San Marino and International Investments 9819903645, 9789819903641

Citation preview

Lorenzo Riccardi

San Marino and International Investments

San Marino and International Investments

Lorenzo Riccardi

San Marino and International Investments

Lorenzo Riccardi Shanghai University Shanghai, China

ISBN 978-981-99-0364-1 ISBN 978-981-99-0365-8 (eBook) https://doi.org/10.1007/978-981-99-0365-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Acknowledgments

Special thanks, for sharing information and ideas for this publication, to Edward Sheehan, Mauro Dellisanti, Simone Restaino, and all the friends from San Marino.

v

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Topography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Government and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Macroeconomic Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 2 2 4

Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 8

Overview of the Tax System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 13

Investing in San Marino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agency of Economic Development and Chamber of Commerce . . . . . . . . . . . ANIS and the Institute for Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 17 18

International Treaties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Double Tax Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agreements Between San Marino and USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agreements Between San Marino and China . . . . . . . . . . . . . . . . . . . . . . . . . . . International Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21 21 27 27 28

European Microstates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relations Between San Marino and Principality of Andorra . . . . . . . . . . . . . . . Relations Between San Marino and Principality of Liechtenstein . . . . . . . . . . Relations Between San Marino and Principality of Monaco . . . . . . . . . . . . . . .

31 32 32 33

Azerbaijan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35 35 36

Barbados . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55 55 56

vii

viii

Contents

Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75 75 76

Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

95 95 96

Luxembourg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Seychelles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Country Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Double Tax Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 Collection of additional Double Tax Agreements . . . . . . . . . . . . . . . . . . . . . . 209

Introduction

History The legend of the foundation of San Marino describes how the state was founded in 301 A.D. by Marinus the Dalmatian, a Christian Stoneman, who escaped the antiChristian Roman Emperor Diocletian from the modern-day Croatia, where he hid on Mount Titano. Shortly after his arrival, he founded a small Christian community that later became a republic called the Land of San Marino in honour of its founder. By the twelfth century, San Marino had formed into a cooperative managed by its very own laws and statutes. The State maintained autonomy despite infringements and impositions by neighbouring priests and lords, due in thanks to its isolation and its mountain fortifications. San Marino was able to enjoy the support of the family of Montefeltro, who governed Urbino, against the assaults of the Malatesta family, who governed the close-by seaport of Rimini. During the middle of the fifteenth century, San Marino became a republic led by a Grand Council, formed by 60 men chosen from the Assembly of Families. Protecting itself from attacks in the sixteenth century, San Marino learned how to endure the Renaissance and survive as a relic of self-ruling city-states. In the eighteenth century, the rule by a few notables and the attempts of control by the Papal State marked the decline of the republic. During Napoleon’s invasion of Italy in 1797, he secured the autonomy of the republic and even offered to expand its region. The Congress of Vienna, at the conclusion of the Napoleonic Wars, confirmed the autonomous status of San Marino. In the nineteenth century movement for Italian unification, San Marino offered a refuge to revolutionaries, such as Giuseppe Garibaldi, the unifier of Italy and after the state of unified Italy was formed, a number of treaties (the first in the year 1862) affirmed San Marino’s autonomy. On May 23rd, 1915, Italy declared war on Austria-Hungary yet the San Marino republic never entered the war. During the Second world war, San Marino maintained its neutrality, but it was subjected to a British bombing raid in the year 1944 and was occupied for a short time by enemies shortly after.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_1

1

2

Introduction

Following the second world war, San Marino was ruled by a communist party through a coalition with the Sammarinese socialist party. The coalition lasted until the year 1957 and marked the first time in the world when a communist government was democratically elected. In the year 1960, San Marino achieved universal suffrage, and in 1988 San Marino joined the Council of Europe as a full member. It entered the United Nations in the year 1992.

Topography San Marino is located in the Italian Peninsula, on the border between the regions of Emilia Romagna and Marche. San Marino is an enclave in Italy and has an area of 61 square km equivalent to 23 square miles. The city of San Marino (Castello di Città) is its capital, while the largest city is Dogana in the administrative area of Serravalle. The topography consists mainly of mountains with its highest elevation Mount Titano at 755 m equivalent to 2,477 feet. The lowest point is Torrente Ausa at 55 m or 180 feet; due to this mountainous terrain only 17% of San Marino’s territory is arable. The climate of San Marino is mild, with maximum temperatures of about 29 °C in summer and about −7 °C in winter. The total annual rainfall ranges between about 560 and 800 mm. The biosphere is typical of the Mediterranean region, with a large variation, and includes olive, pine, oak and ash.

Government and Administration San Marino’s national flag is formed by two horizontal bands with the same dimension. The upper band is white representing peace, while the lower band is light blue representing liberty. In the middle of the flag, there is the official coat of arms of the Republic, and it remains one of the few flags in Europe to depict a heraldic device in its design. The official coat of arms of the Republic is surmounted by a closed crown, a symbol of the sovereignty and emblem of its freedom and independence within the international community. San Marino is a parliamentary representative democratic republic. It does not have a written constitutional charter but the legislative instruments are the Statues, the commune, and customary law. The Law no. 59 of 1974 “Declaration on the Citizens’ Rights and Fundamental Principles of San Marino Constitutional Order”, amended and integrated with Laws no. 95 of 19th September 2000, no. 36 of 26th February 2002 and no. 61 of 28th April 2005 is the most significant written legislative instrument. Its reaffirms the tradition of liberty and democracy with regards to civil and political freedom and the protection of human rights.

Government and Administration

3

The government of San Marino maintains a peculiar structure: with two Captain regents, the Grand and General Council that is made up of 60 members, and the Congress of State composed of 10 members. Capitan regents are elected by the council biannually and act as the heads of State for that period and both regents usually belong to different parties. Their investiture takes place on the 1st April and the 1st October every year. They operate collegially ensuring the correct functioning of the public powers and institutions of the State in respect of the Declaration of Citizens’ Rights and Fundamental Principles of the San Marino. The following table lists the captain regents for the past five years from 2017 to semester one 2022. Year

Semester

Captain regent one

Captain regent two

2022

April

Oscar Mina

Paolo Rondelli

2021

October

Francesco Mussoni

Giacomo Simoncini

2021

April

Gian Carlo Venturini

Marco Nicolini

2020

October

Alessandro Cardelli

Mirko Dolcini

2020

April

Alessandro Mancini

Grazia Zafferani

2019

October

Luca Boschi

Mariella Mularoni

2019

April

Nicola Selva

Michele Muratori

2018

October

Mirko Tomassoni

Luca Santolini

2018

April

Stefano Palmieri

Matteo Ciacci

2017

October

Enrico Carattoni

Matteo Fiorini

2017

April

Mimma Zavoli

Vanessa D´Ambrosio

The 60-member Great and General Council is elected by citizen vote every five years and it is headed by both captains-regent, forming together the Most Excellence Regency. The political role of the Council is of core importance to the state as it operates the legislative function through the passing of laws, decrees, and regulations. The Council also elects the 10-member Congress of State who retain the power of the Government of the Republic and are responsible for the general political direction of the administration. Each so-called Secretary of State in the Congress wields executive power. The ten Secretaries are: • • • • • • • •

Secretary of State for Foreign Affairs Secretary of State for Internal Affairs Secretary of State for Finance Secretary of State for Culture Secretary of State for Health Secretary of State for Territory and Environment Secretary of State for Labour and Sport Secretary of State for Industry and Trade

4

Introduction

• Secretary of State for Justice • Secretary of State for Tourism The College of the Constitutionality of the Rules governs the implementation and interpretation of laws and resolves conflicts between administrative bodies. The legal system is based upon European Civil Law, and is based upon the laws adopted by the Parliament of the Republic, on the decrees adopted by the Government being ratified by Parliament. If legal provisions are missing, customary law is applied, and it is possible to refer to Italian law, such as “lex loci vicinoris”.

Macroeconomic Data San Marino is one of the world oldest republic and Europe’s third smallest State after the Vatican City and Monaco. The economy mainly relies upon finance, industry, services, and tourism and make San Marino one of the wealthiest Countries in the world in terms of GDP per capita (GDP per capita in current USD in San Marino was reported at 45,516 USD in 2020, according to the World Bank collection of development indicators). In terms of Projected Real GDP, the International Monetary Fund forecasted a growth of 1.3% for the year 2022 and a change in Projected Consumer prices of 4.9% for the year 2022 2022 projected real GDP (% change)

1.3

2022 projected consumer prices (% change)

4.9

Country population

34,000

Source IMF, October 2022

GDP (billion USD)

1.79

GDP (constant prices, annual % Change)

1.0

GDP per Capita (USD)

51,029

Inflation rate (% Change)

1.6

Unemployment rate (% labour force)

8.1

Corporate Income Tax (%)

17.0

Maximum Individual Income Tax (%)

35.0

VAT (%)

0.0

Doing business DTF index

62

Income class

High

Imports

Textiles, metals, mineral products, footwear and headwear

Exports

Machines, transportation, chemical products, textiles (continued)

Macroeconomic Data

5

(continued) Currency

Euro

UTC

UTC + 01:00

Global Peace Index

1.737

Language

Italian

Capital

San Marino

Region

Europe

Sources IMF, World Economic Outlook Database, 2022

Economy

San Marino belongs to the category of highly developed economies with agriculture and banking as the dominant sectors. The level of output per capita and standard of living of the Country’s inhabitants are similar to those of the richest regions of Italy. The unemployment rate estimates are that approximately 8% of the population is unemployed. A shallow institutional structure characterises the business and legislative environment of San Marino. The republic has a propensity to establish tailor-made solutions to support proposed investment projects and has shown precedent in passing laws when needed to introduce legislative instruments to assist specific business sectors within a short timeline. The speed and flexibility of decision-making processes reflects the important value of time, which has a considerable effect in terms of competitiveness. From a competitive point of view, social stability, the rule of law, competitive taxation and low bureaucracy are particularly valuable to San Marino. The economy benefits from foreign investments attracted by low corporate taxes, low taxes on capital gains and a growing network of relevant Double Tax Agreements (DTAs). San Marino continues to work towards harmonising its fiscal laws with European Union and international standards. San Marino is considered to cooperate with the EU and has implemented all of its commandments on good tax governance and reporting and the republic is also under process to become an associated country to the European Union. The following table categorises the activities related to the sector, the number of businesses and employers. Sector

Number of businesses

Employers

Services

2,373

3,467

Merchandising

1,081

2,617

Manufacturing

503

6,237

Construction

390

908

Information/communications

202

758

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_2

(continued) 7

8

Economy

(continued) Sector

Number of businesses

Employers

Hotels

198

960

Transport and storage

113

438

Agriculture

57

34

Financial services

81

720

Source Anis, March 2022

San Marino relies heavily on tourism, and prior to the COVID-19 pandemic received approximately two million tourists visitors to the Republic, utilising its strategic positioning with respect to the cultural cities located in the regions of central Italy. In addition to the tourism and agricultural sectors, the economy has developed in promoting enterprises of the high added value service sectors based on small and medium enterprises.

International Trade San Marino is a micro nation, and its international trade reflects this fact, its trade balance, according to the Observatory of Economic Complexity (OEC) last data update of the year 2020, negative by 121 million dollars, with 157 million dollars exported and 278 million dollars imported. Import of goods and services are taxed at the ordinary rate of 17%. If the goods are subsequently exported, the tax paid on goods imported from abroad can be refunded. The top export destinations partners of San Marino are Romania, France, Germany, Austria, and Brazil, while the top import origins are Germany, Italy, Poland, Romania, and France. The largest exports of San Marino are Washing and Bottling Machines, Other Edible Preparations, Packaged Medicaments, Woodworking machines and Other Furniture. The largest imports of San Marino are Planes, Helicopters and Spacecraft, Electricity, Cars, Non-Knit Women’s Suits, and Raw Aluminium. San Marino’s financial system The Central Bank of San Marino Republic (CBSM) was established through a merger between the San Marino Credit Institute (an Institution with private and public shareholders operating as the central bank of the Republic of San Marino) and the Inspectorate for Credit and Currencies (a public Administration Office charged with supervisory and combating money laundering activities). The State retains title as the majority shareholder:

International Trade

9

State (Republic of San Marino)

67%

Cassa di Risparmio della Repubblica di SMR S.p.A

16%

Banca di San Marino S.p.A

6%

Banca Agricola Commerciale Istituto Bancario Sammarinese

5%

Banca CIS–Credito Industriale Sammarinese

5%

Banca Sammarinese di Investimento

1%

Source: www.bcsm.sm

The Central bank supervising the banking, financial and insurance sector, and acts as guarantor for the protection of deposits. It provides banking and financial services to the State and to the public administrative services to the financial system of the Republic. The provisions of its statutes define the following Central bank functions: supervision on the financial system, currency authority, management of the payment system, financial, credit and currency statistics, state treasury, custodian of the financial resources of the State, and institutional reference with international financial organizations. Other functions are and maybe assigned to the central bank through regulatory provisions by the state. The governing bodies of the Central bank are the general meeting of members, the governing council, the chair with the power of legal representation of the central bank, the director general, and the supervisory committee and board of auditors.

Overview of the Tax System

San Marino has an attractive tax regime compared to other jurisdictions in Europe and is characterised by a standard corporate income tax rate equal to 17% of taxable income. There are also incentives for newly established companies that entitle new companies to a tax exemption equal to 50% of the ordinary taxation, which reduces taxation to 8.5% for the income for the first five years of business. Companies entitled to benefit from the measures are: • new companies whose shareholders have not run a similar business in the year preceding the date of application for the benefits, • companies hiring at least one employee, including the director and even if not on the job placement list, within 6 months of the issuing of the license and another one within 24 months. There are also tax incentives for the hiring of local employees, should a company with a workforce equal or greater than 5, increases its annual workforce by at least one employee, it’ll benefit from a 5% tax credit per person hired, provided that 50% of the employees are resident in San Marino. If the company increases its annual workforce by at least one employee, had an average number of employees in the previous financial year less than five, it will benefit from a 10% tax credit per person hired. The Company Income Tax credit may not exceed 25% of the total tax due. If resident workers are listed in one of the categories of disadvantaged workers, the new company will enjoy an additional 5% tax credit. An additional incentive for all business activities is the reduction of taxable income from 40 to 90% up to the value of capital goods or real estate investments and it may be extended to eight years provided that the total investment is higher than euro 7,000,000. In the case of investments in real estate, to benefit from the incentive, the company must hire at least one additional employee with an open-ended contract. © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_3

11

12

Overview of the Tax System

In the case of losses, these can be carried forward to offset a maximum 80% of the taxable income of the following three tax periods: if not used in full to offset taxable income, the possibility to offset will be lost. New companies with a new business and tax losses that arise in the first three tax periods, can carry the losses forward indefinitely and deduct them from the income of subsequent tax periods. Costs are fully deductible if, and to the extent, that they relate to the business activity. Costs and income are included in the computation of taxable income on an accrual’s basis. Income taxes, penalties, passive interest from late or missing payment of taxes, penalties for violations of the law and interest on delayed payments are not deductible. If Directors’ fees have been paid, and only in this case, they are deductible and the expenses or costs from violations cannot be deducted. There are defined limits for the deduction of the following costs: the advertising costs, including sponsorship costs can be deducted up to a value equal to 8% of operating revenue. The data processing costs, including market research can be deducted up to a value equal to 10% of operating revenue. Entertainment expenses can be deducted up to an amount equal to 5% of operating revenue. Costs

Rate

Advertising/Sponsorship

8% operating income

Data processing

10% operating income

Entertainment expenses

5% operating income

Source Law N. 166/2013

The interest expenses on loans that are used to purchase capital assets until the capital assets are used or are ready to be used are not tax deductible. Interest expenses on loans from members of the society who are individuals and shareholders are deductible on a cash basis. For tax purposes, intangible property, which includes goodwill paid for the purchase of a business, can be amortized at a maximum rate of 20% on a straightline basis. In the case that the period of use of the asset is fixed by law or it is predetermined from a contract, the amortization charge is based on this period. The goodwill on the acquisition by a San Marino company of an interest in a subsidiary is not deductible for the reason that it forms part of the purchase cost of the interest.

Payment of Taxes

13

Payment of Taxes A notice of assessment must be served with a three-year time limit: by the end of the third year following the fiscal year in which the taxpayer submits its tax return. In the case that no return is filed, the assessment deadline is prolonged to December 31st of the fourth year after that in which the tax return should been filed and submitted. The accounts and supplementary records, and the other documents relevant for tax assessments and inspections, must be archived for five years after the tax period to which they refer. In the case of no double tax treaty, dividends, interests, and royalties are subject to the following tax rates: Income

Withholding tax

Dividends distributed to residents’ individuals

5%

Dividends distributed to non-residents individuals

5%

Dividends distributed to others (no individuals) (1)

0

Royalties paid to non-resident individual/entities

20%

Interests paid on loans (2)

13%

Interests on loans (3)

Tax deductible/cash base

Interests on current accounts and deposits

11% (4)

Source Law N. 166/2013

(1) (2) (3) (4)

The recipient shall declare not to be acting on behalf of an individual Loans granted by foreign companies unless by a credit institution Loans from company members who are individuals Except for non-resident

Income

rate

Repurchase agreements/securities (5)

5% (5)

Certificate of deposit < 18 months

5% (6)

Certificate of deposit > 18 months

4% (6)

Bond issues (7)

4% WHT (7)

Source: Law N. 166/2013

(5) Interests and other types of income (6) Except for non-resident (7) Except for non-resident

14

Overview of the Tax System

Details—taxes in San Marino Tax or mandatory contribution

Tax rate

Tax base

Employer social security contribution

26,60%

Gross salaries

Employee social security contributions

7%

Gross salaries

Corporate income tax

17% or 8,5%

Taxable profit

Tax on interest

11%

Interest income (bank deposit)

Capital gains tax

8,50%

Capital gains

Circulation tax

e 50

Vehicles

Environmental tax

e 18

Fixed fee

Fuel tax

22%

Included into fuel price

Source: World Bank, 2021

Individual Income Tax The following income tax principles are applied: • Residents: taxation applies on income wherever produced and on a worldwide basis with a foreign tax credit, • Non-residents: taxation only to income generated in the territory of San Marino and on a territorial basis. Residents and non-residents are paying taxes on their income according to the rates listed below: Progressive rates for income brackets up to e 10.000.00

9%

e 10,0000.01–18,000.00

13%

e 18,000.01–28,000.00

17%

e 28,0000.01–38,0000.00

21%

e 38,0000.01–50,0000.00

25%

e 50,0000.01–65,0000.00

28%

e 65,0000.01–80,0000.00

31%

Above e 80,0000.01

35%

Commercial Legal Structures According to the information provided by San Marino Agency of the Economic Development and by the National Industry Association of the Republic of San Marino, Non-San Marino citizens and non-residents are allowed to establish two types of corporations: limited liability and joint-stock companies. The set-up of companies governed by non-residents is done with documents certifies by a local public notary. In the case of banking, trust and investment services must be authorized by the Central Bank of the Republic.

Payment of Taxes

15

• Limited liability company requires a minimum capital of 25,500 euro under San Marino legislation. • Joint stock company with a minimum capital of 77,000 euro. The members of corporations can be either individuals or entities and have a sole member. The registration of a single-member company must be stated in the trade register, and the payment of all contributions must be done within 60 days from the company’s registration date. Shares of joint-stock companies and quotas of limited liabilities companies are registered and be held in trust by financial institutions. Their beneficial owner is identified according to the rules set by the anti-money laundering. The Capital shall be paid within 60 days from the registration day and half of the contributions of the initial corporate capital has to be paid cash. The Directors must request the payment of all contributions within 3 years from the date of registration in the trade register. The business license’s purpose will be admitted if it is lawful, possible, determinate, and consistent with the state economy. The operating license is issued online by the Office of Industry, Craft and Trade. The licence is generally obtained within business-week. The legal address of the license applicant must be in the Republic of San Marino and the address must be for the specific use of the company. The company’s governance can be entrusted to either a resident or a non-resident sole director or to a board of directors with either non-resident or resident members, who have elected a chairman and a chief executive officer. Non-resident directors are required to submit only a recent extract from the judicial record and a certificate of pending proceedings. A joint stock company must designate a sole auditor, who is resident in San Marino and a registered auditor. A limited liability company must designate a Sole Auditor if the capital amount is higher than 77,000 euro or if for two successive fiscal years revenues are higher than 2 million euro. If revenues exceed 7,300,000 euro for two consecutive fiscal years, the election of a Board of Statutory Auditors made up of three or five members mostly residing in the Republic, is mandatory. Residents of San Marino can apply for a license for the exercise of an industrial, service, craft and/or commercial activity or they can establish a company and obtain a license. A private partnership can be set up only by natural persons, and unlike corporations, private partnerships do not have a legal persona. Residency through investment The residence for economic reasons is granted to a foreigner who opens a company in San Marino according to the rules set by Law no. 115/2017: holding up to 51% of the company, hiring three full-time employees of whom minimum 50% comes from the job placement list, hiring one full-time employee selected from the job placement list operating in a sector belonging to the List for economic activities to be encouraged (Annex to Delegated Decree no. 137 of 5 December 2017). The foreigner shall deposit 75.000 euro in a bank with a guarantee in favour of the

16

Overview of the Tax System

Chamber of Commerce. The deposit shall reach the value of 150,000 euro within two years of becoming a resident. The residence for economic reasons with the simplified procedure is granted to foreigners who make investments in the territory according to the rules set by the mentioned Development Law: hiring five employees from the job placement list with a full-time open-ended contract, purchase a property with a value of 300,000 euro, subscribe an health insurance policy of 30,000 euro. If nationals of non-EU Countries or those that do not belong to the Schengen area are applying for a residency through investment visa, San Marin provides for two types of documents, to be acquired for staying in the territory for a period longer than 30 days: stay and residence permits. Stay permits are temporary permits, necessary to regularize stays from 3 months to one year. They have a maximum validity period of 12 months and can be renewed at the holder’s request. Stay permits may be furnished for tourism, work, family reunification with spouse and children or cohabitation. Special stay permits may be granted for reasons like education, sport, medical, health care, religion, humanitarian, international volunteering, working holiday schemes. Residence permits are granted for long-term stays in the territory. There are two kinds of residence permits: • Registered: applied to foreigners who invest in San Marino, committed in activities or in sectors of particular interest to San Marino, according to the rules set by Law 118/2010. • Elective: for foreign nationals wishing to establish their residence in San Marino, making and maintaining a property or a financial investment, according to the rules set by Law no. 94/2017. The foreign applicants must hold a health insurance policy and are neither allowed to work for the overall public sector nor to benefit from State contributions. It lasts ten years and it changes into registered residence permit with all relevant rights. Non-EU nationals must enter the Schengen area to enter and stay in San Marino. Nationals of non-Schengen Countries before entering San Marino must be in possession of the relevant authorisations for the entry and transit in the Schengen area.

Investing in San Marino

The Ministry responsible for International Economic Cooperation manages services aimed at supporting foreign investors who decide to carry out business activities in the Republic of San Marino. The banking and financial system have been a focus in recent years: the traditional retail banking sector being complemented with the development of the fintech sector with a focus on the blockchain. The positive assessment on San Marino formulated by all the main supranational bodies such as the International Monetary Fund, OECD, MONEY-VAL and the European Union reflects the development of a reputable economic and social environment. San Marino was recognized as a fully cooperative Country for tax purposes by EU Finance Ministers and received the highest OECD recognition as compliant for international tax cooperation in 2017. San Marino banking and financial system activity is governed by Law no. 165 of 17th November 2005 and the following amendments (Law on Companies and Banking, Financial and Insurance Services-LISF/Legge sulle imprese e sui servizi finanziari e assicurativi).

Agency of Economic Development and Chamber of Commerce The APS—Agency for the promotion and economic development was established through Law 1997 n. 133. The Chamber of Commerce though Law 2004 n. 71 was established in the form of a joint-stock company. In 2018, the creation of the Agency of Economic Development—Chamber of Commerce, was completed with the amalgamation of the two entities.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_4

17

18

Investing in San Marino

The Economic Development Agency—Chamber of Commerce has the form of joint-stock company with public and private capital: 49% of its capital is held by the State and 51% by trade associations, banks and the university of San Marino. The members of the Economic Development Agency—Chamber of Commerce with headquarter in San Marino are: • • • • • • • • • • •

Chamber of Commerce Assoservizi San Marino Entrepreneurs Association San Marino National Union of Craftsmen San Marino Union of Trade and Tourism San Marino Tourist Operators´ Union Banca Agricola Commerciale Banca di San Marino Cassa di Risparmio della Repubblica di San Marino Credito Industriale Sammarinese University of San Marino

The international division of the Agency of economic development has the purpose of supporting the Ministry of Tourism and the Tourism Board. Tourism is vital for San Marino economy with about two million tourists per year. Among the services of the Chamber of Commerce, there is the issuing of certificates of origin to San Marino companies. Certificates of origin must accompany products exported abroad, certifying the origin of the goods, the production process, and processing operations. Another key service is the online trade register for the company detail updates, financial statements, Guida Titano detail updates, registration certificate applications, and smart card for the electronic signatures.

ANIS and the Institute for Innovation The National Industry Association (ANIS) The National Industry Association (ANIS) was founded on the 18th of November 1945 and is the most important representative association of the employers in the Republic of San Marino. Its original purpose was to protect and represent the Sammarinese enterprise and today it counts around 300-member companies mainly of the manufacturing and services sector. Anis offers additional services to its members through “Assoservizi, Assosicurezza, Assopaghe and Informa”. The National Association of San Marino Industry has had mutual cooperation relations with Confindustria, and it has joined two international bodies: The International Organization of Employers (IOE), based in Genève, and Business Europe, the Union of Industrial and Employers’ Confederations of Europe, based in Brussels.

