A Protocol amending the Double Taxation Agreement between Poland and Malta was signed on the 6th April 2011and has entered into force on the 22nd November 2011. The amendments are effective as of 1st January 2012 and bring the Agreement into line with the OECD Model Tax Convention.
Among others, the amendments include:
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A trust has been included in the definition of ‘person’;
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A building site or construction, installation or assembly project is considered as a permanent establishement if it continues for a period of 12 months, an extension from the previous 6 months;
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Profits derived from the operation of ships or aircraft in international traffic include profits derived from the rental of such ships or aircraft if operated in international traffic or if the rental profits are incidental. The profits exclude profits from leasing on a bare boat charter basis except when it is an ancillary activity of an enterprise engaged in the international operation of ships or aircraft;
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The 5% Polish tax rate on dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 20% of the capital of the distributing company has been amended to an exemption where a company resident in Poland distributes dividends to a Maltese resident who is the beneficial owner of the dividends and has a direct 10% holding in the capital of the Polish company for an uninterrupted 24-month period. In any other case, Polish tax shall not exceed 10% where the beneficial owner of the dividends is a Maltese resident;
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The withholding tax on interest has been reduced from 10% to 5%;
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The withholding tax on royalties has been reduced from 10% to 5% and the term ‘royalties’ has been redefined though retaining most of its original definition;
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Gains derived by a resident of a contracting state from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state may be taxed in that other state;
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Article 14 dealing with Independent Personal Services has been removed;
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Tax on capital gains has been added to the tax to which the credit method applies, along with tax dividends, interest and royalties. In other cases, Poland grants an exemption to avoid double taxation;
-
A new provision on the exchange of information is introduced in line with Article 26 of the OECD Model Tax Convention.
The amending protocol aims to adhere to OECD guidelines while encouraging trade and investment flows between Poland and Malta.
A Protocol amending the Double Taxation Agreement between Poland and Malta was signed on the 6th April 2011and has entered into force on the 22nd November 2011. The amendments are effective as of 1st January 2012 and bring the Agreement into line with the OECD Model Tax Convention.
Among others, the amendments include:
-
A trust has been included in the definition of ‘person’;
-
A building site or construction, installation or assembly project is considered as a permanent establishement if it continues for a period of 12 months, an extension from the previous 6 months;
-
Profits derived from the operation of ships or aircraft in international traffic include profits derived from the rental of such ships or aircraft if operated in international traffic or if the rental profits are incidental. The profits exclude profits from leasing on a bare boat charter basis except when it is an ancillary activity of an enterprise engaged in the international operation of ships or aircraft;
-
The 5% Polish tax rate on dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 20% of the capital of the distributing company has been amended to an exemption where a company resident in Poland distributes dividends to a Maltese resident who is the beneficial owner of the dividends and has a direct 10% holding in the capital of the Polish company for an uninterrupted 24-month period. In any other case, Polish tax shall not exceed 10% where the beneficial owner of the dividends is a Maltese resident;
-
The withholding tax on interest has been reduced from 10% to 5%;
-
The withholding tax on royalties has been reduced from 10% to 5% and the term ‘royalties’ has been redefined though retaining most of its original definition;
-
Gains derived by a resident of a contracting state from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state may be taxed in that other state;
-
Article 14 dealing with Independent Personal Services has been removed;
-
Tax on capital gains has been added to the tax to which the credit method applies, along with tax dividends, interest and royalties. In other cases, Poland grants an exemption to avoid double taxation;
-
A new provision on the exchange of information is introduced in line with Article 26 of the OECD Model Tax Convention.
The amending protocol aims to adhere to OECD guidelines while encouraging trade and investment flows between Poland and Malta.