(Valid from June 6, 1997)

164/1997 Coll.

COMMUNICATION

Ministry of Foreign Affairs

Ministry of Foreign Affairs informs that on 21 June 1996 in Crans Montana was signed Agreement between the Czech Republic and Malta on the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and assets.

Agreed with the Treaty, the Czech Parliament and the president ratified it. The Treaty entered into force by virtue of Article 28, paragraph 2 on 6 June 1997.

Czech translation of the Treaty shall be open simultaneously. The English version of the Treaty can be consulted at the Ministry of Foreign Affairs and Ministry of Finance.

AGREEMENT

between the Czech Republic and Malta

the avoidance of double taxation and prevention of fiscal evasion with respect to Taxes on Income and on Capital

The Czech Republic and Malta,

Desiring to conclude an agreement on avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital

Have agreed as follows:

Article 1

The persons to whom this Agreement applies

This Agreement shall apply to persons who are resident in one or both of the Contracting States (residents).

Article 2

Taxes to which the Convention applies

1) This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the way they are levied.

2) as taxes on income and capital are considered all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3) The existing taxes to which the Convention shall apply are:

a) in the Czech Republic:

(I) the tax on personal income;

(Ii) the tax on corporate income tax;

(Iii) the tax on real estate;

(Hereinafter referred to as “Czech tax”);

b) in Malta:

income tax;

(Hereinafter referred to as “Malta tax”).

4) The Convention shall apply also to any tax of the same or substantially similar nature which are imposed after signing the Agreement in addition to or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.

5) Notwithstanding any other provisions of this Article, this Agreement will not apply to tax paid or payable in Malta under the provisions of subsection (13) Section 56 of the Income Tax Ordinance (Cap. 123) relating to the taxable income of any person involved in the production of oil produced in Malta or under any substantially similar provision shall be enforced after the signing of this contract.

Article 3

General definitions

1) For the purposes of this Agreement, unless the context otherwise requires:

a) the term “Czech Republic”, when used in geographical sense, means the territory in which the Czech Republic may exercise under Czech legislation and in accordance with international law, its sovereign rights;

b) the term “Malta” means the Republic of Malta, and when used in a geographical sense, means the island of Malta, Gozo and the other islands of the Maltese archipelago including the territorial waters of Malta, and any area outside the territorial sea, which, in accordance with international. under Maltese law and the law concerning the continental shelf is or may be designated as the territory in which they can be konávána rights of Malta with respect to the seabed and subsoil and their natural resources;

c) the terms “a Contracting State” and “the other Contracting State” mean respectively, the Czech Republic or Malta;

d) the term “person” includes an individual, company and any other body of persons;

e) the term “company” means any body corporate or any entity which is treated for tax purposes as a legal person;

f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

g) the term “national” means:

(I) any individual possessing the nationality of a Contracting State;

(Ii) any legal person, partnership or association constituted under the law in force in a Contracting State;

h) the term “international traffic” means any transport by a ship, aircraft or road vehicle operated by an enterprise of a Contracting State, except when the ship, aircraft or road vehicle is operated solely between places in the other Contracting State;

i) the term “competent authority” means:

(I) in the case of the Czech Republic Minister of Finance or his authorized representative;

(Ii) in the case of Malta, the Minister responsible for finance or his authorized representative.

2) With regard to the implementation of the Treaty by a Contracting State, any term not defined therein shall have the meaning which it has under the law of that State concerning the taxes to which the Treaty applies, unless the context otherwise requires.

Article 4

Resident

1) The term “resident of a Contracting State” means for purposes of this contract any person who, under the laws of that state has undergone in that State taxation by reason of his domicile, residence, place of management or any other similar criteria. This term does not include a person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2) If the individual is under the provisions of paragraph 1, a resident of both Contracting States, then his status shall be determined as follows:

a) it is assumed that this person is a resident of the State in which he has a permanent home, if he has a permanent home in both countries, is expected to be a resident only of the State with which his personal and economic relations (center of vital interests );

b) if it can not be determined, the State in which he has his center of vital interests or if he has a permanent home in either State, is expected to be a resident only of the State in which an habitual abode;

c) if he has an habitual abode in both States or in neither of them expected to be a resident only of the State, which is a national;

d) if he is a national of both States or of neither of them, the competent authorities of the States Parties to this question by mutual agreement.

3) If a person other than an individual under the provisions of paragraph 1, a resident of both Contracting States, it is assumed to be a resident only of the State in which the place of effective management.