ANIS and the Institute for Innovation

19

San Marino Innovation The Institute for Innovation supervises different start-ups and incubates businesses by supporting technology-based companies settled in the Republic of San Marino and those of the neighbouring Italian territory. It helps to strengthen local economic systems and extend them internationally. The program provides access to the funded regime governed by legislation, accompanies, and verifies business projects by controlling and analysing the half-year progress of the Start-ups. Access to the San Marino Start-up is subject to an initial judgment that selects by certain criteria deserving projects. Such criteria can range from economic feasibility and financial sustainability, the professional curriculum of the proponents, to the level of technological innovation of the plan and link with the sectors of interest of San Marino Innovation. The Republic of San Marino Innovation Institute is owned 100% by the Chamber of Commerce and has the task to lead innovative strategical projects in the long term. Education The University of San Marino located in in the Monastery of Santa Chiara, is a national university established in the year 1985. The university has been structured in 3 departments in the year 2014 with the academic reorganization of the university, following the approval the same year of new framework legislation on academic education: The department of economics, sciences and law, department of human sciences and the department of history and of Sammarinese culture and history. There are a wide selection of courses of study for undergraduate and graduate degree programs, several master courses, and a Research Doctorate in Historical Studies. The small university has the capability of acting at the international level because it belongs to a sovereign state. It has many agreements with universities in Italy and other foreign Countries: in the year 2018, the university signed a five-year deal with the University of Shanghai, following other contracts with academic institutions in Switzerland and Brazil. It represents a centre of excellence playing an essential role in supporting innovation projects, commercial activities, and training programs in San Marino. On November 25th, 2013, with the sign of the Memorandum of Understanding with Beijing City University (BCU) it was established the collaboration for the foundation of a Confucius Institute in the Republic of San Marino.

International Treaties

Due to the geographic location of San Marino, the country has a unique relationship with Italy. On October the 3rd 2013 the Double Taxation Agreement with Italy entered in force as one of the most important treaty for the Republic and the Country has managed to be very active on the international front, having signed many treaties and being a member of numerous International Organization. the Republic keeps relations with 152 Countries, of which 151 at a diplomatic level. In 2018, San Marino held the deputy presidency of the General Assembly of the United Nations. In the year 1983, official relations started with the European Union to strengthen the ties between the two entities and reduce institutional distances. In 2002, the Agreement of Cooperation and Customs Union between San Marino and the European Union took effect. In the same year, the Republic signed a treaty with the OECD towards greater transparency in banking and taxation matters to combat tax evasion. The Monetary Convention of 2012 grants the Republic the right to use euro as the official currency.

Double Tax Agreements Tax treaties, named also double tax agreements, or DTAs, with different nations avoid or alleviate the issue of double taxation. They may cover a scope of taxes including income taxes, inheritance taxes, value-added taxes, or other taxes. Moreover, bilateral treaties, multilateral treaties are also in place. European Union (EU) countries are participating to a multilateral agreement regarding value-added taxes under the sponsorship of the European Union, while 36 countries, including San Marino, are members of the Organization for economic cooperation and development (OECD) for the enhancement of economic progress and world trade. Tax treaties contribute to reducing taxes of one treaty Country for residents of the other treaty.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_5

21

22

International Treaties

The following is a list of the Double Taxation Agreements (DTAs) with the date of entering in force: Austria

01.12.2015

Azerbaijan

02.05.2016

Barbados

06.08.2013

Belgium

25.06.2007

Croatia

05.12.2005

Cyprus

18.07.2018

Georgia

12.04.2013

Greece

07.04.2014

Hungary

03.12.2010

Italy

03.10.2013

Liechtenstein

19.01.2011

Luxembourg

29.12.2006

Malaysia

28.12.2010

Malta

19.07.2005

Portugal

13.12.2015

Qatar

03.10.2013

Romania

11.02.2008

Saint Kitts & Nevis

12.02.2014

Serbia

08.10.2018

Seychelles

30.05.2013

Singapore

18.12.2015

United Arab Emirates

11.07.2018

Vietnam

13.01.2016

The following is a list of Countries with which San Marino has signed Tax Information Exchange Agreements (TIEAs): Andorra

21.09.2009

Argentina

07.12.2009

Australia

04.03.2010

Bahamas

24.04.2009

Brazil

31.03.2016

Canada

27.10.2010

China

09.07.2012

Czech Republic

25.11.2011

Denmark

12.01.2010

Faroe Islands

10.09.2009 (continued)

Double Tax Agreements

23

(continued) Andorra

21.09.2009

Finland

12.01.2010

France

22.09.2009

Germany

06.05.1986

Greenland

22.09.2009

Guernsey

29.09.2010

India

19.12.2013

Indonesia

25.09.2013

Iceland

12.01.2010

Ireland

04.07.2012

Monaco

29.07.2009

Netherlands

27.01.2010

New Zealand

01.04.2016

Norway

12.01.2010

Poland

31.03.2012

Samoa

01.09.2009

Spain

06.09.2010

South Africa

10.03.2011

Sweden

12.01.2010

Switzerland

16.05.2014

United Kingdom

16.02.2010

Vanuatu

19.05.2011

To encourage bilateral foreign and domestic investments the following Promotion and Protection of Investments (PPI) agreements have been signed between San Marino and the following countries: Albania

18.05.2012

Azerbaijan

25.09.2015

Bosnia And Herzegovina

02.08.2011

Bulgaria

23.02.2007

Cyprus

13.09.2006

Croatia

07.05.2004

Malaysia

27.09.2012

Ukraine

13.01.2006

24

International Treaties

Following the provisions of DTAs agreements, dividends, interests, and royalties of the contracting parties are subject to the following preferential tax rates: Country

Dividends (%)

Interest (%)

Royalties (%)

Notes

Austria

0–15 (*)

0

0

(*) Lower rate applicable where the recipient holds an interest of at least 10%

Azerbaijan

5–10 (*)

10

5–10 (**)

(*) 5% for qualifying companies, 10% for individual companies (**) The lower royalty rate applies to royalties for patents, designs or models, plans, secret formulas or processes, computer software, know-how, etc.

Barbados

0–5 (*)

5

0 (**)

(*) The rate is 5% for portfolio dividends; 0% if the beneficial owner is a company holding at least 10% for an uninterrupted period of at least 12 months prior to the decision to distribute the dividend [**] Taxable only in the State in which the beneficial owner is resident

Belgium

0–5–15 (*)

0–10 (**)

5

(*) With respect to EU Countries, a withholding tax exemption is applicable, provided that the conditions of Interest & Royalty Directive are met (**) It concerns an EU Country, or the treaty contains a qualifying exchange of information clause. Hence, the rate of 0% is applicable subject to the same conditions as invoked by the Parent-Subsidiary Directive

Cyprus

0

0

0 (continued)

Double Tax Agreements

25

(continued) Country

Dividends (%)

Interest (%)

Royalties (%)

Notes

Croatia

5–10 (*)

0–10 (**)

5

(*) The 5% rate applies if the recipient (beneficial owner) is an entity that directly holds at least a share of 25% of the capital of the payer (**) Interest is 0% when the payer is the government or local authority, when the receiver is the government or local authority

Georgia

0

0

0

Greece

5–10 (*)

10

5

(*) The rate of 5% applies in case the beneficiary is a company (excluding a partnership) and it holds at least 25% of the capital of the paying

Hungary

0–5–15 (*)

0

0

(*) The rate of 0% applies in case the beneficiary is a company (excluding a partnership) and it holds at least 25% of the capital of the paying company. The rate of 5% applies in case the beneficiary is a company (excluding a partnership) and directly holds less than 25% of the capital of the paying company

Italy

5–15 (*)

0–13

10

(*) The rate of 5% applies in case the beneficiary is a company (excluding a partnership) and directly holding at least 25% of the capital of the paying company for the last 12 months

Liechtenstein

0 – 15 (*)

0

0

(*) 0% if the recipient holds at least 10% of the capital of the payer

Luxembourg

0–15 (*)

0

0

(*) 0% if the recipient company (other than a partnership, as the case may be) directly holds (beneficially) at least 10% of the Luxembourg company’s capital (continued)

26

International Treaties

(continued) Country

Dividends (%)

Interest (%)

Royalties (%)

Notes

Malaysia

0

0–10 (*)

10

(*) Interest on loans given to the Malaysian government or guaranteed by it is exempt from tax

Malta

5–10 (*)

0

0

(*) The lower of the listed rates applies to dividends when the beneficiary directly holds 25% or more of share capital

Portugal

10–15 (*)

10

10

(*) The lower of the listed rates applies to dividends when the beneficiary directly holds 25% or more of share capital

Qatar

0

0

5

Romania

0–5–10 (*)

3

3

(*) The lower rate applies to the participation of at least 50%; the 5% rate applies to the participation of at least 10%

Saint Kitts & Nevis

5–7.5–15 (*)

0

0

(*) The rate of tax is 5% if the beneficial owner is a company that has directly held at least 25% of the capital of the company. The rate is 7.5% if the beneficial owner is a company holding a share capital rate between 10 and 25%

Serbia

5–10 (*)

0–10

0–10

(*) If the beneficial owner is a company (other a partnership) which holds directly at least 25% of the capital of the company paying the dividends throughout a 365 day period that includes the day of payment of dividends

Seychelles

0–5 (*)

0–5

5

(*) The 5% of the gross amount of the dividends if the beneficial owner is a company which has held directly at least 10 percent of the capital of the company paying the dividends for a continuous period of at least 12 months prior to the decision to distribute the dividends (continued)

Agreements Between San Marino and China

27

(continued) Country

Dividends (%)

Interest (%)

Royalties (%)

Notes

Singapore

0

0–12 (*)

8

(*) Exempt if paid to certain government/quasi-government institutions directly holds 25% or more of share capital

United Arab Emirates

0

0

0–10

Vietnam

N/A

10–15

10–15

For all three titles the lower rate applies if the recipient holds at least 10% of capital of the payer

Agreements Between San Marino and USA The diplomatic relations between San Marino and the United States started at the beginning of the twentieth century. The two States are on excellent terms. Among treaties and agreements, the following have primary importance: • Treaty on the extradition of criminals. Signed on 10.01.1906 • The Exchange of Notes on the establishment of official diplomatic relations. Signed on 19.11.1924/16.01.1925 • Supplementary Convention on extradition. Signed on 10.10.1934 • The Exchange of Letters on the payment to San Marino citizens, having returned to their motherland for a period exceeding six months of social security pensions of the United States of America. Signed on 24.07.1964/25.05.1965. • The Employment Agreement on dependents of officials serving in the respective Countries. Signed on 25.02.2004/15.09.2004. • The Statement of Intent for the purposes of exchanging information between the U.S. Counterterrorism Centre and the San Marino National Central Bureau of Interpol. Signed on 18.11.2011. • The Arrangement between the Government of the Republic of San Marino and the Government of the United States of America on enhancing the exchange of law enforcement information. Signed on 18.07.2012. • Foreign Account Tax Compliance Act (FACTA), for the improvement the international fiscal compliance and economic relation. Signed on 30.6. 2014.

Agreements Between San Marino and China On May the 6th 2021 People’s Republic China and San Marino celebrated 50 years of official diplomatic relations.

28

International Treaties

Among treaties and agreements, the following have primary importance: • Protocol on the establishment of official consular relations. Signed on 06.05.1971. • The Collaboration Agreement in the fields of culture and education. Signed on 26.08.1980. • Agreement on the abolition of visa requirements. Signed on 06.05.1985; • The Agreement on the establishment of official diplomatic relations. Signed on 08.05.1991. • The Trade and Economic Cooperation Agreement between the Government of the Republic of San Marino and the Government of the People’s Republic of China. Signed on 20.04.2007. • The Agreement between the Government of the Republic of San Marino and the Government of the People’s Republic of China on exchange of information on tax matters. Signed on 09.07.2012. • The Memorandum of Republic of San Marino and Huzhou Municipality of People’s Republic of China on the setup of “Huzhou San Marino Italy International Technology Park”. Signed on 02.06.2016.

International Organizations The Republic of San Marino has a foreign policy based on traditional neutrality, but retains involvement in international affairs. San Marino maintains official relations with 152 Countries and is a member State of the following major international organizations: IBRD–International Bank for Reconstruction and Development

21.01.2000

FAO–Food and Agriculture Organization

12 0.11.1999

IMF–International Monetary Fund

23.09.1992

ICAO–International Civil Aviation Organization

13.05.1988

ILO–International Labour Organization

18.06.1982

IMO–International Maritime Organization

12.03.2002

WIPO–World Intellectual Property Organization

26.03.1991

WHO–World Health Organization

12.05.1980

WTO–World Tourism Organization

20.07.1971

ITU–International Telecommunications Union

31.08.1994

UNESCO–United Nations Educational, Scientific and Cultural Organization

12.11.1974

UNU–Universal Postal Union

23.06.1967

The United Nations (UN) is a global diplomatic and political organization, which main task is to safeguard international peace and security, expand friendly relations between Countries, accomplish international co-operation and be a centre of developing consensus for the actions of the nations. The headquarter is situated in

International Organizations

29

Manhattan, New York City, and is subject to extraterritoriality, other main offices are in Geneva, Nairobi, and Vienna. The institution is financed by free contributions from its member States. Main objectives of the UN are: securing international peace and security, preserving human rights, delivering humanitarian aid, endorsing sustainable development and defending the law internationally. The UN is the largest, most familiar, and internationally represented, and most powerful intergovernmental organization in the world. On October 24th, 1945, at the end of World War II, the organization was established with the aim of preventing future wars. At its founding, the UN had 51-member States and there are now 193 members. The UN is the successor of the League of Nations. The International Monetary Fund (IMF) is an international organization that consists of 189 members, and its duty is to support global monetary stability, secure financial stability, support international trade, create high employment and economic growth, and reduce poverty around the world. The primary objective of IMF is to provide the stability of the international monetary system, including the system of exchange rates and international payments that enables Countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012, it includes all macroeconomic and financial sector issues. The (IBRD), or Bank for Reconstruction and Development is an international financial institution offering loans to middle-income developing Countries. The IBRD is the first of five-member institutions that compose the World Bank Group, and is headquartered in Washington, D.C., United States. The IBRD was established in 1944 with the main mission of financing the reconstruction of European nations devastated by World War II. The IBRD and its concessional loaning arm, the International Development Association, are together known as the World Bank as they share the same management and staff. After the reconstruction of Europe, the Bank’s objective became expanding worldwide economic development and eliminate poverty. The IBRD contributes to commercial-grade or concessional financing to sovereign States to fund projects that aim to improve transportation and infrastructure, environmental consciousness, access to food and potable water, energy investments, healthcare, education, domestic policy and access to improved sanitation. The World Intellectual Property Organization (WIPO) is an agency of the United Nations which is intended to develop a usable intellectual property (IP) international system, rewarding creativity, stimulates innovation and contributes to economic development while safeguarding the public interest. Its headquarters are in Geneva, Switzerland. WIPO was established in 1967 with a decision of the Member States to promote the protection of IP throughout the world cooperation among States and in collaboration with other international organizations. The World Tourism Organization (UNWTO) belongs to the United Nations agency which is responsible for the promotion of sustainable and accessible tourism. It is the international organization leader in the field of tourism, promoting it as one of the drivers of economic growth, inclusive development and environmental sustainability. It offers leadership and support to the sector in advancing knowledge and tourism policies worldwide. The purposes are to serve as a global forum for tourism policy issues and a practical source of tourism knowledge, to implement the Global Code of

30

International Treaties

Ethics for Tourism, to maximize the contribution of tourism to socio-economic development and minimize its possible negative impacts. It is committed to the promoting of tourism as an instrument in achieving the United Nations Sustainable Development Goals (SDG), geared towards eliminating poverty and fostering sustainable development and peace worldwide. UNESCO, the United Nations Educational, Scientific and Cultural Organization is based in Paris. The purposes of the agency are to contribute security and peace, to promote international collaboration through educational, scientific, and cultural reforms and increase universal respect for justice, and human rights along with fundamental freedom proclaimed in the United Nations Charter. The organization is the successor of the League of Nations’ International Committee on Intellectual Cooperation.

European Microstates

European microstates that lack both substantial human resources and natural resources must focus on the attraction of investors, capital, and consumers, together with the widening of the market for domestic enterprises. The structural limits of small States make these Countries interested in internationalisation with the maintenance of sovereignty, identity, and distinctiveness. The trade-off between the need to allow access and the need to protect the identity, has lead countries such as San Marino, Monaco, Andorra, and Liechtenstein, to avow standard EU membership although they are “European States”. San Marino, Andorra, and Monaco, have however initiated independent paths aimed at achieving an agreement with the European Union that could guarantee greater integration in the single market. Andorra, Monaco, San Marino, use the euro and have been granted the right to issue a definite number of euro coins. The European Union after a period of assessments reached a conclusion that allows to satisfy the needs of the three States: “The Council reaffirms that a closer association of Andorra, Monaco and San Marino with the EU is also in the interest of the EU itself. It should contribute to addressing gaps and overcoming inconsistencies in relations, which are currently fragmented and diverge from one Country to the other. Furthermore, enhanced participation of the three Countries in the internal market could have a positive, though limited economic impact on the EU, in particular with regard to employment in the neighbouring regions and cross-border economic activity.“ (Abstract from the Conclusions on EU relations with the Principality of Andorra, the Republic of San Marino and the Principality of Monaco, dated December 16th, 2013).

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_6

31

32

European Microstates

Relations Between San Marino and Principality of Andorra

Capital: Andorra la Valle Population (2017): about 84,000 Annual GDP (2017): 3,103M$ GDP pro capita (2017): 39,146$ Surface Area 470 km2 . Currency: Euro Belongs to: Council of Europe, UN, OSCE It is situated between Spain and France and it is headed by a Spanish Bishop and the French President. Andorra’s form of government is a parliamentary democracy. Its economy is mainly based on tourism with about 10.2 million visitors each year. The official language is Catalan; Spanish, Portuguese, and French are also used. Andorra is listed among the EU cooperative tax jurisdictions since 2017. Bilateral Agreement

Date signed

Joint Communique’ on the establishment of official diplomatic relations

30.11.1995

Joint Declaration on cooperation in the fields of education, culture, sport, commerce, tourism, environment and other interesting sectors

15.04.1996

Agreement between the Republic of San Marino and the Principality of Andorra on the exchange of information on tax matters

21.09.2009

Source www.esteri.sm

Relations Between San Marino and Principality of Liechtenstein

Capital: Vaduz Population (2017): 38,114 Annual GDP (2017): 6,296 M $ GDP pro capita (2017): 165,185 $ Surface Area: 160 km2 Currency: Swiss francs Government: Constitutional monarchy Belongs to: Europe, EEA, EFTA, UN, OSCE Liechtenstein is bordered to Switzerland to the south and west, Austria to the east and north. It is Europe’s fourth-smallest Country.

Relations Between San Marino and Principality of Monaco

33

The Principality has one of the highest gross domestic product adjusted for purchasing power parity per person in the world. The official language is German. Liechtenstein is listed among the EU cooperative tax jurisdictions since 2017.The bilateral relations with San Marino are on a diplomatic basis. Bilateral agreement

Date signed

Convention between the Republic of San Marino and the Principality of Liechtenstein for the avoidance of double taxation with respect to taxes on income and on capital and relevant exchange of letters

23.09.2009

Exchange of Notes on the establishment of official diplomatic relations

5.07.2011–11.07.2011

Source www.esteri.sm

Relations Between San Marino and Principality of Monaco

Capital: Monaco-Ville (de facto) Population: 38,695 Annual GDP (2017): 6,401 M $ GDP per capita (2017): 165,42 $ Surface Area: 2 km2 Currency: Euro Belongs to: CoE, UN, OSCE The Principality of Monaco is an independent city-state. Its form of government is a constitutional monarchy, and Prince Albert II is the head of the state. The bilateral relations between San Marino and Monaco are on a diplomatic basis. Bilateral agreement

Date signed

Agreement on the establishment of official diplomatic relations

San Marino 18.05.2006 Monaco 01. 06.2006

Agreement between the Republic of San Marino and the Principality of 29.07.2009 Monaco on the exchange of information on tax matters Source www.esteri.sm

34

European Microstates

The Republic of San Marino has signed the Agreement for the double taxation avoidance only with the Principality of Liechtenstein and the Agreement on the exchange of information in tax matters with Monaco and Andorra. Selected Tax Treaties and Country Profiles

Azerbaijan

Country Data GDP (US $ Billions)

40.67

GDP growth rate (% Change)

0.1

GDP per capita (US $ units)

4,141

Inflation rate (% Change)

13.0

Unemployment rate (% labour force)

5.0

Imports of goods and services (current US$ million)

17,105

Exports of goods and services (current US$ million)

19,840

Corporate Income Tax (%)

20.0

Maximum Individual Income Tax (%)

25.0

VAT (%)

18.0

Doing business DTF index

70

Population (mln)

9.822

Income class

Upper-Middle

Imports

Machines, metals, transportation, chemical products

Exports

Mineral Products

Currency

Azerbaijiani Menat

UTC

UTC + 04:00

Global Peace Index

2.426

Language

Azerbaijiani

Capital

Baku

Continent

Asia

Sources World Bank, IMF, EY © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_7

35

36

Azerbaijan

Double Tax Agreement Date of Signature: 08/09/2015 Convention Between the Government of the Republic of San Marino and the Government of the Republic of Azerbaijan for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital. The Government of the Republic of San Marino and the Government of the Republic of Azerbaijan, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following: Article 1 Persons Covered 1. This convention shall apply to persons who are residents of one or both of the contracting states. Article 2 Taxes Covered 1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political or administrative-territorial subdivisions or local authorities, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital or on elements of income or 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 in particular: (a) in the case of the Republic of San Marino: the general income tax which is levied. 1. (i) on individuals; 2. (ii) on bodies corporate and proprietorships; (hereunder referred to as “San Marino tax”); (b) in the case of the Republic of Azerbaijan: 1. 2. 3. 4.

(i) the tax on profit of legal persons; (ii) the income tax of physical persons; (iii) the tax on property; and (iv) the land taxes

(hereunder referred to as “Azerbaijan tax”).

Double Tax Agreement

37

4. The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this 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 that have been made in their taxation laws. Article 3 General Definitions For the purposes of this Convention, unless the context otherwise requires: 1. (a) the term “San Marino” means the territory of the Republic of San Marino, including any other area, within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or jurisdiction; 2. (b) the term “Azerbaijan” means the territory of the Republic of Azerbaijan, including the

3. 4. 5. 6.

7.

8.

Caspian Sea (Lake) sector belonging to the Republic of Azerbaijan, the air space above the Republic of Azerbaijan, within which the sovereign rights and jurisdiction of the Republic of Azerbaijan is implemented in respect to subsoil, sea bed and natural resources, and any other area which has been or may hereinafter be determined in accordance with international law and legislation of the Republic of Azerbaijan; (c) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, San Marino or Azerbaijan; (d) the term “person” includes an individual, a company and any other body of persons; (e) the term “company” means anybody corporate or any entity that is treated as a body corporate for tax purposes in the Contracting State of which it is a resident; (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 “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (h) the term “national” means: 1. (i) any individual possessing the nationality of a Contracting State; 2. (ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

9. (i) the term “competent authority” means: 1. (i) in San Marino, the Ministry of Finance; 2. (ii) in Azerbaijan, the Ministry of Taxes and the Ministry of Finance. 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

38

Azerbaijan

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. Article 4 Resident 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 his domicile, residence, place of registration, place of management or any other criterion of a similar nature, and also includes that State and any political or administrativeterritorial subdivision or local authority thereof. 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 or capital situated therein. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: 1. (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); 2. (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; 3. (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; 4. (d) if he 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. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which it is registered, and its place of effective management is situated. If the place of registration and the place of effective management of this person is not situated in the same Contracting State, then the competent authorities of the Contracting States shall settle the question by mutual agreement and determine the mode of application of this Convention to such person. Article 5 Permanent Establishmen 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. The term “permanent establishment” includes especially: 1. 2. 3. 4. 5.

(a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop;

Double Tax Agreement

39

an installation, structure or vessel or any other place used for the exploration of natural resources; a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. 3. The term “permanent establishment” shall also be deemed to include: 1. (a) a building site, a construction or installation project, or supervisory or consultancy activities in connection therewith, but only if such site, project or activities continue for more than twelve months; 2. (b) the furnishing of services, including consultancy services, by an enterprise through its employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) for a period or periods aggregating more than six months within any twelve-month period. 4. Notwithstanding the preceding provisions of this article, the term “permanent establishment” shall be deemed not to include: 1. (a) The use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; 2. (b) The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; 3. (c) The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; 4. (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; 5. (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; 6. (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. 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person—other than an agent of an independent status to whom paragraph 7 applies—is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the firstmentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person: 1. (a) has and habitually exercises in the first-mentioned State an authority to conclude contracts in the name of 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; or

40

Azerbaijan

2. (b) has no such authority, but habitually maintains in the first—mentioned State a stock of goods or merchandise belonging to such enterprise from which he regularly delivers goods or merchandise on behalf of the enterprise; Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies. 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, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph. 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. Article 6 Income from Immovable Property 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. The term “immovable property” shall have the meaning which it has under the 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. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in another form of immovable property. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise as well as to the income from immovable property used for the performance of independent personal services.

Double Tax Agreement

41

Article 7 Business Profits 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, 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. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of a permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, within the framework determined by the domestic legislation of that State. 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. 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. 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. 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. Article 8 Shipping and Air Transport Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall also include: 1. (a) profits from the bareboat rental, on a random basis of ships or aircraft in international traffic; 2. (b) profits from the use, maintenance or rental of containers in international traffic (including trailers and related equipment for the transportation of containers),

42

Azerbaijan

where such kind of activities is supplementary or incidental to the operation of ships or aircraft in international traffic. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 Associated Enterprises Where. 1. (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 2. (b) the same persons participates 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 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. 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. Article 10 Dividends 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. 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: 1. (a) 5 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 percent of the capital of the company paying the dividends and has invested in that company an amount not less than 250.000 Euros or its equivalent in any other currency;

Double Tax Agreement

43

2. (b) 10 percent of the gross amount of the dividends in all other cases. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ 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 laws of the State of which the company making the distribution is a resident. 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 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. 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. Article 11 Interest Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 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 percent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. Notwithstanding the provisions of paragraph 2, interest arising in one of the Contracting States and paid to a resident of the other Contracting State who is the beneficial owner of this interest shall be taxable only in that other Contracting State if any of the following requirements is fulfilled: 1. (i) the payer or the recipient of the interest is the Government of a Contracting State itself, a public body, a political or administrative territorial subdivision or a local authority thereof or the Central Bank of a Contracting State; 2. (ii) the interest is paid in respect of a loan granted, approved, guaranteed or insured by the Government of a Contracting State, the Central Bank of a Contracting

44

Azerbaijan

State, or agency or instrumentality (including a financial institution) wholly owned or controlled by the Government of a Contracting State. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether 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 charges for late payment shall not be regarded as interest for the purpose of this Article. The provisions of paragraphs 1 to 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 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. 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 he 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 Contracting State in which the permanent establishment or the fixed base is situated. 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, 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. Article 12 Royalties Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 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: 1. (a) 5% of the gross amount of the royalties in respect of payments for the use of, or the right to use, computer software or any patent, trade mark, design or model, plan, secret formula or process or for the use of right to use any industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience. 2. (b) 10% of the gross amount of the royalties in all other cases.

