Decree of the Minister for Foreign Affairs No. 73 / 1975 Coll.
Decree of the Minister for Foreign Affairs on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the French Republic on the avoidance of double taxation in the field of income taxes
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73
DECLARATION
Minister for Foreign Affairs
of 7 March 1975
on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the French Republic on the avoidance of double taxation in the field of income taxes
On 1 June 1973, the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the French Republic on the avoidance of double taxation in the field of income taxes was signed in Paris, which, according to Article 32, entered into force on 25 January 1975.
The Czech text of the Treaty is published simultaneously.
First Deputy Minister:
Krajčir v. r.
TREATY
between the Government of the Czechoslovak Socialist Republic and the Government of the French Republic on the avoidance of double taxation in the field of income taxes
The Government of the Czechoslovak Socialist Republic and the Government of the French Republic, wishing to conclude a double taxation agreement in the field of income taxes, have agreed as follows:
CHAPTER I
SCOPE OF THE TREATY
Persons covered by the contract
This Treaty shall apply to persons who have their domicile in one or both Contracting States.
Taxes covered by the contract
1. This Treaty applies to income and property taxes collected in both Contracting States, whatever the method of collection.
2. Income and property taxes shall be regarded as taxes levied on total income, on all or individual items of income or assets, including taxes on profits arising from the disposal of movable or immovable property, and on the increase in value.
3. The current taxes covered by the contract are:
A. - concerning France:
(a) income tax on natural persons;
(b) company tax,
including any deduction for the source, advance payment or advance payment relating to the taxes referred to above,
(c) trade tax (contribution des patents);
B. - concerning Czechoslovakia:
(a) profit contribution;
(b) profit tax;
(c) payroll tax;
(d) income tax on literary and artistic activities;
(e) agricultural tax;
(f) population income tax,
including any deduction for the source, any advance payment or advance payment relating to the taxes referred to above.
4. The contract will also apply to future taxes of the same or similar nature, which will be attached to or replaced by current taxes. The competent authorities of the Contracting States shall notify each other of changes to be made to their respective tax laws.
CHAPTER II
DEFINITIONS
General definitions
1. Within the meaning of this Treaty, where the link does not require a different interpretation:
(a) the term "Czechoslovakia" refers to the Czechoslovak Socialist Republic, which consists of the Czech Socialist Republic and the Slovak Socialist Republic;
the term "France 'refers to the departments of the European and overseas departments (Guadeloupe, Guyane, Martinique and Réunion) of the French Republic and the zones located outside French territorial waters in which France may, in accordance with international law, exercise rights relating to the seabed, subsoil situated under the seabed and their natural resources;
(b) the terms "one Contracting State" and "the other Contracting State" refer to Czechoslovakia or France as appropriate;
(c) the term "person" includes natural persons, companies, public corporations and all other associations of persons;
(d) the term "company" refers to any legal person or substance considered to be a legal person for tax purposes;
(e) the terms "undertaking of one Contracting State" and "undertaking of the other Contracting State" refer to undertakings operated by a resident in one Contracting State or, where appropriate, undertakings operated by a resident in the other Contracting State;
(f) the term "competent authority" shall mean:
- in the case of Czechoslovakia - Minister of Finance of the Czechoslovak Socialist Republic or his authorised representative,
- in the case of France - the Minister for Economic Affairs and Finance or his authorised representative.
2. Any term which is not otherwise defined shall have a meaning for the application of this Treaty by the Contracting State which is addressed to it by the legislation of that State governing taxes which are the subject of this Treaty, unless the link requires a different interpretation.
Tax domicile
1. For the application of this Treaty, it is assumed that a person has his or her domicile in a Contracting State when he or she is subject to tax in that State on account of his or her residence, his / her place of residence or any other criterion of a similar nature.
2. Where, pursuant to paragraph 1, a natural person is presumed to have his or her domicile in both Contracting States, the case shall be decided in accordance with the following rules:
(a) It is assumed that this person has his or her domicile in the Contracting State in which he or she has a permanent residence. If it has a permanent residence in both Contracting States, it is assumed that it has its domicile 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 have his domicile in the Contracting State in which he normally resides.
