DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE REPUBLIC OF ESTONIA [ S.L.123.67 1
SUBSIDIARY LEGISLATION 123.67
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH THE REPUBLIC OF ESTONIA 
ORDER
22nd January, 2003
LEGAL NOTICE 114 of 2003.
Citation.
1. The title of this order is the Double Taxation Relief on
Taxes on Income with the Republic of Estonia Order.
Arrangements to 
have effect.
2. It is hereby declared:
( a ) that the arrangements specified in the Convention set
out in the Schedule to this Order have been made with
the Republic of Estonia with a view to affording relief
from double taxation in relation to the following taxes
imposed by the laws of the Republic of Estonia:
- the income tax ( tulumaks );
( b ) that it is expedient that those arrangements should
have effect;
( c ) that the Convention has entered into force on the 22nd
January, 2003.
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SCHEDULE
CONVENTION
BETWEEN THE GOVERNMENT OF MALTA
AND THE GOVERNMENT OF THE REPUBLIC OF ESTONIA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of Malta and the Government of the Republic of Estonia,
desiring to conclude a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, have agreed as follows:
Article 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both of
the Contracting States.
Article 2
TAXES COVERED
1. This Convention shall apply to taxes on income imposed on behalf of a
Contracting State or of its local authorities, irrespective of the manner in which they
are levied.
2. There shall be regarded as taxes on income all taxes imposed on total
income, or on elements of income, including taxes on gains from the alienation of
movable or immovable property.
3. The existing taxes to which the Convention shall apply are in particular:
( a ) in Estonia:
the income tax ( tulumaks );
(hereinafter referred to as ''Estonian tax'');
( b ) in Malta:
the income tax;
(hereinafter referred to as ''Malta tax'').
4. The Convention shall apply also to any identical or substantially similar
taxes which are imposed after the date of signature of the Convention in addition to,
or in place of, the existing taxes. The competent authorities of the Contracting States
shall notify each other of any significant changes which have been made in their
respective taxation laws.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
( a ) the term ''Estonia'' means the Republic of Estonia and, when used in the
geographical sense, means the territory of Estonia and any other area
adjacent to the territorial waters of Estonia within which under the laws
of Estonia and in accordance with international law, the rights of
Estonia may be exercised with respect to the sea bed and its sub-soil and
their natural resources;
( b ) the term ''Malta'' means the Republic of Malta and, when used in a
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geographical sense, means the Island of Malta, the Island of Gozo and
the other islands of the Maltese archipelago including the territorial
waters thereof, as well as any area of the sea bed, its sub-soil and the
superjacent water column adjacent to the territorial waters, wherein the
Republic of Malta exercises sovereign rights, jurisdiction, or control in
accordance with international law and its national law, including its
legislation relating to the exploration of the continental shelf and
exploitation of its natural resources;
( c ) the terms ''a Contracting State'' and ''the other Contracting State'' mean
Estonia or Malta, as the context requires;
( d ) the term ''person'' includes an individual, a company and any other body
of persons;
( e ) the term ''company'' means any body corporate or any entity which is
treated as a body corporate for tax purposes;
( f ) the terms ''enterprise of a Contracting State'' and ''enterprise of the other
Contracting State'' mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;
( g ) the term ''international traffic'' means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship
or aircraft is operated solely between places in the other Contracting
State;
( h ) the term ''competent authority'' means:
(i) in Estonia, the Minister of Finance or his authorised
representative;
(ii) in Malta, the Minister responsible for finance or his authorised
representative;
( i ) the term ''national'' means:
(i) any individual possessing the nationality of a Contracting State;
(ii) any legal person, partnership or association deriving its status as
such from the laws in force in a Contracting State.
2. As regards the application of the Convention at any time by a Contracting
State, any term not defined therein shall, unless the context otherwise requires, have
the meaning that it has at that time under the law of that State for the purposes of the
taxes to which the Convention applies, any meaning under the applicable tax laws of
that State prevailing over a meaning given to the term under other laws of that State.
