32/1994 Coll.
The COMMUNICATION FROM the
Ministry of Foreign Affairs
Change: 370/1999 Coll.
Ministry of Foreign Affairs says that the 16 June. September 1993 was in
Prague signed an agreement between the Czech Republic and the United States
of America for the avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and property.
With the Treaty, its assent, Parliament of the Czech Republic and the President of the
the Republic has ratified it. The instruments of ratification were exchanged in the
Washington, 23 February 2005. December 1993.
Treaty has entered into force, pursuant to article 29, paragraph 1. 2 day
on December 23, 1993.
The Czech version of the Treaty shall be designated at the same time.
CONTRACT
between the Czech Republic and the United States of America on the Elimination of double
taxation and the prevention of fiscal evasion with respect to taxes on income and capital
The Czech Republic and the United States desiring to further extend and
to facilitate the mutual economic relations have decided to conclude a contract of
avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on
income and assets, and have agreed as follows:
Article 1
The person to which the contract relates
1. this Agreement shall apply to persons who are resident or established in
one or both of the Contracting States (the residents), if the contract is not
unless otherwise provided for.
2. the contract shall in any way restrict any exception
exemption, deduction, credit, or other relief now or later
provided by:
and) under the laws of one or the other Contracting State; or
(b) by any other agreement) between the Contracting States.
3. A Contracting State may tax its residents [as defined in
Article 4 (Resident)] and its citizens, including the former citizens under the laws
of that State, as if the contract was not in effect.
4. The provisions of paragraph 3 shall not apply to:
and the advantages granted by the Contracting State) pursuant to paragraph 2 of article 9
(Associated enterprises), in accordance with paragraphs 1
(b)) and 4 of article 18 (Pensions, annuities, alimony and child benefits) and
articles 24 (Elimination of double taxation), 25 (prohibition of discrimination) and 26
(Resolving cases by agreement); and
b) advantages accorded by a Contracting State in accordance with articles 20 (public office),
21, (students, trainees, teachers and researchers) and 28 (Diplomats
and consular officials) for individuals who are neither citizens nor
legal permanent residents in this State.
Article 2
The tax, to which the contract relates
1. Current taxes to which this agreement applies are:
and) in the United States: the federal income taxes imposed on the basis of the
Internal Revenue Code (but excluding taxes on accumulated profit tax,
personal holding company tax and social security) and
excise duty levied in connection with the investment income of private
the Foundation (hereinafter referred to as "United States tax");
(b)) in the Czech Republic: the income tax imposed on the basis of the law on taxes
income and real estate tax (hereinafter referred to as "Czech tax").
2. this Agreement shall also apply to any identical or
similar taxes that are imposed after the signature of this agreement, in addition to
current taxes or instead of them. The competent authorities of the Contracting States
they will inform each other of any significant changes that will be
made in their respective taxation laws, and officially
published materials related to the application of the Treaty, including
the explanatory notes, tax regulations, or court decisions.
Article 3
General definitions
1. for the purposes of this agreement, unless the context requires a different interpretation:
and) the term "Contracting State" refers to the United States or the Czech Republic
Depending on what matters;
(b)) the term "United States" refers to the United States, however,
does not include Puerto Rico, the Virgin Islands, Guam or any other
u.s. possession or territory. In a geographical sense, the term "United
States "includes the territorial waters and the seabed and subsoil adjacent
the areas to which they may be exercised by the United States, in accordance
with international law, and on which, in the effectiveness of the laws relating to the
taxes of the United States;
(c)) the term "person" refers to the natural person's estate, fiduciary,
personal company, a company and any other Association of persons;
(d)) the term "company" refers to any legal entity or bearer
rights, considered for the purposes of taxation for legal persons;
(e)) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting
State "means the enterprise carried on by a resident under the circumstances of one
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 boat or
by air, except when such carriage is operated only between
places lying in the other Contracting State;
(g)) the term "competent authority" means:
(i) in the United States Secretary of the Treasury or his
authorised representative;
(ii) in the Czech Republic the Minister of Finance of the Czech Republic or its
authorized representative.
2. each term that is not defined in the contract, it will have for her
the application by a Contracting State the importance of it under the law of that
of a Contracting State relating to the taxes which are the subject of this agreement,
unless the context requires a different interpretation or the competent authorities of
agree on a common interpretation in accordance with the provisions of article 26 (Solution
cases by agreement).
Article 4
A resident of the
1. the term "resident of a Contracting State" means within the meaning of this
of the Treaty, any person who, under the law of that State, subject to the
that State taxation because of their place of residence, permanent residence place
management, place of establishment, or any other similar criteria.
2.
and) However, the term "resident of a Contracting State" does not include a person
that is subjected to taxation in that State only on income from sources in this
State or property located there;
(b)) in the case of revenue, that receives or pays personal company
estate, or fiduciary, this term shall apply only in such
the extent to which income deriving such personal company, estate
or entrusted assets are subject to tax in that State as the income
of a resident, either in its hands or in the hands of its partners or actual
beneficiaries; and
c) Czech Republic will treat the United States citizen or a foreigner
having lawful permanent residence ("green card" holder)
a resident of the United States, only if that person has a substantial
presence, permanent home or habitual residence in the United States.
3. the term "resident of a Contracting State" includes:
and this State is less) Administrative Department or local authority of that State, or
any agency or authority of that State, a lower administrative department
or the Office; and
(b)) pension trust or any other organization, which is based and
operated exclusively for the purpose of providing pensions, or for religious,
charitable, scientific, artistic, cultural or educational purposes and that
is a resident of that State in accordance with the laws of that State, regardless of
the fact that the whole income or part of its income may be exempt from
taxation in accordance with the domestic laws of that State.