(c) Where 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 have his domicile in the Contracting State of which he is a national.
(d) If that person is a national of both Contracting States or if he is not a national of any of them, the competent authorities of the Contracting States shall decide the matter by mutual agreement.
3. Where, pursuant to the provisions of paragraph 1, a person other than a natural person is presumed to have his or her domicile in both Contracting States, his or her domicile shall be presumed to be in the Contracting State in which his or her head office is situated.
Permanent establishment
1. The term "permanent establishment" means, within the meaning of this Treaty, a permanent establishment for the business in which the undertaking carries out its activities in whole or in part.
2. the term "permanent establishment" covers in particular:
(a) the head office of the management;
(b) the race;
(c) an office;
(d) the factory,
(e) workshop,
(f) mine, quarry or any other place where natural resources are extracted.
3. A permanent establishment shall not be considered to be:
(a) the establishment is used only for the storage, display or supply of goods belonging to the holding;
(b) the goods belonging to the holding are stored only as a stock, for the purpose of exhibition or delivery;
(c) the goods belonging to the undertaking are stored only for processing by another undertaking;
(d) a permanent establishment serving business is used only for the purpose of purchasing goods or collecting information for the undertaking;
(e) a permanent establishment serving business is used for the purposes of advertising, information, scientific research or similar activities of a preparatory or auxiliary nature,
(f) the activity of the undertaking shall remain on construction or assembly.
4. A person acting in one Contracting State for the account of an undertaking of another Contracting State - other than a representative having an independent status as referred to in paragraph 5 - shall be considered to be a "permanent establishment 'in the first State if, in that State, he is equipped with the full power normally exercised there and allowing him to conclude contracts on behalf of an undertaking, unless the activity of that person is limited to the purchase of goods for the undertaking.
5. In the other Contracting State, the mere fact that the undertaking carries out its activities there through a broker, a general agent or any other intermediary having an independent position shall not be regarded as a permanent establishment of an undertaking of one Contracting State.
6. The fact that a company which has its domicile in one Contracting State controls or is controlled by a company which has its domicile in the other Contracting State or carries on its activities there (whether through a permanent establishment or not) is not sufficient in itself to make that company a permanent establishment in another company.
CHAPTER III
REVENUE
Revenue from real estate
1. Revenue accruing from immovable property taxed in the Contracting State in which the property is located.
2. The term "immovable property" is defined in accordance with the tax law of the Contracting State in which the immovable property is located. The term covers, in particular, rights governed by legislation applicable to land ownership and the right to variable or fixed supply for mining or for the admission to mining of mineral deposits, springs and other land wealth. Ships, boats and aircraft shall not be considered property.
3. The provisions of paragraph 1 shall apply to revenue resulting from direct management, hire or hire as well as from any other form of exploitation of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to income arising from the immovable property of an undertaking as well as to income from immovable property serving the exercise of a professional profession.
Income from enterprises
1. The proceeds of an undertaking of one Contracting State shall be taxed only in that State if the undertaking does not carry out its business in the other Contracting State through a permanent establishment situated there. Where an undertaking carries out its activities in this way, the income of an undertaking in the other State shall be taxed, but only to the extent that it 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, the proceeds which it could have realised in each Contracting State shall be attributed to that permanent establishment, if it had set up a different and separate undertaking, carrying out activities identical or similar in identical or similar conditions and trading completely independently of the undertaking of which it is a permanent establishment.
3. In calculating the revenue of a permanent establishment, it shall be permitted to deduct the costs incurred for the objectives pursued by that permanent establishment, including management costs and general administrative expenses thus incurred, whether in the State in which that permanent establishment is located or elsewhere.
4. No revenue shall be attributed to a permanent establishment on the basis that this permanent establishment only purchased goods for the undertaking.
5. For the purposes of the preceding paragraphs, the revenue to be attributed to a permanent establishment shall be calculated each year in accordance with the same method, unless there are serious and sufficient grounds for a different procedure.
6. Where revenue includes parts of income which are covered separately in other Articles of this Treaty, the provisions of those Articles shall be without prejudice to the provisions of this Article.