Article 4
RESIDENT
1. For the purposes of this Convention, the term ''resident of a Contracting
State'' means any person who, under the laws of that State, is liable to tax therein by
reason of his domicile, residence, place of management, place of incorporation or
any other criterion of a similar nature, and also includes that State and any local
authority thereof. This term, however, does not include any person who is liable to
tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident
of both Contracting States, then his status shall be determined as follows:
( a ) he shall be deemed to be a resident only of the State in which he has a
permanent home available to him; if he has a permanent home available
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to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);
( b ) if the State in which he has his centre of vital interests cannot be
determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident only of the State in which he
has an habitual abode;
( c ) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident only of the State of which he is a national;
( d ) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, the competent authorities of the
Contracting States shall endeavour to settle the question by mutual agreement. In the
absence of such agreement, such person shall not be considered to be a resident of
either Contracting State for the purposes of enjoying benefits under the Convention.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term ''permanent establishment''
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2. The term ''permanent establishment'' includes especially:
( a ) a place of management;
( b ) a branch;
( c ) an office;
( d ) a factory;
( e ) a workshop, and
( f ) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources including an offshore drilling site.
3. The term ''permanent establishment'' likewise encompasses:
( a ) a building site, a construction, assembly or installation project or
supervisory activities in connection therewith, but only where such site,
project or activities continue for a period of more than six months;
( b ) the furnishing of services, including consultancy services, by an
enterprise of a Contracting State through employees or other personnel
engaged by the enterprise for such purpose, but only where activities of
that nature continue for a period or periods aggregating more than six
months within any twelve month period.
4. Notwithstanding the preceding provisions of this Article, the term
''permanent establishment'' shall be deemed not to include:
( a ) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
( b ) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
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( c ) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
( d ) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or of collecting information, for the
enterprise;
( e ) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
( f ) the maintenance of a fixed place of business solely for any combination
of activities mentioned in subparagraphs ( a ) to ( e ), provided that the
overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -
other than an agent of an independent status to whom paragraph 6 applies - is acting
on behalf of an enterprise and has, and habitually exercises, in a Contracting State an
authority to conclude contracts in the name of the enterprise, that enterprise shall be
deemed to have a permanent establishment in that State in respect of any activities
which that person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph 4 which, if exercised through a fixed
place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that State through a
broker, general commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost wholly
on behalf of that enterprise, he will not be considered an agent of an independent
status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls
or is controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable
property (including income from agriculture or forestry) situated in the other
Contracting State may be taxed in that other State.
2. The term ''immovable property'' shall have the meaning which it has under
the law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions of
general law respecting landed property apply, any option or similar right to acquire
immovable property, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, or to explore for,
mineral deposits, sources and other natural resources. Ships, boats and aircraft shall
not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct
use, letting, or use in any other form of immovable property.
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4. Where the ownership of shares or other corporate rights in a company
entitles the owner of such shares or corporate rights to the enjoyment of immovable
property held by the company, the income from the direct use, letting, or use in any
other form of such right to enjoyment may be taxed in the Contracting State in which
the immovable property is situated.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from
immovable property of an enterprise and to income from immovable property used
for the performance of independent personal services.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it might be expected to
make if it were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly independently
with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be
allowed as deductions expenses which are incurred for the purposes of the
permanent establishment, including executive and general administrative expenses
so incurred, whether in the Contracting State in which the permanent establishment
is situated or elsewhere.
4. Insofar as it has been customary in a Contracting State to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts, nothing in
paragraph 2 shall preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the method of apportionment
adopted shall, however, be such that the result shall be in accordance with the
principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to
the permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in
other Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.
8. Nothing in this Article shall prevent a Contracting State from applying its
law relating to the taxation of any person who carries on the business of insurance.