4. If the individual is under the provisions of paragraph 1, a resident in the
both of the Contracting States, the position of the specified as follows:
and it is assumed that) this person is resident in the State in which the
He has a permanent home; If he has a permanent home in both States, it is assumed that
It is resident in the State, which has a strong personal and economic
relations (Centre of vital interests);
(b)) if it cannot be determined by the State in which he has his Centre
their vital interests, or if it does not have a permanent home in any State
It is assumed that it is resident in the State in which it is usually
resides;
(c)) If this person usually resides in both States, or in any
of them, it is assumed that it is resident in the State of which he is a
National;
d) if that person is a national of both States or of any
of them, the competent authorities of the Contracting States shall adjust the question by mutual
by the agreement.
5. If the company is in accordance with the provisions of paragraph 1 a resident in both
Contracting States, then if it is established under the law of a Contracting
State or its lower administrative unit, it is assumed that it is
resident in that Contracting State.
6. If a person other than an individual or a company is referred to in
the provisions of paragraph 1, a resident of both Contracting States, the competent
authorities of the Contracting States shall by mutual agreement this question and identify the
the method of application of the Treaty for that person.
Article 5
Permanent establishment
1. the term "permanent establishment" within the meaning of this Treaty indicates the Permanent
device for business, through which the undertaking carries out completely
or part of their activities.
2. the term "permanent establishment" includes especially:
and instead of keeping);
(b)) race;
(c));
(d) a factory;)
e) a workshop; and
f) mine, the site of diesel or gas, a quarry or any other place where the benefits
natural resources.
3. the term "permanent establishment" also includes:
a building site or construction) or Setup project or drilling rig
or ship used for the exploration or mining of natural resources,
only if the last more than twelve months; and
(b)) the provision of services, including consultancy services provided by the undertaking
through employees or other personnel, but only where
activities such as to insist on the same or related (
the project) on the territory of the State for a period or periods exceeding in the aggregate
more than 9 months in any 12-month period.
A permanent establishment does not arise in any tax year in which the activity
as described in subparagraphs a) or b) of this paragraph takes over one or
more period not exceeding in the aggregate 30 days in this tax year.
4. Notwithstanding the preceding provisions of this article, the term "permanent
establishment "does not include:
and) device that is used only for storage, display or delivery
goods belonging to the enterprise;
(b)) the supply of goods belonging to the enterprise solely for the purpose
storage, display or delivery;
(c)) the supply of goods belonging to the enterprise solely for the purpose
the processing of another undertaking;
d) durable equipment for the business, which is used only for the purpose of
purchase of goods, or collecting information for the enterprise;
e) durable equipment for the business, which is solely for the purpose
engaging in any other activity that has for undertaking the preparatory or
auxiliary character;
f) durable equipment for the business, which is kept only for any
the combination of activities mentioned in subparagraphs a) to (e)).
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person (other than the
an independent representative, to whom paragraph 6 applies) acting on behalf of
of the enterprise and has, and usually uses the power of Attorney, which allows her to enter into
the contract on behalf of the company, it will be deemed that the company has a permanent
place of business in that State in respect of all the activities which that person
performed for the enterprise, if such activities are not confined to persons
the activities referred to in paragraph 4, and which, if they are performed
standing places for business, done by the Permanent
instead of a permanent establishment under the provisions of this paragraph.
6. Not considered that the enterprise has a permanent establishment in a Contracting
the State just because it carries out its activities through
a broker, General Commission agent or any other agent of an independent,
If these persons are acting within their proper operation.
7. the fact that a company which is resident in a Contracting
State, controlled by the company or is controlled by a company which is
a resident of the other Contracting State, or which carries on there
activity (whether through a permanent establishment or otherwise), will not make itself
about myself from any of this company a permanent establishment of the other
the company.
Article 6
Income from immovable property
1. the income accruing to a resident of a Contracting State from immovable
property (including income from agriculture or forestry) situated in the second
a Contracting State may be taxed in that other State.
2. the term "immovable property" shall be defined in accordance with the law of
the Contracting State in which such property is located. This expression includes the
in any case, accessories of immovable property, the living and the dead
inventory used in agriculture and forestry, rights to which it applies
the provisions of civil law relating to property, the right to the enjoyment of
of immovable property and rights to variable or fixed salaries for unfair advantage
or consent to the mining of mineral deposits, sources and other
natural resources; ships, boats and aircraft shall not be regarded as immovable
asset.
3. The provisions of paragraph 1 shall apply to income from the direct use, letting, or
any other manner of use of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property
the assets of the company and to income from immovable property used for the performance of
an independent profession.
5. A resident of a Contracting State who is subject to taxation in the second
Contracting State income from immovable property situated in that other
State may calculate tax on this income from the net basis, such as
If such income was attributed to a permanent establishment in that other State.
In the case of taxes of the United States will be the choice of the application of the preceding sentence
binding for the tax year in which the election was made, and for all
the following tax years, if the competent authorities of the United States will not be
agree with the completion of this election.
Article 7
The profits of enterprises
1. The profits of an enterprise of a Contracting State shall be taxable only in that
State if the undertaking does not or has not performed its activities in the second
Contracting State through a permanent establishment that is located there.
If the enterprise carries on or has pursued its activities in this way,
profits of the enterprise may be taxed in that other State, but only to the
to such an extent that can be attributed to that permanent establishment.