7. The provisions of paragraph 1 shall apply by analogy to the trade tax.
Maritime, inland waterway and air transport
1. Proceeds resulting from the operation of ships and aircraft in international transport shall be subject to taxation only in the Contracting State in which the head office of the undertaking is situated.
2. Proceeds resulting from the operation of inland waterway boats shall be subject to taxation only in the Contracting State in which the head office of the undertaking's actual management is located.
3. Where the head office of a seagoing or inland waterway undertaking is on board a ship or a boat, that seat shall be deemed to be located in the Contracting State in which the home port of that ship or boat is situated or, in the absence of a home port, in the Contracting State where the operator of the ship or boat is domiciled.
(4) The provisions of paragraphs 1 and 2 shall apply by analogy to trade tax.
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) if the same persons participate, directly or indirectly, in the management, control or capital of an undertaking of one Contracting State and of an undertaking of the other Contracting State,
and if both undertakings are linked, in one and the other, in their commercial and financial relations, to conditions adopted or imposed which differ from those which would be negotiated between independent undertakings, the revenues of that undertaking may be included and, consequently, taxed, which would have been achieved without these conditions by one of the undertakings, but which could not have actually been obtained in view of those conditions.
Dividends
(1) Dividends paid by a company which has been domiciled in one Contracting State, to a person domiciled in the other Contracting State, shall be subject to taxation in that other State.
2. However, these dividends may be taxed in the Contracting State in which the company which pays them has its domicile, under the laws of that State. However, the tax thus established may not exceed 10% of the gross amount of dividends.
This paragraph shall not affect the taxation of the profits of the company serving to pay dividends.
3. The term "dividends," as used in this Article, refers to income arising from shares, profit participation certificates, coupons, founding shares or other profit interests, with the exception of receivables, as well as income from other social holdings, which are assimilated to income from shares by the tax legislation of the State in which the company which distributes dividends has its domicile.
4. The provisions of paragraphs 1 and 2 shall not apply where the recipient of dividends domiciled in one Contracting State has a permanent establishment in the other Contracting State in which the company which pays dividends has its domicile, to which the participation providing dividends is actually linked. In this case, the provisions of Article 7 shall apply.
5. A person who has his or her domicile in Czechoslovakia and who receives dividends paid by a company having its domicile in France may claim payment of a tax deduction on those dividends made in advance by a company paying dividends in the present case. However, France may levy the tax provided for in paragraph 2 on the amount of the payments.
Income realised by the plants
If a company with a domicile in Czechoslovakia has a permanent establishment in France, it may be subject to a tax reduction at the source, under the conditions foreseen by the national French legislation. However, the basis on which the haircut is collected shall be reduced by one third and the rate of the reduction may not exceed 10%.
Interest
1. Interest accruing from one Contracting State and paid to a person who is domiciled in the other Contracting State shall be subject to taxation only in that other State.
2. The term "interest" used in this Article shall refer to revenue from public bonds, bonds, whether or not covered by a hypothetical guarantee or a clause on participation in profits and claims of any kind, as well as any other proceeds made by the tax legislation of the State from which the revenue is derived, to income from loans.
3. The provisions of paragraph 1 shall not apply where the beneficiary of the interest which he is domiciled in one Contracting State has a permanent establishment in the other Contracting State on which the interest is accruing, to which he or she actually has a claim which is a source of interest. In this case, the provisions of Article 7 shall apply.
4. It is considered that interest shall have a source in a particular Contracting State, if the debtor is that State itself, the local corporation or the resident in that State. However, if the debtor of interest, whether or not he is domiciled in a Contracting State, has a permanent establishment in one Contracting State for which the interest-granting loan has been agreed and which bears such interest at its expense, the interest shall be assumed to have a source in the Contracting State in which the permanent establishment is situated.
5. Where, as a result of special relations between the debtor and the creditor, or which are maintained by one or the other with third parties, the amount of interest paid, taking into account the claim for which they are paid, exceeds the amount which the debtor would have agreed with the creditor if it were not for similar relationships, the provisions of this Article shall apply only to that last amount. In this case, part of the salaries exceeding it shall remain subject to tax under the legislation of each Contracting State and under other provisions of this Treaty.
