Exchange Of Tax Information Between The Czech Republic And The Isle Of Man

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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.