2. If an enterprise of a Contracting State, carries on or pursued
its activities in the other Contracting State through a permanent establishment,
that is placed there, attributing is subject to the provisions of paragraph 3 in the
Each Contracting State such permanent establishment profits which could
so if she was as a distinct and independent enterprise engaged
the same or similar activities under the same or similar conditions.
3. when calculating the profits of a permanent establishment shall be allowed to deduct the costs of
the company spent on the objectives pursued by the permanent establishment, including
a reasonable amount of expenditure on research and development, interest, and other similar
costs and expenses management and General and administrative expenses, whether incurred in the
State in which the permanent establishment is situated or elsewhere.
4. no permanent establishment of nepřičtou profits from a business based on the
the fact that only goods for the company.
5. the business profits to be attributed to the permanent establishment shall be for
the purpose of this contract include only gains from property or
activities of the permanent establishment and will be fixed each year for the same
method, if there are sufficient grounds for a different procedure.
6. Nothing in this article shall affect the application of the laws of each Contracting
State relating to the determination of the tax liability of a person in cases where the
the information that the competent authorities of that State are not available
appropriate for determining the profits attributable to a permanent establishment, for
provided that, on the basis of available information is the determination of the profits of the Permanent
the establishment, in accordance with the principles laid down in this article.
7. the term "profits" means, for the purposes of this agreement, income
of any commercial or industrial activity. Includes, for example, profits from the
production, trade, fishing, transport, communication or
mining operations and the provision of services to another person, including
in cases where the company provides the services of its employees. This expression
does not include the income of a natural person for the provision of services, whether
as an employee or in an independent profession.
8. If the profits of the enterprise include income dealt with separately
in the other articles of this agreement, the provisions of those articles shall not affect the
the provisions of this article.
Article 8
Shipping and air transport
1. The 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.
2. the term "profits from the operation of ships or aircraft in international traffic"
includes, for the purposes of this article, profits derived from the rental of ships or
aircraft including the crew at a specific time or a path. Also includes the
profits arising from the rental of ships or aircraft without crew, which performs
Enterprise operating ships or aircraft in international traffic if
such leases are incidental in relation to the activities described in paragraph
1.
3. Profits of an enterprise of a Contracting State from the use, maintenance, or
rental of containers (including trailers, towing boats and related
device for the transport of containers) used in international traffic
shall be taxable only in that State.
4. The provisions of paragraph 1 shall also apply to profit from participation in the
the pool, in a joint venture or an international operating agency.
Article 9
Associated enterprises
1. If:
and the company) of a Contracting State participates directly or indirectly in the
management, control or capital of an undertaking of the other Contracting State; or
(b)) the same persons participate directly or indirectly in the management, control or
the assets of the enterprise of a Contracting State and enterprise of the other Contracting
State,
and if in these cases are both enterprises in their commercial or
bound by the terms of the financial relations which differ from those which
would have been agreed upon between undertakings, any gains that may
, but for those conditions, have accrued to one of the businesses, but because
These conditions were not achieved, be included in the profits of this business
and then taxed.
2. where a Contracting State includes in the profits of the enterprise of that State and
then tax the profits from which the enterprise of the other Contracting State
taxed in that other State and the profits following profits which are included
would have been achieved by the undertaking first-mentioned State if the conditions
negotiated between the companies were for what would have been agreed upon between the
independent enterprises, the second State shall adjust the amount of tax saved from appropriately
such profits in that State. In determining such adjustment, due
into account the other provisions of this agreement and, if necessary, the appropriate
the authorities of the Contracting States shall to this end consult each other.
3. The provisions of paragraph 2 shall not apply in the case of fraud, gross
negligence or wilful neglect.
Article 10
Dividends
1. dividends paid by a company which is resident in the same
Contracting State, to a person who is resident in the other Contracting State,
may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State in
which is a company that is paid, a resident, and according to the laws
the laws of this State, but if the recipient who is the real
the owner of the dividends is a resident of the other Contracting State, the tax so
provided for shall not exceed:
and 5% of the gross amount) of the dividends if the beneficial owner is
the company, which owns at least 10% of the voting shares of the
the company paying the dividends;
b) 15% of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the profits of the company, from which they are
dividends are paid.
3. Paragraph a) of paragraph 2 shall not apply in the case of dividends
be paid to United State Regulated Investment Company or Real Estate
Investment Trust. Subparagraph (b)) paragraph 2 shall apply in the case of
dividends paid by Regulated Investment Company. In
the case of dividends paid by Real Estate Investment Trust
with subparagraph (b)), paragraph 2 apply if the beneficial owner of
the dividend is the natural person owning less than 10% of the participation in the company
Real Estate Investment Trust; otherwise, apply the rate of withholding tax
According to national legislation.
4. the term "dividends" as used in this article means income from shares,
or other rights, with the exception of receivables, with a share of the profits, as well as
income from other rights to companies which are subjected to the same
taxation as income from shares by the tax legislation of the State in which it is
the company that rozdílí profit, a resident. The term dividends also
includes the income from accounts payable, including promissory notes bearing right
share of the profit to the extent as provided for under the laws,
the laws of the Contracting State in which the income arises.
5. The provisions of paragraph 2 shall not apply if the beneficial owner
of the dividends, being a resident in a Contracting State, carries on or
exercised in the other Contracting State in which it is a resident company
paying the dividends, industrial or commercial activity
through a permanent establishment situated therein, or performs
exercise an independent profession or in a permanent base located there, and
If the dividends can be attributed to that permanent establishment or that fixed
the base. In such a case, the provisions of article 7 (Profits
enterprises) or article 14 (independent professions), depending on which case
it comes.