Licence fees
1. Licensing fees originating in one Contracting State and paid to a person who is domiciled in the other Contracting State shall be subject to taxation in that other State.
2. However, licence fees may be taxed in the Contracting State from which they originate, under the legislation of that State. However, the tax thus established may not exceed 5% of the gross amount of royalties.
3. Notwithstanding the provisions of paragraph 2, royalties resulting from copyright in respect of works of literary, artistic or scientific nature shall be taxed only in the Contracting State in which the person who receives them is domiciled.
4. The term "royalties" used in this Article shall refer to compensation of any kind, paid for use or for permission to use copyright for the work of literary, artistic or scientific, including cinematographic films, patent, production or trade mark, design or model, plan, secret instruction or production process, as well as to the use or use of industrial, commercial or scientific equipment and for information relating to industrial, commercial or scientific experience.
5. The provisions of paragraph 1 shall not apply where the licensee who is domiciled in one Contracting State has a permanent establishment in the other Contracting State from which the royalties are derived, to which the law or property which is the source of the royalties actually relates. In this case, the provisions of Article 7 shall apply.
6. Where, as a result of special relations between the debtor and the creditor, or which one or the other maintain with third parties, the amount of the remuneration paid, in respect of the transactions for which they are paid, exceeds the remuneration which the debtor would have agreed with the creditor if it were not for similar relationships, the provisions of this Article shall apply only to that last amount. In this case, part of the salaries exceeding it shall remain subject to tax under the legislation of each Contracting State and under other provisions of this Treaty.
Capital gains
1. Profit arising from the disposal of immovable property, the definition of which is set out in paragraph 2 of Article 6, or from the disposal of holdings or similar rights in companies whose assets consist mainly of immovable property, shall be taxed in the Contracting State in which the immovable property is located.
2. Profit or loss arising from the disposal of movable property which are part of the assets of a permanent establishment by an undertaking of a Contracting State having a permanent base in the other Contracting State, or of a basic movable assets, which a person domiciled in one Contracting State has in the other Contracting State for the pursuit of the free profession, including those profits which result from the total disposal of that permanent establishment (alone or with the whole undertaking) or that permanent base, shall be subject to taxation in that other State.
However, profits arising from the disposal of ships or aircraft used in international transport and of movable property intended for the operation of those ships or aircraft which are taxed only in the Contracting State in which the head office of the undertaking is situated.
3. Profit accruing from the disposal of all 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 is domiciled.
Independent professions
1. Revenue received by a resident in a Contracting State from a liberal profession or other independent activities of a similar nature shall be subject to taxation only in that State, unless that person normally uses a permanent basis for the pursuit of his activities in the other Contracting State. If it has such a base, income is subject to taxation in the other State, but only to the extent that it can be attributed to that permanent base.
2. The term "free professions" shall include the particular independent activities of the type of scientific, literary, artistic, educational or teaching, as well as the independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Dependent employment
1. Subject to the provisions of Articles 17, 19, 20, 21 and 22, wages, salaries and other similar remuneration which a person who is a resident of a Contracting State receives for reasons of paid employment shall be subject to taxation only in that State. However, where employment is carried out in a second Contracting State, the remuneration received under this heading shall be subject to taxation in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration received by a resident in one Contracting State in respect of paid employment in the other Contracting State shall be subject to taxation only in the first State if:
(a) the consignee shall stay in the other State for a period of one or more periods not exceeding 183 days in whole during the tax year under consideration;
(b) the remuneration shall be paid by the employer or in the name of the employer who does not have his domicile in that other State; and
(c) if the remuneration is due to a permanent establishment or a permanent base held by an employer in that other State.
3. Notwithstanding the previous provisions of this Article, remuneration in respect of paid employment carried out on board a ship or aircraft in international transport or on board a boat serving inland navigation shall be subject to taxation in the Contracting State in which the head office of the undertaking is situated.
