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Canada and the Czech Republic, desiring to conclude a
Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on in
come, have agreed as follows:
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This Convention shall apply to persons who are residents of
one or both of the Contracting States.
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1. This Convention shall apply to taxes on income imposed on
behalf of Canada and on behalf of the Czech Republic or of its
political subdivisions or local authorities, irrespective of the
manner in which they are levied.
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2. There shall be regarded as taxes on income all taxes
imposed on total income, or on elements of income, 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.
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3. The existing taxes to which the Convention shall apply are:
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(a) in the case of Canada:
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the income taxes imposed by the Government of Canada
under the Income Tax Act (hereinafter referred to as
``Canadian tax'');
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(b) in the case of the Czech Republic:
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(i) the tax on income of individuals;
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(ii) the tax on income of legal persons;
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(hereinafter referred to as ``Czech tax'').
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4. The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of, the
existing taxes. The competent authorities of the Contracting
States shall notify each other of any significant changes which
have been made in their respective taxation laws.
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1. For the purposes of this Convention, unless the context
otherwise requires:
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(a) the term ``Canada'' used in a geographical sense, means the
territory of Canada, including
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(i) any area beyond the territorial sea of Canada which, in
accordance with international law and the laws of Canada,
is an area within which Canada may exercise rights with
respect to the seabed and subsoil and their natural
resources;
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(ii) the sea and airspace above every area referred to in
clause (i) in respect of any activity carried on in connection
with the exploration for or the exploitation of the natural
resources referred to therein;
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(b) the term ``the Czech Republic'' means the territory of the
Czech Republic over which, under Czech legislation and in
accordance with international law, the sovereign rights of the
Czech Republic are exercised;
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(c) the terms ``a Contracting State'' and ``the other Contracting
State'' mean Canada or the Czech Republic as the context
requires;
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(d) the term ``person'' comprises an individual, a trust, a
company and any other body of persons;
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(e) the term ``company'' means any body corporate or any
entity which is treated as a body corporate for tax purposes;
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(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;
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(g) the term ``national'' means:
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(i) any individual possessing the nationality of a
Contracting State;
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(ii) any legal person, partnership or association deriving its
status as such from the laws in force in a Contracting State;
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(h) the term ``international traffic'' means any transport by a
ship or aircraft operated by a resident of a Contracting State,
except when the ship or aircraft is operated solely between
places in the other Contracting State;
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(i) the term ``competent authority'' means:
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(i) in the case of Canada, the Minister of National Revenue
or the Minister's authorised representative;
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(ii) in the case of the Czech Republic, the Minister of
Finance or the Minister's authorised representative.
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2. As regards the application of the Convention at any time by
a Contracting State, any term not defined therein shall, unless the
context otherwise requires, have the meaning that it has at that
time under the law of that State for the purposes of the taxes to
which the Convention applies, any meaning under the applicable
tax laws of that State prevailing over a meaning given to the term
under other laws of that State.
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1. For the purposes of this Convention, the term ``resident of
a Contracting State'' means any person who, under the laws of
that State, is liable to tax therein by reason of the person's
domicile, residence, place of management, place of
incorporation or any other criterion of a similar nature and also
includes that State and any political subdivision or local
authority thereof or any agency or instrumentality of that State,
subdivision or authority. This term, however, does not include
any person who is liable to tax in that State in respect only of
income from sources in that State.
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2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then the
individual's status shall be determined in accordance with the
following rules:
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(a) the individual shall be deemed to be a resident only of the
State in which the individual has a permanent home available;
if the individual has a permanent home available in both
States, the individual shall be deemed to be a resident only of
the State with which the individual's personal and economic
relations are closer (centre of vital interests);
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(b) if the State in which the individual has a centre of vital
interests cannot be determined, or if there is not a permanent
home available to the individual in either State, the individual
shall be deemed to be a resident only of the State in which the
individual has an habitual abode;
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(c) if the individual has an habitual abode in both States or in
neither of them, the individual shall be deemed to be a resident
only of the State of which the individual is a national;
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(d) if the individual is a national of both States or of neither of
them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
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3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting States,
then:
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(a) the person shall be deemed to be a resident only of the State
of which the person is a national;
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(b) if the person is a national of neither of the States, the
competent authorities of the Contracting States shall by
mutual agreement endeavour to settle the question and to
determine the mode of application of the Convention to such
person. In the absence of such agreement, such person shall
not be entitled to claim any relief or exemption from tax
provided by the Convention.