6. a company which is resident in a Contracting State may, in addition to
taxation in accordance with the other provisions of this agreement will be subject to yet another
Dani. This tax, however, cannot exceed 5% of the revenue of the company, that can be
attributable to a permanent establishment in that other State, or subject to
taxation on a net basis in that other State in accordance with article 6 (income from
immovable property) or under article 13 (gains from the alienation of property)
deduction of taxes from the profits of these receipts are stored in that other State and
After editing with respect to an increase or decrease in the assets, after taking into account
the company's obligations in relation to the permanent establishment or business, or
industrial activities. Such a tax may be used only if such
stores the tax under the legislation of the second Member State income
any permanent establishment, which is kept in that other State
the company, which is not resident in that other State.
7. Where a company which is a resident of a Contracting State,
achieves profits or income from the other Contracting State, that
the second State to tax dividends paid by the company, unless such
dividends are paid to a resident of that other State or to participate,
for which the dividends are paid, form part of the business property of a permanent
establishment or fixed base situated in that other State, even if the
paid dividends consisting wholly or partly of profits or
income realised in that other State.
Article 11
Interest
1. interest arising in a Contracting State and which is actually
own a resident of the other Contracting State shall be taxable only in the
that other State.
2. the United States may, notwithstanding the provisions of paragraph 1, tax
amount exceeding the residual interest in a Real Estate Mortgage Investment
Conduit in accordance with national legislation.
3. The term "interest" as used in this article means income from debt-claims
any kind, secured and not secured the right to
real estate, and subject to paragraph 4 of article 10 (dividends)
to provide or not provide the 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 related to these valuable
securities, bonds or debentures, as well as any other income,
that is according to the tax laws of the Contracting State in which the income arises,
considered income from borrowed money.
4. The provisions of paragraph 1 shall not apply if the beneficial owner
interest, which is resident in a Contracting State, carries out or
performed in the other Contracting State in which they have interest, source
industrial or commercial activity through a fixed establishment there
located, or exercised or performed in that other State independent
the profession of a permanent base located there and if interest can be attributed to
such permanent establishment or fixed base. In this case,
provisions of article 7 (business Profits) or article 14 (independent
profession), depending on what matters.
5. It is assumed that interest rates have a source in a Contracting State,
If the payer is a resident of that State. If, 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, and such interest shall be charged to such
permanent establishment or fixed base, then such interest will be a source of
considered to be the State in which the permanent establishment or fixed base
located.
6. If the amount of interest that are applicable to the claim from which they are
paid exceeds the due to the special relationship between the
the payer and the beneficial owner of the interest, or that one or the other keeps the
with a third party, the amount which would have been had given the payer with the actual
owner, if it wasn't for such a relationship, the provisions of this
article just on this latter amount. The amount of the salaries that it
exceeds, in this case, will be taxed in accordance with the legislation of each
a Contracting State with regard to the other provisions of this Treaty.
Article 12
License fees
1. license fees arising in a Contracting State, that
a resident of the other Contracting State, may be taxed in that
the second State.
2. the royalties and licence fees referred to in subparagraph (a)) of paragraph 3, which
actually own a resident of a Contracting State, may be taxed
only in that State. Royalties and licence fees referred to in subparagraph (b))
paragraph 3 may also be taxed in the Contracting State in which the
their source, and in accordance with the legislation of that State, but if the
the recipient who is the beneficial owner of the royalties is a resident
of the other Contracting State, the tax amount thus determined may not exceed 10% of the
the gross amount of the royalties.
3. the term "royalties" as used in this agreement indicates the payment
of any kind received as a consideration for the use of, or the right to
use:
and) copyright in the literary, artistic or scientific
including cinematograph films, or films or tapes or any other
means of image or sound reproduction;
b) patent, trade mark, design or model, plan, secret formula
or manufacturing process or other similar rights or property, or
industrial, commercial or scientific equipment, or for information,
that applies to experience acquired in the field of industrial, commercial
or scientific.
The term "royalties" also includes payments resulting from the sale
such rights or assets that are tied to productivity,
use or resale.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of
of the royalties, being a resident in a Contracting State,
performs or performed in the other Contracting State in which they have
source license fees, industrial or commercial activity
through a permanent establishment situated therein, or performs
or performed in that other State independent profession in the Permanent
the base located there, and if these license fees can be attributed to
such permanent establishment or fixed base. In this case, shall apply
the provisions of article 7 (business Profits) or article 14 (independent professions)
Depending on what matters.
5. If the amount of the license fees that are related to the use,
law or information for which they are paid, exceeds the due
the special relationship between the payer and the beneficial owner or
that one and the other keeps with the third party, for any reason,
the amount you would have been had given the Bill-to customer is the beneficial owner, if
There was no such relationship, the provisions of this article shall apply only to that
latter amount. The amount of salaries, which will be in excess
this case taxed pursuant to the legislation of each Contracting State to the
reference to the other provisions of this agreement.
6. for the purposes of this article:
and with the license fees) will be treated as having a source in
a Contracting State when the payer is that Contracting State itself or its
lower administrative department or local authority of that State or a person who is
resident for tax purposes by that State. If, however, the person paying
license fees, whether he is or is not a resident in any Contracting
State, has in a Contracting State a permanent establishment or a fixed base in
connection with which the obligation to pay license fees was that go to
borne by that permanent establishment or fixed base, it is considered that these
license fees are to arise in the State in which the permanent establishment is
or fixed base is situated.
(b)) if it cannot be referred to in subparagraph a) dispose of the royalties as a
with the fees having a source in a Contracting State, it will be with the license
the fees paid for the use of, or the right to use in a Contracting
State any assets or rights described in paragraph 3, and usage
as with the fees having a source in that State.