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Article 8
SHIPPING AND AIR TRANSPORT
1. 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 provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
( a ) an enterprise of a Contracting State participates directly or indirectly in
the management, control or capital of an enterprise of the other
Contracting State, or
( b ) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in
their commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those conditions,
have not so accrued, may be included in the profits of that enterprise and taxed
accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that
State - and taxes accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other State and the profits so
included are profits which would have accrued to the enterprise of the first-
mentioned State if the conditions made between the two enterprises had been those
which would have been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of the tax charged therein on
those profits. In determining such adjustment, due regard shall be had to the other
provisions of this Convention and the competent authorities of the Contracting
States shall if necessary consult each other.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident and according to the laws of
that State, but:
( a ) where the dividends are paid by a company which is a resident of
Estonia to a resident of Malta who is the beneficial owner thereof, the
Estonian tax so charged shall not exceed:
(i) 5 per cent of the gross amount of the dividends if the beneficial
owner is a company (other than a partnership) which holds
directly at least 25 per cent of the capital of the company paying
the dividends;
(ii) 15 per cent of the gross amount of the dividends in all other cases;
( b ) where the dividends are paid by a company which is a resident of Malta
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to a resident of Estonia who is the beneficial owner thereof, Malta tax
on the gross amount of the dividends shall not exceed that chargeable on
the profits out of which the dividends are paid.
This paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.
3. The term ''dividends'' as used in this Article means income from shares or
other rights, not being debt-claims, participating in profits, as well as income from
other rights which is subjected to the same taxation treatment as income from shares
by the laws of the State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner
of the dividends, being a resident of a Contracting State, carries on business in the
other Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits
or income from the other Contracting State, that other State may not impose any tax
on the dividends paid by the company, except insofar as such dividends are paid to a
resident of that other State or insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed base
situated in that other State, nor subject the company’s undistributed profits to a tax
on the company’s undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in such
other State.
Article 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which
it arises and according to the laws of that State, but if the beneficial owner of the
interest is a resident of the other Contracting State, the tax so charged shall not
exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a
Contracting State, derived and beneficially owned by the Government of the other
Contracting State, including its local authorities, the Central Bank or any financial
institution wholly owned by that Government, or interest derived on loans
guaranteed by that Government shall be exempt from tax in the first-mentioned
State.
4. The term ''interest'' as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a 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
attaching to such securities, bonds or debentures. The term ''interest'' shall not
include any income which is treated as a dividend under the provisions of Article 10.
Penalty charges for late payment shall not be regarded as interest for the purpose of
this Article.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial
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owner of the interest, being a resident of a Contracting State, carries on business in
the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in respect of which
the interest is paid is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14, as the case may be,
shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a
resident of that State. Where, 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 in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the State in
which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of the
interest, having regard to the debt-claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall remain
taxable according to the laws of each Contracting State, due regard being had to the
other provisions of this Convention.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which
they arise and according to the laws of that State, but if the beneficial owner of the
royalties is a resident of the other Contracting State, the tax so charged shall not
exceed 10 per cent of the gross amount of the royalties.
3. The term ''royalties'' as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright of
literary, artistic or scientific work including cinematograph films and films or tapes
and other means of image or sound reproduction for radio or television broadcasting,
any patent, trade mark, design or model, plan, secret formula or process, or for the
use of, or the right to use, industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner
of the royalties, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the right or property in respect of
which the royalties are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a
resident of that State. Where, however, the person paying the royalties, whether he is
a resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the liability to pay the
royalties was incurred, and such royalties are borne by such permanent
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establishment or fixed base, then such royalties shall be deemed to arise in the State
in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of the
royalties, having regard to the use, right or information for which they are paid,
exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.
Article 13
ALIENATION OF PROPERTY
1. Income or gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6 and situated in the other
Contracting State or shares or comparable interests in a company the assets of which
consist directly or indirectly mainly of such property may be taxed in that other
State.
2. Gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such gains from the
alienation of such a permanent establishment (alone or with the whole enterprise) or
of such fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State operating ships or
aircraft in international traffic from the alienation of ships or aircraft operated in
international traffic or movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that State.
4. Gains from the alienation of any property other than that referred to in
paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the
alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by an individual who is a resident of a Contracting State in
respect of professional services or other activities of an independent character shall
be taxable only in that State unless he has a fixed base regularly available to him in
the other Contracting State for the purpose of performing his activities. If he has
such a fixed base, the income may be taxed in the other State but only so much of it
as is attributable to that fixed base. If an individual who is a resident of a
Contracting State has no such fixed base but he stays in the other Contracting State
for a period or periods exceeding in the aggregate 183 days in any twelve month
period commencing or ending in the fiscal year concerned, he shall be deemed to
have a fixed base regularly available to him in that other State and the income that is
derived from his activities referred to above that are performed in that other State
shall be attributable to that fixed base.
