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Treaty between Czech Republic and New Zealand – details — Orbitax Tax News & Alerts

Details of the first-time income tax treaty between the Cezech Republic and New Zealand, signed on 26 October 2007, have become available. The treaty was concluded in the English and Czech languages, each text having equal authenticity. The treaty generally follows the OECDE Model Comvention.

The maximum rates of withholding tax are:

-   15% on dividends;
-   10%on interest, subject to exceptions; and
-   10% on royalties

Deviations from the OECD Model include that:

-   the furnishing of services, including managerial or consultancy services, by an enterprise of a contracting state or through employees or other personnel engaged by the enterprise for such purpose, constitutes a permanent establishment (PE), but only where activities of that nature continue in the territory of the other contracting state for a period or periods exceeding in the aggregate 6 months within any 12-month period (Art. 5 Permanent establishment);
-   a building site or a construction, installation or assembly project, or supervisory activities in connection therewith, constitute a PE, but only where such site, project or activities continue for a period of more than 6 months (Art. 5 Permanent Establishment);
-   Art. 9(3) provides that no corresponding adjustment will be made under Art. 9(2) to relieve the economic double taxation resulting from a transfer pricing adjustment made in the other contracting state in the case of fraud, gross negligence or wilful default (Art. 9 Associated enterprises);
-   Art. 25 expressly preserves the application in the context of this treaty of domestic anti-avoidance provisions (the treaty refers to "domestic laws aimed at the prevention of fiscal evasion") on, inter alia, thin capitalization, transfer pricing, substance over form and aggregation of activities carried on by associated enterprises (Art. 25 Miscellaneous rules); and
-   the treaty lacks articles concerning assistance in the collection of taxes and non-discrimination.