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1. For the purposes of this Convention, the term ``permanent
establishment'' means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
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2. The term ``permanent establishment'' includes especially:
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(a) a place of management;
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(f) a mine, an oil or gas well, a quarry or any other place
relating to the exploration for or the exploitation of natural
resources.
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3. The term ``permanent establishment'' likewise
encompasses:
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(a) a building site, or a construction, assembly or installation
project or supervisory activities in connection therewith, but
only where such site, project or activities continue for a period
of more than twelve months;
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(b) the furnishing of services, including consultancy or
managerial services, by an enterprise of a Contracting State
through employees or other personnel engaged by the
enterprise for such purposes, but only where activities of that
nature continue in the territory of the other Contracting State
for a period or periods exceeding in the aggregate six months
within any twelve month period.
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4. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' shall be deemed not to
include:
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(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
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(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
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(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
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(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting
information, for the enterprise;
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(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of
a preparatory or auxiliary character;
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(f) the maintenance of 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.
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5. Notwithstanding the provisions of paragraphs 1 and 2,
where a person - other than an agent of an independent status
to whom paragraph 6 applies - is acting on behalf of an
enterprise and has, and habitually exercises, in a Contracting
State an authority to conclude contracts in the name of the
enterprise, that enterprise shall be deemed to have 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 that paragraph.
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6. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission
agent or any other agent of an independent status, where such
persons are acting in the ordinary course of their business.
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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 carries on business in that
other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a
permanent establishment of the other.
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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.
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2. For the purposes of this Convention, the term ``immovable
property'' shall have the meaning which it has for the purposes
of the relevant tax law of the Contracting State in which the
property in question is situated. The term shall in any case include
property 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 as consideration for the working of, or the right to
work, mineral deposits, sources and other natural resources.
Ships and aircraft shall not be regarded as immovable property.
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3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of immovable
property.
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4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income
from immovable property used for the performance of
independent personal services.
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1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on or has
carried on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries
on or has carried on business as aforesaid, the profits of the
enterprise may be taxed in the other State but only so much of
them as is attributable to that permanent establishment.
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2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on or has carried on
business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting
State be attributed to that permanent establishment the profits
which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under
the same or similar conditions and dealing wholly independently
with the enterprise of which it is a permanent establishment.
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3. In the determination of the profits of a permanent
establishment, there shall be allowed as deductions those
deductible expenses which are incurred for the purposes of the
permanent establishment, including executive and general
administrative expenses so incurred, whether in the State in
which the permanent establishment is situated or elsewhere.
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4. Insofar as it has been customary in 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 such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles contained in
this Article.
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5. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
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6. For the purposes of the preceding paragraphs, the profits to
be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and
sufficient reason to the contrary.
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7. Where profits include items of income which are dealt with
separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the
provisions of this Article.
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1. Profits derived by a resident of a Contracting State from the
operation of ships or aircraft in international traffic shall be
taxable only in that State.
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2. Notwithstanding the provisions of paragraph 1 and of
Article 7, profits derived from the operation of ships or aircraft
used principally to transport passengers or goods exclusively
between places in a Contracting State may be taxed in that State.
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3. The provisions of paragraphs 1 and 2 shall also apply to
profits derived by a resident of a Contracting State from its
participation in a pool, a joint business or an international
operating agency.
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4. For the purposes of this Article, profits from the operation
of ships or aircraft in international traffic include:
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(a) profits from the rental on a bare boat basis of ships or
aircraft and
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(b) profits from the use, maintenance or rental of containers
(including trailers and related equipment for the transport of
containers) used for the transport of goods,
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where such rental or such use, maintenance or rental, as the case
may be, is incidental to the operation of ships or aircraft in
international traffic.