Article 13
Gains from the alienation of property
1. The gains to a resident of a Contracting State from the alienation of
immovable property situated in the other Contracting State may be
taxed in that other State.
2. for the purposes of this article, the term "immovable property located in the second
Contracting State "includes immovable property referred to in article 6, which is
situated in that other State. Also includes shares in the company,
capital is made up of at least 50% of the immovable property located in
the other Contracting State, and also participation in partnerships, given
property or estate if their assets consists of real estate
the assets located in that other State.
3. Gains from the alienation of movable property that can be attributed to the Permanent
the establishment, which has or had an enterprise of a Contracting State in the other
Contracting State, or which can be attributed to a permanent base, which has had
a resident of a Contracting State in the other Contracting State for the performance of
an independent profession, and gains from the alienation of such a permanent establishment
(alone or together with the whole enterprise) or a permanent base, can be
taxed in that other State.
4. Gains enterprise of a Contracting State from the alienation of ships or
aircraft used in international traffic shall be taxable only in that
State.
5. the payments described in paragraph 3 of article 12 (royalties) shall be subject to
taxation only under the provisions of article 12.
6. Gains from the alienation of property, other than that referred to in paragraphs 1
up to 5, shall be taxable only in the Contracting State in which the alienator
resident.
Article 14
An independent profession
1. Income derived by a resident of a Contracting State receives from
a separate independent profession, shall be taxable only in that State,
If such activity is not or has not been exercised in the other Contracting
State and:
and income not attributable to permanent) base, already has this natural person
regularly available in that other State for the purposes of this
activity; in this case, the income that is attributable to that permanent
base, may be taxed in that other State; or
(b) a natural person is not present) in the other Contracting State for a period or
more periods exceeding in the aggregate 183 days in any 12-month
period.
2. the term "independent profession" includes especially independent activity
scientific, literary, artistic, educational or teaching, as well as
separate the activities of physicians, lawyers, engineers, architects, dentists and
accounting experts.
Article 15
Dependent of the profession
1. a salaries, wages and other similar remuneration derived by a resident of a Contracting
the State is receiving due to employment, shall, subject to the provisions of
articles 16 (directors ' fees), 19 (Pensions, annuities, alimony and family allowances for children),
20 (public office) and 21 (students, trainees, teachers and researchers
workers) taxable only in that State unless the employment is exercised
in the other Contracting State. If the employment is exercised, there may be
such fees received for them taxed in that other State.
2. remuneration which a resident of a Contracting State is receiving because of the
employment exercised in the other Contracting State, shall be subject to whatever
the provisions of paragraph 1, taxable only in the first-mentioned State if
and the recipient is resident in) other State for a period or multiple periods
shall not exceed in the aggregate 183 days in any 12-month period;
(b)) the rewards are paid by the employer, or 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 has
employer in the other State.
3. Notwithstanding the preceding provisions of this article may be rewards
received because of employment exercised as a member of the proper crew boats
or aircraft, which are operated by the enterprise of a Contracting State in
international transport, taxed only in that Contracting State.
Article 16
Royalties
Directors ' fees and other similar remuneration, which a resident of a Contracting State
he receives for services rendered in the other Contracting State as a member of the Board
the Council of the company or of another similar organ of a company that is
a resident of the other Contracting State, may be taxed in that other
State.
Article 17
Limitation of benefits
1. a person who is a resident of a Contracting State and derives income from the
of the other Contracting State, it will be entitled to a remission under this agreement from
taxation in the other Contracting State, only if that person is:
a) a natural person;
(b) the State party or lower), the Administrative Department or local authority of that
State;
(c)) involved in the active implementation of commercial or industrial activities in
the first-mentioned State (other than in the area of implementation or management
the investment, if it's not about the activities in the banking or insurance business
by a bank or insurance company) and the income arising from the second
Contracting State is obtained on the basis of the commercial or industrial
activities or in connection with it;
(d)), the company, whose principal class of shares is materially the scale and
regularly traded on a stock exchange recognised securities or that is
wholly owned, directly or indirectly, a resident of a Contracting State,
the principal class of shares is the substantial scale and regularly traded
on a stock exchange recognised securities;
(e)), a body which is a non-profit organisation (including pension fund
or private foundation) and that, on the basis of this position, it is generally
exempt from taxation in the Contracting State in which he is a resident of,
provided that more than half of the actual beneficiaries, members or
attendees, if you are like that, they are in such an organization in
This article, the advantages arising from this agreement; or
f) person who meets both of the following conditions:
(i) more than 50% of the actual market share of such person (or in the case of
the company, more than 50% of the number of shares of each type of shares of the company)
is owned, directly or indirectly, by persons who are entitled to
benefits arising from this agreement pursuant to subparagraphs a), b), (d) or (e)));
and
(ii) not more than 50% of the gross income of such persons is used directly
or indirectly, on the fulfilment of obligations (including obligations for interest or royalty
fees) to persons who are not entitled to the benefits under this
the contract pursuant to subparagraphs a), b), (d) or (e)).)
2. A person who is not entitled to benefits pursuant to the provisions of this agreement,
paragraph 1 may be granted, however, the benefits of this Treaty,
If the competent authority of the State in which the income source shall designate.
3. For the purposes of subparagraph d) of paragraph 1, the expression means "change of recognized
securities ":
and NASDAQ) system owned by the National Association of
Securities Dealers, Inc. (National Association of securities dealers,
Inc.) and any stock exchange registered with the Securities and Exchange
Commission (Commission of securities and stock exchanges) as a National Securities Exchange
securities for the purposes of the Act on the stock exchanges of 1934;
(b)) the Czech stock exchange (stock exchange Prague a.s.) and any other
a stock exchange recognised by the public authorities; and
(c) any other stock exchange), on which the competent authorities shall agree.
