Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income
- Contractual party
- New Zealand
- Date of Issue
SYNTHESISED TEXT OF THE MLI AND THE CONVENTION BETWEEN THE GOVERNMENT OF FINLAND AND THE GOVERNMENT OF NEW ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
This document presents the synthesised text for the application of the Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed on 12 March 1982 and the Protocol signed on 5 December 1986 (the “Convention”), as modified by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting signed by the Republic of Finland and New Zealand on 7 June 2017 (the “MLI”).
This document was prepared by the competent authority of Finland and represents its understanding of the modifications made to the Agreement by the MLI.
The document was prepared on the basis of the MLI position of the Republic of Finland submitted to the Depositary upon acceptance on 25 February 2019 and of the MLI position of New Zealand submitted to the Depositary upon ratification on 27 June 2018. These MLI positions are subject to modifications as provided in the MLI. Modifications made to MLI positions could modify the effects of the MLI on the Convention. The document also contains the modifications resulting from the withdrawal of the reservation made by the Republic of Finland to Article 9 of the MLI (consolidated MLI position of the Republic of Finland on 27 June 2023).
The authentic legal texts of the Convention and the MLI take precedence and remain the legal texts applicable. Whereas the Convention as presented in this synthesised text incorporates changes contained in the 1986 Protocol into the original 1982 Convention for readability, the 1982 Convention, and the 1986 Protocol remain the legal texts applicable.
The provisions of the MLI that are applicable with respect to the provisions of the Convention are included in boxes throughout the text of this document in the context of the relevant provisions of the Convention. The boxes containing the provisions of the MLI have generally been inserted in accordance with the ordering of the provisions of the 2017 OECD Model Tax Convention.
Changes to the text of the provisions of the MLI have been made to conform the terminology used in the MLI to the terminology used in the Convention (such as “Covered Tax Agreement” and “Convention”, “Contracting Jurisdictions” and “Contracting States”), to ease the comprehension of the provisions of the MLI. The changes in terminology are intended to increase the readability of the document and are not intended to change the substance of the provisions of the MLI. Similarly, changes have been made to parts of provisions of the MLI that describe existing provisions of the Convention: descriptive language has been replaced by legal references of the existing provisions to ease the readability.
In all cases, references made to the provisions of the Convention or to the Convention must be understood as referring to the Convention as modified by the provisions of the MLI, provided such provisions of the MLI have taken effect.
Entry into Effect of the MLI Provisions
The provisions of the MLI applicable to this Convention do not take effect on the same dates as the original provisions of the Convention. Each of provisions of the MLI could take effect on different dates, depending on the types of taxes involved (taxes withheld at source or other taxes levied) and on the choices made by the Republic of Finland and New Zealand in their MLI positions.
Dates of the deposit of instruments of ratification, acceptance or approval: 25 February 2019 for the Republic of Finland and 27 June 2018 for New Zealand.
Entry into force of the MLI: 1 June 2019 for the Republic of Finland and 1 October 2018 for New Zealand.
This document provides specific information on the dates on or after which each of the provisions of the MLI has effect with respect to the Convention throughout this document.