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1. Where
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(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, or
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(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,
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and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations which
differ from those which would be made between independent
enterprises, then any profits which would, but for those
conditions, have 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.
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2. Where 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 has been
charged to tax 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 shall make
an appropriate adjustment to the amount of the tax charged
therein on those profits. In determining such adjustment, due
regard shall be had to the other provisions of this Convention and
the competent authorities of the Contracting States shall if
necessary consult each other.
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3. A Contracting State shall not change the profits of an
enterprise in the circumstances referred to in paragraph 1 after the
expiry of the time limits provided in its domestic laws and, in any
case, after five years from the end of the year in which the profits
which would be subject to such change would have accrued to an
enterprise of that State.
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4. The provisions of paragraphs 2 and 3 shall not apply in the
case of fraud, wilful default or neglect.
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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.
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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 if the
beneficial owner of the dividends is a resident of the other
Contracting State, the tax so charged shall not exceed:
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(a) except in the case of dividends paid by a
non-resident-owned investment corporation that is a resident
of Canada, 5 per cent of the gross amount of the dividends if
the beneficial owner is a company which controls directly or
indirectly at least 10 per cent of the voting power in the
company paying the dividends;
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(b) 15 per cent of the gross amount of the dividends in all other
cases.
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The provisions of this paragraph shall not affect the taxation of
the profits out of which the dividends are paid.
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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 which is subjected to the same
taxation treatment as income from shares by the laws of the State
of which the company making the distribution is a resident.
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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 business in the other Contracting
State of which the company paying the dividends is a resident,
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 may be, shall apply.
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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 not impose any tax on 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 the
company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
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6. Nothing in this Convention shall be construed as preventing
a Contracting State from imposing on the alienation of
immovable property situated in that State by a company carrying
on a trade in immovable property or on the earnings of a
company attributable to a permanent establishment in that State,
tax in addition to the tax which would be chargeable on the
earnings of a company which is a resident of that State, provided
that any additional tax so imposed shall not exceed 5 per cent of
the amount of such earnings which have not been subjected to
such additional tax in previous taxation years. For the purpose of
this provision, the term ``earnings'' means the earnings
attributable to the alienation of such immovable property
situated in a Contracting State as may be taxed by that State under
the provisions of paragraph 1 of Article 13, and the profits,
including any gains from the alienation of any property,
attributable to a permanent establishment in a Contracting State
in a year and previous years after deducting therefrom all taxes,
other than the additional tax referred to herein, imposed on such
profits by that State.
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1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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2. However, such interest may also be taxed in the Contracting
State in which it arises and according to the laws of that State, but
if the beneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 10 per cent
of the gross amount of the interest.
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3. Notwithstanding the provisions of paragraph 2,
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(a) interest arising in a Contracting State and paid in respect
of indebtedness of the government of that Contracting State or
of a political subdivision or local authority thereof shall,
provided that the interest is beneficially owned by a resident
of the other Contracting State, be taxable only in that other
State;
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(b) interest arising in a Contracting State and paid to and
beneficially owned by a resident of the other Contracting State
shall be taxable only in that other State if it is paid in respect
of a loan made, guaranteed or insured, or a credit extended,
guaranteed or insured by an entity wholly-owned and
controlled by the government of that other State, provided this
loan or credit is in respect of imports or exports;
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(c) interest arising in a Contracting State, beneficially owned
by a resident of the other Contracting State and paid in
connection with the sale on credit of any equipment,
merchandise or services except where the sale is made
between persons not dealing with each other at arm's length,
shall be taxable only in that other State;
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(d) interest arising in a Contracting State and paid to a resident
of the other Contracting State which was constituted and is
operated exclusively to administer or provide benefits under
one or more pension, retirement or other employee benefits
plans shall not be taxable in the first-mentioned State provided
that
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(i) the resident is the beneficial owner of the interest and is
generally exempt from tax in the other State, and
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(ii) the interest is not derived from carrying on a business
or from an associated person within the meaning of
subparagraph (a) or subparagraph (b) of paragraph 1 of
Article 9.