4. For the purposes of subparagraph (f)) (ii) of paragraph 1, the term "gross receipts"
means the gross income, or where an undertaking engaged in industrial and
commercial activities involving the processing or production of the goods, the gross proceeds
less the direct cost of labor and material that can be attributed to the
such processing or production and that are or may be paid from the
These revenues.
Article 18
Artists and athletes
1. Income derived by a resident of a Contracting State as to the
public entertainer, such as a theatre, film,
radio or television artist, or a musician, or as an athlete of the
their personally executing activities in the other Contracting State, may be
Notwithstanding the provisions of articles 14 (independent professions) and 15 (Dependent
profession) are taxed in that other State, except when the amount
gross income accruing to the artists or athletes, including expenses,
him or on his behalf were paid out of such activities,
shall not exceed twenty thousand United States dollars (USD 20,000) or their
the equivalent in Czech Crowns for the applicable tax year. Such a tax may
be imposed on the whole amount of the deduction of all gross proceeds
such artists or athletes at any period during the relevant
tax year, assuming that the artist or athlete is entitled to
You may receive a refund of such taxes when the tax liability is incurred in the
the relevant tax year under the provisions of this agreement.
2. If the income from the activities carried out personally by the artist or
athlete accrues not to that artists or athletes, but to another person,
This revenue may be the other person, notwithstanding the provisions of article 7
(Profits) and 14 (an independent profession) taxed in the Contracting State in
which are the activities of the artist or athlete are exercised, unless
found that not even an artist or an athlete or other person, they may have to
relationship, do not participate directly or indirectly in the profits of that other person
in any way, including the receipt of deferred remuneration, bonuses, fees,
dividends, profit distribution partnerships or other partitioned
profits.
3. the income accruing to a resident of a Contracting State as artists or
athletes will, notwithstanding the provisions of paragraphs 1 and 2 shall be exempt from
the taxation of the second Contracting State, if the visit to that other State
is substantially paid from public funds for the first-mentioned State
or its lower administrative subdivision or a local authority or
exercised on the basis of a specific agreement between the Governments of the Contracting States.
Article 19
Pensions, annuities, alimony and child benefits
1. subject to the provisions of article 20 (public service):
a) pensions and other similar remuneration for the previous employment arising
a resident of a Contracting State, that is their actual
by the owner or other person who is resident in the same Contracting State,
shall be taxable only in that State; and
(b) social insurance contributions) and other public pensions paid by one
a Contracting State to a resident of the other Contracting State, or the citizens of the United
States shall be taxable only in the first-mentioned State.
2. Rents accruing to a resident of a Contracting State, which is their
beneficial owner, it shall be taxable only in that State. The expression
"annuity" as used in this paragraph indicates a set amount paid
repeatedly at specified dates after the specified number of years on the basis of the commitment
to make the payments in return for adequate performance entirely (other than
the provision of services).
3. Alimony paid to a resident of a Contracting State shall be taxable
only in that State. The term "alimony" as used in this paragraph indicates
recurring payments made under a written contract about a breakup, or
According to the Decree of divorce, separate nutrition or compulsory support,
and that are taxable for the recipient according to the laws of the State of which he is
resident.
4. Non-deductible alimony and recurring payments for the purpose of child support
carried out under a written contract about a breakup, or by decision of the
divorce, separation pay, or compulsory support, paid
a resident of a Contracting State to a resident of the other Contracting State,
are not subject to tax in that other State.
Article 20
Public function
Remuneration, including pensions, paid out of public funds of a Contracting
State or lower administrative department or local authority of that State
citizens of this State for services rendered in the functions of Government in nature
shall be taxable only in that State. However, the provisions of article 14 of
(An independent profession), article 15 (Dependent profession) or article 18 of the
(Artists or athletes), as the case may be applied and shall not be used
the previous sentence remuneration paid out of public funds of a Contracting
the State Department or the local sub-district administrative authority of that State for
services rendered in connection with the industrial or commercial activities
by any Contracting State, a political subdivision, or
local authority of that State.
Article 21
Students, trainees, teachers and researchers
1.
a) a natural person who is a resident in a Contracting State to the
the beginning of his visits the other Contracting State and who is temporarily staying
in that other State for the primary purpose of:
(i) at a university or other officially recognised educational Institute
in that other Contracting State, or
(ii) ensure the training required to qualify by profession
or professional specialization, or
(iii) study or conduct research as a recipient of the cash gifts,
contributions and awards from governmental, religious, charitable, scientific,
literary or educational organisations,
will be exempt from taxation by the other Contracting State of any and all amounts
described in subparagraph (b)) of this paragraph for a period not exceeding five
years from the date of their arrival at that other Contracting State.
(b)) the amounts referred to in paragraph) of this paragraph are:
(i) of the remittance from abroad, other than remuneration for personal services, for the purpose of
nutrition, education, study, research or training;
(ii) the monetary donation, contribution or award; and
(iii) income from personal services performed in that other State in the
Summary of not more than 5000 dollars in the United States (5000 USD)
or its equivalent in Czech Crowns for any tax year.
2. A natural person who is a resident of a Contracting State to the
the beginning of his visits the other Contracting State and who is temporarily staying
in that other Contracting State as an employee of a resident of the first-
the said Contracting State or has a contract with him, for the primary purpose of:
and to obtain technical, professional) or business experience from the
a person other than a resident of the first-mentioned Contracting State thereof,
or
(b)), at a university or other officially recognised educational Institute
in that other Contracting State,
will be exempt from taxation by the other Contracting State for a period of 12
consecutive months of their income from personal services in summary
amount not exceeding 8000 United States dollars ($ 8000) or its
equivalent in Czech Crowns.