Double Tax Agreement

45

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 computer software, cinematograph films and recordings for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, as well as for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience. 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 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. 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 he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or the fixed base is situated. 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, 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. Article 13 Capital Gains 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. Gains derived by a resident of a Contracting State from the alienation of shares or other corporate rights in company the assets of which directly or indirectly consist mainly of immovable property situated in the other Contracting State may be taxed in that other State. 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 permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.

46

Azerbaijan

Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State. Gains from the alienation of any property other than that referred to in preceding paragraphs of this Article, shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 Independent Personal Services 1. Income derived by 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: If he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or If his stay in the other Contracting State is for a period or periods amounting to or 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 his activities performed in that other State may be taxed in that other State. 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, accountants and auditors. Article 15 Income from Employment 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar 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 there from may be taxed in that other State. 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: (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 concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.

Double Tax Agreement

47

Article 16 Directors’ Fees Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors, supervisory board or board of auditors 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 Artistes and Sportsmen 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 sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman 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 activities of the entertainer or sportsman are exercised. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, income mentioned in this Article shall be exempt from tax in the Contracting State in which the activity of the entertainer or sportsman is exercised provided that this activity is supported in a considerable part out of public funds of this State or of the other State or the activity is exercised under a cultural agreement or arrangement between the Contracting States. In such a case, the income is taxable only in the Contracting State of which the artiste or the sportsman is a resident. Article 18 Pensions Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. The provisions of paragraph 1 shall not apply if the recipient is not liable to tax in respect of such income in the State of which he is a resident and according to the laws of that State. In such case such income shall be taxable in the State in which it arises. Article 19 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political or administrative-territorial subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. 2. (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; or. (ii) did not become a resident of that State solely for the purpose of rendering the services.

48

Azerbaijan

Any pension paid by, or out of funds created by, a Contracting State or a political or administrative-territorial subdivision or a local authority thereof, to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political or administrativeterritorial subdivision or a local authority thereof. Article 20 Students and Business Apprentices Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first- mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. 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. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs 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 may be, shall apply. Article 22 Captial 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 has in the other Contracting State or by 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 may be taxed in that other State. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State or by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

Double Tax Agreement

49

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 It is agreed that double taxation shall be avoided in accordance with the following paragraphs of this Article. In San Marino: 1. (a) Where a resident of San Marino derives income which, in accordance with the provisions of this Convention, may be taxed in Azerbaijan, San Marino shall, subject to the provisions of paragraphs (b) and (c), exempt such income from tax but may, nevertheless, in calculating the amount of tax on the remaining income of such resident, apply the same tax rate which would apply if the income in question were not exempt. 2. (b) Where a resident of San Marino derives income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Azerbaijan, San Marino shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Azerbaijan. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income arising in Azerbaijan. In the case of Azerbaijan, double taxation shall be avoided as follows: Where a resident of Azerbaijan derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in San Marino, the tax on this income or capital paid by this person in San Marino shall be deducted from tax collected from this person in Azerbaijan in respect of such income or capital. Such deduction shall not, however, exceed the tax amount computed for such income or capital according to the legislation and taxation rules of Azerbaijan. Article 24 Non-discrimination 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 persons who are not residents of one or both of the Contracting States. Stateless persons who are residents of a Contracting State shall not be subjected in either 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 the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected. The taxation on a permanent establishment which an enterprise 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 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 allowances, reliefs and

50

Azerbaijan

reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been 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 the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. Enterprises 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 enterprises of the first-mentioned State are or may be subjected. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. Article 25 Mutual Agreement Procedure 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 of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a 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 this Convention. The competent authority 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, which is not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 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. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs. Where,

Double Tax Agreement

51

1. (a) under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Convention, and 2. (b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within two years from the presentation of the case to the competent authority of the other Contracting State, any unresolved issues arising from the case shall be submitted to arbitration if the person so requests. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either State. Unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision, that decision shall be binding on both Contracting States and shall be implemented notwithstanding any time limits in the domestic laws of these States. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this paragraph. Article 26 Exchange of Information The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their administrative-territorial subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2. Any information received under paragraph 1 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, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. 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. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation: 1. (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; 2. (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; 3. (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 (order public). If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the

52

Azerbaijan

requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. Article 27 Members of Diplomatic Missions and Consular Posts 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. Article 28 Refunds 1. Taxes collected in a Contracting State through a withholding tax shall be refunded upon request of the interested party where the right to levy such taxes is limited by the provisions of this Convention. Refund claims to be submitted within the time limits set forth in the laws of the Contracting State which has to make the refund and accompanied by documents required by the regulations of that Contracting State concerning the refund of taxes. When it is required by the regulations mentioned in previous paragraph, documents accompanying the refund claim to certify that the taxpayer meets the requirements for being entitled to the benefits of this Convention, shall be duly approved by the competent authority of the Contracting State where that taxpayer is resident. The competent authorities of the Contracting State shall, when necessary, decide by mutual agreement, in accordance with the provisions of Article 25 of this Convention, the mode of application of this Article. Article 29 Limitation of Benefits 1. Notwithstanding any other provision of this Convention, a resident of a Contracting State shall not receive the benefit of any reduction in or exemption from taxes provided for in this Convention by the other Contracting State if the main purpose or one of the main purposes of the creation or existence of such resident or any person connected with such resident is to obtain the benefits under this Convention that would not otherwise be available. 2. Nothing in this Convention shall affect the application of the domestic provisions to prevent fiscal evasion and tax avoidance concerning the limitation of expenses and any deductions arising from transactions between enterprises of a Contracting State and enterprises situated in the other Contracting State, if the main purpose or one of the main purposes of the creation of such enterprises or of the transactions undertaken between them, is to obtain the benefits under this Convention, that would not otherwise be available.

Double Tax Agreement

53

3. The provisions of this Convention shall not be applicable to companies which benefit from a special fiscal treatment under the laws or administrative practice of that or of the other Contracting State. Similarly, such provisions shall not be applicable in respect of income which a resident of the other Contracting State receives from such companies, or in respect of shares or other corporate rights in the capital of those companies which are held by such resident. Article 30 Changes and Additions By a mutual consent of the competent authorities of the Contracting States changes and additions made out by separate Protocols, being an integral part of this Convention and entering into force in the order stipulated in Article 30 of this Convention can be made to this Convention. Article 31 Entry into Force Each of the Contracting States shall notify the other Contracting State on the completion of its internal state procedures necessary for the entry into force of this Convention This Convention shall enter into force on the date of the latter of these notifications. The provisions of the Convention shall thereupon apply: 1. (a) with respect to taxes withheld, to the amounts charged as from 1 January of the calendar year next following that in which this Convention enters into force; and 2. (b) with respect to the other taxes on income and taxes on capital, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which this Convention enters into force. Article 32 Termination This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention not earlier than 5 years from its entry into force, through diplomatic channels, by giving notice of termination at least six months before the end of the calendar year. In such event, the Convention shall cease to have effect: 1. (a) with respect to taxes withheld, to the amounts charged as from 1 January of the calendar year next following that in which the notification of termination is given; and 2. (b) with respect to the other taxes on income and taxes on capital, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which the notification of termination is given.

54

Azerbaijan

IN WITNESS THEREOF, the undersigned, duly authorised to this end, have signed this Convention. Done in duplicate, on this day in the Italian, Azerbaijani and English languages, all texts being equally authentic. In case of divergence in interpretation between the texts the English text shall prevail.

Barbados

Country Data GDP (US $ Billions)

5.02

GDP growth rate (% Change)

0.9

GDP per capita (US $ units)

17,859

Inflation rate (% Change)

4.4

Unemployment rate (% labour force)

9.8

Imports of goods and services (current US$ million)

2,387

Exports of goods and services (current US$ million)

2,320

Corporate Income Tax (%)

25,0

Maximum Individual Income Tax (%)

40

VAT (%)

17.5

Doing business DTF index

55

Population (mln)

0,281

Income class

High

Imports

Machines, mineral products, foodstuffs, chemical product

Exports

Precious metals, foodstuffs, chemical products, mineral products

Currency

Barbadian Dollar

UTC

UTC -04:00

Global Peace Index

–

Language

English, Bajan Creole (continued)

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_8

55

56

Barbados

(continued) Capital

Bridgetown

Continent

America

Sources World Bank, IMF, EY

Double Tax Agreement Date of Signature: 14/12/2012 Convention Between the Republic of San Marino and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The Government of the Republic of San Marino and the Government of Barbados desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: Article 1 Persons Covered This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political or administrative subdivisions or local authorities, irrespective of the manner in which they are levied. 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. 3. The existing taxes to which this Convention shall apply are: (a) in Barbados: (i) the income tax (including premium income tax); (ii) the corporation tax (including the tax on branch profits); and (iii) the petroleum winning operations tax; (hereinafter referred to as “Barbados tax”). (b) in San Marino: the general income tax which is levied: (i) on individuals; (ii) on bodies corporate and proprietorships; even if collected through a withholding tax (hereinafter referred to as “San Marino tax”); 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

Double Tax Agreement

57

shall notify each other of any substantial changes which have been made in their respective taxation laws. Article 3 General Definitions 1. For the purposes of this convention, unless the context otherwise requires: (a) the term “Barbados” means the present territory of Barbados including the territorial sea and any maritime area situated outside the territorial sea of Barbados, which has been or might in the future be designated under the national law of Barbados in accordance with international law as an area within which Barbados may exercise its sovereign rights and jurisdiction to explore, exploit and preserve the seabed, subsoil and the natural resources; (b) the term “San Marino” means the Republic of San Marino, and, when used in a geographical sense, the territory of the Republic of San Marino, including any other area within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or jurisdiction; (c) the term “company” means anybody corporate or any entity which is treated as a body corporate for tax purposes; (d) the term “competent authority” means: (i) in Barbados, the Minister responsible for Finance or his authorized representative; (ii) in the Republic of San Marino, the Ministry of Finance or its authorised representative, and, for the purposes of Article 26 “Exchange of information”, the Central Liaison Office of the Republic of San Marino; (e) the terms “a Contracting State” and “the other Contracting State” mean San Marino or Barbados as the context requires; (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 “international traffic” means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (h) the term “person” includes an individual, a company and any other body of persons; (i) the term “national” means any individual who is a citizen of a Contracting State, and any legal person, partnership and association deriving its status as such from the laws in force in a Contacting State. 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 which it has at that time under the law of that State concerning the taxes to which the Convention applies.

58

Barbados

Article 4 Resident 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 his domicile, residence, place of management or any other criterion of a similar nature. 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 or capital situated therein. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both contracting states, then his status shall be determined as follows: a. he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); b. if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; c. if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; d. if he 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. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. Article 5 Permanent Establishment 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. 2. The term “permanent establishment” includes especially: (a) (b) (c) (d) (e) (f)

a place of management; a branch; an office; a factory; a workshop; and a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. The term “permanent establishment” also encompasses: (a) A building site or construction, assembly or installation project or supervisory activities in connection therewith, or an installation or drilling rig or

Double Tax Agreement

59

ship used for the exploration or exploitation of natural resources, but only if such site, project or activities lasts more than six months. (b) The furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within the other Contracting State for a period or periods aggregating more than 300 days in any 12-month period. 4. Notwithstanding the preceding provisions of this article, the term “Permanent Establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (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; (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; (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (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, 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. 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, provided that such persons are acting in the ordinary course of their business. 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

60

Barbados

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. 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 which it has under the 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, boats 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 use in any other form of immovable property. 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. 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, 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. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions 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. 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

Double Tax Agreement

61

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. 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. 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. 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. Article 8 Shipping and Air Transport 1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident. 3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 Associated Enterprises 1. Where (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 (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 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. 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

62

Barbados

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. 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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed: (a) 0% of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 10% of the capital of the company paying the dividends for an uninterrupted period of at least 12 months prior to the decision to distribute the dividends; (b) 5% of the gross amount of the dividends in all other cases; This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term “Dividends” as used in this article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ 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 laws of the State of 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 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. 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

Double Tax Agreement

63

or the undistributed profits consist wholly or partly of profits or income arising in such other State. 6. Where a company, which is a resident of a Contracting State having a permanent establishment in the other Contracting State, derives profits or income from that permanent establishment, the other Contracting State may not impose a tax on any remittances or deemed remittances of such profits or income by the permanent establishment to the company which is a resident of the first-mentioned Contracting State. Article 11 Interest 1. Interest 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 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 a Contracting State the tax so charged shall not exceed 5% of the gross amount of the interest. 3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State, or any agency or instrumentality thereof, shall be exempt from tax in the first- mentioned Contracting State. For the purposes of this paragraph, the term “Government” shall include the Central Bank of Barbados, the Central Bank of San Marino, a statutory body, and any other similar institution as may be agreed upon from time to time by the competent authorities of the Contracting States. 4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether 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 charges for late payment shall not be regarded as interest for the purpose of this Article. 5. The provisions of paragraphs 1 and 2 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. 6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he 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

64

Barbados

or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 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, 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 lastmentioned 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. Article 12 Royalties 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be only taxed in that other State. 2. 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 cinematograph films, and films, discs or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of or right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience. 3. 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. 4. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he 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. 5. 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, 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

Double Tax Agreement

65

payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 13 Capital Gains 1. 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. 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 fixed base, may be taxed in that other State. 3. Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic, or from movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State. 4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 Independent Personal Services 1. Income derived by 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. However, such income may be taxed in the other Contracting State in the following circumstances: (a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the 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 is for a period or periods amounting to or 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 activity exercised in the other Contracting State during the aforesaid period or periods be taxed in that other State. 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.

66

Barbados

Article 15 Income from Employment 1. Subject to the provisions of Articles 16, 18 19 and 21, salaries, wages and other similar 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. 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: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned; (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by a resident of a Contracting State may be taxed in that State. Article 16 Director’s Fees Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 Entertainers and Sportspersons 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 his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson 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 activities of the entertainer or sportsperson are exercised. 3. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a Contracting State by entertainers or sportspersons if the visit to that State is substantially supported by public funds of the other Contracting State or a political subdivision or a local authority thereof. In such

Double Tax Agreement

67

a case the income shall be taxable only in the State of which the entertainer or sportsperson is a resident. Article 18 Pensions 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. Notwithstanding the provisions of paragraph 1 of this Article, pensions and other similar payments made under the social security legislation of a Contracting State shall be taxable only in that State. Article 19 Government Service 1. Salaries, wages, and other similar 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 subdivision or authority shall be taxable only in that State. (i) did not become a resident of that State solely for the purpose of rendering the services. 2. Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political or administrative subdivision or a local authority thereof, to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. (a) 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; or (b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3. and other similar 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.

68

Barbados

Article 20 Students and Business Apprentices Payments which a student, business trainee, or apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training, receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. Article 21 Professors, Teachers and Researchers 1. An individual who has been resident in a Contracting State immediately before traveling to the other Contracting State, and who, at the invitation of a school, university, or other similar non-profit educational institution, remains in that other State for a period not exceeding two years from the date of his first arrival in that State, for the purpose of teaching or carrying out research, or both, in such educational institutions, shall be exempt from tax in that other State with respect to the remuneration received for such teaching or research. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages, pensions. 2. The provisions of paragraph 1 of this Article shall not be applicable to the remuneration received for teaching or research work if such is not carried out for the public good, but principally for the private benefit of a specified person or specified persons. Article 22 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. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State 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 may be, shall apply. Article 23 Elimination of Double Taxation 1. In the case of Barbados, subject to the provisions of the laws of Barbados regarding the allowance as a credit against Barbados tax of tax payable in a territory outside Barbados double taxation shall be eliminated as follows:

Double Tax Agreement

69

a. tax payable under the laws of San Marino and in accordance with the Convention, whether directly or by deduction, on profits or income from sources within San Marino (excluding, in the case of a dividend tax payable in respect of the profits out of which the dividend is paid), shall be allowed as a credit against any Barbados tax computed by reference to the same profits or income in respect of which the San Marino tax is computed; b. in the case of a dividend paid by a company that is a resident of San Marino to a company that is a resident of Barbados and which holds directly at least 10 percent of the capital of the company paying the dividend, the credit referred to in sub-paragraph (a) shall take into account, the San Marino tax payable by the company paying the dividend in respect of the profits out of which such dividend is paid; and c. the credit, however, shall in no case exceed the part of the tax, as computed before the credit is given, which is appropriate to the income which may be taxed in San Marino. 2. In the case of San Marino double taxation shall be eliminated as follows: Where a resident of San Marino owns items of income which are taxable in Barbados, San Marino, in determining its taxes on income specified in Article 2 of this Convention, may include in the basis upon which such taxes are imposed the said items of income, unless specific provisions of this Convention otherwise provide. In such case, San Marino shall deduct from the taxes so calculated the tax on income paid in Barbados, but in an amount not exceeding that proportion of the aforesaid San Marino tax which such items of income bear to the entire income. However, no deduction will be granted if the item of income is subjected in San Marino to a final withholding tax and/or to a substitute tax by request of the recipient of the said income in accordance with the San Marino law. Article 24 Non-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 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 persons who are not residents of one or both of the Contracting States. 2. The taxation on a permanent establishment which an enterprise 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 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 allowances,

70

3.

4. 5.

6.

Barbados

reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 5 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. The provisions of this Article shall not be construed to prevent Barbados from applying its tax on branch profits at the rate specified under the Income Tax Act. Enterprises 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 enterprises of the first-mentioned State are or may be subjected. This Article shall apply to taxes which are the subject of this Convention.

Article 25 Mutual Agreement Procedure 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 of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within two years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention. 2. The competent authority 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 which is not in accordance with the Convention. The mutual agreement procedure shall expire by the end of the third year following that in which the case was presented by the taxpayer. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. 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.

Double Tax Agreement

71

4. 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. Article 26 Exchange of Information 1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2. 2. Any information received under paragraph 1 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, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or oversight of the above. 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. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a contracting state the obligation: (a) to 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 course of the 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 (order public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be Ccnstrued to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

72

Barbados

Article 27 Members of Diplomatic Missions and Consular Posts 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. Article 28 Limitation on benefits 1. Notwithstanding the other provisions of this Convention, a person that is a resident of a Contracting State shall not be entitled to tax reductions or exemptions granted by the other Contracting State under this Convention if the main purpose or one of the main purposes of the establishment or existence of such resident, or of any person concerned with such resident, was to be granted the benefits envisaged by this Convention, to which said person would not otherwise have been entitled. 2. The application of domestic laws concerning limitation on expenditure and other deductions deriving from transactions between enterprises of a Contracting State and enterprises situated in the other Contracting State shall not be affected by the provisions contained in this Convention. Article 29 Entry into Force 1. Each Contracting State shall notify the other of the completion of the procedures required by its law for the entering into force of this Convention. The Convention shall enter into force on the date of the later of the two notifications. 2. The provisions of the Convention shall apply: (a) with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which this Convention enters into force; and (b) with respect to the other taxes on income, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which this Convention enters into force. Article 30 Termination This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of a period of five years from the date of its entry into force. In such event, the Convention shall cease to have effect: a. with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which the notification of termination is given; and

Double Tax Agreement

73

b. with respect to the other taxes on income, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which the notification of termination is given. IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention.

Belgium

Country Data GDP (US $ Billions)

494.73

GDP growth rate (% Change)

1.7

GDP per capita (US $ units)

43,582

Inflation rate (% Change)

2.2

Unemployment rate (% labour force)

7.2

Imports of goods and services (current US$ million)

416,968

Exports of goods and services (current US$ million)

419,581

Corporate Income Tax (%)

29.0

Maximum Individual Income Tax (%)

50.0

VAT (%)

21.0

Doing business DTF index

72

Population (mln)

11.352

Income class

High

Imports

Machines, foodstuffs, pharmaceuticals

Exports

Chemicals, machines, metal products

Currency

Euro

UTC

UTC + 01:00

Global Peace Index

1.525

Language

Dutch, French, German

Capital

Brussels

Continent

Europe

Sources World Bank, IMF, EY

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_9

75

76

Belgium

Double Tax Agreement Date of Signature: 21/12/2005 The Government of the Republic of San Marino and the Government of the Kingdom of Belgium, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of tax fraud with respect to taxes on income, and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed as follows: Article 1 Persons Covered This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political or administrative subdivisions or local authorities, irrespective of the manner in which they are levied. 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. 3. The existing taxes to which the Convention shall apply are in particular: (a) in the case of San Marino: the general income tax which is levied: 1° on individuals; 2° on bodies corporate and proprietorships; even if collected through a withholding tax, (hereinafter referred to as “San Marino tax”); (b) in the case of Belgium: 1° the individual income tax; 2° the corporate income tax; 3° the income tax on legal entities; 4° the income tax on non-residents; 5° the supplementary crisis contribution, including the prepayments and the surcharges on these taxes and prepayments, (hereinafter referred to as “Belgian tax”).

Double Tax Agreement

77

4. The Convention shall apply also to any identical or substantially similar taxes that 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 that have been made in their taxation laws. Article 3 General Definitions 1. For the purposes of this Convention, unless the context otherwise requires: (a) 1° the term “San Marino” means the Republic of San Marino; used in a geographical sense, it means the territory of the Republic of San Marino, including any other area within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or its jurisdiction;

(b) (c) (d)

(e)

(f)

(g)

2° the term “Belgium” means the Kingdom of Belgium; used in a geographical sense, it means the territory of the Kingdom of Belgium, including the territorial sea and any other area in the sea and in the air within which the Kingdom of Belgium, in accordance with international law, exercises sovereign rights or its jurisdiction; the terms “a Contracting State” and “the other Contracting State” mean Belgium or San Marino as the context requires; the term “person” includes an individual, a company and any other body of persons; the term “company” means anybody corporate or any entity that is treated as a body corporate for tax purposes in the Contracting State of which it is a resident; 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; the term “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; the term “competent authority” means: 1° in the case of San Marino, the Ministry of Finance, and 2° in the case of Belgium, the Minister of Finance or his authorised representative;

(h) the term “national” means: 1° any individual possessing the nationality of a Contracting State;

78

Belgium

2° any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State. 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. Article 4 Resident 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 his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political or administrative subdivision or local authority thereof. 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. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) if he 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. 3. Whereby reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.

Double Tax Agreement

79

Article 5 Permanent Establishment 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. 2. The term “permanent establishment” includes especially: 1. 2. 3. 4. 5. 6.

(a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop, and (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than 12 months. 4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (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; (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; (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs 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, where a person -other than an agent 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.

80

Belgium

6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other 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, provided that such persons are acting in the ordinary course of their business. 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. 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 which it has under the 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 private 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, boats 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 use in any other form of immovable property. 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. 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, 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. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so

Double Tax Agreement

4.

5.

6.

7.

81

incurred, whether in the State in which the permanent establishment is situated or elsewhere. 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. 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. 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. 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.

Article 8 Shipping and Air Transport 1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident. 3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 Associated Enterprises 1. Where 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 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 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.

82

Belgium

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 such an adjustment as it considers appropriate 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 consult each other. 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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed: 1. (a) 0% of the gross amount of the dividends if the beneficial owner is a company which, at the moment when the dividends are paid, holds directly at least 25% of the capital of the company paying the dividends for an uninterrupted period of at least twelve months; 2. (b) 5% of the gross amount of the dividends if the beneficial owner is a company which, at the moment when the dividends are paid, holds directly at least 10% but less than 25% of the capital of the company paying the dividends for an uninterrupted period of at least twelve months; 3. (c) 15% of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt- claims, participating in profits, as well as income -even paid in the form of interest- which is subjected to the same taxation treatment as income from shares by the tax legislation of the State of which the paying company 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 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.

Double Tax Agreement

83

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. Article 11 Interest 1. Interest 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 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% of the gross amount of the interest. 3. Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State in which it arises if it is: 1. (a) interest on commercial debt-claims -including debt-claims represented by commercial paper- resulting from deferred payments for goods, merchandise or services supplied by an enterprise; 2. (b) interest paid in respect of a loan granted, guaranteed or insured or a credit extended, guaranteed or insured under a scheme organised by a Contracting State or one of its political or administrative subdivisions or local authorities in order to promote the export; 3. (c) interest on debt-claims or loans of any nature -not represented by bearer instruments- paid to banking enterprises; 4. (d) interest on deposits made with a banking enterprise; 5. (e) interest paid to the other Contracting State or one of its political or administrative subdivisions or local authorities. 4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether 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. However, the term “interest” shall not include for the purpose of this Article penalty charges for late payment or interest regarded as dividends under paragraph 3 of Article 10. 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

84

Belgium

fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 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 he 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. 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, 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 lastmentioned 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. 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 the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5% of the gross amount of the royalties. 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 software as well as cinematograph films and films or tapes for 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. 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. 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 he 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

Double Tax Agreement

85

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. 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, 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. Article 13 Capital Gains 1. 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. 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 fixed base, may be taxed in that other State. 3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 4. Gains derived by a resident of a Contracting State from the alienation of shares of a company more than 50% of the value of which is derived directly or indirectly from immovable property situated in the other Contracting State, may be taxed in that other State. 5. Gains from the alienation of any 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 Services 1. Income derived by 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 unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base. 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.

86

Belgium

Article 15 Dependent Personal Services 1. Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and other similar 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. 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: 1. (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 taxable period concerned, and 2. (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and 3. (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated. Article 16 Company Mangers 1. Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State. The preceding provision shall also apply to payments derived in respect of the discharge of functions which, under the laws of the Contracting State of which the company is a resident, are regarded as functions of a similar nature as those exercised by a person referred to in the said provision. 2. Remuneration derived by a person referred to in paragraph 1 from a company which is a resident of a Contracting State in respect of the discharge of day-to-day functions of a managerial or technical, commercial or financial nature, may be taxed in accordance with the provisions of Article 15, as if such remuneration were remuneration derived by an employee in respect of an employment and as if references to the “employer” were references to the company. Article 17 Artistes and Sportsmen 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 sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

Double Tax Agreement

87

2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman 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 activities of the entertainer or sportsman are exercised. Article 18 Pensions 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply if the recipient is not taxed in respect of such income in the State of which he is a resident and according to the laws of that State. In such case such income may be taxed in the State in which it arises. 3. Notwithstanding the provisions in paragraph 1 of this Article, pensions and other similar payments made by a Contracting State under provisions of the social security legislation or under a public scheme organised by that State in order to supplement the benefits of its social security legislation shall be taxable only in that State. Article 19 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political or administrative subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or 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: 1° is a national of that State; or. 2° did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political or administrative subdivision or a local authority thereof, to an individual in respect of services rendered to that State or subdivision or 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 of, and a national of, that State. 3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a trade or business carried on by a Contracting State or a political or administrative subdivision or a local authority thereof.