2. The term ''professional services'' includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the independent
activities of physicians, lawyers, engineers, architects, dentists and accountants.
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Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is exercised in
the other Contracting State. If the employment is so exercised, such remuneration as
is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:
( a ) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period
commencing or ending in the fiscal year concerned, and
( b ) the remuneration is paid by, or on behalf of, 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 the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by an enterprise of a Contracting State may be taxed in that
State.
Article 16
DIRECTORS’ FEES
Directors’ fees and other similar remuneration derived by a resident of a
Contracting State in his capacity as a member of the board of directors or any other
similar organ of a company which is a resident of the other Contracting State may be
taxed in that other State.
Article 17
ARTISTES AND SPORTSMEN
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a
resident of a Contracting State as an entertainer, such as a theatre, motion picture,
radio or television artiste, or a musician, or as a sportsman, from his personal
activities as such exercised in the other Contracting State, may be taxed in that other
State.
2. Where income in respect of personal activities exercised by an entertainer or
a sportsman in his capacity as such accrues not to the entertainer or sportsman
himself but to another person, that income may, notwithstanding the provisions of
Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the
entertainer or sportsman are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to income derived from
activities exercised in a Contracting State by an entertainer or a sportsman if the visit
to that State is wholly or mainly supported by public funds of one or both of the
Contracting States or local authorities thereof. In such case, the income shall be
taxable only in the Contracting State of which the entertainer or sportsman is a
resident.
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Article 18
PENSIONS AND SOCIAL SECURITY PAYMENTS
1. Subject to the provisions of paragraph 2 of Article 19, pensions and other
similar remuneration paid to a resident of a Contracting State in consideration of
past employment shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, pensions paid and other
payments made under the social security legislation of a Contracting State shall be
taxable only in that State.
Article 19
GOVERNMENT SERVICE
1. ( a ) Salaries, wages and other similar remuneration, other than a pension,
paid by a Contracting State or a local authority thereof to an individual
in respect of services rendered to that State or authority shall be taxable
only in that State.
( b ) However, such salaries, wages and other similar remuneration shall be
taxable only in the other Contracting State if the services are rendered in
that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.
2. ( a ) Any pension paid by, or out of funds created by, a Contracting State or a
local authority thereof to an individual in respect of services rendered to
that State or authority shall be taxable only in that State.
( b ) However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages
and other similar remuneration, and to pensions, in respect of services rendered in
connection with a business carried on by a Contracting State or a local authority
thereof.
Article 20
STUDENTS
A student, an apprentice or a trainee who is present in a Contracting State
solely for the purpose of his education or training and who is, or immediately before
being so present was, a resident of the other Contracting State shall be exempt from
tax in the first-mentioned State on payments received from outside that first-
mentioned State for the purpose of his maintenance, education or training.
Article 21
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not
dealt with in the foregoing Articles of this Convention shall be taxable only in that
State. However, such items of income, arising in the other Contracting State, may
also be taxed in that other 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, if the recipient of
such income, being a resident of a Contracting State, carries on business in the other
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Contracting State through a permanent establishment situated therein, or performs in
that other State independent personal services from a fixed base situated therein, and
the right or property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
Article 22
ELIMINATION OF DOUBLE TAXATION
1. In the case of a resident of Estonia, double taxation shall be eliminated as
follows:
Where a resident of Estonia derives income which, in accordance with this
Convention, may be taxed in Malta, unless a more favourable treatment is provided
in its domestic law, Estonia shall allow as a deduction from the tax on the income of
that resident an amount equal to the income tax paid thereon in Malta. Such
deduction shall not, however, exceed that part of the income tax in Estonia, as
computed before the deduction is given, which is attributable to the income which
may be taxed in Malta.
2. In the case of a resident of Malta, double taxation shall be eliminated as
follows:
Subject to the provisions of the law of Malta regarding the allowance of a
credit against Malta tax in respect of foreign tax, where, in accordance with the
provisions of this Convention, there is included in a Malta assessment income from
sources within Estonia, the Estonian tax on such income shall be allowed as a credit
against the relative Malta tax payable thereon.