3. A natural person who is a resident of a Contracting State in
the time, when it starts to bother temporarily in the other Contracting State, and which
temporarily resides in that other State for a period not exceeding 1 year,
as a participant in the Government-funded program of the other Contracting
the State for the primary purpose of the training, research or study, will be exempt
This second State from taxation of its income from personal services
undertaken in connection with such training, research or study in
the latter Contracting State in aggregate amount not exceeding 10 000
United States dollars (US $ 10,000) or its equivalent in the Czech
Crowns.
4. the competent authorities of the Contracting States may agree to amend the amounts
referred to in paragraphs 1 (b) (iii), 2 (b) and 3 of this article, in order to
taken into account the significant changes in price levels.
5. An individual who visits a Contracting State for the primary purpose of
teaching or carrying out research at a University, College, school or
Another officially recognised educational or Research Institute in this contractual
State and who is or was immediately before such visit
a resident of the other Contracting State, shall be exempt from taxation in the first-
that State for a period not exceeding two years from the remuneration for such
teaching or research. The benefits provided in this paragraph will not be granted
a natural person who, during the immediately preceding period
benefit from one of the preceding paragraphs of this article.
A natural person shall be entitled to the benefits of this paragraph only once.
6. This article shall not apply to income from research if such
research is carried out in the public interest but primarily for the private
benefit of a specific person or persons.
Article 22
Other income
1. the income of a person who is resident in a Contracting State, whether they arise
Anyway, which are 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 (income from
immovable property), if the beneficial owner of such income, which is
a resident of a Contracting State, carries out or carry out industrial and
business activity in the other Contracting State through a permanent
establishment located there, or exercised or performed in this second
State independent of the profession of a permanent base located there, and this revenue
are attributable to such permanent establishment or fixed base. In such a
the case will apply the provisions of article 7 (business Profits) or article 14 of
(An independent profession), depending on what matters.
Article 23
Property
1. Capital represented by immovable property referred to in article 6 (Income
of the immovable property), owned by the resident of a Contracting State, and
located in the other Contracting State may be taxed in that other
State.
2. Capital represented by movable property that forms part of the operating
the property of a permanent establishment which an enterprise of a Contracting State in the
the other Contracting State or of movable property relating to permanent
the base, which is a resident of a Contracting State in the other Contracting
State in order to exercise an independent profession, may be taxed in that
the second State.
3. Capital represented by ships, aircraft and containers that custom
a resident of a Contracting State and which operates in the international
transport and movable property pertaining to the operation of such ships,
and aircraft, are subject to tax only in that State.
4. any other part of the property of a resident of a Contracting State
shall be taxable only in that State.
Article 24
Elimination of double taxation
1. in accordance with the provisions and subject to the limitations of the legislation
The United States (which may be amended from time to time without
have changed their general principles), a resident of the United States shall permit or
citizens of the United States as a credit on the income tax of the United States tax
income paid in the Czech Republic to a resident or a citizen of the
or on its behalf.
2. In the Czech Republic, double taxation will be avoided in the following
follows:
Czech Republic may, when depositing taxes its residents included in the
base from which to impose such a tax, the revenue that can be
According to the provisions of this Treaty also taxed in the United States, however,
enables to reduce the amount of tax calculated on the basis of the amount of such
equal to the tax paid in the United States (other than only to
the basis of citizenship). Such a reduction shall not exceed that part of the Czech taxes
calculated before the reduction, that fairly falls on revenue
may be taxed under the provisions of this agreement in the United States
(other than on the basis of citizenship).
3. in the case of a natural person who is a citizen of the United States and
a resident of the United States, it is considered that the income that may be
taxed in the United States solely because of citizenship in accordance with the
paragraph 3 of article 1 (the person to which the contract applies), has a source in the
The Czech Republic, to the extent necessary to avoid double taxation,
provided that in no event will the duty paid to the United States
less than the tax that would have been payable if a natural person has not been
citizen of the United States.
Article 25
Prohibition of discrimination
1. nationals of a Contracting State shall not be subjected in the
the other Contracting State to any taxation or duties associated with him,
which is other or more burdensome than the taxation and connected requirements
which are or may be subjected by nationals of this second
State who are in the same situation. This provision will apply
as well as to persons who are not residents of one or both of the Contracting States.
However, for the purposes of United States taxation, citizens of the United
States who are subject to taxation on the basis of the worldwide profits, are not
in the same situation as Czech nationals, who are not residents
Of the United States.
2. the term "nationals" means:
and all the natural persons) which are nationals of any of the
Contracting State;
(b)) to any legal person, partnership and association which have been
constituted under the law in force in a Contracting State.
3. the taxation on a permanent establishment which an enterprise of a Contracting State has in the
the other Contracting State, that other State will not be less favourable than
taxation of enterprises of that other State carrying out the same activity.
This provision shall not be construed as an obligation of a Contracting State,
admitting to residents of the other Contracting State personal credits, deductions and
reduction for tax purposes for reasons of status or family
the commitments which it grants to its residents.
4. nothing in this article shall be construed as preventing one of the
the States parties, save tax, as described in paragraph 6 of article 10
(Dividends).