88

Belgium

Article 20 Professors, Teachers and Researchers 1. A professor, teacher or researcher who makes a temporary visit to a Contracting State for a period not exceeding 2 years for the purpose of teaching or conducting research at an officially recognized university, college, school, or other similar educational institution, and who is, or immediately before such visit was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State in respect of remuneration from such teaching or research. 2. The provisions of paragraph 1 shall not apply to remuneration received in consideration for research carried on not in the public interest, but primarily for the private benefit of a specific person or persons. Article 21 Students and Business Apprentices Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. Article 22 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. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State 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 may be, shall apply. 3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of the Convention and arising in the other Contracting State may also be taxed in that other State if these items are not taxed in the first-mentioned State. Article 23 Miscellaneous A person that is a resident of a Contracting State and derives income from the other Contracting State shall not be entitled to relief from taxation otherwise provided for in this Convention if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of such item of income to take advantage of the provisions of this Convention.

Double Tax Agreement

89

Article 24 Methods for Elimination of Double Taxation 1. In the case of San Marino, double taxation shall be avoided as follows: 1. (a) Where a resident of San Marino derives income which, in accordance with the provisions of this Convention, may be taxed in Belgium, San Marino shall, subject to the provisions of sub-paragraphs (b) and (c) exempt such income from tax but may, nevertheless, in calculating the amount of tax on the remaining income of such resident, apply the same tax rate which would apply if the income in question were not exempt. 2. (b) Where a resident of San Marino derives income which, in accordance with the provisions of Articles 10 and 11, may be taxed in Belgium, San Marino shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Belgium. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income arising in Belgium. 3. (c) Notwithstanding the provisions of sub-paragraph (b), where a company which is a resident of San Marino has held at least 25% of the capital of a company which is a resident of Belgium paying dividends for at least 12 months prior to the decision to distribute the dividends, San Marino shall exempt from tax the dividends paid to the company which is a resident of San Marino by the company which is a resident of Belgium. 2. In the case of Belgium, double taxation shall be avoided as follows: 1. (a) Where a resident of Belgium derives income, not being dividends, interest or royalties, which may be taxed in San Marino in accordance with the provisions of this Convention, and which are taxed there, Belgium shall exempt such income from tax but may, in calculating the amount of tax on the remaining income of that resident, apply the rate of tax which would have been applicable if such income had not been exempted. However, in the case of a company which is a resident of Belgium, where the San Marino tax is less than 15% of the net amount of the income referred to in this provision, Belgium shall not exempt that income, but reduce to a third the Belgian tax, which is proportionally relating to that income, calculated as if that income were income from Belgian sources. 2. (b) Notwithstanding the provisions of sub-paragraph, (a) of this paragraph and any other provision of this Convention, Belgium shall, for the determination of the additional taxes established by Belgian municipalities and conurbations, take into account the earned income (revenus professionnels– beroepsinkomsten) that is exempted from tax in Belgium in accordance with sub-paragraph (a) of this paragraph. These additional taxes shall be calculated on the tax which would be payable in Belgium if the earned income in question had been derived from Belgian sources. 3. (c) Dividends derived by a company which is a resident of Belgium from a company which is a resident of San Marino shall be exempt from the corporate

90

Belgium

income tax in Belgium under the conditions and within the limits provided for in Belgian law. 4. (d) Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are interest or royalties, the San Marino tax levied on that income shall be allowed as a credit against Belgian tax relating to such income. 5. (e) Where, in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in San Marino have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in sub-paragraph (a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in San Marino by reason of compensation for the said losses. Article 25 Non-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 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 persons who are not residents of one or both of the Contracting States. 2. Stateless persons who are residents of a Contracting State shall not be subjected in either 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 the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected. 3. The taxation on a permanent establishment which an enterprise 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 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 allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 5. Enterprises 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

Double Tax Agreement

91

than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. Article 26 Mutual Agreement Procedure 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 of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident, or if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within two years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention. 2. The competent authority 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 which is not in accordance with the Convention. The mutual agreement procedure shall expire by the end of the third year following that in which the case was presented. If an agreement is reached, it shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. 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. 4. The competent authorities of the Contracting States shall agree on administrative measures necessary to carry out the provisions of the Convention and particularly on the proofs to be furnished by residents of either Contracting State in order to benefit in the other State from the exemptions or reductions of tax provided for in the Convention. 5. The competent authorities of the Contracting States shall communicate directly with each other for the application of the Convention. Article 27 Exchange of Information 1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention, insofar as the taxation thereunder is not contrary to the Convention, in particular to prevent tax fraud. 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 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, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes covered by this Convention. Such persons or authorities shall

92

Belgium

use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: 1. (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; 2. (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; 3. (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 (order public). Article 28 Aid in Recovery 1.

2.

3.

4.

The Contracting States shall provide aid and assistance to each other in order to notify and recover the taxes referred to in this Convention as well as surcharges, additions, interest, costs and fines of a non-penal nature relating to these taxes, when such tax claims are due and are no longer open to appeal in accordance with the legal provisions or regulations of the State applying for assistance. At the request of the applicant State the requested State shall proceed to the notification and recovery of the tax claims of that State in accordance with the laws and administrative practice applying to the notification and recovery of its own tax claims, unless otherwise provided by the Convention. The requested State shall not be obliged to accede to the request of the applicant State if that State has not exhausted all remedies in its own territory for the recovery of its tax claim. The request for assistance in the recovery of a tax claim shall be accompanied: 1. (a) by an official copy of the instrument permitting enforcement in the applicant State; 2. (b) by an official copy of any other document required for recovery in the applicant State; and 3. (c) where appropriate, by a certified copy of any final decision of an administrative body or of a court of law.

5. 6. 7.

8.

The instrument permitting the enforcement in the applicant State shall have the same effect in the requested State. Questions concerning any period of limitation of a tax claim shall be governed solely by the laws of the applicant State. Acts of recovery performed by the requested State in pursuance of the request for assistance which, according to the laws of that State, would have the effect of suspending or interrupting the period of limitation, shall have this effect too under the laws of the applicant State. The requested State shall inform the applicant State about measures taken to this end. Tax claims for the recovery of which assistance is requested shall not have any priority in the requested State.

Double Tax Agreement

93

9.

The requested State shall not be obliged to apply any means of enforcement which are not authorised by the legal provisions or regulations of the applicant State. 10. With regard to tax claims of a Contracting State which are the subject of, or which are still open to appeal, the competent authority of that State may, in order to safeguard its rights, request the competent authority of the other Contracting State to take the protective measures provided for in the laws of that State. The provisions of the preceding paragraphs shall apply mutatis mutandis to such measures. The competent authorities of the Contracting states shall consult together in order to settle the mode of transfer of the amounts recovered by the requested state on behalf of the applicant State. Article 29 Members of Diplomatic Missions and Consular Posts 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. 2. For the purposes of the Convention, persons who are members of diplomatic missions or consular posts of a Contracting State in the other Contracting State or in a third State and who are nationals of the sending State, shall be deemed to be residents of the sending State if they are subjected therein to the same obligations in respect of taxes on income as are residents of that State. 3. The Convention shall not apply to international organisations, to organs or officials thereof and to persons who are members of diplomatic missions or consular posts of a third State, being present in a Contracting State and not treated in either Contracting State as residents in respect of taxes on income. Article 30 Refunds 1. Taxes collected in a Contracting State through a withholding tax shall be refunded upon request of the interested party where the right to levy such taxes is limited by the provisions of this Convention. 2. Refund claims to be submitted within the time limits set forth in the laws of the Contracting State which has to make the refund, shall be accompanied by an official declaration of the Contracting State of which the taxpayer is a resident stating that such taxpayer meets the requirements to be entitled to the benefits of this Convention. 3. The competent authorities of the Contracting State shall decide by mutual agreement, in accordance with the provisions of Article 26 of this Convention, the mode of application of this Article. Article 31 Entry into Force 1. Each Contracting State shall notify the other Contracting State of the completion of the procedures required by its laws for the bringing into force of this Convention. The Convention shall enter into force from the date on which the later of these notifications is received.

94

Belgium

2. The provisions of the Convention shall have effect: (a) with respect to taxes due at source on income credited or payable on or after January 1 of the year next following the year in which the Convention entered into force; (b) with respect to taxes other than taxes due at source on income of taxable periods beginning on or after January 1 of the year next following the year in which the Convention entered into force. Article 32 Termination This Convention shall remain in force until terminated by a Contracting State but either Contracting State may terminate the Convention, through diplomatic channels, by giving to the other Contracting State, written notice of termination not later than the 30th of June of any calendar year from the fifth year following that in which the Convention entered into force. In the event of termination before July 1 of such year, the Convention shall cease to have effect: 1. (a) with respect to taxes due at source on income credited or payable from January 1 of the year next following the year in which the notice of termination is given; 2. (b) with respect to taxes other than taxes due at source on income of taxable periods beginning on or after January 1 of the year next following the year in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention.

Italy

Country Data GDP (US $ Billions)

1937.89

GDP growth rate (% Change)

1.5

GDP per capita (US $ units)

31,984

Inflation rate (% Change)

1.3

Unemployment rate (% labour force)

11.3

Imports of goods and services (current US$ million)

548,205

Exports of goods and services (current US$ million)

607,267

Corporate Income Tax (%)

24.0

Maximum Individual Income Tax (%)

43.0

VAT (%)

22.0

Doing business DTF index

73

Population (mln)

60.589

Income class

High

Imports

Machines, chemical products, transportation, mineral products

Exports

Machines, chemical products, transportation, metals

Currency

Euro

UTC

UTC + 01:00 (continued)

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_10

95

96

Italy

(continued) Global Peace Index

1.737

Language

Italian

Capital

Rome

Continent

Europe

Sources World Bank, IMF, EY

Double Tax Agreement Date of Signature: 21/03/2002 Convenzione tra La Repubblica Di San Marino e La Repubblica Italiana per Evitare Le Doppie Imposizioni in Materia di Imposte Sul Reddito e per Prevenire Le Frodi Fiscali. Il Governo della Repubblica di San Marino e il Governo della Repubblica italiana, di seguito denominati Stati contraenti, desiderosi di concludere una Convenzione per evitare le doppie imposizioni in materia di imposte sul reddito e per prevenire le frodi fiscali e per rafforzare l’ordinato sviluppo delle relazioni economiche tra i due Paesi nel contesto di una maggiore cooperazione, nonché per assicurare che i vantaggi della Convenzione per evitare le doppie imposizioni vadano a beneficio esclusivo dei contribuenti che adempiono i loro obblighi fiscali hanno convenuto quanto segue: Capitolo I Campo Di Applicazione Della Convenzione Articolo 1 Soggetti La presente Convenzione si applica alle persone che sono residenti di uno o di entrambi gli Stati contraenti. Articolo 2 Imposte Considerate 1. La presente Convenzione si applica alle imposte sul reddito prelevate per conto di ciascuno degli Stati contraenti, delle sue suddivisioni politiche o amministrative o dei suoi enti locali, qualunque sia il sistema di prelevamento. 2. Sono considerate imposte sul reddito le imposte prelevate sul reddito complessivo o su elementi del reddito, comprese le imposte sugli utili derivanti dall’alienazione di beni mobili o immobili, le imposte sull’ammontare complessivo degli stipendi e dei salari corrisposti dalle imprese, nonché le imposte sui plusvalori. 3. Le imposte attuali cui si applica la Convenzione sono in particolare: (a) per quanto concerne la Repubblica di San Marino: (i) l’imposta sul reddito delle persone fisiche;

Double Tax Agreement

97

(ii) l’imposta sul reddito delle persone giuridiche e delle imprese individuali; ancorché riscosse mediante ritenuta alla fonte (qui di seguito indicate quali “imposta sammarinese”); (b) per quanto concerne la Repubblica Italiana: (i) l’imposta sul reddito delle persone fisiche; (ii) l’imposta sul reddito delle persone giuridiche; (iii) l’imposta regionale sulle attività produttive; ancorché riscosse mediante ritenuta alla fonte; (qui di seguito indicate quali “imposta italiana”) 4. La Convenzione si applicherà anche alle imposte future di natura identica o analoga che verranno istituite dopo la data della firma della presente Convenzione in aggiunta o in sostituzione delle imposte esistenti. Le autorità competenti degli Stati contraenti si notificheranno le modifiche importanti apportate alle rispettive legislazioni fiscali. Capitolo II Definizioni Articolo 3 Definizioni Generali 1. Ai fini della presente Convenzione, a meno che il contesto con richieda Una diversa interpretazione: (a) il termine “Italia” designa la Repubblica italiana (b) il termine “San Marino” designa la Repubblica di San Marino; (c) le espressioni “uno Stato contraente” e “l’altro Stato contraente” designano, come il contesto richiede, San Marino o l’Italia; (d) il termine “persona” comprende una persona fisica, una società ed ogni altra associazione di persone; (e) il termine “società” designa qualsiasi persona giuridica o qualsiasi ente che è considerato persona giuridica ai fini dell’imposizione; (f) le espressioni “impresa di uno Stato contraente” e “impresa dell’altro Stato contraente” designano rispettivamente un’impresa esercitata da un residente di uno Stato contraente e un’impresa esercitata da un residente dell’altro Stato contraente; (g) l’espressione “traffico internazionale” designa qualsiasi attività di trasporto effettuato per mezzo di una nave o di un aeromobile da parte di un’impresa la cui sede di direzione effettiva è situata in uno Stato contraente, ad eccezione del caso in cui la nave o l’aeromobile sia utilizzato esclusivamente tra località situate nell’altro Stato contraente; (h) il termine “nazionali” designa: (i) le persone fisiche che hanno la nazionalità di uno Stato contraente; (ii) le persone giuridiche, le società di persone, e le associazioni costituite in conformità della legislazione in vigore in uno Stato contraente; (I) l’espressione “autorità competente” designa: (i) per quanto concerne l’Italia, il Ministero dell’Economia e delle Finanze; (ii) per quanto concerne San Marino, la Segreteria di Stato per le Finanze.

98

Italy

2. Per l’applicazione della Convenzione—da parte di uno Stato contraente in qualsiasi momento, le espressioni ivi non definite hanno il significato che ad esse è in quel momento attribuito dalla legislazione di detto Stato relativa alle imposte alle quali si applica la Convenzione, a meno che il contesto. Non richieda una diversa interpretazione. Articolo 4 Residenza 1. Ai fini della presente Convenzione l’espressione “residente di uno Stato contraente” designa ogni persona che, in virtù della legislazione di detto Stato, è ivi assoggettata ad imposta, a motivo del suo domicilio, della sua residenza, della sede della sua direzione o di ogni altro criterio di natura analoga. Tuttavia, tale espressione non comprende le persone che sono assoggettate ad imposta in detto Stato soltanto per il reddito che esse ricavano da fonti situate in detto Stato. 2. Quando, in base alle disposizioni del paragrafo 1, una persona fisica è considerata residente di entrambi gli’ Stati contraenti, la sua situazione è determinata nel seguente modo: (a) detta persona è considerata residente soltanto dello Stato nel quale ha un’abitazione permanente; quando essa dispone di un’abitazione permanente in entrambi gli Stati, è considerata residente dello Stato nel quale le sue relazioni personali ed economiche sono più strette (centro degli interessi vitali); (b) se non si può determinare lo Stato nel quale detta persona ha il centro dei suoi interessi vitali, o se la medesima non ha un’abitazione permanente in alcuno degli Stati, essa è considerata residente dello Stato in cui soggiorna abitualmente; (c) se detta persona soggiorna abitualmente in entrambi gli Stati, ovvero non soggiorna abitualmente in alcuno di essi, essa è considerata residente soltanto dello Stato del quale ha la nazionalità; (d) se detta persona ha la nazionalità di entrambi gli Stati, o se non ha la cittadinanza di alcuno di essi, le autorità competenti degli Stati risolvono la questione di comune accordo. 3. Quando, in base alle disposizioni del paragrafo 1, una persona diversa da una persona fisica è residente di entrambi gli Stati contraenti, si ritiene che essa è residente soltanto dello Stato in cui si trova la sede della sua direzione effettiva. Articolo 5 Stabile Organizzazione 1. Ai fini della presente Convenzione, l’espressione “stabile organizzazione” designa una sede fissa di affari in cui l’impresa esercita in tutto o in parte la sua attività. 2. L’espressione “stabile organizzazione” comprende in particolare: (a) una sede di direzione; (b) una succursale; (c) un ufficio;

Double Tax Agreement

99

(d) un’officina; (e) un laboratorio; (f) una miniera, un giacimento petrolifero o di gas naturale, una cava od ogni altro luogo di estrazione di risorse naturali; (g) un cantiere di costruzione o di montaggio la cui durata oltrepassa i dodici mesi; 3. Non si considera che vi sia una “stabile organizzazione” se: (a) si fa uso di una installazione ai soli fini di deposito, di esposizione, o di consegna di beni o merci appartenenti all’impresa; (b) i beni o le merci appartenenti all’impresa sono immagazzinate ai soli fini di deposito, di esposizione o di consegna; (c) i beni o le merci appartenenti all’impresa sono immagazzinate ai soli fini della trasformazione da parte di un’altra impresa; (d) una sede fissa di affari è utilizzata ai soli fini di acquistare beni o merci o di raccogliere informazioni per la impresa; (e) na sede fissa di affari è utilizzata, per l’impresa, ai soli fini di pubblicità, di fornire informazioni, di ricerche scientifiche o di altre attività che abbiano carattere preparatorio o ausiliario; 4. Una persona che agisce in uno Stato contraente per conto di un’impresa dell’altro Stato contraente—diversa da un agente che goda di uno status indipendente, di cui al paragrafo 5—è considerata stabile organizzazione nel primo Stato se dispone nello Stato stesso di poteri che esercita abitualmente e che le permettono di concludere contratti a nome dell’impresa, salvo il caso in cui l’attività di detta persona sia limitata all’acquisto di beni o merci per l’impresa. 5. Non si considera che un’impresa di uno Stato contraente ha una stabile organizzazione nell’altro Stato contraente per il solo fatto che essa vi esercita la propria attività per mezzo di un mediatore, di un commissionario generale o di ogni altro intermediario che goda di uno status indipendente, a condizione che dette persone agiscano nell’ambito della loro ordinaria attività. 6. Il fatto che una società residente di uno Stato contraente controlli o sia controllata da una società residente dell’altro Stato contraente ovvero svolga la sua attività in questo altro Stato (sia per mezzo di una stabile organizzazione oppure no) non costituisce di per sé motivo sufficiente per far considerare una qualsiasi delle dette società una stabile organizzazione dell’altra. Capitolo III Imposizione Dei Redditi Articolo 6 Redditi Immobiliari 1. I redditi che un residente di uno Stato contraente ritrae da beni immobili (compresi i redditi delle attività agricole o forestali) situati nell’altro Stato contraente sono imponibili in detto altro Stato. 2. L’espressione “beni immobili” ha il significato che ad essa è attribuito dalla legislazione dello Stato contraente in cui i beni sono situati. L’espressione comprende

100

Italy

in ogni caso gli accessori, le scorte morte o vive delle imprese agricole e forestali, i diritti ai quali si applicano le disposizioni del diritto privato riguardanti la proprietà fondiaria. Si considerano altresì “beni immobili” l’usufrutto dei beni immobili e i diritti relativi a pagamenti variabili o fissi per lo sfruttamento o la concessione dello sfruttamento di giacimenti minerari, sorgenti ed altre risorse naturali. Le navi, i battelli e gli aeromobili non sono considerati beni immobili. 3. Le disposizioni del paragrafo 1 si applicano ai redditi derivanti dalla utilizzazione diretta, dalla locazione o da ogni altra forma di utilizzazione di beni immobili. 4. Le disposizioni dei paragrafi 1 e 3 si applicano anche ai redditi derivanti dai beni immobili di un’impresa nonché ai redditi dei beni immobili utilizzati per l’esercizio di una professione indipendente. Articolo 7 Utili Delle Imprese 1. Gli utili di un’impresa di uno Stato contraente sono imponibili soltanto in detto Stato, a meno che l’impresa non svolga la sua attività nell’altro Stato contraente per mezzo di una stabile organizzazione ivi situata. Se l’impresa svolge in tal modo la sua attività, gli utili dell’impresa sono imponibili nell’altro Stato ma soltanto nella misura in cui detti utili sono attribuibili alla stabile organizzazione. 2. Fatte salve le disposizioni. del paragrafo 3, quando un’impresa di uno Stato contraente svolge la sua attività nell’altro Stato contraente per mezzo di una stabile organizzazione ivi situata, in. ciascuno Stato contraente vanno attribuiti a detta stabile organizzazione gli utili che si ritiene sarebbero stati da essa conseguiti se si fosse trattato di un’impresa distinta e separata svolgente attività identiche o analoghe in condizioni identiche o analoghe e in piena indipendenza dall’impresa di cui essa costituisce una stabile organizzazione. 3. Nella determinazione degli utili di una stabile organizzazione sono ammesse in deduzione le spese sostenute per gli scopi perseguiti dalla stessa stabile organizzazione, comprese le spese di direzione e le spese generali di amministrazione, sia nello Stato in cui è situata la stabile organizzazione, sia altrove. 4. Qualora uno degli Stati contraenti segua la prassi di determinare gli utili da attribuire ad una stabile organizzazione in base al riparto degli utili complessivi dell’impresa fra le diverse parti di essa, la disposizione del paragrafo 2 non impedisce a detto Stato contraente di determinare gli utili imponibili secondo la ripartizione in uso. Tuttavia, il metodo di riparto adottato dovrà essere tale che il risultato ottenuto sia conforme ai princìpi contenuti nel presente articolo. 5. Nessun utile può essere attribuito ad una stabile organizzazione per il solo fatto che essa ha acquistato beni o merci per l’impresa. 6. Ai fini dei paragrafi precedenti, gli utili da attribuire alla stabile organizzazione sono determinati annualmente con lo stesso metodo, a meno che non esistano validi e sufficienti motivi per procedere diversamente. 7. Quando gli utili comprendono elementi di reddito considerati separatamente in altri articoli della presente Convenzione, le disposizioni di tali articoli non vengono modificate da quelle del presente articolo.

