Tantiems
Tantiéms and similar salaries received by a resident of one Contracting State as a member of the Management Board or another similar body of a company resident in the other Contracting State may be taxed in that other State.
Artists and athletes
1. Receipts received in public by performers (such as theatre, film, radio or television artists and musicians) or by sportsmen from activities carried out in person may be taxed in the Contracting State in which they are carried out, irrespective of the provisions of Articles 14 and 15.
2. Where income from activities personally carried out by an artist or an athlete does not result from that person alone, but from another person, that income may be taxed in the Contracting State in which those activities are carried out, regardless of the provisions of Articles 7, 14 and 15.
3. The revenue from the activities referred to in paragraph 1 carried out in the framework of a cultural exchange agreed between the Governments of the Contracting States shall be exempt from taxation in the Contracting State in which those activities are carried out, notwithstanding the provisions of paragraph 1.
Pensions and pensions
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Regulation Information
| Citation | Communication from the Ministry of Foreign Affairs No. 5 / 1996 Coll., on the Agreement between the Czech Republic and Australia on the avoidance of double taxation and the prevention of tax evasion in the field of income tax |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 05.01.1996 |
|---|---|
| Effective from | 27.11.1995 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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