5. Except where the provisions of paragraph 1 shall apply to article 9
(Associated enterprises), paragraph 4 of article 11 (interest) or paragraph 5 of article
12 (royalties), interest, royalties and other remuneration paid
a resident of a Contracting State to a resident of the other Contracting State
for the purposes of determining the taxable profits of a resident of the first-mentioned
deductible under the same conditions as if they had been paid to a resident of the
the first-mentioned State. Similarly, any debts that has a resident
of a Contracting State to a resident of the other Contracting State, shall be
to determine the taxable assets of former resident of deductible
under the same conditions as if they had been contracted to a resident of the first-
of that State.
6. enterprises of a Contracting State, the capital of which is wholly or partly,
directly or indirectly owned or controlled by a person or persons,
that are resident in the other Contracting State, shall not be subjected in the first-
mentioned State to any taxation or duties associated with him that
is other or more burdensome than the taxation and connected requirements to which
are or may be subjected to other similar businesses for the first time
of that State.
7. The provisions of this article shall, notwithstanding the provisions of article 2 (taxes,
to which the contract applies) will apply to taxes of every kind
and character imposed by one of the Contracting States, or of his lower
Administrative Department or local authority of that State.
Article 26
Resolving cases by agreement
1. where a person considers that the actions of one or both of the Contracting
States lead or lead it to taxation not in accordance with the
the provisions of this Treaty, may, notwithstanding the remedies that
provides the right of those States, present his case to the competent authority
the Contracting State of which he is a resident or national. Case
must be presented within three years from the first notification of the action of the head of
to taxation not in accordance with the provisions of this agreement.
2. the competent authority will try if the objection for
justified and if it is not itself able to find a satisfactory solution, to resolve the
the case of the agreement with the competent authority of the other Contracting State, so that the
avoid taxation which is not in conformity with this agreement. Achieved
the agreement will be made without regard to any time or other
the procedural restriction contained in national legislation
Contracting State.
3. the competent authorities of the Contracting States shall endeavour to resolve by agreement
any difficulties or concerns that may arise in the interpretation of
or application of this agreement. They may also consult together for the prevention of
double taxation in cases where the contract is not.
4. the competent authorities of the Contracting States may come in direct contact with a view to
reaching an agreement in the sense of the preceding paragraphs.
Article 27
The exchange of information and assistance in the field of management
1. the competent authorities of the Contracting States shall exchange the information necessary
for the application the provisions of this agreement or of national laws
regulations of the Contracting States shall apply to the taxes which are the subject
of this agreement, provided that such taxation is not contrary to this agreement.
Exchange of information is not restricted by article 1 (scope of the contract
covered). Any information received by a Contracting State shall be maintained
in the secret in the same manner as information received under
national law of that State and shall be disclosed only to
to persons or authorities (including courts and administrative bodies) concerned with
charge of the assessment, collection or enforcement, or the management of the criminal
prosecution in the matter of taxes, or deciding on appeals in
relation to the taxes covered by this agreement. Such persons or authorities
They shall apply these information only for those purposes. This information can
disclose in public hearings or in judicial
decisions.
2. The provisions of paragraph 1 shall not be in any way interpreted as
store the Contracting State the obligation:
and management measures) to conduct that would violate the law or
the administrative practice of that or of the other Contracting State;
(b)) to divulge information that could not be obtained on the basis of the legal
regulations or in a normal administrative procedure of this or of the other Contracting
State;
(c)) to divulge information which would reveal a trade, business,
industrial, commercial or professional secret or trade process, or
information whose communication would be contrary to public policy.
3. If in accordance with this article, the requested information one
Contracting State, gets the second Contracting State information, which is
covered by the requirement, in the same manner and to the same extent as if the
the tax for the first-mentioned State were the tax of that other State and has been saved
This second State. On special request of the competent authority of one
a Contracting State shall provide to the competent authority of the other Contracting State
information under this article in the form of depositions of witnesses and verified
copies of unpublished original documents (including books,
documents, statements, records, accounts and manuscripts in the same the extent to which
such statements and documents obtained under the laws and
administrative practices of that other State with respect to its own taxes.
4. Notwithstanding the provisions of article 2 (taxes covered)
with this agreement for the purposes of this article shall apply to the taxes of all kinds,
imposed by a Contracting State.
Article 28
Diplomats and consular officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular
officials under the General rules of international law or on the basis of
the provisions of special agreements.
Article 29
Entry into force
1. this Treaty is subject to ratification in accordance with the procedures
applicable to each of the Contracting States, and ratification shall be
exchanged in Washington, D.C., as soon as possible.
2. the contract shall enter into force by the exchange of instruments of ratification and its
the provisions will take effect:
and) with regard to taxes withheld at source, on amounts paid or
attributed to the first day, or after the first day of the second month following
After the date on which the Agreement enters into force;
(b)) in respect of other taxes, for taxation years beginning on the first day
or after the first day of January of the year in which the Agreement enters into force.
Article 30
Notice of termination
1. this Agreement shall remain in force until denounced by one
Contracting State. Each State party may terminate the contract at any time after
5 years from the date when the Treaty enters into force, provided that the
at least six months before the termination of the diplomatic note was passed to the
along the way. In this case the Treaty cease to apply:
and) with regard to taxes withheld at source, on amounts paid or
attributed to the first day, or after the first day of January following the
the expiration of the six-month period;
(b)) in respect of other taxes, for taxation years beginning on the first day
or after the first day of January next following the expiration of six months.
In witness whereof the undersigned, duly authorised, have signed this agreement.
Given in duplicate in Prague, in Czech and English languages, each
both texts are equally authentic, on July 16. September 1993.
For the Czech Republic:
Ivan Kočárník, v.r.
For the United States:
Adrian Basora v.r.