Article 5

Permanent establishment

1) The term “permanent establishment” means a contract for the purposes of this fixed place of business through which is wholly or partly carried on business.

2) The term “permanent establishment” includes especially:

a) a place of management;

b) race;

c) an office;

d) a factory;

e) a workshop;

f) a mine, an oil or gas well, quarry or any other place, where the extraction of natural resources, including mimobřežního well.

3) The term “permanent establishment” likewise encompasses:

a) a building site, construction, assembly or installation project or supervisory activities in connection therewith, but only if it takes such site, project or activities for more than nine months;

b) the provision of services, including consultancy and managerial services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue in the territory of a Contracting State for a period or periods exceeding in the aggregate six months within any twelve month period.

4) Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall not include:

a) equipment to be indulging solely for the purpose of storage, display or delivery of the goods belonging to the enterprise;

b) the supply of goods or merchandise belonging to the enterprise solely for the purpose of storage. display or delivery;

c) the supply of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

d) a fixed place of business solely for the purpose of purchasing goods or collecting information for the enterprise;

e) a fixed place of business solely for the purpose of advertising, information, scientific research or similar activities to the enterprise a preparatory or auxiliary character; and

f) a fixed place of business solely for any combination of activities mentioned in subparagraphs a) to e) provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. ·

5) Notwithstanding the provisions of paragraphs 1 and 2 person – other than an independent agent to whom paragraph 6 applies – is acting in a Contracting State on behalf of an enterprise and has and habitually exercises power which allows her to conclude contracts on behalf of the company, it is considered that this enterprise has a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of this paragraph.

6) shall not be considered that an enterprise of a Contracting State a permanent establishment in the other Contracting State merely because in that other Contracting State carries on business through a broker, general commission agent or other independent representative, if such persons are acting in the ordinary course of their activities. However, if such agents are wholly or largely devoted to the benefit of this undertaking will not be considered an agent of independent status within the meaning of this paragraph.

7) The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which in that other State, carries on business (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6

Income from immovable property

1) Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

2) The term “immovable property” shall have the meaning it has under the law of the Contracting State in which such property is situated. The term shall in any case accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments for the working of, or consent to work, or for research of mineral deposits, sources and other natural resources, ships and aircraft shall not be regarded as immovable property.

3) The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or any other form of immovable property.

4) The provisions of paragraphs 1 and 3 shall also apply to income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7

Business Profits

1) The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2) If an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, when the plague, subject to the provisions of paragraph 3, in each Contracting State a permanent establishment the profits which would have been able to achieve if it were as a separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which the permanent establishment, or in contact with other associated companies.

3) In calculating the profits of a permanent establishment, there shall be allowed as deductions expenses which were incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere, and which have been deductible if the permanent establishment were an independent company that would pay these costs

4) If a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by the usual distribution , the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article.

5) Permanent establishment nepřičtou any profits from the fact, that the mere purchase of goods for the enterprise.

6), the profits to be attributed to the permanent establishment for purposes of the preceding paragraphs the same way every year unless there is sufficient reason to the contrary.

7) Where profits include items of income which are dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

8) The provisions of this Article shall affect the provisions of the law of a Contracting State concerning the taxation of company profits in insurance.

Article 8

International Shipping

1) Profits of an enterprise of a Contracting State from the operation of ships, aircraft or road vehicles in international traffic shall be taxable only in that State.

2) The provisions of paragraph 1 shall also apply to profits from participation in a pool, a joint business or an international operating agency.

Article 9

Associated Enterprises

1) If

a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State;

b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and if in these cases, the two enterprises in their commercial or financial relations conditions that have negotiated or imposed and which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have been accrued to one of the enterprises, but by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2) If a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State shall be taxed in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State makes a fair amount of tax charged therein on those profits. In determining such adjustment, due regard shall be to the other provisions of this contract, and if necessary, the competent authorities of the Contracting States to this end consult each other.

3) A Contracting State shall not adjust the profits of the enterprise in the circumstances referred to in paragraph 2 after the expiry of time limits imposed by its national law.

4) The provisions of paragraph 2 shall not apply in cases of fraud, willful default or negligence.

Article 10

Dividends

1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other 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 paying the dividends is a resident and according to the laws of that State, but:.

a) if the dividends paid by a resident of the Czech Republic to a resident of Malta who is the beneficial owner in the Czech tax so charged shall not exceed five percent of the gross amount of dividends;

b) if the dividends paid by a company which is resident in Malta, Czech resident. Republic, which is the beneficial owner, Malta tax on the gross amount of dividends does not exceed the tax imposed on profits from which dividends are paid. This paragraph shall not affect the taxation of profits from which dividends are paid.