3. For the purpose of paragraphs 1 and 2 the terms ''income tax paid thereon in
Malta'' and ''the Estonian tax on such income'' shall, for the first five years during
which this Convention is applicable, be deemed to include the Malta tax or the
Estonian tax which would have been paid but which has been reduced or waived
under incentive provisions of the Malta law or the Estonian law designed to promote
economic development to the extent that reduction or exemption is granted for
profits from industrial or manufacturing activities or from agriculture, fishing or
tourism provided that in the case of application of paragraph 1 the activities are
carried out within Malta and in the case of application of paragraph 2 the activities
are carried out within Estonia.
Article 23
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith, which is
other or more burdensome than the taxation and connected requirements to which
nationals of that other State in the same circumstances, in particular with respect to
residence, are or may be subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not residents of one or both of
the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other State than the taxation levied on enterprises of that other State
carrying on the same activities. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes on account of civil status or
family responsibilities which it grants to its own residents.
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3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of
Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a
resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any taxation
or any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the first-
mentioned State are or may be subjected.
Article 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the provisions
of this Convention, he may, irrespective of the remedies provided by the domestic
law of those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if his case comes under paragraph 1 of Article 23,
to that of the Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in taxation not in
accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in accordance with the
Convention. Any agreement reached shall be implemented notwithstanding any time
limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of the Convention. They may also consult together for
the elimination of double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate with
each other directly, including through a joint commission consisting of themselves
or their representatives, for the purpose of reaching an agreement in the sense of the
preceding paragraphs.
Article 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information as is necessary for carrying out the provisions of this Convention or of
the domestic laws of the Contracting States concerning taxes covered by the
Convention insofar as the taxation thereunder is not contrary to the Convention. The
exchange of information is not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed only to persons
or authorities (including courts and administrative bodies) concerned with the
assessment or collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to, the taxes covered by the Convention. Such
persons or authorities shall use the information only for such purposes. They may
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disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose
on a Contracting State the obligation:
( a ) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
( b ) to supply information which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
( c ) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy
( ordre public ).
Article 26
LIMITATION OF BENEFITS
1. Where under any provision of this Convention any income is relieved from
tax in a Contracting State and, under the law in force in the other Contracting State,
a person, in respect of that income, is subject to tax by reference to the amount
thereof which is remitted to or received in that other Contracting State and not by
reference to the full amount thereof, then the relief to be allowed under this
Convention in the first-mentioned Contracting State shall apply only to so much of
the income as is taxed in the other Contracting State.
2. The provisions of this Convention shall not apply to persons enjoying a
special fiscal treatment by virtue of the laws or the administrative practice of either
one of the Contracting States which are identified in a Protocol to this Convention.
Neither shall they apply to income derived from such persons by a resident of the
other Contracting State, nor to shares or other rights in such persons owned by such
a resident.
3. Notwithstanding any other provision of this Convention, a resident of a
Contracting State shall not receive the benefit of any reduction in or exemption from
taxes provided for in this Convention by the other Contracting State if the main
purpose or one of the main purposes of the creation or existence of such resident or
any person connected with such resident was to obtain the benefits under this
Convention that would not otherwise be available.
Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal privileges of members of
diplomatic missions or consular posts under the general rules of international law or
under the provisions of special agreements.
Article 28
ENTRY INTO FORCE
1. The Governments of the Contracting States shall notify each other, through
diplomatic channels, that the legal requirements for the entry into force of this
Convention have been complied with.
2. The Convention shall enter into force on the date of the later of the
notifications referred to in paragraph 1 and its provisions shall have effect:
( a ) in Estonia:
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(i) in respect of taxes withheld at source, on income derived on or
after the first day of January in the calendar year next following
the year in which the Convention enters into force;
(ii) in respect of other taxes on income, for taxes chargeable for any
fiscal year beginning on or after the first day of January in the
calendar year next following the year in which the Convention
enters into force;
( b ) in Malta:
in respect of taxes on income derived during any calendar year or
accounting period, as the case may be, beginning on or after the first
day of January immediately following the date on which the Convention
enters into force.