Double Tax Agreement

101

Articolo 8 Navigazione Marittima Ed Aerea 1. Gli utili derivanti dall’esercizio, in traffico internazionale, di navi o di aeromobili sono imponibili soltanto nello Stato contraente in cui è situata la sede della direzione effettiva dell’impresa. 2. Se la sede della direzione effettiva di una impresa di navigazione marittima è situata a bordo di una nave, detta sede si considera situata nello Stato contraente in cui si trova il porto di immatricolazione della nave, oppure, in mancanza di un porto di immatricolazione, nello Stato contraente di cui è residente l’esercente la nave. 3. Le disposizioni del paragrafo 1 si applicano parimenti agli utili derivanti dalla partecipazione a un fondo comune (pool), a un esercizio in comune o ad un organismo internazionale di esercizio. Articolo 9 Imprese Associate 1. Allorché (a) un’impresa di uno Stato contraente partecipa direttamente o indirettamente, alla direzione, al controllo o al capitale di un’impresa dell’altro Stato contraente, o (b) le medesime persone partecipano direttamente o indirettamente alla direzione, al controllo o al capitale di un’impresa di uno Stato contraente e di un’impresa dell’altro Stato contraente, e, nell’uno e nell’altro caso, le due imprese, nelle loro relazioni commerciali o finanziarie, sono vincolate da condizioni accettate o imposte, diverse da quelle che sarebbero state convenute tra imprese indipendenti, gli utili che, in mancanza di tali condizioni, sarebbero stati realizzati da una delle imprese, ma che a causa di dette condizioni non lo sono stati, possono essere inclusi negli utili di questa impresa e tassati in conseguenza. 2. Allorché uno Stato contraente include tra gli utili di un’impresa di detto Stato—e di conseguenza assoggetta a tassazione—utili per i quali un’impresa dell’altro Stato contraente è stata sottoposta a tassazione in detto altro Stato, e gli utili così inclusi sono utili che sarebbero maturati a favore dell’impresa del primo Stato se le condizioni fissate tra le due imprese fossero state quelle che sarebbero state convenute tra imprese indipendenti, allora detto altro Stato farà un’apposita rettifica all’importo dell’imposta ivi applicata su tali utili. Tali rettifiche dovranno effettuarsi unicamente in conformità alla procedura amichevole di cui all’articolo 25 della presente Convenzione. Articolo 10 Dividendi 1. I dividendi pagati da una società residente di uno Stato contraente ad un residente dell’altro Stato contraente sono imponibili in detto altro Stato. 2. Tuttavia, tali dividendi possono essere tassati anche nello Stato contraente di cui la società che paga i dividendi è residente ed in conformità alla legislazione di detto Stato, ma, se l’effettivo beneficiario dei dividendi è un residente dell’altro Stato contraente, l’imposta così applicata non può eccedere:

102

Italy

(a) il 5 per cento dell’ammontare lordo dei dividendi se l’effettivo beneficiario è una società che ha detenuto almeno il 25 per cento del capitale della società che distribuisce i dividendi per un periodo di almeno 12 mesi antecedente alla data della delibera di distribuzione dei dividendi; (b) il 15 per cento dell’ammontare lordo dei dividendi, in tutti gli altri casi. Le autorità competenti degli Stati contraenti regoleranno di comune accordo le modalità di applicazione di tali limitazioni. Il presente paragrafo non riguarda l’imposizione della società per gli utili con i quali sono stati pagati i dividendi. 3. Ai fini del presente articolo il termine “dividendi” designa i redditi derivanti da azioni, da azioni o diritti di godimento, da quote minerarie, da quote di fondatore o da altre quote di partecipazione agli utili, ad eccezione dei crediti, nonché i redditi di altre quote sociali assoggettati al medesimo regime fiscale dei redditi delle azioni secondo la legislazione fiscale dello Stato di cui è residente la società distributrice. 4. Le disposizioni dei paragrafi 1 e 2 non si applicano nel caso in cui il beneficiario effettivo dei dividendi, residente di uno Stato contraente, eserciti nell’altro Stato contraente, di cui è residente la società che paga i dividendi, un’attività industriale o commerciale per mezzo di una stabile organizzazione ivi situata, oppure una professione indipendente mediante una base fissa ivi situata, e la partecipazione generatrice di dividendi si ricolleghi effettivamente ad esse. In tal caso, i dividendi sono imponibili in detto altro Stato contraente secondo la propria legislazione. 5. Qualora una società residente di uno Stato contraente ricavi utili o redditi dall’altro Stato contraente, detto altro Stato non può applicare alcuna imposta sui dividendi pagati dalla società, a meno che tali dividendi siano pagati ad un residente di detto altro Stato o che la partecipazione generatrice dei dividendi si ricolleghi effettivamente ad una stabile organizzazione o a una base fissa situate in detto altro Stato, né prelevare alcuna imposta, a titolo di imposizione degli utili non distribuiti, sugli utili non distribuiti dalla società, anche se i dividendi pagati o gli utili non distribuiti costituiscono in tutto o in parte utili o redditi realizzati in detto altro Stato. Articolo 11 Interessi 1. Gli interessi provenienti da uno stato contraente e pagati ad un residente dell’altro stato contraente sono imponibili in detto altro stato. 2. Tuttavia, tali interessi possono essere tassati anche nello Stato contraente dal quale essi provengono e in conformità alla legislazione di detto Stato, ma, se l’effettivo beneficiario degli interessi è un residente dell’altro Stato contraente, l’imposta così applicata non può eccedere il 13 per cento dell’ammontare lordo degli interessi. Le autorità competenti degli Stati contraenti regoleranno di comune accordo le modalità di applicazione di tale limitazione. 3. Nonostante le disposizioni del paragrafo 2, gli interessi provenienti da uno degli stati contraenti sono esenti da imposta in detto stato se:

Double Tax Agreement

103

(a) il debitore degli interessi è il Governo di detto Stato contraente o un suo ente locale; o (b) gli interessi sono pagati al Governo dell’altro Stato contraente o ad un suo ente locale o ad un ente od organismo (compresi gli istituti finanziari) interamente di proprietà di questo altro Stato contraente o di un suo ente locale; o (c) gli interessi sono pagati, per conto del Governo, ad altri enti od organismi (compresi gli istituti finanziari) in dipendenza di finanziamenti da essi concessi nel quadro di accordi conclusi tra i Governi degli Stati contraenti. 4. Ai fini del presente articolo il termine “interessi” designa i redditi dei titoli del debito pubblico, di buoni od obbligazioni di prestiti garantiti o non da ipoteca e portanti o meno una clausola di partecipazione agli utili, e dei crediti di qualsiasi natura, nonché ogni altro provento assimilabile ai redditi di somme date in prestito in base alla legislazione fiscale dello Stato da cui i redditi provengono. 5. Le disposizioni dei paragrafi da 1 a 3 non si applicano nel caso in cui il beneficiario effettivo degli interessi, residente di uno Stato contraente, eserciti nell’altro Stato contraente dal quale provengono gli interessi, un’attività industriale o commerciale per mezzo di una stabile organizzazione ivi situata, oppure una professione indipendente mediante una base fissa ivi situata, ed il credito generatore degli interessi si ricolleghi effettivamente ad esse. In tal caso, gli interessi sono imponibili in detto altro Stato contraente secondo la propria legislazione. 6. Gli interessi si considerano provenienti da uno Stato contraente quando il debitore è lo Stato stesso, una sua suddivisione politica o amministrativa, un suo ente locale o un residente di detto Stato. Tuttavia, quando il debitore degli interessi, sia esso residente o no di uno Stato contraente, ha in uno Stato contraente una stabile organizzazione o una base fissa, per le cui necessità viene contratto il debito sul quale sono pagati gli interessi e tali interessi sono a carico della stabile organizzazione o della base fissa, gli interessi stessi si considerano provenienti dallo Stato contraente in cui è situata la stabile organizzazione o la base fissa. 7. Se, in conseguenza di particolari relazioni esistenti tra il debitore e il beneficiario effettivo o tra ciascuno di essi e terze persone, l’ammontare degli interessi, tenuto conto del credito per il quale sono pagati, eccede quello che sarebbe stato convenuto tra il debitore e il beneficiario effettivo in assenza di simili relazioni, le disposizioni del presente articolo si applicano soltanto a quest’ultimo ammontare. In tal caso, la parte eccedente dei pagamenti è imponibile in conformità della legislazione di ciascuno Stato contraente e tenuto conto delle altre disposizioni della presente Convenzione. Articolo 12 Canoni 1. I canoni provenienti da uno Stato contraente e pagati ad un residente dell’altro Stato contraente sono imponibili in detto altro Stato. 2. Tuttavia, tali canoni sono imponibili anche nello Stato contraente dal quale essi provengono ed in conformità alla legislazione di detto Stato, ma, se l’effettivo beneficiario dei canoni è un residente dell’altro Stato contraente, l’imposta così

104

3.

4.

5.

6.

Italy

applicata non può eccedere il 10 per cento dell’ammontare lordo dei canoni. Le autorità competenti degli Stati contraenti regoleranno di comune accordo le modalità di applicazione di tale limitazione. Ai fini del presente articolo il termine “canoni” designa i compensi di qualsiasi natura corrisposti per l’uso o la concessione in uso, di un diritto d’autore su opere letterarie, artistiche o scientifiche, ivi compresi il software, le pellicole cinematografiche e le registrazioni per trasmissioni radiofoniche o televisive, di brevetti, marchi di fabbrica o di commercio, disegni o modelli, progetti, formule o processi segreti, nonché per l’uso o la concessione in uso di attrezzature industriali, commerciali o scientifiche o per informazioni concernenti esperienze di carattere industriale, commerciale o scientifico. Le disposizioni del paragrafo 1 e 2 non si applicano nel caso in cui il beneficiario effettivo dei canoni, residente di uno Stato contraente, eserciti nell’altro Stato contraente dal quale provengono i canoni, un’attività commerciale o industriale per mezzo di una stabile organizzazione ivi situata, oppure una professione indipendente mediante una base fissa ivi situata, ed il diritto o il bene generatore dei canoni si ricolleghino effettivamente ad esse. In tal caso, i canoni sono imponibili in detto altro Stato contraente secondo la propria legislazione. I canoni si considerano provenienti da uno Stato contraente quando il debitore è lo Stato stesso, una sua suddivisione politica o amministrativa, un suo ente locale o un residente di detto Stato. Tuttavia, quando il debitore dei canoni, sia esso residente o no di uno Stato contraente, ha in uno Stato contraente una stabile organizzazione o una base fissa a cui si ricollegano effettivamente i diritti o i beni generatori dei canoni, e tali canoni sono a carico della stabile organizzazione o della base fissa, i canoni stessi si considerano provenienti dallo Stato in cui è situata la stabile organizzazione o la base fissa. Se, in conseguenza di particolari relazioni esistenti tra il debitore e il beneficiario effettivo o tra ciascuno di essi e terze persone, l’ammontare dei canoni, tenuto conto dell’uso, diritto o informazione per i quali sono pagati, eccede quello che sarebbe stato convenuto tra debitore e beneficiario effettivo in assenza di simili relazioni, le disposizioni del presente articolo si applicano soltanto a quest’ultimo ammontare. In tal caso, la parte eccedente dei pagamenti è imponibile in conformità della legislazione di ciascuno Stato contraente e tenuto conto delle altre disposizioni della presente Convenzione.

Articolo 13 Utili Di Capitale 1. Gli utili che un residente di uno Stato contraente ricava dall’alienazione di beni immobili di cui all’articolo 6, sono imponibili nello Stato contraente dove detti beni sono situati. 2. Gli utili derivanti dall’alienazione di beni mobili facenti parte dell’attivo di una stabile organizzazione che un’impresa di uno Stato contraente ha nell’altro Stato contraente, ovvero di beni mobili appartenenti ad una base fissa di cui dispone un residente di uno Stato contraente nell’altro Stato contraente per l’esercizio di una professione indipendente, compresi gli utili provenienti dall’alienazione di

Double Tax Agreement

105

detta stabile organizzazione (da sola od in uno con l’intera impresa) o di detta base fissa, sono imponibili in detto altro Stato. 3. Gli utili derivanti dall’alienazione di navi o di aeromobili impiegati in traffico internazionale o di beni mobili adibiti all’esercizio di dette navi od aeromobili sono imponibili soltanto nello Stato contraente in cui è situata la sede della direzione effettiva dell’impresa. 4. Gli utili derivanti dall’alienazione di ogni altro bene diverso da quelli menzionati ai paragrafi l, 2 e 3, sono imponibili soltanto nello Stato contraente di cui l’alienante è residente. Articolo 14 Professioni Indipendenti 1. I redditi che una persona fisica residente di uno Stato contraente ritrae dall’esercizio di una libera professione oda altre attività analoghe di carattere indipendente sono imponibili in detto Stato. Tali redditi sono imponibili anche nell’altro Stato contraente secondo la propria legislazione interna. 2. L’espressione “libera professione” comprende in particolare le attività indipendenti di carattere scientifico, letterario, artistico, educativo o pedagogico, nonché le attività indipendenti dei medici, avvocati, ingegneri, architetti, dentisti e contabili. Articolo 15 Lavoro Dipendente 1. Salve le disposizioni degli articoli 16, 18, 19, 20 e 21 i salari, gli stipendi e le altre remunerazioni analoghe che un residente di uno Stato contraente riceve in corrispettivo di un’attività dipendente sono imponibili soltanto in detto Stato, a meno che tale attività non venga svolta nell’altro Stato contraente. Se l’attività è quivi svolta, le remunerazioni percepite a tal titolo sono imponibili in questo altro Stato. 2. Nonostante le disposizioni del paragrafo l, le remunerazioni che un residente di uno Stato contraente riceve in corrispettivo di un’attività dipendente svolta nell’altro Stato contraente sono imponibili soltanto nel primo Stato se: (a) il beneficiario soggiorna nell’altro Stato per un periodo o periodi che non oltrepassano in totale 183 giorni in un periodo di dodici mesi che inizi o termini nel corso dell’anno fiscale considerato, e (b) le remunerazioni sono pagate da o per conto di un datore di lavoro che non è residente dell’altro Stato, e (c) l’onere delle remunerazioni non è sostenuto da una stabile organizzazione o da una base fissa che il datore di lavoro ha nell’altro Stato. 3. Nonostante le disposizioni precedenti del presente articolo, le remunerazioni percepite in corrispettivo di un lavoro subordinato svolto a bordo di navi o di aeromobili impiegati in traffico internazionale sono imponibili soltanto nello Stato contraente nel quale è situata la sede della direzione effettiva dell’impresa.

106

Italy

Articolo 16 Compensi E Gettoni Di Presenza I compensi, i gettoni di presenza e le altre retribuzioni analoghe che un residente di uno Stato contraente riceve in qualità di membro del consiglio di amministrazione o del collegio sindacale di una società residente dell’altro Stato contraente, sono imponibili in detto altro Stato. Articolo 17 Artisti E Sportivi 1. Nonostante le disposizioni degli articoli 14 e 15, i redditi che un residente di uno Stato contraente ritrae dalle sue prestazioni personali svolte nell’altro Stato contraente in qualità di artista dello spettacolo, quale un artista di teatro, del cinema, della radio o della televisione, o in qualità di musicista, nonché di sportivo, sono imponibili in detto altro Stato. 2. Qualora i redditi relativi a prestazioni personali effettuate da un artista o sportivo siano corrisposti non all’artista o sportivo direttamente, ma ad un’altra persona, detta remunerazione è, nonostante le disposizioni degli articoli 7, 14 e 15, imponibile nello stato contraente in cui le prestazioni dell’artista o dello sportivo sono esercitate. Articolo 18 Pensioni 1. Fatte salve le disposizioni del paragrafo 2 dell’articolo 19, le pensioni e le altre remunerazioni analoghe, pagate ad un residente di uno Stato contraente in relazione ad un cessato impiego; sono imponibili soltanto in questo Stato. 2. Le disposizioni del paragrafo 1 non si applicano se il beneficiario dei redditi non è assoggettato a imposizione relativamente a tali redditi nello Stato di cui è residente e conformemente alla legislazione di detto Stato. In tal caso, detti redditi sono imponibili nello Stato dal quale provengono. 3. Nonostante le disposizioni del paragrafo 1 del presente articolo, le pensioni e altri pagamenti analoghi ricevuti nell’ambito della legislazione di sicurezza sociale di uno Stato contraente sono imponibili soltanto in detto Stato. 4. Se un residente di uno Stato contraente diviene residente dell’altro Stato contraente, le somme ricevute da detto residente all’atto della cessazione dell’impiego nel primo Stato come indennità di fine rapporto o remunerazioni forfetarie di natura analoga sono imponibili soltanto nel primo Stato contraente. Articolo 19 Funzioni Pubbliche 1. (a) Le remunerazioni, diverse dalle pensioni, pagate da uno Stato contraente da una sua suddivisione politica o amministrativa o da un suo ente locale a una persona fisica, in corrispettivo di servizi resi a detto Stato o a detta suddivisione od ente, sono imponibili soltanto in detto Stato. (b) Tuttavia, tali remunerazioni sono imponibili soltanto nell’altro Stato contraente se i servizi vengono resi in questo Stato e la persona fisica è un residente di questo Stato che: (i) ha la nazionalità di questo Stato; o

Double Tax Agreement

107

(ii) non è divenuto residente di questo Stato al solo scopo di rendervi i servizi. 2. (a) Le pensioni corrisposte da uno Stato contraente o da una sua suddivisione politica od amministrativa o da un suo ente locale, sia direttamente sia mediante prelevamento da fondi da essi costituiti, ad una persona fisica in corrispettivo di servizi resi a detto Stato o a detta suddivisione od ente, sono imponibili soltanto in questo Stato. (b) Tuttavia, tali pensioni sono imponibili soltanto nell’altro Stato contraentesi la persona fisica è un residente di questo Stato e ne ha la nazionalità. 3. Le disposizioni degli articoli 15, 16, 17 e 18 si applicano alle remunerazioni e pensioni pagate in corrispettivo di servizi resi nell’ambito di una attività industriale o commerciale esercitata da uno degli Stati contraenti o da una sua suddivisione politica o amministrativa o da un suo ente locale. Articolo 20 Professori Insegnanti Ricercatori 1. Un professore, un insegnante od un ricercatore il quale soggiorni temporaneamente, per un periodo non superiore a due anni, in uno Stato contraente allo scopo di insegnare o di effettuare ricerche presso una università, collegio, scuola od altro analogo istituto di istruzione, e che è, o era immediatamente prima di tale soggiorno, residente dell’altro Stato contraente è esente da imposta nel primo Stato contraente limitatamente alle remunerazioni derivanti dall’attività di insegnamento o di ricerca. 2. Le disposizioni del paragrafo 1 del presente articolo non si applicano ai redditi derivanti dalla ricerca se tale ricerca è intrapresa non nell’interesse pubblico ma nell’interesse privato di una o più persone specifiche. Articolo 21 Studenti Ed Apprendisti 1. Le somme provenienti dall’estero che uno studente o un apprendista, il quale è, o era, immediatamente prima di recarsi in uno Stato contraente, un residente dell’altro Stato contraente, e che soggiorna nel primo Stato contraente al solo scopo di compiervi i suoi studi o di attendere alla propria formazione di carattere tecnico, professionale, o aziendale, riceve per sopperire alle spese di mantenimento, di istruzione o di formazione professionale o a titolo di borsa di studio per attendere alla propria istruzione, non sono imponibili in questo Stato per un periodo di tempo che è ragionevolmente o usualmente necessario per completare l’istruzione o l’apprendistato intrapreso, ma in nessun caso ima persona godrà dei benefici previsti dal presente paragrafo per più di 5 anni dall’inizio di tale istruzione o apprendistato. 2. Le remunerazioni pagate a uno studente o apprendista, rispettivamente, per i servizi resi nell’altro Stato contraente sono esenti da imposta in detto altro Stato per un periodo di 2 anni a condizione che tali servizi siano connessi al suo mantenimento, istruzione o formazione professionale.

108

Italy

Articolo 22 Altri Redditi 1. Gli elementi di reddito di un residente di uno Stato contraente, qualunque ne sia la provenienza, che non sono stati trattati negli articoli precedenti della presente Convenzione sono imponibili soltanto in detto Stato. 2. Le disposizioni del paragrafo 1 non si applicano ai redditi diversi da quelli derivanti da beni immobili definiti al paragrafo 2 dell’articolo 6, nel caso in cui il beneficiario di tali redditi, residente di uno Stato contraente, eserciti nell’altro Stato contraente un’attività industriale o commerciale per mezzo di una stabile organizzazione ivi situata, oppure una professione indipendente mediante una base fissa ivi situata, ed il diritto od il bene produttivo del reddito si ricolleghi effettivamente a tale stabile organizzazione o base fissa. In tal caso gli elementi di reddito sono imponibili in detto altro. Stato contraente secondo la propria legislazione. 3. Se, in conseguenza di particolari relazioni esistenti tra le persone che hanno svolto le attività per la cui prestazione sono pagati i redditi di cui al paragrafo 1, il pagamento per tali attività eccede l’ammontare che sarebbe stato convenuto tra persone indipendenti, le disposizioni del* paragrafo 1 si applicano soltanto a quest’ultimo ammontare. In tal caso, la parte eccedente dei pagamenti è imponibile in conformità della legislazione di ciascuno Stato contraente e tenuto conto delle altre disposizioni della presente Convenzione. Capitolo IV Metodi Per Eliminare La Doppia Imposizione Articolo 23 Eliminazione Della Doppia Imposizione 1. Si conviene che la doppia imposizione sarà eliminata in conformità ai seguenti paragrafi del presente articolo. 2. Per quanto concerne l’Italia: Se un residente dell’Italia possiede elementi di reddito che sono imponibili a San Marino, l’Italia, nel calcolare le proprie imposte sul reddito specificate nell’articolo 2 della presente Convenzione, può includere nella base imponibile di tali imposte detti elementi di reddito, a meno che espresse disposizioni della presente Convenzione non stabiliscano diversamente. In tal caso, l’Italia deve detrarre dalle imposte così calcolate l’imposta sui redditi pagata a San Marino ma l’ammontare della detrazione non può eccedere la quota di imposta italiana attribuibile ai predetti elementi di reddito nella proporzione in cui gli stessi concorrono alla formazione del reddito complessivo. Tuttavia, nessuna detrazione sarà accordata ove l’elemento di reddito venga assoggettato in Italia ad imposizione mediante ritenuta a titolo di imposta su richiesta del beneficiario del reddito in base alla legislazione italiana. 3. Per quanto concerne San Marino: Se un residente di San Marino possiede elementi di reddito che sono imponibili in Italia, San Marino, nel calcolare le proprie imposte sul reddito specificate nell’articolo 2 della presente Convenzione, può includere nella base imponibile di tali imposte detti

Double Tax Agreement

109

elementi di reddito, a meno che espresse disposizioni della presente Convenzione non stabiliscano diversamente. In tal caso, San Marino deve detrarre dalle imposte così calcolate l’imposta sui redditi pagata in Italia ma l’ammontare della detrazione non può eccedere la quota di imposta sammarinese attribuibile ai predetti elementi di reddito nella proporzione in cui gli stessi concorrono alla formazione del reddito complessivo. Tuttavia, nessuna detrazione sarà accordata ove l’elemento di reddito venga assoggettato a San Marino ad imposizione mediante ritenuta a titolo di imposta su richiesta del beneficiario del reddito in base alla legislazione sammarinese. Capitolo V Disposizioni Particolari Articolo 24 Non Discriminazione 1. I nazionali di uno Stato contraente non sono assoggettati nell’altro Stato contraente ad alcuna imposizione od obbligo ad essa relativo, diversi o più onerosi di quelli cui sono o potranno essere assoggettati i nazionali di detto altro Stato che si trovino nella stessa situazione. La presente disposizione si applica altresì, nonostante le disposizioni dell’articolo 1, alle persone che non sono residenti di uno o di entrambi gli Stati contraenti. 2. L’imposizione di una stabile organizzazione che una impresa di uno Stato contraente ha nell’altro Stato contraente non può essere in questo altro Stato meno favorevole dell’imposizione a carico delle imprese di detto altro Stato che svolgono la medesima attività. La presente disposizione non può essere interpretata nel senso che faccia obbligo ad uno Stato contraente di accordare ai residenti dell’altro Stato contraente le deduzioni personali, le esenzioni e le riduzioni di imposta che esso accorda ai propri residenti in relazione alla loro situazione o ai loro carichi di famiglia. 3. Fatta salva l’applicazione delle disposizioni del paragrafo 1 dell’articolo 9, del paragrafo 7 dell’articolo 11 o del paragrafo 6 dell’articolo 12, gli interessi, i canoni ed altre spese pagati da una impresa di uno Stato contraente ad un residente dell’altro Stato contraente sono deducibili, ai fini della determinazione degli utili imponibili di detta impresa, nelle stesse condizioni in cui sarebbero deducibili se fossero stati pagati ad un residente del primo Stato. 4. Le imprese di uno Stato contraente, il cui capitale è in tutto o in parte, direttamente o indirettamente, posseduto o controllato da uno o più residenti dell’altro Stato contraente, non sono assoggettate nel primo Stato contraente ad alcuna imposizione od obbligo ad essa relativo, diversi o più onerosi di quelli cui sono o potranno essere assoggettate le altre imprese della stessa natura del primo Stato. 5. Le disposizioni del presente articolo si applicano, nonostante le disposizioni dell’articolo 2, alle imposte di ogni genere e denominazione. Articolo 25 Procedura Amichevole 1. Quando una persona ritiene che le misure adottate da uno o da entrambi gli Stati contraenti comportano o comporteranno per essa un’imposizione non conforme alle disposizioni della presente Convenzione, essa può, indipendentemente dai

110

Italy

ricorsi previsti dalla legislazione nazionale di detti Stati, sottoporre il proprio caso all’autorità competente dello Stato contraente di cui è residente o, se il suo caso ricade nel paragrafo 1 dell’articolo 24, a quella dello Stato contraente di cui possiede la nazionalità. Il caso deve essere sottoposto entro, i due anni che seguono la prima notifica della misura che comporta un’imposizione non conforme alle disposizioni della Convenzione. 2. L’autorità competente, se il ricorso le appare fondato e se essa non è in grado di giungere ad una soddisfacente soluzione, farà del suo meglio per regolare il caso per via di amichevole composizione con l’autorità competente dell’altro Stato contraente, al fine di evitare una tassazione non conforme alla Convenzione. L’accordo raggiunto sarà applicato quali che siano i termini previsti dalle legislazioni nazionali degli Stati contraenti. 3. Le autorità competenti degli Stati contraenti faranno del loro meglio per risolvere per via di amichevole composizione le difficoltà o i dubbi inerenti all’interpretazione o all’applicazione della Convenzione. Esse potranno altresì consultarsi al fine di eliminare la doppia imposizione nei casi non previsti dalla Convenzione. 4. Le autorità competenti degli Stati contraenti potranno comunicare direttamente tra loro al fine di pervenire ad un accordo come indicato nei paragrafi precedenti. Qualora venga ritenuto che degli scambi verbali di opinioni possano facilitare il raggiungimento di tale accordo, essi potranno aver luogo in seno ad una Commissione formata da rappresentanti delle autorità competenti degli Stati contraenti. 5. Nei casi previsti dai paragrafi precedenti, se le autorità competenti degli Stati contraenti non raggiungono un accordo che elimini la doppia imposizione entro due anni dalla data in cui il caso è stato sottoposto per la prima volta ad una di esse, le autorità competenti istituiscono, per ogni caso specifico, una Commissione arbitrale con l’incarico di emettere un parere sul modo di eliminare la doppia imposizione, sempreché il/i contribuente/i si impegni(no) ad ottemperare alle decisioni della stessa. L’istituzione della Commissione può aver luogo soltanto se le parti in causa rinunciano preventivamente—senza riserve o condizioni—agli atti del giudizio in corso presso il tribunale nazionale. La Commissione arbitrale è composta da tre membri così designati: ciascuna autorità competente designa, entro 3 mesi dalla scadenza del termine di cui sopra, un membro ed i due membri designano, nello stesso termine, di comune accordo, il Presidente, scegliendolo tra personalità indipendenti appartenenti agli Stati contraenti o ad uno Stato terzo membro dell’OCSE. La Commissione, nel pronunciare il suo parere, applicherà le disposizioni della presente Convenzione ed i principi generali di diritto internazionale, tenendo conto della legislazione interna degli Stati contraenti. La Commissione stabilisce essa stessa le regole del procedimento arbitrale. Il/i contribuente/i può/possono, qualora ne faccia/no richiesta, essere ascoltato/i o farsi rappresentare dinanzi alla Commissione e, se la Commissione lo richiede,

Double Tax Agreement

111

detto/i contribuente/i è/sono tenuto/i a presentarsi dinanzi alla medesima o a farvisi rappresentare. 6. La Commissione rende il suo parere entro sei mesi dalla data in cui è stato nominato il Presidente. La Commissione arbitrale delibera a maggioranza semplice dei suoi componenti. Entro sei mesi dalla pronuncia del parere da parte della Commissione arbitrale, le autorità competenti delle Parti possono ancora adottare, di comune accordo, misure volte ad eliminare la ~ causa che ha determinato l’insorgere della controversia. Le misure così adottate possono essere non conformi al parere della Commissione arbitrale. Qualora entro sei mesi dall’emissione del parere da parte della Commissione arbitrale le autorità competenti delle Parti non abbiano raggiunto un accordo per eliminare la causa della controversia, esse devono conformarsi a detto parere e dargli esecuzione. 7. Le spese procedurali della commissione sono suddivise in parti uguali tra gli stati contraenti. Articolo 26 Scambio Di Informazioni 1. Le autorità competenti degli Stati contraenti si scambieranno le informazioni necessarie per applicare le disposizioni della presente Convenzione o quelle delle leggi interne, ivi comprese quelle dirette a contrastare l’evasione e le frodi fiscali, degli Stati contraenti relative alle imposte previste dalla Convenzione, nella misura in cui la tassazione che tali leggi prevedono non è contraria alla Convenzione. Lo scambio di informazioni non viene limitato dall’articolo l. Le informazioni ricevute da uno Stato contraente saranno tenute segrete, analogamente alle informazioni ottenute in base alla legislazione interna di detto Stato e saranno comunicate soltanto alle persone od autorità {ivi compresi i tribunali e gli organi amministrativi) incaricate dell’accertamento o della riscossione delle imposte previste dalla Convenzione, delle procedure o dei procedimenti concernenti tali imposte, o delle decisioni di ricorsi presentati per tali imposte. Dette persone o le predette autorità utilizzeranno tali informazioni soltanto per questi fini. Esse potranno servirsi di queste informazioni nel corso di udienze pubbliche di tribunali ó nei giudizi. 2. Le disposizioni del paragrafo 1 non possono in nessun caso essere interpretate nel senso di imporre ad uno stato contraente l’obbligo: (a) di adottare provvedimenti amministrativi in deroga alla propria legislazione o alla propria prassi amministrativa o a quelle dell’altro Stato contraente; (b) di fornire informazioni che non potrebbero essere ottenute in base alla propria legislazione o nel quadro della propria normale prassi amministrativa o di quelle dell’altro Stato contraente; (c) di fornire informazioni che potrebbero rivelare un segreto commerciale, industriale, professionale o un processo commerciale oppure informazioni la cui comunicazione sarebbe contraria all’ordine pubblico.

