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Poland; Malta

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Protocol to treaty between Poland and Malta – details

Details have become available of the amending protocol to the Malta and Poland income tax treaty of 7 January 1994, signed on 6 April 2011).

The protocol contains a new exchange of information provision (Art. 17) in line with Art. 26 of the OECD Model Tax Convention.

Art. 3 provides that a building site or construction or assembly or installation project constitutes a permanent establishment, where such site or project continues for more than 12 months.

Art. 8 replaces Paras. 2, 4 and 5 of Art. 10 of the treaty and provides, inter alia, for the maximum rates of withholding tax on dividends, as follows:

-   10% (currently, 15%) for dividends paid by a company resident in Poland to a resident of Malta who is the beneficial owner of the dividends; and
-   0% if the beneficial owner of such dividends is a company resident in Malta that holds directly at least 10% of the capital of the company paying the dividends on the date the dividends are paid and has done so or will have done so for an uninterrupted 24-month period in which that date falls (currently 5%, if 20% holding).

For dividends paid by a company which is a resident of Malta to a resident of Poland which is the beneficial owner thereof, the Maltese tax on the gross amount of the dividends shall not exceed that chargeable on the profits out of which the dividends are paid.

Art. 9 replaces Paras. 2, 5 and 6 of the Art. 11 of the treaty and provides, inter alia, for 5% (currently, 10%) on interest in general.

Art. 10 replaces Paras. 2, 3, 4 and 5 of the Art. 12 of the treaty and provides, inter alia, for 5% (currently, 10%) on royalties. The term "royalties" is redefined:

-   to mean "payments of any kind received as a consideration for the use of, or the right to use, any copyright, patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, any industrial, commercial, or scientific equipment or for information (know-how) concerning industrial, commercial or scientific experience"; and
-   to include "payments of any kind related to cinematograph films, and films or tapes for radio or television broadcasting".

Art. 11 replaces the whole Art. 13 of the treaty and provides, inter alia, that gains derived by a resident of a contracting state from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state may be taxed in that other state.

Art. 16 amends Art. 23 of the treaty and provides that Poland grants an exemption to avoid double taxation, However, the credit method applies to capital gains, dividends, interest and royalties.

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