Article 29
TERMINATION
This Convention shall remain in force until terminated by a Contracting
State. Either Contracting State may terminate the Convention, through diplomatic
channels, by giving written notice of termination at least six months before the end
of any calendar year. In such event, the Convention shall cease to have effect:
( a ) in Estonia:
(i) in respect of taxes withheld at source, on income derived on or
after the first day of January in the calendar year next following
the year in which the notice has been given;
(ii) in respect of other taxes on income, for taxes chargeable for any
fiscal year beginning on or after the first day of January in the
calendar year next following the year in which the notice has been
given;
( b ) in Malta:
in respect of taxes on income derived during any calendar year or
accounting period, as the case may be, beginning on or after the first
day of January immediately following the date on which the notice is
given.
In witness whereof, the undersigned, duly authorised thereto, have signed
this Convention.
Done in duplicate at Tallinn this 3rd day of May 2001, in the Estonian and
English languages, both texts being equally authentic. In the case of divergence of
interpretation the English text shall prevail.
AUSTIN GATT MART LAAR
For the Government of For the Government of
Malta the Republic of Estonia
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WITH THE REPUBLIC OF ESTONIA [ S.L.123.67 17
PROTOCOL
At the signing of the Convention between the Government of the Republic
of Estonia and the Government of Malta for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income (hereinafter referred to
as ''the Convention'') the undersigned have agreed upon the following provisions
which form an integral part of the Convention.
1. With reference to paragraph 3 of Article 4
It is understood that under the domestic legislation in Estonia, a company
may only be considered resident for tax purposes if it is incorporated in Estonia.
Should such legislation be changed to provide for tax residence to be established
also on the basis of the place of effective management of a company, then where a
company is considered to be a resident of both Contracting States, it shall be deemed
to be a resident only of the Contracting State in which its place of effective
management is situated.
This provision shall be applicable from the date from which the said change
in legislation shall have effect.
2. With reference to paragraph 1 of Article 7
It is understood that profits of an enterprise of a Contracting State derived
from the sale of goods or merchandise in the other Contracting State of the same or
similar kind as those sold, or from other business activities carried on in the other
Contracting State of the same or similar kind as those effected, through a permanent
establishment situated in that other State may be considered attributable to that
permanent establishment if it is established that such sales or activities were
structured in a manner intended to avoid taxation in that other State.
3. With reference to paragraph 3 of Article 7
It is understood that the expenses to be allowed as deductions by a
Contracting State shall include only expenses that are deductible under the domestic
laws of that State.
4. With reference to paragraph 2 of Article 26 it is understood that:
( a ) in the case of Estonia, there is no legislation or administrative practice
under which persons may enjoy special fiscal treatment;
( b ) in the case of Malta, the persons who enjoy a special fiscal treatment are
the following:
(i) persons entitled to a special tax benefit under the Malta Financial
Services Centre Act, 1994, except for those persons who opt to be
subject to the normal provisions of the Income Tax Act (Cap.
123) and of the Income Tax Management Act, 1994; or
(ii) persons who and to the extent to which under the provisions of the
Merchant Shipping Act, 1973 are not subject to tax on the profits
derived from the operation of ships in international traffic; or
(iii) persons entitled to any special tax benefit in respect of
distributions by a trust subject to the provisions of the Trusts Act
given that a trust as laid down in that Act is not vested with legal
personality and therefore cannot benefit under this Convention in
its own right;
( c ) if any law substantially similar to those indicated in sub-paragraph ( b )
of this paragraph is enacted by either Contracting State and it is agreed
by the competent authorities of the Contracting States that it be included
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within the terms of paragraph 2 of Article 26, persons entitled to any
special tax benefit thereunder shall likewise be excluded from the
provisions of this Convention.
In witness whereof, the undersigned, duly authorised thereto, have signed
this Protocol.
Done in duplicate at Tallinn this 3rd day of May 2001, in the Estonian and
English languages, both texts being equally authentic. In the case of divergence of
interpretation the English text shall prevail.
AUSTIN GATT MART LAAR
For the Government of For the Government of
Malta the Republic of Estonia