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4. The term ``interest'' as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds or debentures, including premiums and
prizes attaching to such securities, bonds or debentures, as well
as income which is subjected to the same taxation treatment as
income from money lent by the laws of the State in which the
income arises. However, the term ``interest'' does not include
income dealt with in Article 10.
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5. The provisions of paragraphs 1, 2 and 3 shall not apply if
the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the interest arises, 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 in respect of 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 may be, shall apply.
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6. Interest shall be deemed to arise in a Contracting State when
the payer is a resident of that State. Where, however, the person
paying the interest, whether the payer is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated.
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7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest paid, having regard to the
debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other
provisions of this Convention.
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1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
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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 the royalties is a
resident of the other Contracting State, the tax so charged shall
not exceed 10 per cent of the gross amount of the royalties.
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3. The term ``royalties'' as used in this Article means payments
of any kind received as a consideration for the use of, or the right
to use, any copyright of literary, artistic or scientific work
including motion picture films and works on films, tapes or other
means of reproduction for use in connection with television or
radio broadcasting, any patent, trade mark, design or model,
plan, secret formula or process, or for the use of, or the right to
use, industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientific
experience. However, the term ``royalties'' does not include
income dealt with in Article 8.
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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 business in the other Contracting
State in which the royalties arise, 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 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 may be, shall apply.
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5. Royalties shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the royalties, whether the payer is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
liability to pay the royalties was incurred, and such royalties are
borne by such permanent establishment or fixed base, then such
royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
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6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties paid, having regard to
the use, right or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
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1. Income and gains derived by a resident of a Contracting
State from the alienation of immovable property situated in the
other Contracting State may be taxed in that other State.
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2. 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 pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such a
fixed base, may be taxed in that other State.
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3. The provisions of paragraphs 1 and 2 shall also apply to
gains from the alienation of an interest in a partnership to the
extent that the gains can be attributed to immovable property or
to movable property forming part of the business property of a
partnership.
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4. Gains derived by a resident of a Contracting State from the
alienation of ships or aircraft operated in international traffic or
of movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that State.
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5. Gains derived by a resident of a Contracting State from the
alienation of
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(a) shares forming part of a substantial interest in the capital
stock of a company, at least 50 per cent of the value of which
shares is derived from immovable property situated in the
other State, and
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(b) an interest in a trust, at least 50 per cent of the value of
which is derived from immovable property situated in that
other State,
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may be taxed in that other State. For the purposes of this
paragraph, the term ``immovable property'' does not include any
property, other than rental property, in which the business of the
company or trust is carried on, and a substantial interest exists
when the resident or persons related thereto own 10 per cent or
more of any class of the capital stock of a company.
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6. Gains from the alienation of any property other than that
referred to in paragraphs 1, 2, 3, 4 and 5, shall be taxable only in
the Contracting State of which the alienator is a resident.
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7. The provisions of this Article shall not affect the right of a
Contracting State to levy, according to its law, a tax on gains from
the alienation of any property derived by an individual who is a
resident of the other Contracting State and have been a resident
of the first-mentioned State at any time during the six years
immediately preceding the alienation of the property.
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8. Where an individual who ceases to be a resident of a
Contracting State, and immediately thereafter becomes a resident
of the other Contracting State, is treated for the purposes of
taxation in the first-mentioned State as having alienated a
property and is taxed in that State by reason thereof, the
individual may elect to be treated for the purposes of taxation in
the other State as if the individual had, immediately before
becoming a resident of that State, sold and repurchased the
property for an amount equal to its fair market value at that time.
However, this provision shall not apply to property any gain
from which, arising immediately before the individual became a
resident of that other State, may be taxed in that other State nor
to immovable property situated in a third State.
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1. Income derived by an individual who is a resident of a
Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that
State except in the following circumstances, when such income
may also be taxed in the other Contracting State:
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(a) if the individual has or had a fixed base regularly available
in the other Contracting State for the purpose of performing
the activities; in that case, only so much of the income as is
attributable to that fixed base may be taxed in the other State;
or
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(b) if the individual is present in the other State for a period or
periods exceeding in the aggregate 183 days in any twelve
month period commencing or ending in the fiscal year
concerned; in that case, only so much of the income as is
derived from the activities performed in the other State may be
taxed in that other State.