3) The term “dividends” as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation laws of the State which the company making the distribution is a resident.

4) The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on in the other Contracting State of which the resident company paying the dividends on business through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid, is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case.

5) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may tax the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State .

Article 11

Interest

1) Interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State if such resident is the beneficial owner of such interest.

2) The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures , including premiums and prizes attaching to such securities, bonds or debentures. Penalty for late payment shall not be regarded as interest for the purposes of this article.

3) The provisions of paragraph 1 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on in the other Contracting State in which the interest arises, or business through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim from which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case.

4) If the amount of interest that relate to a claim for which it is paid by reason of a special relationship between the payer and the recipient is the beneficial owner or between both of them and some other person the amount which would have been agreed upon by the payer to such recipient in the absence of such relationship, the provisions of this Article only to the last-mentioned amount. The amount of payments, the excess will be taxed in this case under the laws of each Contracting State, due regard to the other provisions of this contract.

Article 12

Royalties

1) Royalties arising in a Contracting State and paid to a 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 arise, and according to the laws of that State, but if the beneficial owner of royalties resident of the other Contracting State the tax so charged shall not exceed five percent of the gross amount of the royalties charges.

3) The term “royalties” as used in this Article means payments of any kind received as consideration for the use or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process or any industrial, commercial or scientific equipment or for information related to the experience gained in industrial, commercial or scientific.

4) The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on in the other Contracting State in which the royalties arise, or business through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case.

5) It is assumed that the license fees to arise in a Contracting State when the payer is that State itself, a political subdivision, local authority or a resident of that State. However, if the person paying the royalties, whether he is or is not a resident of a Contracting State has in a Contracting State a permanent establishment or fixed base in connection with which the obligation to pay royalties, and such royalties are borne by such permanent establishment or fixed base, is, that such royalties shall be deemed to arise in the Contracting State, in which the permanent establishment or fixed base is situated.

6) If the amount of the royalties, having regard to the use, right or information for which they are paid by reason of a special relationship between the payer and the beneficial owner of the royalties or between both of them and some other person the amount which would have been agreed upon by the payer the beneficial owner in the absence of such relationship, the provisions of this Article only to the last-mentioned amount. The amount of payments, the excess will be taxed in this case under the laws of each Contracting State, due regard to other provisions of this contract.

Article 13

Disposal of assets

1) Income or gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2) Income or gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property belonging to a fixed base which the resident of a Contracting State in the other Contracting State for the purpose performing independent personal services, including income or gains from the alienation of such permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.

3) Income or gains from the alienation of shares or similar interests in a company whose assets consist directly or indirectly, in principle, of immovable property situated in a Contracting State may be taxed in that State.

4) Income or gains from the alienation of ships, aircraft or road vehicles operated in international traffic by an enterprise of a Contracting State or of movable property pertaining to the operation of such ships, aircraft or road vehicles shall be taxable only in that State.

5) Income or gains from the alienation of property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14

Independent Personal

1) Income derived by a resident of a Contracting State from professional services or other activities of an independent character shall be taxable only in that State. However, such income may be taxed in the other Contracting State, under the following circumstances:

a) if it is regularly available in the other Contracting State a permanent base for the purpose of performing his activities, in which case only so much income as is attributable to that fixed base may be taxed in that other Contracting State, or

b) if his stay in the other Contracting State for a period or periods amounting to or exceeding in the aggregate 120 days during any twelve month period commencing or ending in the fiscal year, in which case only so much income as derived from activities performed in the other Contracting State may be taxed in that other State.

2) In calculating the period mentioned in paragraph 1 point. b) the provisions of Article 15, paragraph 3

3) The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants.

Article 15

Employment

1) Salaries, wages and other similar remuneration, a resident of a Contracting State in respect of employment, subject, subject to the provisions of Articles 16, 18 and 19, be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration may be received for them taxed in that other State.

2) Remuneration which a resident of a Contracting State in respect of employment exercised in the other Contracting State shall, notwithstanding the provisions of paragraph 1 be taxable only in the first-mentioned State if all the following conditions are met:

a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year,

b) the remuneration is paid by the employer or the employer who is not a resident of the other State, and

c) the remuneration is not borne by a permanent establishment or fixed base which the employer has in the other State.