112

Italy

Articolo 27 Agenti Diplomatici E Funzionari Consolari Le disposizioni della presente Convenzione non pregiudicano i privilegi fiscali di cui beneficiano gli agenti diplomatici o i funzionari consolari in virtù delle regole generali del diritto internazionale o delle disposizioni di accordi particolari. Articolo 28 Rimborsi 1. Le imposte riscosse in uno Stato contraente mediante ritenuta alla fonte sono rimborsate a richiesta dell’interessato qualora il diritto alla percezione di dette imposte sia limitato dalle disposizioni della presente Convenzione. 2. Le istanze di rimborso, da prodursi in osservanza dei termini stabiliti dalla legislazione dello Stato contraente tenuto ad effettuare il rimborso stesso, devono essere corredate da un attestato ufficiale dello Stato contraente di cui il contribuente è residente certificante che sussistono le condizioni richieste per aver diritto all’applicazione dei benefici previsti dalla presente Convenzione. 3. Le autorità competenti degli Stati contraenti stabiliranno di comune accordo, conformemente alle disposizioni dell’articolo 25 della presente Convenzione, le modalità di applicazione del presente articolo. Articolo 29 Limitazione Dei Benefici 1. Nonostante le altre disposizioni della presente Convenzione, una persona residente di uno Stato contraente non riceverà il beneficio di riduzioni o esenzioni fiscali previste dalla presente Convenzione da parte dell’altro Stato contraente, qualora lo scopo principale o uno degli scopi principali della costituzione o esistenza di tale residente o qualunque persona collegata a tale residente era di ottenere i benefici ai sensi della presente Convenzione ai quali detta persona non avrebbe altrimenti avuto diritto. 2. Le disposizioni della presente Convenzione non pregiudicano l’applicazione della normativa interna concernente la limitazione delle spese e altre deduzioni derivanti da transazioni tra imprese di uno Stato contraente e imprese situate nell’altro Stato contraente. Capitolo VI Disposizioni Finali Articolo 30 Entrata in Vigore La presente Convenzione entrerà in vigore alla data della ricezione della seconda delle due notifiche con cui le Parti contraenti si saranno comunicate ufficialmente l’avvenuto espletamento delle rispettive procedure interne di ratifica all’uopo previste e le sue disposizioni si applicheranno: (a) con riferimento alle imposte prelevate mediante ritenuta alla fonte, alle somme realizzate a partire dal 1 ° gennaio dell’anno solare successivo a quello in cui la presente Convenzione è entrata in vigore; e (b) con riferimento alle altre imposte sul reddito, alle imposte relative ai periodi di imposta a partire dal 1 ° gennaio dell’anno solare successivo a quello in cui la presente Convenzione è entrata in vigore.

Double Tax Agreement

113

Articolo 31 Denuncia La presente Convenzione rimarrà in vigore sino alla denuncia da parte di uno degli Stati contraenti. Ciascuno Stato contraente può denunciare la Convenzione per via diplomatica non prima che siano trascorsi cinque anni dalla sua entrata in vigore, notificandone la cessazione almeno sei mesi prima della fine dell’anno solare. In questo caso, la Convenzione cesserà di avere effetto: (a) con riferimento alle imposte prelevate alla fonte, sulle somme realizzate a partire 1 ° gennaio dell’anno solare successivo a quello nel quale è stata notificata la denuncia; (b) con riferimento alle altre imposte sul reddito, sulle imposte relative ai periodi di imposta a partire dal 1 ° gennaio dell’anno solare successivo a quello nel quale è stata notificata la denuncia. IN FEDE DI CHE i sottoscritti, debitamente autorizzati a farlo, hanno firmato la presente Convenzione con annesso Protocollo aggiuntivo. FATTO a Roma, il 21 marzo 2002, in duplice originale nella lingua italiana. Per il Governo della Repubblica di San Marino. Per il Governo della Repubblica italiana.

Luxembourg

Country Data

GDP (US $ Billions)

62.39

GDP growth rate (% Change)

3.5

GDP per capita (US $ units)

105,803

Inflation rate (% Change)

2.1

Unemployment rate (% labour force)

5.8

Imports of goods and services (current US$ million)

96,940

Exports of goods and services (current US$ million)

118,523

Corporate Income Tax (%)

26.0

Maximum Individual Income Tax (%)

45.8

VAT (%)

17.0

Doing business DTF index

69

Population (mln)

0.590

Income class

High

Imports

Transportation, machines, chemical products, textiles

Exports

Machines and chemical products

Currency

Euro

UTC

UTC + 01:00

Global Peace Index

–

Language

Luxembourgish, French, German

Capital

Luxembourg City

Continent

Europe

Sources World Bank, IMF, EY © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_11

115

116

Luxembourg

Double Tax Agreement Date of Signature: 27/03/2006 Convention Between the Republic of San Marino and the Grand Duchy of Luxembourg for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital. The Government of the Republic of San Marino and the Government of the Grand Duchy of Luxembourg, hereunder the “Contracting States”, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital, have agreed the following: Article 1 Persons Covered This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income and on capital 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 in particular: (a) in the case of San Marino: the general income tax which is levied: (i) on individuals; (ii) on bodies corporate and proprietorships treated as bodies corporate; even if collected through a withholding tax (hereunder referred to as “San Marino tax”); (b) in the case of Luxembourg: (i) the income tax on individuals (l’impôt sur le revenu des personnes physiques); (ii) the corporation tax (l’impôt sur le revenu des collectivités); (iii) the capital tax (l’impôt sur la fortune); and (iv) the communal trade tax (l’impôt commercial communal); (hereunder referred to as “Luxembourg tax”). 4. The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this 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 that have been made in their taxation laws.

Double Tax Agreement

117

Article 3 General Definitions 1. For the purposes of this Convention, unless the context otherwise requires: (a) the term “San Marino” means the Republic of San Marino and, when used in a geographical sense, means the territory of the Republic of San Marino; (b) the term “Luxembourg” means the Grand Duchy of Luxembourg and, when used in a geographical sense, means the territory of the Grand Duchy of Luxembourg; (c) the term “person” includes an individual, a company and any other body of persons; (d) the term “company” means anybody corporate or any entity that is treated as a body corporate for tax purposes; (e) the term “enterprise” applies to the carrying on of any business; (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 “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (h) the term “national” means: (i) any individual possessing the nationality of a Contracting State; (ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; (i) the term “competent authority” means: (i) in San Marino, the Ministry of Finance; (ii) in Luxembourg, the Minister of Finance or his authorised representative; (j) the term “business” includes the performance of professional services and of other activities of an independent character. 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. Article 4 Resident 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 his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any local authority thereof. This

118

Luxembourg

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 or capital situated therein. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) if he 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. 2. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. Article 5 Permanent Establishment 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. 2. The term “permanent establishment” includes especially: (a) (b) (c) (d) (e) (f)

a place of management; a branch; an office; a factory; a workshop; a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than 12 months. 4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

Double Tax Agreement

119

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (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; (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; (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (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, 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. 6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other 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, provided that such persons are acting in the ordinary course of their business. 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. 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 which it has under the 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, boats and aircraft shall not be regarded as immovable property.

120

Luxembourg

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in another form of immovable property. 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise. 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, 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. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of a permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. 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. 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. 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. 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. Article 8 Shipping, Inland Waterways Transport and Air Transport 1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

Double Tax Agreement

121

2. Profits from the operation of boats engaged in inland waterways transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 3. If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident. 4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 Associated Enterprises 1. Where (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 (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, 2. 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. 3. 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 consult each other. 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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

122

Luxembourg

(a) 0 percent of the gross amount of the dividends if the beneficial owner is a company which has held directly at least 10 percent of the capital of the company paying the dividends for an uninterrupted period of at least 12 months prior to the decision to distribute the dividends; (b) 15 percent of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ 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 laws of the State of 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 business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. 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 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. 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 the interest. 2. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether 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. However, the term “interest”, shall not include income as referred to in Article 10. Penalty charges for late payment shall not be regarded as interest for the purpose 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 business in the other Contracting State in which the interest arises through a permanent establishment

Double Tax Agreement

123

situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. 4. 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, 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 lastmentioned 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. Article 12 Royalties 1. Royalties 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 the royalties. 2. 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 software, cinematograph films and recordings for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 3. The provisions of paragraph 1 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, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. 4. 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, 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. Article 13 Capital Gains 1. 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. 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, including such gains from the alienation

124

Luxembourg

of such permanent establishment (alone or with the whole enterprise), may be taxed in that other State. 3. Gains from the alienation of ships or aircraft operated in international traffic, boats engaged in inland waterways transport or movable property pertaining to the operation of such ships, aircraft or boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 Income From Employment 1. Subject to the provisions of Articles 15, 17, 18 and 19, salaries, wages and other similar 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. 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: (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 calendar year concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment which the employer has in the other State. 2. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or road vehicle operated in international traffic, or aboard a boat engaged in inland waterways transport, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated. Article 15 Directors’ Fees Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or similar organ of a company which is a resident of the other Contracting State may be taxed in that other State. Article 16 Artistes and Sportsmen 1. Notwithstanding the provisions of Article 7 and 14, 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 sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

Double Tax Agreement

125

2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Article 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised. Article 17 Pensions 1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. Notwithstanding the provisions of paragraph 1, pensions and other payments made under the social security legislation of a Contracting State shall be taxable solely in that State. 3. Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration (including lump-sum payments) arising in a Contracting State and paid 4. to a resident of the other Contracting State shall be taxable only in the firstmentioned State, provided that such payments derive from contributions paid to or from provisions made under a pension scheme by the recipient or on his behalf and that these contributions, provisions or the pensions or other similar remuneration have been subjected to tax in the first-mentioned State under the ordinary rules of its tax laws. Article 18 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or 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; or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof, to an individual in respect of services rendered to that State or 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 of, and a national of, that State. 3. The provisions of Articles 14, 15, 16, and 17 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in

126

Luxembourg

connection with a business carried on by a Contracting State or a local authority thereof. Article 19 Professors, Teachers and Researchers A resident of one of the Contracting States who, at the invitation of a university, college, school, or other recognized educational institutions, situated in the other Contracting State, is temporarily present in the other State solely for the purpose of teaching, or engaging in research, or both, at the educational institution shall, for a period not exceeding two years from the date he first arrives in the other State, be exempt from tax by the other State on his remuneration for such teaching or research. If the visit exceeds two years, the other State may tax the individual under its national law for the entire period of the visit, unless in a particular case the competent authorities of the States agree otherwise. Article 20 Students and Business Apprentices Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. 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. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. Article 22 Capital 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 has in the other Contracting State may be taxed in that other State. 3. Capital represented by ships and aircraft operated in international traffic and by boats engaged in inland waterways transport, and by movable property pertaining to the operation of such ships, aircraft and boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

Double Tax Agreement

127

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 Subject to the provisions of the law of the Contracting States regarding the elimination of double taxation which shall not affect the general principle hereof, double taxation shall be eliminated as follows: (a) Where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned Contracting State shall, subject to the provisions of sub-paragraphs (b) and (c), exempt such income or capital from tax but may, in order to calculate the amount of tax on the remaining income or capital of the resident, apply the same rates of tax as if the income or capital had not been exempted. (b) Where a resident of a Contracting State derives income which, in accordance with the provisions of Articles 10 and 16, may be taxed in the other Contracting State, the first-mentioned Contracting State shall allow as a deduction from the income tax on individuals or from the corporation tax of that resident, an amount equal to the tax paid in the other Contracting State. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from the other Contracting State. (c) Notwithstanding the provisions of paragraph (b), where a company which is a resident of a Contracting State has held at least 10 percent of the capital of a company which is a resident of the other Contracting State paying dividends for an uninterrupted period of at least 12 months prior to the decision to distribute the dividends, the first-mentioned Contracting State shall exempt from tax the dividends paid by the company which is a resident of the other Contracting State to the company which is a resident of the first-mentioned Contracting State; (d) The provisions of sub-paragraph (a) shall not apply to income derived or capital owned by a resident of a Contracting State where the other Contracting State applies the provisions of the Convention to exempt such income or capital from tax or applies the provisions of paragraph 2 of Article 10 to such income. Article 24 Non-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 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 persons who are not residents of one or both of the Contracting States. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that

128

Luxembourg

other State than the taxation levied on 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 allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provisions of paragraph 1 of Article 9, paragraph 4 of Article 11, or paragraph 4 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been 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 the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 4. Enterprises 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 enterprises of the first-mentioned State are or may be subjected. 5. The provisions of this Article shall apply to taxes covered by this Convention. Article 25 Mutual Agreement Procedure 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 of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within two years from the first notification of the action resulting in taxation not in accordance with the provisions of this Convention. 2. The competent authority 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 which is not in accordance with the Convention. The mutual agreement procedure shall expire by the end of the third year following that in which the case was presented by the tax payer. If an agreement is reached, it shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. 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. 4. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or

Double Tax Agreement

129

their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs. Article 26 Exchange of Information 1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention, insofar as the taxation thereunder is not contrary to the Convention. Any 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, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes covered by this Convention. 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. 2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or the other Contracting State; (b) to supply information which is not obtainable under the laws or in the normal course of 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 (order public). Article 27 Members of Diplomatic Missions And Consular Posts 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. Article 28 Refunds 1. Taxes collected in a Contracting State through a withholding tax shall be refunded or reduced upon request of the interested party where the right to levy such taxes is limited by the provisions of this Convention. 2. Refund claims to be submitted within the time limits set forth in the laws of the Contracting State which has to make the refund, shall be accompanied by an official declaration of the Contracting State of which the taxpayer is a resident stating that such taxpayer meets the requirements to be entitled to the benefits of this Convention. Article 29 Entry Into Force This Convention shall enter into force on the date of the last notification, through diplomatic channels, by both Contracting States of the completion of their domestic

130

Luxembourg

procedures of ratification necessary for its entry into force. The provisions of the Convention shall apply: (a) with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which this Convention enters into force; and (b) with respect to the other taxes on income, and taxes on capital, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which this Convention enters into force. Article 30 Termination This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention not earlier than 5 years from its entry into force, through diplomatic channels, by giving notice of termination at least six months before the end of the calendar year. In such event, the Convention shall cease to have effect: (a) with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which the notification of termination is given; and (b) with respect to the other taxes on income, and taxes on capital, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which the notification of termination is given.

Malaysia

Country Data GDP (US $ Billions)

314.50

GDP growth rate (% Change)

5.9

GDP per capita (US $ units)

9,813

Inflation rate (% Change)

3.8

Unemployment rate (% labour force)

3.4

Imports of goods and services (current US$ million)

203,059

Exports of goods and services (current US$ million)

224,994

Corporate Income Tax (%)

24.0

Maximum Individual Income Tax (%)

28.0

VAT (%)

0.0

Doing business DTF index

78

Population (mln)

32.050

Income class

Upper-Middle

Imports

Machines, mineral products, metals, chemical products

Exports

Machines, mineral products, animal and vegetable bi-products, plastics and rubbers

Currency

Malaysian Ringgit

UTC

UTC + 08:00

Global Peace Index

1.637

Language

Malay, English (continued)

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_12

131

132

Malaysia

(continued) Capital

Kuala Lampur

Continent

Asia

Sources World Bank, IMF, EY

Double Tax Agreement Date of Signature: 19/11/2009 The Government of Malaysia and the Government of the Republic of San Marino Desiring to Conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, Have Agreed as Follows: Article 1 Persons Covered This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State, irrespective of the manner in which they are levied. 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 totals amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. 3. The existing taxes which are the subject of this Agreement are: (a) in Malaysia: (i) the income tax; and (ii) the petroleum income tax; (hereinafter referred to as “Malaysian tax”); (b) in San Marino: the general income tax which is levied: (i) on individuals; (ii) on bodies corporate and proprietorships:(hereinafter referred to as “San Marino tax”). 4. This Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement 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 that have been made in their taxation laws.

Double Tax Agreement

133

Article 3 General Definitions 1. For the purposes of this agreement, unless the context otherwise requires: (a) the term “Malaysia” means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the territorial waters, and the airspace above such areas, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia and in accordance with international law as an area over which Malaysia has sovereign rights or jurisdiction for the purposes of exploring and exploiting the natural resources, whether living or non- living; (b) the term “San Marino” means the territory of the Republic of San Marino, including any other area within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or jurisdiction; (c) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Malaysia or San Marino; (d) the term “person” includes an individual, a company and any other body of persons; (e) the term “company” means anybody corporate or any entity which is treated as a body corporate for tax purposes; (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 or citizenship of a Contracting State; (ii) any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State: (h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (i) the term “competent authority” means: (i) in the case of Malaysia, the Minister of Finance or his authorise representative; and (ii) in the case of San Marino, the Ministry of Finance. 2. As regards the application of this Agreement 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 this Agreement 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.

134

Malaysia

Article 4 Resident 1. For the purposes of this Agreement, 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 his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State, any political or administrative subdivision, a local authority or a statutory body thereof. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) if he 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. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then the competent authorities of the Contracting States shall settle the question by mutual agreement. Article 5 Permanent Establishment 1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term “permanent establishment” includes especially: (a) (b) (c) (d) (e) (f)

a place of management; a branch; an office; a factory; a workshop; and a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. A building site, a construction, installation or assembly project constitutes a permanent establishment only if it lasts more than 6 months. 4. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on supervisory activities in that other State for more than 6 months in connection with a building site or a

Double Tax Agreement

135

construction, installation or assembly project which is being undertaken in that other State. 5. Notwithstanding the preceding provisions of this article, the term “permanent establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (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; (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; (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. 6. Notwithstanding the provisions of paragraphs 1 and 2, where a person—other than an agent of an independent status to whom paragraph 7 applies—is acting in one of the States on behalf of an enterprise of the other State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for the enterprise if the person: (a) has, and habitually exercises in the first-mentioned State an authority to conclude contracts in the name of 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; or (b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders on behalf of the enterprise. 7. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other 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, provided that such persons are acting in the ordinary course of their business. 8. 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

136

Malaysia

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. 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 which it has under the 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, boat 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 use in any other form of immovable property. 4. The provisions of paragraphs 1 and 3 shall apply also to the 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, the profits of the enterprise may be taxed in the other State but only so much thereof as is attributable to that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions 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. 4. If the information available to the competent authority is inadequate to determine the profits to be attributed to the permanent establishment of an enterprise, nothing in this Article shall affect the application of any law of that State relating to the determination of the tax liability of a person by the exercise of a discretion or the making of an estimate by the competent authority, provided that the law shall be

Double Tax Agreement

137

applied, so far as the information available to the competent authority permits, in accordance with the principles of this Article. 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. 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. 7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 Shipping and Air Transport 1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable cnly in that State. 2. Paragraph 1 shall also apply to the share of the profits from the operation of ships or aircraft derived by an enterprise of a Contracting State through participation in a pool, a joint business or an international operating agency. Article 9 Associated Enterprises 1. Where (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 (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 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. 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 where that other State considers the adjustment justified. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

138

Malaysia

Article 10 Dividends 1. 2.

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. 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: (a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends; (b) 10 per cent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.

The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ 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 laws of the State of which the company making the distributions 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 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 15, as the case may be, shall apply. 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. Article 11 Interest 1. Interest 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 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

Double Tax Agreement

139

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. 3. Notwithstanding the provisions of paragraph 2, the Government of a Contracting State shall be exempt from tax in the other Contracting State in respect of interest derived by the Government from that other State. 4. For the Purposes of Paragraph 3, the Term “Government”:

5.

6.

7.

8.

(a) in the case of Malaysia means the Government of Malaysia and shall include: (i) the governments of the states; (ii) the local authorities; (iii) the statutory bodies; (iv) the Bank Negara Malaysia; and (v) the Export-Import Bank of Malaysia Berhad (EXIM Bank); (b) in the case of San Marino means the Government of the Republic of San Marino and shall include: (i) the governments of the states; (ii) the local authorities; (iii) the statutory bodies; and (iv) the Central Bank of San Marino. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether 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 charges for late payment shall not be regarded as interest for the purpose of this Article. The provisions of paragraphs 1 and 2 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 a fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 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 he 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. 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, 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

140

Malaysia

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 Agreement. Article 12 Royalties 1. 2.

3.

4.

5.

6.

Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 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. 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 software, cinematograph films, and recordings, films or tapes for radio or television 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 (know-how) concerning industrial, commercial or scientific experience. 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 Articles 7 or Article 15, as the case may be, shall apply. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying such royalties, whether he 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 obligation 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. 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, 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 Agreement.

Double Tax Agreement

141

Article 13 Capital Gains 1.

2.

3.

4.

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. 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. Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State of which the alienator is a resident. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14 Fees for Technical Services 1. 2.

3.

4.

5.

Fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but where the beneficial owner of the fees for technical services is a resident of the other Contracting State the tax so charged shall not exceed 10 percent of the gross amount of the fees for technical services. The term “fees for technical services” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the fees for technical services arise through a permanent establishment situated therein, or performs in that other State independent personnel services from a fixed base situated therein, and the fees for technical services are effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 15, as the case may be, shall apply. Fees for technical services shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the fees for technical services, whether he 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 obligation to pay the fees for technical services was incurred, and such fees for technical services are borne by such permanent establishment

142

Malaysia

or fixed base, then such fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 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 fees for technical services paid exceeds, for whatever reason, 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 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 Agreement. Article 15 Independent Personal Services 1. Subject to the provisions of Article 14, income derived by 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 unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base. 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. Article 16 Dependent Personal Services 1. Subject to the provisions of Articles 17, 19 and 20, salaries, wages and other similar 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. 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: (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 concerned; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.

Double Tax Agreement

143

Article 17 Directors’ Fees Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or board of auditors of a company which is a resident of the other Contracting State, may be taxed in that other State. Article 18 Artistes and Sportsmen 1. Notwithstanding the provisions of Articles 15 and 16 incomes 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 sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised. 3. The provisions of paragraphs 1 and 2 shall not apply to remuneration or profits derived from activities exercised in a Contracting State if the visit to that State is wholly or mainly supported by public funds of the other Contracting State, a political subdivision, a local authority or a statutory body thereof. In such a case, the remuneration or profits is taxable only in the Contracting State in which the artiste or the sportsman is a resident. Article 19 Pensions and Annuities 1. Subject to the provisions of paragraph 2 of Article 20, pension and other similar remuneration and annuities paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. The term “annuity” means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth. 3. Notwithstanding the provisions in paragraph 1 of this Article, pensions and other similar remuneration paid by a Contracting State under provisions of the social security legislation shall be taxable solely in that State. Article 20 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political or administrative subdivision or a local authority or a statutory body thereof to an individual in respect of services rendered to that State or political or administrative subdivision or local authority or statutory body thereof shall be taxable only in that State.

144

Malaysia

(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; or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a Contracting State, or a political or administrative subdivision or a local authority or a statutory body thereof to any individual in respect of services rendered to that State or political subdivision or local authority or statutory body 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 of, and a national of, that State. 3. The provisions of Articles 16, 17, 18 and 19 shall apply to salaries, wages and other similar remuneration or pensions in respect of services rendered in connection with any business carried on by a Contracting State or a political or administrative subdivision or a local authority or a statutory body thereof. Article 21 Professors, Teachers and Researchers A professor, teacher or researcher who makes a temporary visit to a Contracting State for a period not exceeding 2 years for the purpose of teaching or conducting research at a university, college, school, or other similar educational institution, and who is, or immediately before such visit was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State in respect of remuneration from such teaching or research. Article 22 Students and Trainees An individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State solely: (a) as a student at a recognised university, college, school or other similar recognised educational institution in that other State; (b) as a business or technical apprentice; or (c) as a recipient of a grant, allowance or award for the primary purpose of study, research or training from the Government of either State or from a scientific, educational, religious or charitable organisation or under a technical assistance programme entered into by the Government of either State, shall be exempt from tax in that other State on: (i) all remittances from abroad for the purposes of his maintenance, education, study, research or training; and (ii) the amount of such grant, allowance or award.