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2. The term ``professional services'' includes especially
independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
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1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable
only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other
State.
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2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
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(a) the employment is exercised 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
concerned, and
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(b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of the other State, and
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(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the
other State.
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3. Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated by a resident of a Contracting
State in international traffic, may be taxed in that State.
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Directors' fees and other similar payments derived by a
resident of a Contracting State in that resident's capacity as a
member of the board of directors or other similar organ of a
company which is a resident of the other Contracting State may
be taxed in that other State.
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1. Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsperson, from that resident's
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
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2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson in that individual's capacity as
such accrues not to the entertainer or sportsperson personally 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 activities of the entertainer or sportsperson are
exercised.
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1. Pensions and annuities arising in a Contracting State and
paid to a resident of the other Contracting State may be taxed in
that other State.
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2. Pensions and annuities arising in a Contracting State and
paid to a resident of the other Contracting State may also be taxed
in the State in which they arise and according to the laws of that
State. However, in the case of periodic pension (other than
benefits under the social security legislation in a Contracting
State) and annuity payments, the tax so charged shall not exceed
15 per cent of the gross amount of the payments. However, this
limitation does not apply to lump-sum payments arising on the
surrender, cancellation, redemption, sale or other alienation of a
pension plan or an annuity.
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3. Notwithstanding anything in this Convention:
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(a) benefits under the social security legislation in a
Contracting State and war veterans pensions and allowances
arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxable only in the first-mentioned
State;
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(b) alimony, maintenance and other similar payments arising
in a Contracting State and paid to a resident of the other
Contracting State who is subject to tax therein in respect
thereof, shall be taxable only in that other State but the amount
taxable in that other State shall not exceed the amount that
would be taxable in the first-mentioned State if the recipient
were a resident thereof.
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1. (a) Salaries, wages and other remuneration, other than a
pension, paid by a Contracting State or a political subdivision
or a local authority thereof to an individual in respect of
services rendered to that State or political subdivision or local
authority shall be taxable only in that State.
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(b) However, such salaries, wages and other 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:
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(i) is a national of that State; or
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(ii) did not become a resident of that State solely for the
purpose of rendering the services.
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2. The provisions of paragraph 1 shall not apply to salaries,
wages and other remuneration in respect of services rendered in
connection with a business carried on by a Contracting State or
a political subdivision or a local authority thereof.
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Payments which a student or business apprentice who is
present in a Contracting State solely for the purpose of that
individual's education or training and who is or was immediately
before such visit a resident of the other Contracting State receives
for the purpose of that individual's maintenance, education or
training shall not be taxed in the first-mentioned Contracting
State, provided that such payments arise from sources outside
that State.
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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.
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2. Notwithstanding the provisions of paragraph 1, items of
income of a resident of a Contracting State not dealt with in the
foregoing Articles of this Convention and arising in the other
Contracting State may also be taxed in that other State. Where
such income is income of a resident of the Czech Republic from
a trust, other than a trust to which contributions were deductible,
the tax so charged shall, if the income is taxable in the Czech
Republic where the beneficial owner is a resident, not exceed 15
per cent of the gross amount of the income.
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1. In the case of Canada, double taxation shall be avoided as
follows:
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(a) subject to the existing provisions of the law of Canada
regarding the deduction from tax payable in Canada of tax
paid in a territory outside Canada and to any subsequent
modification of those provisions which shall not affect the
general principle hereof and unless a greater deduction or
relief is provided under the laws of Canada, tax payable in the
Czech Republic on profits, income or capital gains arising in
the Czech Republic shall be deducted from any Canadian tax
payable in respect of such profits, income or capital gains;
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(b) for the purposes of this paragraph, profits, income or
capital gains of a resident of Canada which may be taxed in the
Czech Republic in accordance with this Convention shall be
deemed to arise from sources in the Czech Republic.