3) The computation of the periods referred to in paragraph 2. a) shall include the following days:

a) all days of physical presence including days of arrivals and departures, and

b) days spent outside the State of activity such as Saturdays and Sundays, national holidays, vacation, business trips relating to the business, after which the activity was in the territory of that State.

4) The term employer referred to in paragraph 2. b) means a person who has the right of the work and bearing the responsibility and risk associated with the performance of work.

5) Notwithstanding the preceding provisions of this Article, remuneration derived from employment exercised aboard a ship, aircraft or road vehicles operated in international traffic by an enterprise of a Contracting State taxed in that State.

Article 16

Royalties

Directors’ fees and other similar payments to a resident of a Contracting State in his capacity as a Board member or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17

Artists and athletes

1) Income derived by a resident of a Contracting State as an entertainer such as a theater, motion picture, radio or television artiste, or a musician, or as a sportsman, from such personal activities exercised in the other Contracting State, may be, notwithstanding the provisions of Articles 14 and 15 taxed in that other State.

2) If the income from activities carried out personally artist or athlete accrues not entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the entertainer or athlete are exercised their activities.

3) Income derived from activities defined in paragraph 1, performed in the framework of cultural exchanges between the governments of both countries will be without prejudice to the provisions of paragraphs 1 and 2, exempt from taxation in the Contracting State in which such activities are performed.

Article 18

1) Pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be subject, subject to the provisions of Article 19, paragraph 2, be taxable only in that State.

2) Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under the legislation of one Contracting State for social security shall be taxable only in that State.

Article 19

Public function

1) a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual for services rendered to that State or subdivision or local authority shall be taxable only in that State.

b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(I) is a national of that State;

(II) did not become a resident of that State solely for the purpose of rendering the services.

2) a) Any pension paid by a Contracting State or a political subdivision or local authority thereof or out of funds created by, a natural person for services rendered to that State or subdivision or local authority shall be taxable only in that State.

b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident and national of that State.

3) The provisions of Articles 15, 16 and 18 shall apply to salaries, wages and other similar remuneration and to pensions for services rendered in connection with a business carried on by a smluvím State or political subdivision or local authority thereof.

4) If the salaries, wages and other similar remuneration paid by the program of a Contracting State to assist in the development of the fund solely financed by the State expert or volunteer seconded to the other Contracting State with the consent of that other State, then such remuneration shall be taxable only in the first mentioned State.

Article 20

Students and apprentices

Student or apprentice who is present in a Contracting State solely for the purpose of his education or training and who is or was immediately before visiting a resident of that state of the other Contracting State shall in the first-mentioned State exempt from tax payments, receives from sources outside the first-mentioned State to cover the costs of nutrition, education or training.

Article 21

Other income

1) Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

2) Paragraph 1 shall not apply to income other than income from immovable property as defined in Article 6, paragraph 2, if the recipient of such income, being a resident of a Contracting State, carries on in the other Contracting State on business through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case.

Article 22

Property

1) Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.

2) Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State in the other Contracting State or movable property belonging to a fixed base available to a resident of a Contracting State has in the other Contracting State to exercise an independent profession may be taxed in that other State.

3) Capital represented by ships, aircraft and road vehicles that are operated by an enterprise of a Contracting State in international traffic and by movable property pertaining to the operation of such ships, aircraft and road vehicles shall be taxable only in that State in which the company is located.

4) All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Article 23

Elimination of double taxation

1) In the case of Malta, double taxation shall be eliminated as follows:

In accordance with the provisions of Maltese law on the foreign tax credit on Maltese tax if they are in Maltese taxable income includes income from sources in the Czech Republic in accordance with the provisions of this Treaty, the Czech tax on such income credited to a comparable Malta tax payable on such income.

2) In the case of the Czech Republic, double taxation shall be eliminated as follows

Czech Republic, when imposing taxes on its residents in the tax base from which such taxes are imposed the items of income or property which may be in accordance with the provisions of this contract also taxed in Malta, but shall allow the amount of tax computed on such a base an amount equal to the tax paid in Malta. The amount by which the tax is reduced, however, exceed that part of the Czech tax, as computed before the deduction, which is attributable to the income or property which may be in accordance with the provisions thereof taxed in Malta.

3) If the contract provides that income arising in a Contracting State shall be exempt from tax in that State, either in whole or in part, and according to applicable laws, regulations in the other Contracting State, such income shall be subject to taxation according to the amount that is remitted to that other State or received in that other State and not with regard to the total amount, then the exemption to be allowed in the first-mentioned State shall apply only to that portion of income which is remitted to another state or received in the other State.

