On October 21, 2016, Poland and Taiwan signed a Special Double Taxation Agreement ("the agreement"). Since the re are no diplomatic relations between Poland and Taiwan, the agreement has been officially concluded between the Warsaw Trade Office in Taipei and the Taipei Economic and Cultural Office in Warsaw.

The agreement follows the standard OECD Model Convention, with a number of significant deviations. With respect to the description of taxes covered, the agreement refers to the taxes in the territory in which the taxation law administered by the Polish Ministry of Finance is applied and, respectively, to the taxes in the territory in which the taxation law administered by the Ministry of Finance, Taiwan is applied. The same references are used for the definition of the term "territory" and are followed throughout the agreement. The definition of permanent establishment follows the standard language of the OECD Mode l Convention, providing that the building site, construction or installation project constitutes a permanent establishment only if it lasts more than 12 months.

According to the agreement the withholding taxes on cross-border dividends and interest payments shall be limited to 10 percent of the respective gross amounts, while the withholding taxes on cross-border royalty payments shall be limited to 3 percent in case of the royalties paid as a consideration for the use of or the right to use, industrial, commercial, or scientific equipment and to 10 percent of the gross amount of the royalties in all other cases.

Regarding the capital gains, the agreement includes a real-estate rich company clause, providing that gains derived by a resident of a territory from alienation of shares deriving more than 50 percent of their value directly or indirectly from immovable property situated in the other territory may be taxed in that other territory.

Unlike the current OECD Model Convention, the agreement includes rules dealing with independent personal services.

Both contracting territories shall apply an ordinary credit as the method for avoidance of double taxation of income. The agreement also includes a special pro­ vision regarding limitation on benefits.

On December 15, 2016, the Polish Parliament, passed a special law on principles for the avoidance of double taxation of income between the two territories mentioned, effectively allowing for the implementation of the agreement. As a consequene, the agreem­ent became effective on January 1, 2017 and applies to income derived on or after that date.

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