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2. In the case of the Czech Republic, double taxation shall be
avoided as follows:
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the Czech Republic, when imposing taxes on its residents,
may include in the tax base upon which such taxes are
imposed the items of income which according to the
provisions of this Convention may also be taxed in Canada,
but shall allow as a deduction from the amount of tax
computed on such a base an amount equal to the tax paid in
Canada. Such deduction shall not, however, exceed that part
of the Czech tax, as computed before the deduction is given,
which is appropriate to the income which, in accordance with
the provisions of this Convention, may be taxed in Canada.
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3. Where in accordance with any provision of the Convention
income derived by a resident of a Contracting State is exempt
from tax in that State, such State may nevertheless, in calculating
the amount of tax on other income, take into account the
exempted income.
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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 nationals of
that other State in the same circumstances, in particular with
respect to residence, are or may be subjected. This provision
shall, notwithstanding the provisions of Article 1, also apply to
individuals who are not residents of one or both of the
Contracting States.
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2. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or on a fixed base that an individual who is a resident of a
Contracting State has in the other Contracting State shall not be
less favourably levied in that other State than the taxation levied
on enterprises or individuals, as the case may be, of that other
State carrying on the same activities.
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3. Nothing in this Article shall be construed as obliging a
Contracting State to grant to residents of the other Contracting
State any personal allowances, reliefs and reductions for taxation
purposes on account of civil status or family responsibilities
which it grants to its own residents.
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4. Companies which are residents of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly
or indirectly, by one or more 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 other similar companies which are
residents of the first-mentioned State, the capital of which is
wholly or partly owned or controlled, directly or indirectly, by
one or more residents of a third State, are or may be subjected.
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1. Where a person considers that the actions of one or both of
the Contracting States result or will result for that person in
taxation not in accordance with the provisions of this
Convention, that person may, irrespective of the remedies
provided by the domestic law of those States, address to the
competent authority of the Contracting State of which that
person is a resident or, if that person's case comes under
paragraph 1 of Article 23, to that of the Contracting State of
which that person is a national, an application in writing stating
the grounds for claiming the revision of such taxation. To be
admissible, the said application must be submitted within two
years from the first notification of the action which gives rise to
taxation not in accordance with the Convention.
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2. The competent authority referred to in paragraph 1 shall
endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the
other Contracting State, with a view to the avoidance of taxation
not in accordance with the Convention.
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3. A Contracting State shall not, after the expiry of the time
limits provided in its domestic laws and, in any case, after five
years from the end of the year in which the income concerned has
accrued, increase the tax base of a resident of either of the
Contracting States by including therein items of income which
have also been charged to tax in the other Contracting State. This
paragraph shall not apply in the case of fraud, wilful default or
neglect.
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4. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention. They may also consult together for the elimination
of double taxation in cases not provided for in the Convention.
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5. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching
an agreement in the sense of the preceding paragraphs.
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1. The competent authorities of the Contracting States shall
exchange such information as is relevant for carrying out the
provisions of this Convention and of the domestic laws of the
Contracting States concerning taxes covered by the Convention
insofar as the taxation thereunder is not contrary to the
Convention, and in particular for the prevention of fraud or
evasion in relation to such taxes. The exchange of information is
not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as
secret information obtained under the domestic laws of that State
and shall be disclosed only to persons or authorities (including
courts and administrative bodies) involved in the assessment or
collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to, the taxes imposed by that
State. Such persons or authorities shall use the information only
for such purposes. They may disclose the information in public
court proceedings or in judicial decisions.
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2. Nothing in paragraph 1 shall be construed so as to impose
on a Contracting State the obligation:
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(a) to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other
Contracting State;
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(b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that or of
the other Contracting State;
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(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.
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3. If information is requested by a Contracting State in
accordance with this Article, the other Contracting State shall
endeavour to obtain the information to which the request relates
in the same way as if its own taxation were involved even though
the other State does not, at that time, need such information. If
specifically requested by the competent authority of a
Contracting State, the competent authority of the other
Contracting State shall endeavour to provide information under
this Article in the form requested to the same extent such
information can be obtained under the laws and administrative
practices of that other State with respect to its own taxes.