Tantiems
Tantiéms, compensation for participation in administrative bodies and other similar salaries which a resident in one Contracting State receives in his or her capacity as a member of the administrative or supervisory board of a company which is domiciled in the other Contracting State shall be subject to taxation in that other State.
Artists and athletes
Notwithstanding the provisions of Articles 15 and 16, income received by public performing professionals, such as theatrical, film, radio or television artists and musicians, as well as sportsmen, shall be subject to taxation in the Contracting State in which those activities are carried out.
Pension
Subject to the provisions of paragraph 1 of Article 20, pensions, including social security pensions, and other similar salaries, referred to by reason of former employment to a person who is resident in a Contracting State shall be subject to taxation only in that State.
Public functions
(1) Salaries, including pensions, paid by one contracting State or by a local corporation or by a legal person in public law of that State either directly or through the funds they have set up shall be subject to taxation in that State by reason of the services shown to that State, by that corporation or by that legal person in the performance of public functions.
However, this provision shall not apply where such salaries are shown to natural persons who are domiciled in the other State and who are nationals of that other State.
2. The provisions of Articles 16, 17 and 19 shall apply to salaries or pensions referred to in respect of services shown in the course of a commercial or industrial activity carried out by one of the Contracting States or by one of its local corporations or by a legal person governed by public law in that State.
3. The property of a legal entity under public law shall be determined in accordance with the law of the State in which the legal entity was established.
Professors
A professor who has had his domicile in one Contracting State before the beginning of his stay in the other Contracting State and who teaches for a period not exceeding two years at the educational institution of the other Contracting State shall be exempt from the remuneration tax which he receives for such teaching in that other State.
Study
1. The amounts which a student or intern who has or had previously inherited in one Contracting State and who resides in the other Contracting State only to continue his studies or training there shall not be subject to taxation in that other State to cover the costs of residence, study or practical training, provided that they originate from sources outside that other State.
2. Students studying in teaching institutes of one Contracting State who carry out paid activities in the other Contracting State in order to receive practical training relating to their studies shall not be subject to pay tax in that other State, provided that the duration of that activity does not exceed 183 days per calendar year.
Revenue not explicitly mentioned
Parts of the income of a person domiciled in a Contracting State not specifically mentioned in the preceding Articles of this Treaty shall be taxed only in that State.
CHAPTER IV
RELIEF
Property
1. Property remaining from immovable property as defined in paragraph 2 of Article 6 shall be subject to taxation in the Contracting State in which the property is located.
2. Property remaining from movable property which is part of the assets of a permanent establishment of an undertaking or of movable property which creates a permanent base for the exercise of a free profession shall be subject to taxation in the Contracting State where the permanent establishment or permanent base is situated.
3. Ships and aircraft used in international operations and inland waterway vessels, as well as movable goods intended for their operation, shall be subject to taxation only in the Contracting State where the head office of the undertaking's actual management is located.
4. All other parts of the property of a person domiciled in one Contracting State shall be subject to taxation only in that State.
CHAPTER V
PROVISIONS FOR THE PURPOSE OF THE EXPORTING OF TWO REVENUE
Double taxation shall be excluded as follows:
A. - France
(a) revenue other than those referred to in (b) below shall be exempt from French taxes calculated in Article 2, paragraph 3 - A., where such revenue is subject to taxation in Czechoslovakia under this Treaty;
(b) in respect of the income referred to in Articles 10, 13, 17 and 18 which are subject to Czechoslovak tax pursuant to the provisions of those Articles, France shall grant to persons who are domiciled in France who receive such income from the Czechoslovak source a tax credit corresponding to the tax levied in Czechoslovakia; this tax credit which cannot exceed the amount of tax collected on the income in question shall be credited to the French taxes listed in Article 2 (3) - (A.) on which the said revenue is incorporated;
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Regulation Information
| Citation | Decree of the Minister for Foreign Affairs No. 73 / 1975 Coll., on the Treaty between the Government of the Czechoslovak Socialist Republic and the Government of the French Republic on the avoidance of double taxation in the field of income taxes |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 16.07.1975 |
|---|---|
| Effective from | 25.01.1975 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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