JUDr. Radka Jerie
The Isle of Man and the Czech
Republic signed a Tax Information Exchange Agreement
(TIEA) on 18 July to regulate and facilitate the
exchange of tax information between them. The TIEA will
enter into force after both parties have completed all
required ratification procedures and exchanged
corresponding notifications. Most of its provisions will
then take effect immediately, with the remainder taking
effect on the following 1 January.
Information exchange
The TIEA covers the following taxes:
-
VAT
-
immovable property tax and taxes
on income (including most capital gains) of
individuals and legal persons imposed by the Czech
Republic; and
-
taxes on income or profit imposed
by the Isle of Man (there is no capital gains tax).
Under the TIEA the competent
authorities of the two parties are obliged to provide
each other with tax information that is “foreseeably
relevant to the administration and enforcement of the
domestic laws
of the Contracting Parties concerning
taxes covered by this Agreement” upon request. To
demonstrate its relevance, any request must be supported
by the information and confirmations specified in
article 5 of the TIEA, including a statement that the
party making the request has pursued all means available
in its territory to obtain the information requested.
The party receiving a valid request
is obliged to use all relevant information gathering
measures in order to provide the information requested,
notwithstanding that it may not need such information
for its own tax purposes.
Exchange obligation is construed
widely. It extends to information held by banks and
financial institutions, or persons acting as agents or
fiduciaries including nominees and trustees, information
regarding the legal and beneficial ownership of
companies and their ownership chain, information on
settlors, trustees, protectors and beneficiaries of
trusts, or on founders, members of council and
beneficiaries of foundations.
Limitations
There are, however, some limitations.
A party is not required to obtain or provide information
that the other party would not be able to obtain under
its own law for the administration or enforcement of its
own tax laws.
Furthermore, there is no obligation
to provide information subject to legal privilege or
information which would disclose any trade, business,
industrial, commercial or professional secret or trade
process.
A request may also be declined if it
is not made in accordance with the TIEA or if the
disclosure of information would be contrary to public
policy or it 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.
On the other hand, disputing the tax
claim which has given rise to the information request is
not an accepted ground for refusal of the request.
Examinations abroad
The TIEA also provides for the
possibility of examinations and interviews being carried
out by officials of one party in the territory of the
other. Thus, with reasonable notice one party may
request permission for its competent representatives to
enter the territory of the other for the purpose of
interviewing individuals and examining 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.