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1. Nothing in this Convention shall affect the fiscal privileges
of members of diplomatic missions or consular posts under the
general rules of international law or under the provisions of
special agreements.
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2. Notwithstanding Article 4, an individual who is a member
of a diplomatic mission, consular post or permanent mission of
a Contracting State which is situated in the other Contracting
State or in a third State shall be deemed for the purposes of the
Convention to be a resident of the sending State if that individual
is liable in the sending State to the same obligations in relation to
tax on total income as are residents of that sending State.
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3. The Convention shall not apply to international
organizations, to organs or officials thereof and to persons who
are members of a diplomatic mission, consular post or permanent
mission of a third State or group of States, being present in a
Contracting State and who are not liable in either Contracting
State to the same obligations in relation to tax on their total
income as are residents thereof.
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1. The provisions of this Convention shall not be construed to
restrict in any manner any exemption, allowance, credit or other
deduction accorded
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(a) by the laws of a Contracting State in the determination of
the tax imposed by that State; or
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(b) by any other agreement entered into by a Contracting
State.
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2. Nothing in the Convention shall be construed as preventing
a Contracting State from imposing a tax on amounts included in
the income of a resident of that State with respect to a partnership,
trust, or controlled foreign affiliate, in which the resident has an
interest.
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3. For the purposes of paragraph 3 of Article XXII
(Consultation) of the General Agreement on Trade in Services,
the Contracting States agree that, notwithstanding that
paragraph, any dispute between them as to whether a measure
falls within the scope of this Convention may be brought before
the Council for Trade in Services, as provided by that paragraph,
only with the consent of both Contracting States. Any doubt as
to the interpretation of this paragraph shall be resolved under
paragraph 4 of Article 24 or, failing agreement under that
procedure, pursuant to any other procedure agreed to by both
Contracting States.
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1. Each of the Contracting States shall notify the other,
through the diplomatic channel, the completion of the
procedures required by its domestic law for the bringing into
force of this Convention. The Convention shall enter into force
on the date of the later of these notifications and its provisions
shall have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited on or after 1st January in the calendar year next
following that in which the Convention enters into force;
and
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(ii) in respect of other Canadian tax for taxation years
beginning on or after 1st January in the calendar year next
following that in which the Convention enters into force;
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(b) in the Czech Republic:
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(i) in respect of taxes withheld at the source, to income paid
or credited on or after 1st January in the calendar year next
following that in which the Convention enters into force;
and
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(ii) in respect of other taxes on income, to income in any
taxable year beginning on or after 1st January in the
calendar year next following that in which the Convention
enters into force.
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2. From the date of entry into force of this Convention the
Convention between the Government of Canada and the
Government of the Czech and Slovak Federal Republic for the
Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income and on Capital signed
at Prague on the 30th day of August, 1990, shall, as between
Canada and the Czech Republic, terminate. However, the
provisions of the 1990 Convention corresponding to those of this
Convention shall continue to have effect until the provisions of
this Convention take effect in accordance with the provisions of
paragraph 1.
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This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the
Convention, through the diplomatic channel, by giving notice of
termination at least six months before the end of any calendar
year following after the period of five years from the date on
which the Convention enters into force. In such event, the
Convention shall cease to have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited on or after 1st January in the calendar year next
following that in which the notice is given; and
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(ii) in respect of other Canadian tax for taxation years
beginning on or after 1st January in the calendar year next
following that in which the notice is given;
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(b) in the Czech Republic:
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(i) in respect of taxes withheld at the source, to income paid
or credited on or after 1st January in the calendar year next
following that in which the notice is given; and
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(ii) in respect of other taxes on income, to income in any
taxable year beginning on or after 1st January in the
calendar year next following that in which the notice is
given.
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IN WITNESS WHEREOF the undersigned, duly authorised
thereto, have signed this Convention.
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DONE in duplicate at Prague, this 25th day of May, 2001, in
the English, French and Czech languages, each version being
equally authentic.
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FOR CANADA FOR THE CZECH REPUBLIC
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Jane Stewart Jiri Rusnok
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