4) For the purpose of allowing the credit, it is assumed that the tax payable in the Czech Republic or Malta, as the context requires, include the tax that would otherwise be payable in a Contracting State but has been reduced or waived by that State under its law relating to tax credits.

Article 24

Prohibition of discrimination

1) Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which are or may be subjected to nationals of that other State who are, especially with respect to residence, in the same situation. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2) taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be in that other State than the taxation favorably enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal deductions, exemptions and tax reductions for civil status or family responsibilities which it grants to its residents.

3) Except where the provisions of Article 9, paragraph 1, Article 11, paragraph 4 or Article 12, paragraph 6, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State a resident of the other Contracting State to determine the deductible taxable profits of that enterprise under the same conditions as if they were paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for purposes of determining the taxable capital of such enterprise. Deductible under the same conditions as if they were contracted to a resident of the first-mentioned State.

4) Enterprises of a Contracting State, the capital is full. or in part, directly or indirectly owned or controlled by the person or persons who are residents of the other Contracting State shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which are or may be subject to other similar enterprises of the first-mentioned State.

5) The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description, which are covered by this contract.

Article 25

Mutual Agreement

1) Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions thereof, irrespective of the remedies provided by the domestic law of those States, present his case to the competent the Contracting State of residence, or if his case falls under Article 24, paragraph 1, of the Contracting State of which he is national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Treaty.

2) If the competent authority of the objection to be justified and if it is not itself able to arrive at a satisfactory solution, they will try to resolve the case by mutual agreement with the competent authority of the other Contracting State to the avoidance of taxation not in accordance with the Treaty. Any agreement reached shall be implemented notwithstanding any time limits laid down in national law of the Contracting States.

3) The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Treaty. They may also consult together for the avoidance of double taxation in cases where the contract does not cover.

4) The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement within the meaning of the preceding paragraphs. If an oral exchange of opinions seems advisable for reaching agreement, it may make such an exchange of views through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article 26

Exchange of information

1) The competent authorities of the Contracting States shall exchange information necessary to implement the provisions of this contract or national laws of the Contracting States concerning taxes covered by this Agreement insofar as the taxation thereunder is not contrary to this Treaty. Exchange of information is not restricted by Article 1 All information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of taxes covered by this contract, enforcement or prosecution in respect of those taxes or the determination of appeals in relation to these taxes. Such persons or authorities shall use such information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

2) The provisions of paragraph 1 shall not be in any way construed so as to impose on a Contracting State the obligation:

a) carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

b) to supply information which is not obtainable under the laws or in the normal administration of that or of the other Contracting State;

c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy.

Article 27

Members of diplomatic missions and consular officials

Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular officials under the general rules of international law or under the provisions of special agreements.

Article 28

Entry into force

1) The Contracting States shall notify each other that the constitutional requirements for entry into force of this Treaty have been fulfilled.

2) The contract shall enter into force on the later notification referred to in paragraph 1 and its provisions shall have effect:

a) in the Czech Republic:

(I) in respect of taxes withheld at source, to amounts derived from 1 January or later in the calendar year next following that in which the Convention enters into force;

(Ii) in respect of other taxes on income and property taxes, to taxes chargeable for any taxable year beginning on 1 January or later in the calendar year next following that in which the Convention enters into force;

b) in Malta:

with respect to taxes on income received during each calendar year or financial year, depending on what terms, beginning 1 January or later, immediately following the date on which the Convention enters into force.

Article 29

Statement

This Agreement shall remain in force until terminated by a Contracting State. Each State Party may denounce the Treaty through diplomatic channels, by giving written notice at least six months before the end of each calendar year beginning after the expiration of a period of five years from the date on which the Convention entered into force. In this case, the Convention shall cease to have effect:

a) in the Czech Republic:

(i) in respect of taxes withheld at source, to amounts derived from 1 January or later in the calendar year following the year in which the notice is given;

(ii) in respect of other taxes on income and property taxes, to taxes chargeable for any taxable year beginning on 1 January or later in the calendar year following the year in which the notice is given;

b) in Malta:

with respect to taxes on income received during each calendar year or financial year, depending on what terms, beginning 1 January or later, immediately following the date on which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorized thereto, have signed this Agreement.

Done in Crans Montana on 21 June 1996 in two originals in the English language.