Double Tax Agreement

145

Article 23 Other Income 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State 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 15, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State. Article 24 Elimination of Double Taxation 1. Subject to the laws of Malaysia regarding the allowance as a credit against Malaysian tax of tax payable in any country other than Malaysia, the San Marino tax payable under the laws of San Marino and in accordance with this Agreement by a resident of Malaysia in respect of income derived from San Marino shall be allowed as a credit against Malaysian tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of San Marino to a company which is a resident of Malaysia and which owns not less than 10 per cent of the voting shares of the company paying the dividend, the credit shall take into account San Marino tax payable by that company in respect of its income out of which the dividend is paid. The credit shall not, however, exceed that part of the Malaysian tax, as computed before the credit is given, which is appropriate to such item of income. 2. For the purposes of paragraph 1, the term “San Marino tax payable” shall be deemed to include San Marino tax which would, under the laws of San Marino and in accordance with this Agreement, have been payable on any income derived from sources in San Marino had the income not been taxed at a reduced rate or exempted from San Marino tax in accordance with the provisions of this Agreement and the special incentives under the San Marino laws for the promotion of economic development of San Marino which were in force on the date of signature of this Agreement or any other provisions which may subsequently be introduced in San Marino in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States to be of a substantially similar character. 3. Subject to the laws of San Marino regarding the allowance as a credit against San Marino tax of tax payable in any country other than San Marino, the Malaysian tax payable under the laws of Malaysia and in accordance with this Agreement

146

Malaysia

by a resident of San Marino in respect of income derived from Malaysia shall be allowed as a credit against San Marino tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of Malaysia to a company which is a resident of San Marino and which owns not less than 10 percent of the voting shares of the company paying the dividend, the credit shall take into account Malaysian tax payable by that company in respect of its income out of which the dividend is paid. The credit shall not, however, exceed that part of the San Marino tax, as computed before the credit is given, which is appropriate to such item of income. 4. For the purpose of paragraph 3, the term “Malaysian tax payable” shall be deemed to include Malaysian tax which would, under the laws of Malaysia and in accordance with this Agreement, have been payable on any income derived from sources in Malaysia had the income not been taxed at a reduced rate or exempted from Malaysian tax in accordance with the provisions of this Agreement and the special incentives under the Malaysian laws for the promotion of economic development of Malaysia which were in force on the date of signature of this Agreement or any other provisions which may subsequently be introduced in Malaysia in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States to be of a substantially similar character. Article 25 Non-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 nationals of that other State in the same circumstances in particular with respect to residence, are or may be subjected. 2. The taxation on a permanent establishment which an enterprise 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 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 allowances, reliefs and reductions for tax purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Enterprises 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 enterprises of the first- mentioned State are or may be subjected. 4. In this article, the term “taxation” means taxes to which this Agreement applies. Article 26 Mutual Agreement Procedure 1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in

Double Tax Agreement

147

accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a 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 this Agreement. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate 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 which is not in accordance with this Agreement. 3. 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 this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement. 4. The competent authorities of the Contracting States may communicate with each other for the purpose of reaching an agreement according of the preceding paragraphs. Article 27 Exchange of Information 1. The competent authorities of the Contracting State shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivision or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2. 2. Any information received under paragraph 1 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, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. 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. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to Impose on a Contracting State the obligation: (a) to 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 course of the administration of that or of the other Contracting State;

148

Malaysia

(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 (order public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. Article 28 Members of Diplomatic Missions and Consular Posts Nothing in this Agreement 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. Article 29 Entry into Force The Contracting State shall notify each other, by exchange of notes through the diplomatic channel the completion of the procedures required by its domestic law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of the notification and shall thereupon have effect. 1. (a) in Malaysia: (i) in respect of Malaysian tax, other than petroleum income tax, to tax chargeable for any year of assessment beginning on or after the first day of January in the calendar year following the year in which this Agreement enters into force; and (ii) in respect of petroleum income tax, to tax chargeable for any year of assessment beginning on or after the first day of January of the second calendar year following the year in which this Agreement enters into force. 2. (b) in San Marino: (i) with respect of taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which this Agreement enters into force; and

Double Tax Agreement

149

(ii) with respect to the other taxes on income, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which this Agreement enters into force. Article 30 Termination This Agreement shall remain in effect indefinitely, but either Contracting State may terminate this Agreement, through diplomatic channel, by giving to the other Contracting State written notice of termination on or before June 30th in any calendar year after the period of five years from the date on which this Agreement enters into force. In such an event this Agreement shall cease to have effect: (a) in Malaysia: (i) in respect of Malaysian tax, other than petroleum income tax, to tax chargeable for any year of assessment beginning on or after the first day of January in the calendar year following the year in which the notice is given; and (ii) in respect of petroleum income tax, to tax chargeable for any year of assessment beginning on or after the first day of January of the second calendar year following the year in which the notice is given. (b) in San Marino: (i) with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which the notification of termination is given; and (ii) with respect to the other taxes on income, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which the notification of termination is given. IN WITNESS whereof the undersigned, duly authorised thereto, by their respective Governments, have signed this Agreement.

Seychelles

Country Data GDP (US $ Billions)

1.48

GDP growth rate (% Change)

4.2

GDP per capita (US $ units)

15,686

Inflation rate (% Change)

2.9

Unemployment rate (% labour force)

3.0

Imports of goods and services (current US$ million)

1,706.77

Exports of goods and services (current US$ million)

1,562.92

Corporate Income Tax (%)

33.0

Maximum Individual Income Tax (%)

15.0

VAT (%)

15.0

Doing business DTF index

61

Population (mln)

0.094

Income class

High

Imports

Transportation, animal products, mineral products, machines

Exports

Foodstuffs, animal products, mineral products, transportation

Currency

Seychellois Rupee

UTC

UTC + 04:00

Global Peace Index

–

Language

English, French, Seychellois Creole (continued)

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_13

151

152

Seychelles

(continued) Capital

Victoria

Continent

Africa

Sources World Bank, IMF, EY

Double Tax Agreement Date of Signature: 28/09/2012 Agreement Between the Republic of San Marino and the Republic of Seychelles for the Avoidance of Double Taxation with Respect to Taxes on Income. The Government of the Republic of San Marino and the Government of the Republic of Seychelles, hereunder the “Contracting States”, wishing to conclude an Agreement for the avoidance of double taxation with respect to taxes on income and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following: Article 1 Persons Covered This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State irrespective of the manner in which they are levied. 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. 3. The existing taxes to which the Agreement shall apply are in particular: (a) in the case of San Marino: the general income tax which is levied: (i) on individuals; (ii) on bodies corporate and proprietorships; even if collected through a withholding tax (hereunder referred to as “San Marino tax”); (b) in the case of Seychelles: (i) the business tax; (ii) income and non-monetary benefits tax act; and (iii) the petroleum income tax; (hereunder referred to as “Seychelles tax”). 4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement 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 that have been made in their

Double Tax Agreement

153

taxation laws and if it seems desirable to amend any Article of the Agreement without affecting the general principles thereof, the necessary amendments may be made by mutual consent by means of exchange of diplomatic notes. Such amendments shall make integral part of this Agreement and shall enter into force subject to the provisions of the Article 27 of this Agreement. Article 3 General Definitions 1. For the purposes of this agreement, unless the context otherwise requires: (a) the term “San Marino” means the territory of the Republic of San Marino, including any other area within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or jurisdiction; (b) the term “Seychelles” means the territory of the Republic of Seychelles including its exclusive economic zone and continental shelf where Seychelles exercises sovereign rights and jurisdiction in conformity with the provisions of the United Nations Agreement on the Law of the Sea; (c) the terms “a Contracting State” and “the other Contracting State” mean San Marino or Seychelles, as the context requires; (d) the term “person” includes an individual, a company and any other body of persons that is treated as an entity for tax purposes; (e) the term “company” means anybody corporate or any entity that is treated as a body corporate for tax purposes; (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 “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (h) the term “national” means: (i) any individual possessing the nationality or citizenship of a Contracting State; and (ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; (i) the term “competent authority” means: (i) in San Marino, the Ministry of Finance or its authorised representative, and, for the purposes of Article 25 “Exchange of information”, the Central Liaison Office of the Republic of San Marino; (ii) in Seychelles, the Minister of Finance or an authorised representative of the Minister of Finance. 2. As regards the application of the Agreement 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 Agreement applies, any meaning under the applicable tax

154

Seychelles

laws of that State prevailing over a meaning given to the term under other laws of that State. Article 4 Resident 1. For the purposes of this Agreement, 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 his domicile, residence, place of management or any other criterion of a similar nature. 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 or capital therein. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both contracting states, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either States, he shall be deemed to be a resident only of the State in which he has a habitual abode; (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) if he 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. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. Article 5 Permanent Establishment 1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term “permanent establishment” includes especially: (a) (b) (c) (d) (e) (f)

a place of management; a branch; an office; a factory; a workshop; a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) a building site or construction or assembly or installation project or supervisory activity connected therewith where such site, project or activity continues for a period of more than 183 days; and.

Double Tax Agreement

155

(h) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue for the same or a connected project within the Contracting 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. 3. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (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; (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; (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (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. 4. Notwithstanding the provisions of paragraphs 1 and 2, where a person—other than an agent of an independent status to whom paragraph 5 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 3 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. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other 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, provided that such persons are acting in the ordinary course of their business. 6. 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.

156

Seychelles

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 Contracting State. 2. The term “immovable property” shall have the meaning which it has under the 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 private 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, boats 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 use in another form of immovable property. 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise. 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, 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. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of a permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by the

Double Tax Agreement

4.

5.

6.

7.

157

way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 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. 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. 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. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8 Shipping and Air Transport 1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2. For the purpose of this article, profits from the operation in international traffic of ships or aircraft shall include in particular: (a) profitsderivedfromtherentalorleasebytheenterpriseonabareboatcharterbasisof ships or aircraft used in international traffic where such rental or lease is ancillary to the transportation of passengers or cargo; (b) profits derived from the use, maintenance, rental or lease of containers by the enterprise where such use, maintenance, rental or lease is ancillary to the transportation of cargo. 3. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident. 4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

158

Seychelles

Article 9 Associated Enterprises 1. Where (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 (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 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. 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 Agreement and the competent authorities of the Contracting States shall consult each other. 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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed: (a) 5% of the gross amount of the dividends if the beneficial owner is a company which has held directly at least 10 percent of the capital of the company paying the dividends for an uninterrupted period of at least 12 months prior to the decision to distribute the dividends; (b) 0% of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from

Double Tax Agreement

159

other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of 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 business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. 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 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. Article 11 Interest 1. Interest 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 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 interest shall: (a) be exempted from tax if it is interest on debt-claims or loans of any nature— not represented by bearer instruments—paid to banking and financial institutions; (b) be exempted from tax if it is interest on deposits made with a banking or financial institution; (c) be exempted from tax if it is interest paid to the other Contracting State; (d) not be charged a tax exceeding 5% in all other cases. 3. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether 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 charges for late payment shall not be regarded as interest for the purpose of this Article. 4. The provisions of paragraphs 1 to 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 and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

160

Seychelles

5. 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 he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment, in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 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 interest, 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 lastmentioned 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 Agreement. Article 12 Royalties 1. Royalties arising in a Contracting State and beneficially owned by the resident of the other Contracting State shall be taxable only in that other State. 2. The term “royalties” as used in this Article means payments of any kind received as a consideration for: (a) the use of, or right to use any patent, invention, design or model, secret formula or process, trademark, or other like property or right; (b) the use of, or right to use any copyright of a literary, artistic, or scientific work (including computer software, cinematograph films or films or video tapes or discs for use in connection with radio or television broadcasting); (c) the receipt of, or right to receive, any visual images or sounds, or both, transmitted by satellite, cable, optic fibre, or similar technology in connection with television, radio, or internet broadcasting; (d) the supply of any technical, industrial, commercial, or scientific knowledge, experience, or; (e) the use of or right to use any industrial, commercial, or scientific equipment; or (f) the supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of, any property or right referred to in paragraphs (a) through (e). 3. The provisions of paragraph 1 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, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. 4. 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,

Double Tax Agreement

161

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 Agreement. Article 13 Capital Gains 1. 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. 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, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State. 3. Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 Income from Employment 1. Subject to the provisions of Articles 15, 17, 18 and 19, salaries, wages and other similar 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. 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: (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 concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may only be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

162

Seychelles

Article 15 Directors’ Fees Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or board of auditors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 16 Entertainers and Sportspersons 1. Notwithstanding the provisions of Articles 7 and 14, 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 his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2 of this Article, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State or takes place under a cultural agreement or arrangement between the Governments of the Contracting States. Article 17 Pensions 1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply if the recipient is not liable to tax in respect of such income in the State of which he is a resident and according to the laws of that State. In such case such income shall be taxable in the State in which it arises. 3. Notwithstanding the provisions of paragraph 1, pensions and other similar payments made under the social security system of a Contracting State or under a public scheme organized by that State in order to supplement the benefits of its social security legislation shall be taxable only in that State. Article 18 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State to an individual in respect of services rendered to that State 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:

Double Tax Agreement

163

(i) is a national of that State; or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a Contracting State to an individual in respect of services rendered to that State 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 of, and a national of, that State. 3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State. Article 19 Professors, Teachers and Researchers 1. A professor, teacher or researcher who makes a temporary visit to a Contracting State for a period not exceeding 2 years for the purpose of teaching or conducting research at a university, college, school, or other similar educational institution, and who is, or immediately before such visit was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State in respect of remuneration from such teaching or research. 2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific person or persons. Article 20 Students and Business Apprentices Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first- mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. 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 Agreement shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

164

Seychelles

Article 22 Elimination of Double Taxation 1. (a) Where a resident of a Contracting State derives income which, in accordance with the provisions of this Agreement, may be taxed in the other Contracting State, the first- mentioned State shall allow, as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in that other State. Such deduction in either case shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in that other State. (b) Where, in accordance with any provision of this Agreement, 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 the remaining income of such resident, take into account the exempted income. 2. The tax payable in a Contracting State mentioned in paragraph 1 shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of that Contracting State and which are designed to promote economic development. Article 23 Non-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 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 persons who are not residents of one or both of the Contracting States. 2. The taxation on a permanent establishment which an enterprise 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 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 allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provisions of paragraph 1 of Article 9, paragraph 6 of Article 11, or paragraph 4 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 4. Enterprises 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

Double Tax Agreement

165

than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 5. The provisions of this article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. Article 24 Mutual Agreement Procedure 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 of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within two years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement. 2. The competent authority 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 which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. 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 Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4. 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. Article 25 Exchange of Information 1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes covered by this Agreement insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2. 2. Any information received under paragraph 1 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, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. 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. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a contracting state the obligation:

166

Seychelles

(a) to 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 course of the 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 (order public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. 6. The competent authorities of the Contracting states shall agree upon the mode of application of this Article. Article 26 Members of Diplomatic Missions and Consular Posts Nothing in this Agreement 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. Article 27 Entry into Force This Agreement shall enter into force on the date of the last notification by both Contracting States of the completion of their domestic procedures of ratification necessary for its entry into force. The provisions of the Agreement shall have effect: (a) with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which this Agreement enters into force; and. (b) with respect to the other taxes on income, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which this Agreement enters into force. Article 28 Termination This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement not earlier than 5 years from its entry into force, through diplomatic channels, by giving notice of termination at least six months before the end of the calendar year. In such event, the Agreement shall cease to have effect:

Double Tax Agreement

167

(a) with respect to taxes withheld, to the amounts collected as from 1 January of the calendar year next following that in which the notification of termination is given; and. (b) with respect to the other taxes on income, to the taxes referred to taxable periods as from 1 January of the calendar year next following that in which the notification of termination is given.

Singapore

Country Data GDP (US $ Billions)

323.90

GDP growth rate (% Change)

3.6

GDP per capita (US $ units)

57,713

Inflation rate (% Change)

0.6

Unemployment rate (% labour force)

2.2

Imports of goods and services (current US$ million)

482,881

Exports of goods and services (current US$ million)

561,467

Corporate Income Tax (%)

17.0

Maximum Individual Income Tax (%)

22.0

VAT (%)

7.0

Doing business DTF index

85

Population (mln)

5.612

Income class

High

Imports

Machines, mineral products, transportation, chemical products

Exports

Machines, chemical products, mineral products, instruments

Currency

Singapore Dollar

UTC

UTC + 08:00

Global Peace Index

1.534

Language

English, Malay, Mandarin (continued)

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_14

169

170

Singapore

(continued) Capital

Singapore

Continent

Asia

Sources: World Bank, IMF, EY.

Double Tax Agreement Date of Signature: 11/12/2013 Agreement Between the Government of the Republic of Singapore and the Government of the Republic of San Marino for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The Government of the Republic of Singapore and the Government of the Republic of San Marino, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: Article 1 Persons Covered This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 Taxes Covered 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied. 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. 3. The existing taxes to which the Agreement shall apply are in particular: (a) in Singapore: - the income taxes (hereinafter referred to as “Singapore tax”); (b) in San Marino: the general income tax which is levied: (i) on individuals; (ii) on bodies corporate and proprietorships; even if collected through a withholding tax (hereinafter referred to as “San Marino tax”).

Double Tax Agreement

171

4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of 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 significant changes that have been made in their taxation laws. Article 3 General Definitions 1. For the purposes of this Agreement, unless the context otherwise requires: (a) the term “Singapore” means the Republic of Singapore and, when used in a geographical sense, includes its land territory, internal waters and territorial sea, as well as any maritime area situated beyond the territorial sea which has been or might in the future be designated under its national law, in accordance with international law, as an area within which Singapore may exercise sovereign rights or jurisdiction with regards to the sea, the sea-bed, the subsoil and the natural resources; (b) the term “San Marino” means the territory of the Republic of San Marino, including any other area within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or jurisdiction; (c) the term “person” includes an individual, a company and any other body of persons; (d) the term “company” means anybody corporate or any entity that is treated as a body corporate for tax purposes; (e) 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; (f) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (g) the term “competent authority” means: (i) in Singapore, the Minister for Finance or his authorised representative; (ii) in San Marino, the Minister of Finance or his authorised representative and, for the purposes of Article 25 “Exchange of information”, the Central Liaison Office of the Republic of San Marino; (h) the term “national”, in relation to a Contracting State, means: (i) any individual possessing the nationality or citizenship of that Contracting State; and (ii) (any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State. 2. As regards the application of the Agreement 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 Agreement applies, any meaning under the applicable tax

172

Singapore

laws of that State prevailing over a meaning given to the term under other laws of that State. Article 4 Resident 1. For the purposes of this Agreement, 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 his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision, local authority or statutory body thereof. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both contracting states, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) in any other case, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. Article 5 Permanent Establishment 1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term “permanent establishment” includes especially: (a) (b) (c) (d) (e) (f)

a place of management; a branch; an office; a factory; a workshop; and a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. The term “permanent establishment” also encompasses: (a)

a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities lasts more than 12 months;

Double Tax Agreement

173

(b) the furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within the other Contracting State for a period or periods aggregating more than 365 days in any 15-month period. 4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include: (a) (b) (c) (d)

(e)

(f)

the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; 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; the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (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, 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. 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, provided that such persons are acting in the ordinary course of their business. 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.

174

Singapore

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 which it has under the 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. 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. 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. 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, 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. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions all expenses, including executive and general administrative expenses, which would be deductible if the permanent establishment were an independent enterprise, insofar as they are reasonably allocable to the permanent establishment, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. 4. 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. 5. 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.

Double Tax Agreement

175

6. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 Shipping and Air Transport 1. 1Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3. Interest on funds connected with the operations of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest. 4. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall include: (a) profits from the rental on a bareboat basis of ships or aircraft; and (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 or merchandise; 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. Article 9 Associated Enterprises 1. Where (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 (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 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. 2. Where a Contracting State includes, in accordance with the provisions of paragraph 1, 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 where the competent authorities of the Contracting States agree, upon consultation, that all or part of 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

176

Singapore

appropriate adjustment to the amount of the tax charged therein on those agreed profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement. 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 shall be taxable only in that other State. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 2. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ 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 laws of the State of which the company making the distribution is a resident. 3. The provisions of paragraph 1 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. 4. 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. Article 11 Interest 1. Interest 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 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 12 per cent of the gross amount of the interest. 3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State shall be exempt from tax in the first-mentioned State. 4. For the Purpose of Paragraph 3, the Term “Government”:

Double Tax Agreement

(a)

5.

6.

7.

8.

177

in the case of Singapore, means the Government of Singapore and shall include: (i) the Monetary Authority of Singapore; (ii) the Government of Singapore Investment Corporation Pte Ltd; (iii) a statutory body; and (iv) any institution wholly or mainly owned by the Government of Singapore as may be agreed from time to time between the competent authorities of the Contracting States. (b) in the case of San Marino, means the Government of the Republic of San Marino and shall include: (i) the Central Bank of San Marino; (ii) a statutory body; (iii) any institution wholly or mainly owned by the Government of San Marino as may be agreed from time to time between the competent authorities of the Contracting States. The provisions of paragraphs 1 and 2 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 kind, whether or not secured by mortgage and whether 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 charges for late payment shall not be regarded as interest for the purpose of this Article. The term “interest” as used in this Article means income from debt-claims of every permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 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 he 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. 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, 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 lastmentioned 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 Agreement.

178

Singapore

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 the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 8 per cent of the gross amount of the royalties. 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 cinematograph films, or films or tapes used for radio or television broadcasting, any computer software, patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 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. 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 he 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. 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, 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 Agreement. Article 13 Capital Gains 1. 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. 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

Double Tax Agreement

179

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 fixed base, may be taxed in that other State. 3. Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State. 4. Gains from the alienation of any property other than that referred to in the preceding paragraphs of this Article shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 Independent Personal Services 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: (a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the 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 is for a period or periods exceeding in the aggregate 365 days in any 15-month period; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 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. Article 15 Income from Employment 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar 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. 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: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

180

Singapore

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State. However, if the remuneration is derived by a resident of the other Contracting State, it may also be taxed in that other State. Article 16 Directors’ Fees Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 Artistes and Sportsmen 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 sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2. Where income in respect of or in connection with personal activities exercised by an entertainer or a sportsman accrues not to the entertainer or sportsman 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 activities of the entertainer or sportsman are exercised. 3. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities exercised in a Contracting State by an artiste or a sportsman if the visit to that State is wholly or mainly supported by public funds of one or both of the Contracting States or political subdivisions or local authorities or statutory bodies thereof. In such case, the income shall be taxable only in the Contracting State in which the artiste or the sportsman is a resident. Article 18 Pensions Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. Article 19 Government Service 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision, a local authority or a statutory body thereof to an individual in respect of services rendered to that State or subdivision, authority or body 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; or

Double Tax Agreement

181

(ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision, a local authority or a statutory body thereof to an individual in respect of services rendered to that State or subdivision, authority or body 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 of, and a national of, that State. 3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision, a local authority or a statutory body thereof. Article 20 Students and Business Apprentices Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. 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 agreement shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs 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 may be, shall apply. 3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State. Article 22 Elimination of Double Taxation 1. It is Agreed that Double Taxation Shall Be Avoided in Accordance with the Following Paragraphs of This Article. 2. In Singapore, double taxation shall be avoided as follows: Where a resident of Singapore derives income from San Marino which, in accordance with the provisions of this Agreement, may be taxed in San Marino, Singapore shall, subject to its laws regarding the allowance as a credit against Singapore

182

Singapore

tax of tax payable in any country other than Singapore, allow the San Marino tax paid, whether directly or by deduction, as a credit against the Singapore tax payable on the income of that resident. Where such income is a dividend paid by a company which is a resident of San Marino to a resident of Singapore which is a company owning directly or indirectly not less than 10 per cent of the share capital of the first-mentioned company, the credit shall take into account the San Marino tax paid by that company on the portion of its profits out of which the dividend is paid. 3. In San Marino, double taxation shall be avoided as follows: Where a resident of San Marino owns items of income which are taxable in Singapore, San Marino, in determining its taxes on income specified in Article 2 of this Agreement, may include in the basis upon which such taxes are imposed the said items of income, unless specific provisions of this Agreement otherwise provide. In such case, San Marino shall deduct from the taxes so calculated the tax on income paid in Singapore, but in an amount not exceeding that proportion of the aforesaid San Marino tax which such items of income bear to the entire income. However, no deduction will be granted if the item of income is subjected in San Marino to a final withholding tax and/or to a substitute tax by request of the recipient of the said income in accordance with the San Marino law. Article 23 Non-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 nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. 2. The taxation on a permanent establishment which an enterprise 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 of that other State carrying on the same activities. 3. Nothing in this Article shall be construed as obliging a Contracting State to grant to: (a) residents of the other Contracting State any personal allowances, reliefs and reductions for tax purposes which it grants to its own residents; or (b) nationals of the other Contracting State those personal allowances, reliefs and reductions for tax purposes which it grants to its own nationals who are not residents of that State or to such other persons as may be specified in the taxation laws of that State. 4. Enterprises 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

Double Tax Agreement

183

than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 5. Where a Contracting State grants tax incentives to its nationals designed to promote economic or social development in accordance with its national policy and criteria, it shall not be construed as discrimination under this Article. 6. The provisions of this Article shall apply to the taxes which are the subject of this Agreement. Article 24 Mutual Agreement Procedure 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 of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within 3 years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement. 2. The competent authority 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 which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. 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 Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4. 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. Article 25 Exchange of Information 1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement The exchange of information is not restricted by Articles 1 and 2. 2. Any information received under paragraph 1 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, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such

184

Singapore

persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation: (a) to 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 course of the 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 (order public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. Article 26 Members of Diplomatic Missions and Consular Posts Nothing in this Agreement 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. Article 27 Entry into Force 1. Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. 2. The Agreement shall enter into force on the date of the later of these notifications and its provisions shall have effect: (a) in Singapore: (i) in respect of taxes withheld at source, on amounts liable to be paid, deemed paid or paid (whichever is the earliest) on or after 1 January of the calendar year next following the year in which the Agreement enters into force; (ii) in respect of tax chargeable (other than taxes withheld at source) for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the Agreement enters into force; and

Double Tax Agreement

185

(iii) in respect of Article 25 (Exchange of Information), for requests made on or after the date of entry into force concerning information on taxes relating to taxable periods beginning on or after 1 January of the calendar year next following the year in which the Agreement enters into force; or where there is no taxable period, for all charges to tax arising on or after 1 January of the calendar year next following the year in which the Agreement enters into force. (b) in San Marino: (i) in respect of taxes withheld at source, on amounts paid or payable on or after 1 January of the calendar year next following that in which the Agreement enters into force; (ii) in respect of tax chargeable (other than taxes withheld at source) for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the Agreement enters into force; and (iii) in respect of Article 25 (Exchange of Information), for requests made on or after the date of entry into force concerning information on taxes relating to taxable periods beginning on or after 1 January of the calendar year next following the year in which the Agreement enters into force; or where there is no taxable period, for all charges to tax arising on or after 1 January of the calendar year next following the year in which the Agreement enters into force. Article 28 Termination This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the expiration of a period of five years from the date of its entry into force. In such event, the Agreement shall cease to have effect: (a) in Singapore: (i)

in respect of taxes withheld at source, on amounts liable to be paid, deemed paid or paid (whichever is the earliest) after the end of that calendar year in which the notice is given; (ii) in respect of tax chargeable (other than taxes withheld at source) for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the notice is given; and (iii) in all other cases, including requests made under Article 25 (Exchange of Information) after the end of that calendar year in which the notice is given. (b) in San Marino: (i)

in respect of taxes withheld at source, on amounts paid or payable by the end of the calendar year in which the notice is given;

186

Singapore

(ii) in respect of tax chargeable (other than taxes withheld at source) for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the notice is given; and (iii) in all other cases, including requests made under Article 25 (Exchange of Information), after the end of that calendar year in which the notice is given. IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Agreement. DONE in duplicate at Brussels on this 11th day of December 2013 in the English language.

