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JUDr. Radka Jerie
The Czech Republic has concluded another agreement on
exchange of information on tax
matters (TIEA). Following the signing of similar agreements
with the British Virgin Islands
on 13 June 2011 and the Isle of Man on 18 July 2011, the
Czech Republic concluded and
signed a TIEA with Bermuda on 15 August 2011. The TIEA with
Bermuda will enter into
force after both parties have completed all required
ratification procedures and exchanged
corresponding notifications. For criminal tax matters the
treaty provisions will take effect
immediately on that date.
The TIEA meets the OECD international standard on tax
cooperation and transparency. A
protocol concerning the interpretation and application is an
integral part of the agreement.
Information Exchange
The taxes which are the subject of the TIEA are:
the tax on income of individuals and legal persons, the tax
on immovable property, the
VAT and the excise tax imposed by the Czech Republic; and
direct taxes of every kind and description imposed by
Bermuda.
The competent authorities of the two parties are obliged to
provide each other with tax
information upon request. The party demanding information
must demonstrate the foreseeable
relevance of the information to the request and provide the
other party with certain
identification details and confirmations specified in
Article 5 of the TIEA.
Information can be exchanged only for the purpose of the
administration and enforcement of
the domestic laws concerning the taxes covered by the TIEA.
This (according to Article 1 of
the TIEA) includes information relevant to the
determination, assessment and collection of
such taxes, the recovery and enforcement of tax claims, or
the investigation or prosecution
of tax matters. The state making the request must declare
that the request is in compliance
with its law and normal administrative practices. The other
state is then obliged to provide the
information, irrespective of whether the conduct under
investigation would constitute a crime
under its domestic laws, and irrespective of whether the tax
claim giving rise to the request is
disputed.
The scope of information exchange under the TIEA with
Bermuda is widely drawn, as is
also the case with the agreements with the BVI and the Isle
of Man mentioned above. It
covers information held by banks and other financial
institutions, persons acting as agents
or fiduciaries including nominees and trustees, and
information regarding the ownership of
companies, trusts, partnerships, foundations and other
persons and their ownership chain.
With regard to trusts, information on settlors, trustees and
beneficiaries can be required,
and in the case of foundations information on founders,
members of council and foundation
beneficiaries.
Information received under the TIEA must be treated as
confidential and may be disclosed
only to relevant tax bodies of the requesting state. They in
turn may disclose the information
in public court proceedings or in judicial decisions.
However, disclosure to any other person
or any other jurisdiction can proceed only with the express
written consent of the competent
authority of the requested party (Article 8 TIEA).
Limitations
There is no obligation under the TIEA to comply with a
request for information if:
• it concerns ownership information regarding publicly
traded companies or public
collective investment funds or schemes unless such
information can be obtained
without giving rise to disproportionate difficulties
(Article 5(4)(b) TIEA); or
the requested information would disclose any trade,
business, industrial, commercial
or professional secret or trade process (Article 7(2) TIEA);
or
the party requesting the information would not be able to
obtain the relevant
information under its own laws for the purposes of the
administration and enforcement
of its own tax laws (Article 7(1) TIEA); or
the request is not made in accordance with the TIEA (Article
7(1)) or the disclose of
the information would be contrary to public policy or
fundamental social principles
(Article 7(4) TIEA); or
the requested information would reveal confidential
communications between a
client and an attorney where such communications are
produced for the purposes of
seeking or providing legal advice, or for use in legal
proceedings, whether existing or
contemplated (Article 7(3) TIEA); or
the information is requested in connection with enforcement
of tax law discriminatory
against a national of the requested party as compared with a
national of the requesting
party in the same circumstances (Article 7(6) TIEA).
Examinations abroad
The treaty also provides for the possibility of examinations
and interviews being carried out
by officials of one state in the territory of the other.
Thus, one state may allow representatives
of the competent authority of the other to enter its
territory in order to interview individuals
and examine records with the prior written consent of the
persons concerned.
Similarly, a party can request permission to attend a tax
examination taking place in the
territory of the other.
The parties are obliged to notify each other of the time and
place of the tax examination or the
interview, as applicable.
24 August 2011
Mgr. Kateřina Brandýsová, LL.M.
Advocate (Cyprus) / Senior Associate
ANDREAS NEOCLEOUS & CO LLC
Prague Office: Betlémská 1, 110 00 Prague 1, Czech Republic
http://www.neocleous.com
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