Vietnam

Country Data GDP (US $ Billions)

220.41

GDP growth rate (% Change)

6.8

GDP per capita (US $ units)

2,354

Inflation rate (% Change)

3.5

Unemployment rate (% labour force)

2.2

Imports of goods and services (current US$ million)

219,621

Exports of goods and services (current US$ million)

227,245

Corporate Income Tax (%)

20.0

Maximum Individual Income Tax (%)

35.0

VAT (%)

10.0

Doing business DTF index

68

Population (mln)

93.643

Income class

Lower-Middle

Imports

Machines, textiles, metals, chemical products

Exports

Machines, textiles, footwear and headwear, vegetable products

Currency

Vietnamese Dong

UTC

UTC + 07:00

Global Peace Index

1.919

Language

Vietnamese

Capital

Hanoi

Continent

Asia

Sources World Bank, IMF, EY © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_15

187

188

Vietnam

Double Tax Agreement The Government of the Republic of San Marino and Government of the Socialist Republic of Vietnam, Date of Signature: 14/02/2013 Agreement Between the Government of the Republic of San Marino and the Government of the Socialist Republic of Vietnam for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital. Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following. Article 1: Persons Covered This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2: Taxes Covered 1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State, a political subdivision or of its local authorities, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income and on capital 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 Agreement shall apply are in particular: (a) in Vietnam: (i) the personal income tax; (ii) the business income tax; and (iii) the capital tax (if any); (hereinafter referred to as “Vietnamese tax”); and (b) in San Marino: the general income tax which is levied: (i) on individuals; and (ii) on bodies corporate and proprietorships;

Double Tax Agreement

189

even if collected through a withholding tax (hereinafter referred to as “San Marino tax”). 4. The Agreement shall also apply to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement 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 that have been made in their taxation laws. Article 3: General Definitions 1. For the purposes of this Agreement, unless the context otherwise requires: (a) the term “Vietnam” means the Socialist Republic of Vietnam; when used in a geographical sense, it means its land territory, islands, internal waters, territorial sea and airspace above them, the maritime areas beyond territorial sea including seabed and subsoil thereof over which the Socialist Republic of Vietnam exercises sovereignty, sovereign rights and jurisdiction in accordance with national legislation and international law; (b) the term “San Marino” means the territory of the Republic of San Marino, including any other area within which the Republic of San Marino, in accordance with international law, exercises sovereign rights or jurisdiction; (c) the terms “a Contracting State” and “the other Contracting State” mean Vietnam or San Marino as the context requires; (d) the term “person” includes an individual, a company and any other body of persons; (e) the term “company” means anybody corporate or any entity that is treated as a body corporate for tax purposes; (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”, in relation to a Contracting State, means: . (i) any individual possessing the nationality of a Contracting State; and . (ii) any legal person, partnership and association deriving their status as such from the laws in force in a Contracting State; (h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise, that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; and (i) the term “competent authority” means: . (i) in the case of Vietnam, the Minister of Finance or his/her authorized representative;

190

Vietnam

. (ii) in the case of San Marino, the Minister of Finance or his/her authorized representative. 2. As regards the application of the Agreement 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 Agreement 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. Article 4: Resident 1. For the purposes of this Agreement, 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 his domicile, residence, place of registration, place of management, or any other criterion of a similar nature. 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 or capital situated therein. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode; (c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; (d) if he 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. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. Article 5: Permanent Establishment 1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term “permanent establishment” includes especially: (a) a place of management; (b) a branch;

Double Tax Agreement

(c) (d) (e) (f) (g)

191

an office; a factory; a workshop; a warehouse; and a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

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 such site, project or activities last more than six months; (b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than six months within any twelve- month period; and (c) a person conducting in a Contracting State activities (including offshore activities) which relate to the exploration for and exploitation of natural resources located in that Contracting State shall be considered as carrying on business through a permanent establishment in that Contracting State. 4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include: (a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of collecting information for the enterprise; (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; and (f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a)–(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, where a person—other than an agent of an independent status to whom paragraph 7 applies—is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the firstmentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

192

Vietnam

(a) has and habitually exercises in that State an authority to conclude contracts in the name of 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; or (b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies. 7. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph. 8. 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 Contracting State (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 Contracting State. 2. The term “immovable property” shall have the meaning which it has under the 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, boats 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 use in any other form of immovable property.

Double Tax Agreement

193

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. 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, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to: (a) that permanent establishment; (b) sales in that other Contracting State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in that other Contracting State of the same or similar kind as those effected through that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business 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. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 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 such Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted

194

Vietnam

shall, however, be such that the result shall be in accordance with the principles contained in this Article. 5. 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. 6. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8: Shipping and Air Transport 1. Profits derived from the operation of ships, aircraft in international traffic shall be taxable in Contracting State in which the place of effective management of the enterprise is situated. 2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident. 3. Notwithstanding the provisions of paragraph 1, profits from sources within a Contracting State derived by an enterprise of the other Contracting State from the operation of ships, aircraft in international traffic may be taxed in the firstmentioned State but the tax so charged shall not exceed whichever is lesser of either: (a) 1% of the gross revenues derived from sources in that State; or (b) 50% of rate imposed on profits (income) of the same kind derived under similar circumstances in the Contracting State. 4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9: Associated Enterprises 1. Where (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 (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 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 the reason of those conditions,

Double Tax Agreement

195

have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 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 Agreement and the competent authorities of the Contracting States shall if necessary consult each other. 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 Contracting 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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed: (a) 10% of the gross amount of the dividends if the beneficial owner is a company which has held directly at least 10% of the capital of the company paying the dividends for an uninterrupted period of at least 12 months prior to the decision to distribute the dividends; (b) 15% of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ 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 laws of the State of 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 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 Contracting 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 Articles 7 or 15, as the case may be, shall apply.

196

Vietnam

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting 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 Contracting 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 Contracting 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 Contracting State. Article 11: Interest 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State. 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: (a) 10% if the beneficial owner is a company which has held directly at least 10% of the capital of the company paying the interest for an uninterrupted period of at least 12 months prior to the decision to pay the interest; (b) 15% in all other cases. 3. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether 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 charges for late payment shall not be regarded as interest for the purpose of this Article. 4. The provisions of paragraphs 1 and 2 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 Contracting 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 (a) such permanent establishment or fixed base, or with (b) business activities referred to in subparagraph (c) of paragraph 1 of Article 7. In such case the provisions of Articles 7 or 15, as the case may be, shall apply. 5. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision or entity thereof, a local authority or a resident of that State. Where, however, the person paying the interest, whether he 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.

Double Tax Agreement

197

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 interest, 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 lastmentioned 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 Agreement. 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 Contracting 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 the royalties is a resident of the other Contracting State, the tax so charged shall not exceed: (a) 10% of the gross amount of the royalties if the beneficial owner is a company which has held directly at least 10% of the capital of the company paying the royalties for an uninterrupted period of at least 12 prior to the payment of the royalties; (b) 15% of the gross amount of the royalties in all other cases. 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 cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process as well as for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience. 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 Contracting 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 (a) such permanent establishment or fixed base or with (b) business activities referred to in subparagraph (c) of paragraph 1 of Article 7. In such case the provisions of Articles 7 or 15, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision or entity thereof, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or 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. 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,

198

Vietnam

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 Agreement. Article 13: Technical Fees 1. Technical fees arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State. 2. However, such technical fees 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 technical fees is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amounts of the technical fees. 3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature. 4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise through a permanent establishment situated therein, or performs in that other Contracting State independent personal services through a fixed base, and the technical fees paid are effectively connected with (a) such permanent establishment or fixed base or with (b) business activities referred to in subparagraph (c) of paragraph 1 of Article 7. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 5. Technical fees shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision or entity thereof, a local authority or a resident of that State. Where, however, the person paying the technical fees, whether he 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 technical fees was incurred, and such technical fees are borne by that permanent establishment or fixed base, then such technical fees shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 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 technical fees paid exceeds, for whatever reason, 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 Agreement.

Double Tax Agreement

199

Article 14: Gains from the Alienation of Property 1. 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. 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 fixed base, may be taxed in that other State. 3. Gains from the alienation of ships or aircraft operated by an enterprise of a Contracting State in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State in which the place of effective management of the enterprise is situated. 4. Gains from the alienation of shares of the capital stock of a company, or of an interest in a partnership, trust or estate, the property of which consist directly or indirectly principally of immovable property situated in the other Contracting State, may be taxed in that other State. For the purposes of this paragraph, “principally” in relation to ownership of immovable property means the value of such immovable property exceeding 30% of the aggregate value of all assets owned by the company, partnership, trust or estate. 5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State. 6. Gains from the alienation of any property other than that referred to in paragraphs 1–5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 15: Independent Personal Services 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: (a) If he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the 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 is for a period or periods amounting to or exceeding in the aggregate 183 days within any twelve-onth period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting State; or (c) If the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment

200

Vietnam

or a fixed base situated in that Contracting State and the gross amount of the remuneration (before the deduction of expenses) derived by that person exceeds 3,000 USD in the fiscal year; or (d) Income derived by that person from having property used to perform these services. 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. Article 16: Dependent Personal Services 1. Subject to the provisions4 of Articles 17, 19–22, salaries, wages and other similar 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 Contracting State. 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: (a) the recipient is present in the other Contracting 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 (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may only be taxed in the Contracting State in which the place of effective management of the enterprise is situated. Article 17: Directors’ Fees and Remuneration of Top-Level Managerial Officials 1. Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the Board of Directors or Board of Auditors of a company which is a resident of the other Contracting State may be taxed in that other Contracting State. 2. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top-level managerial position of a company which is a resident of the other Contracting State may be taxed in that other Contracting State. Article 18: Entertainers and Sportspersons 1. Notwithstanding the provisions of Articles 15 and 16, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture,

Double Tax Agreement

201

radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his/her capacity as such accrues not to the entertainer or sportsperson himself/herself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by entertainers or sportspersons who are residents of a Contracting State from activities in the other Contracting State under a plan of cultural exchange between the Governments of both Contracting States shall be exempt from tax in that other Contracting State. Article 19: Pensions and Social Security Payments 1. Subject to the provisions of paragraph 2 of Article 20, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2. Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a local authority thereof shall be taxable only in that State. Article 20: Government Service 1. (a) Salaries, wages and other similar remunerations, 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 subdivision or authority shall be taxable only in that State. (b) However, such salaries, wages and other similar remunerations shall be taxable only in the other Contracting State if the services are rendered in that Contracting State and the individual is a resident of that Contracting State who: (i) is a national of that Contracting State; or (ii) did not become a resident of that Contracting State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created 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 subdivision or 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 of, and a national of, that other Contracting State. 3. The provisions of Articles 16–19 shall apply to salaries, wages and other similar remuneration and pensions 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.

202

Vietnam

Article 21: Professors, Teachers and Researchers A professor, teacher or researcher who makes a temporary visit to a Contracting State for a period not exceeding 2 years for the purpose of teaching or conducting research at a university, college, school, or other similar educational institution, and who is, or immediately before such visit was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State in respect of remuneration from such teaching or research. Article 22: Students and Business Apprentices Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his/her maintenance, education or training shall not be taxed in that State: (a) payment derived from sources outside for the purpose of his/her maintenance, education, study or training; and (b) notwithstanding the provisions of Articles 15 and 16, payment, not exceed 4,000 USD or equivalent in currency of the Contracting State, derived from service activities of that person in a taxable year. Article 23: Other Income 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to the income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State 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 Articles 7 or 15, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other Contracting State. Article 24: Capital 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 Contracting State. 2. Capital represented by 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 by movable property pertaining to a fixed base

Double Tax Agreement

203

available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services may be taxed in that other Contracting State. 3. Capital represented by ships, boats or aircraft operated in international traffic and by movable property pertaining to the operation of such ships, boats and aircraft, shall be taxable only in the State in which the place of effective management of the enterprise is situated. Article 25: Method for Elimination of Double Taxation 1. Subject to the laws of Vietnam regarding the allowance as a credit against Vietnamese tax of tax payable in any country other than Vietnam, the San Marino tax payable under the laws of San Marino and in accordance with this Agreement by a resident of Vietnam in respect of income derived from San Marino shall be allowed as a credit against Vietnamese tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of San Marino to a company which is a resident of Vietnam and which owns not less than 10% of the voting shares of the company paying the dividend, the credit shall take into account San Marino tax payable by that company in respect of its income out of which the dividend is paid. The credit shall not, however, exceed that part of the Vietnamese tax, as computed before the credit is given, which is appropriate to such item of income. 2. For the purposes of paragraph 1, the term “San Marino tax payable” shall be deemed to include San Marino tax which would, under the laws of San Marino and in accordance with this Agreement, have been payable on any income derived from sources in San Marino had the income not been taxed at a reduced rate or exempted from San Marino tax in accordance with the provisions of this Agreement and the special incentives under the San Marino laws for the promotion of economic development of San Marino which were in force on the date of signature of this Agreement or any other provisions which may subsequently be introduced in San Marino in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States to be of a substantially similar character. 3. Subject to the laws of San Marino regarding the allowance as a credit against San Marino tax of tax payable in any country other than San Marino, the Vietnamese tax payable under the laws of Vietnam and in accordance with this Agreement by a resident of San Marino in respect of income derived from Vietnam shall be allowed as a credit against San Marino tax payable in respect of that income. Where such income is a dividend paid by a company which is a resident of Vietnam to a company which is a resident of San Marino and which owns not less than 10% of the voting shares of the company paying the dividend, the credit shall take into account Vietnamese tax payable by that company in respect of its income out of which the dividend is paid. The credit shall not, however, exceed that part of the San Marino tax, as computed before the credit is given, which is appropriate to such item of income.

204

Vietnam

4. For the purposes of paragraph 3, the term “Vietnamese tax payable” shall be deemed to include Vietnamese tax which would, under the laws of Vietnam and in accordance with this Agreement, have been payable on any income derived from sources in Vietnam had the income not been taxed at a reduced rate or exempted from Vietnamese tax in accordance with the provisions of this Agreement and the special incentives under the Vietnamese laws for the promotion of economic development of Vietnam which were in force on the date of signature of this Agreement or any other provisions which may subsequently be introduced in Vietnam in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States to be of a substantially similar character. Article 26: Non-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 nationals of that other Contracting State in the same circumstances are or may be subjected. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other Contracting State than the taxation levied on enterprises of that other Contracting 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 allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provisions of paragraph 1 of Article 9, paragraph 6 of Article 11, paragraph 6 of Article 12 or paragraph 6 of Article 13, apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 4. Enterprises 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 enterprises of the first-mentioned State are or may be subjected. 5. The provisions of this Article shall apply only to the taxes covered in this Agreement. Article 27: Mutual Agreement Procedure 1. Where a person who is a resident of a Contracting State considers that the actions of the competent authority of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement,

Double Tax Agreement

205

he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which that person is a resident. 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 Agreement. 2. The competent authority 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 which is not in accordance with this Agreement. The mutual agreement procedure shall expire by the end of the third year following that in which the case was presented by the taxpayer. If an agreement is not reached after the end of that period, the administration of the Contracting States shall apply their domestic laws respectively. If an agreement is reached, it shall be implemented notwithstanding any time limits in the domestic laws of the Contracting States. 3. 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 Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4. 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. Article 28: Exchange of Information 1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2. 2. Any information received under paragraph 1 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, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. 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. 3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

206

Vietnam

(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 (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 (order public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interest in a person. Article 29: Members of Diplomatic Missions and Consular Posts Nothing in this Agreement 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. Article 30: Entry into Force Each of the Contracting State shall notify to the other in writing through the diplomatic channels the completion of the procedures required by its legislation for the entry into force of this Agreement. This Agreement shall enter into force on the date received the later of these notifications. This Agreement shall have effect: (a) in respect of taxes withheld at source, in relation to taxable amounts as derived on or after the first day of January following the calendar year in which the Agreement enters into force, and in subsequent calendar years; and (b) in respect of other taxes, in relation to income, profits, gains or capital arising on or after the first day of January following the calendar year in which the Agreement enters into force, and in subsequent calendar years. Article 31: Termination This Agreement shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State, written notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:

Double Tax Agreement

207

(a) in respect of taxes withheld at source, in relation to taxable amounts as derived on or after the first day of January following the calendar year in which the notice of termination has been received, and in subsequent calendar years; and (b) in respect of other taxes, in relation to income, profits, gains or capital arising on or after the first day of January following the calendar year in which the notice of termination has been received, and in subsequent calendar years. IN WITNESS WHEREOF the undersigned, being duly authorized thereto by their respective Governments, have signed this Agreement. DONE in duplicate at Rome this fourteenth day of February of the year two thousand and thirteen in the Italian, Vietnamese and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.

Collection of additional Double Tax Agreements

Austria Double Tax Agreement Date and place of Signature: 24/11/2004, Vienna Date of Ratification: 04/07/2005 Date of Entry into force: 01/12/2005 Convention Between the Republic of San Marino and Austria with Respect to Taxes on Income and on Capital. The Republic of San Marino and the Republic of Austria desiring to conclude a Convention with respect to taxes on income and on capital, Have agreed as follows:

DTA Articles 10, 11 & 12 Dividends (%)

0-15[1]

Interest (%)

0

Royalties (%)

0

Notes

[1]

Lower rate applicable where recipient holds an interest of at least 10%

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 L. Riccardi, San Marino and International Investments, https://doi.org/10.1007/978-981-99-0365-8_16

209

210

Collection of additional Double Tax Agreements

Cyprus Double Tax Agreement Date and place of Signature: 27/04/2007, Nicosia Date of Ratification: 14/06/2007 Date of Entry into force: 18/07/2018 The Republic of Cyprus And the Republic of San Marino for the Avoidance of Double Taxation with Respect to Taxes on Income The Government of the Republic of San Marino and the Government of the Republic of Cyprus, hereunder the “Contracting States”, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following:

DTA Articles 10, 11 & 12 Dividends (%)

0

Interest (%)

0

Royalties (%)

0

Notes

Croatia Double Tax Agreement Date and place of Signature: 18/10/2004, San Marino Date of Ratification: 04/07/2005 Date of Entry into force: 05/12/2005 Agreement Between the Republic of San Marino and the Republic of Croatia for the Avoidance of Double Taxation with Respect to Taxes on Income The Republic of San Marino and the Republic of Croatia, hereunder the “Contracting States”, wishing to conclude an Agreement for the avoidance of double taxation with respect to taxes on income, have agreed the following:

DTA Articles 10, 11 & 12

211

DTA Articles 10, 11 & 12 Dividends (%) 5–10[1] Interest (%)

0–10[2]

Royalties (%)

5

Notes

[1]

The 5% rate applies if the recipient (beneficial owner) is an entity that directly holds at least 25% of the capital of the payer. [2] Interest is 0% when the payer is the government or local authority, when the receiver is the government, local authority

Georgia Double Tax Agreement Date and place of Signature: 28/09/2012, New York Date of Ratification: 21/03/2013 Date of Entry into force: 12/04/2013 Agreement Between Georgia and the Republic of San Marino for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Georgia and The Republic of San Marino desiring to promote and strengthen the economic, cultural and scientific relations by concluding an Agreement for the avoidance of double taxation with respect to taxes on income and on capital, Have agreed as follows:

DTA Articles 10, 11 & 12 Dividends (%)

0

Interest (%)

0

Royalties (%)

0

Notes

212

Collection of additional Double Tax Agreements

Greece Double Tax Agreement Date and place of Signature: 26/06/2013, San Marino Date of Ratification: 23/01/2014 Date of Entry into force: 07/04/2014 Convention Between the Republic of San Marino and the Hellenic Republic for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital The Republic of San Marino and the Hellenic Republic, hereunder the “Contracting States”, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following:

DTA Articles 10, 11 & 12 Dividends (%) 5–10[1] Interest (%)

10

Royalties (%)

5

Notes

[1] The rate of 5% applies in case the beneficiary is a company (excluding a partnership) and directly holds at least 25% of the capital of the paying company.

Hungary Double Tax Agreement Date and place of Signature: 15/09/2009 Date of Ratification: 21/01/2010 Date of Entry into force: 03/12/2010 Convention between the Republic of Hungary and the Republic of San Marino for the avoidance of Double Taxation with respect to Taxes on Income The Republic of Hungary and the Republic of San Marino, hereunder the “Contracting States”, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following:

DTA Articles 10, 11 & 12

213

DTA Articles 10, 11 & 12 Dividends (%)

0-5-15[1]

Interest (%)

0

Royalties (%)

0

Notes

[1]The rate of tax is 0% if the beneficial owner is a company that has directly held at least 25% of the capital of the company and The rate is 5% if the beneficial owner is a company that directly holds less than 25% of the capital of the company

Liechtenstein Double Tax Agreement Date and place of Signature: 23/09/2009, Bruxelles Date of Ratification: 21/01/2010 Date of Entry into force: 19/01/2011 The Republic of San Marino and The Principality of Liechtenstein Hereinafter Referred to as “Contracting States.” Whereas the Contracting States Recognise that the Well-Developed Economies Tie Between the Contracting States Call for Further: Cooperation; Whereas the Contracting States wish to Develop their Relationship Further by Cooperating to their Mutual Benefits in the Field of Taxation; and Whereas the Contracting States wish to Conclude a Convention for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital; Have Agreed as Follows:

DTA Articles 10, 11 & 12 Dividends (%)

0–15[1]

Interest (%)

0

Royalties (%)

0

Notes

[1]

0% if the recipent holds at least 10 % of capital of payer

214

Collection of additional Double Tax Agreements

Malta Double Tax Agreement Date of Signature: 03/05/2005 Date of Ratification: 04/07/2005 Date of Entry into force: 19/07/2005 Convention between the Republic of San Marino and Malta with respect to Taxes on Income. The Government of the Republic of San Marino and the Government of Malta, desiring to conclude a Convention with respect to taxes on income, and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed as follows:

DTA Articles 10, 11 & 12 Dividends (%)

0-5-10[1]

Interest (%)

0

Royalties (%)

0

Notes

[1] The

lower of the listed rates applies to dividends when the beneficiary directly holds 25% or more of share capital

Portugal Double Tax Agreement Date of Ratification: 27/04/2011 Date of Signature: 18/11/2010 Date of Entry into force: 03/12/2015 Convention between the Portuguese Republic and the Republic of San Marino for the avoidance of Double Taxation and the prevention of Fiscal Evasion with respect to Taxes on Income. The Portuguese Republic and the Republic of San Marino, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed as follows:

DTA Articles 10, 11 & 12

215

DTA Articles 10, 11 & 12 Dividends (%)

0-10-15[1]

Interest (%)

0-10

Royalties (%)

0-10

Notes

[1] The

lower of the listed rates applies to dividends when the beneficiary directly holds 25% or more of share capital

Qatar Double Tax Agreement Date of Signature: 17/03/2013 Date of Ratification: 23/10/2013 Date of Entry into force: 30/10/2013 Agreement between the Republic of San Marino and the State of Qatar for the avoidance of double taxation and the prevention of fiscal evasion with respect to Taxes on Income. The Government of the Republic of San Marino and the Government of the State of Qatar, hereunder the “Contracting States”, wishing to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed as follows:

DTA Articles 10, 11 & 12 Dividends (%)

0

Interest (%)

0

Royalties (%)

0-5

Notes

-

216

Collection of additional Double Tax Agreements

Romania Double Tax Agreement Date of Signature: 23/05/2007 Date of Ratification: 04/02/2008 Date of Entry into force: 11/02/2008 Convention between the Republic of San Marino and Romania for the avoidance of Double Taxation with respect to Taxes on Income and on Capital. The Republic of San Marino and Romania, hereunder the “Contracting States”, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital, and to strengthen the development of economic relations between the two States in the framework of greater cooperation, have agreed the following:

DTA Articles 10, 11 & 12 Dividends (%) 0-5-10[1] Interest (%)

0-3

Royalties (%)

0-3

Notes

[1] The

lower rate applies to participations of at least 50%; the 5% rate applies to participations of at least 10%.

Saint Kitts and Nevis Double Tax Agreement Date of Signature: 20/04/2010 Date of Ratification: 01/06/2010 Date of Entry into force: 12/02/2014 Convention between the Republic of San Marino and the Government of Saint Kitts And Nevis for the avoidance of Double Taxation with respect to Taxes on Income The Government of the Republic of San Marino and the Government of Saint Kitts and Nevis, hereunder the “Contracting States”, wishing to conclude a Convention for the avoidance of double taxation with respect to taxes on income and to strengthen the disciplined development of economic relations between the two States in the framework of greater cooperation, have agreed the following

DTA Articles 10, 11 & 12

217

DTA Articles 10, 11 & 12 Dividends (%)

0-5-7.5-10[1]

Interest (%)

0

Royalties (%)

0

Notes

[1]The rate of tax is 5% if the beneficial owner is a company that has directly held at least 25% of the capital of the company and The rate is 7.5% if the beneficial owner is a company that has directly held at least 10% but less than 25% of the capital of the company

Serbia Double Tax Agreement Date and Place of Signature: 16/04/2018, Belgrade Date of Ratification: 24/09/2018 Date of Entry into force: 08/10/2018 Convention between the Government of the Republic of San Marino and the Government of the Republic of Serbia for the avoidance of double taxation and the prevention of fiscal evasion with respect to Taxes on Income. The Government of the Republic of San Marino and the Government of the Republic of Serbia, intending to conclude a Convention for the elimination of double taxation with respect to taxes on income without creating opportunities for nontaxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this Convention for the indirect benefit of residents of third States), desiring to further develop their economic relationship and to enhance their cooperation in tax matters, have agreed as follows:

DTA Articles 10, 11 & 12 Dividends (%)

0-5-10[1]

Interest (%)

0-10

Royalties (%)

0-10

Notes

[1] The

lower of the listed rates applies to dividends when the beneficiary directly holds 25% or more of share capital

218

Collection of additional Double Tax Agreements

United Arabian Emirates Double Tax Agreement Date and place of Signature: 11/07/2018, Abu Dhabi Date of Ratification: 04/12/2018 The Government of the Republic of San Marino and the Government of the United Arab Emirates, Desiring to promote their mutual economic relations and to enhance their cooperation in tax matters through the conclusion between them of an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Have agreed as follows:

DTA Articles 10, 11 & 12 Dividends (%)

0

Interest (%)

0

Royalties (%)

0

Notes