References
The authentic legal texts of the MLI can be found on the MLI Depositary (OECD) webpage:
– in English: http://www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-measures-to-prevent-BEPS.pdf and
The MLI position of the Republic of Finland submitted to the Depositary upon acceptance on 25 February 2019, the consolidated MLI position of the Republic of Finland submitted to the Depositary on 27 June 2023 and the MLI position of New Zealand submitted to the Depositary upon ratification on 27 June 2018 can be found on the MLI Depositary (OECD) webpage: http://www.oecd.org/tax/treaties/beps-mli-signatories-and-parties.pdf
The MLI Matching Database is publicly available on the OECD webpage: http://www.oecd.org/tax/treaties/mli-matching-database.htm
The Act on Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting is published in Statute Book of Finland 231/2019. Link to Finnish language version https://www.finlex.fi/fi/laki/alkup/2019/20190231 Link to Swedish language version https://www.finlex.fi/sv/laki/alkup/2019/20190231
The Government´s Statute on the entry into force of the MLI and the Act and the Finnish text (translation) of the MLI is published in the Treaty Series of the Statute Book of Finland SopS 21-22/2019. Links to Finnish language versions https://www.finlex.fi/fi/sopimukset/sopsteksti/2019/20190021 and https://www.finlex.fi/fi/sopimukset/sopsteksti/2019/20190022
Links to Swedish language versions https://www.finlex.fi/sv/sopimukset/sopimussarja/2019/fds20190021.pdf and https://www.finlex.fi/sv/sopimukset/sopimussarja/2019/fds20190022.pdf
The Announcement of the Ministry of Finance on withdrawal of reservation made to Article 9 of the MLI and on additional notifications is published in the Treaty Series of the Statute Book of Finland SopS 48/2023. Link to Finnish language version https://finlex.fi/fi/sopimukset/sopsteksti/2023/20230048/20230048_1 Link to Swedish language version https://finlex.fi/sv/sopimukset/sopimussarja/2023/fds20230048.pdf
The Announcement of the Ministry of Finance on the entry into force of the MLI in New Zealand is published in the Treaty Series of the Statute Book of Finland SopS 48/2019. Link to Finnish language version https://finlex.fi/fi/sopimukset/sopsteksti/2019/20190048 Link to Swedish language version https://finlex.fi/sv/sopimukset/sopimussarja/2019/fds20190048.pdf
Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed on 12 March 1982 date is published in the Treaty Series of the Statute Book of Finland SopS 49/1984. Link to Finnish language version: https://www.finlex.fi/fi/sopimukset/sopsteksti/1984/19840049
Protocol amending the Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed on 5 December 1986 is published in the Treaty Series of the Statute Book of Finland SopS 16/1988. Link to Finnish language version https://www.finlex.fi/fi/sopimukset/sopsteksti/1988/19880016/19880016_2
Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income
The Government of Finland and the Government of New Zealand,
REPLACED by paragraph 1 of Article 6 of the MLI
Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,
ARTICLE 6 OF THE MLI – PURPOSE OF A COVERED TAX AGREEMENT
Intending to eliminate double taxation with respect to the taxes covered by [ this Convention ] without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in [ the Convention ] for the indirect benefit of residents of third jurisdictions),
Have agreed as follows:
Article 1Personal scope
This Convention shall apply to persons who are residents of one or both of the Contracting States.
Article 2Taxes covered
1. The existing taxes to which this Convention shall apply are:
(a) in the case of New Zealand:
the income tax and the excess retention tax;
(hereinafter referred to as "New Zealand tax");
(b) in the case of Finland:
(i) the state income tax;
(ii) the communal tax;
(iii) the church tax;
(iv) the sailors' tax; and
(v) the tax withheld at source from non-residents' income;
(hereinafter referred to as "Finnish tax").
2. 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.
See Protocol to this Agreement.
Article 3General definitions
1. For the purposes of this Convention, unless the context otherwise requires:
(a) (i) the term "New Zealand", when used in a geographical sense, means the metropolitan territory of New Zealand (including the outlying islands) but does not include the Cook Islands, Niue or Tokelau; it also includes areas adjacent to the territorial sea of the metropolitan territory of New Zealand (including the outlying islands) which by New Zealand legislation and in accordance with international law have been, or may hereafter be, designated as areas over which New Zealand has sovereign rights for the purposes of exploring them or of exploring, exploiting, conserving and managing the natural resources of the sea, or of the sea-bed and subsoil;
(ii) the term "Finland" means the Republic of Finland and, when used in a geographical sense, means the territory of the Republic of Finland, and any area adjacent to the territorial waters of the Republic of Finland within which, under the laws of Finland and in accordance with international law, the rights of Finland with respect to the exploration and exploitation of the natural resources of the sea-bed and its subsoil may be exercised;
(b) the term "person" includes an individual, a company and any other body of persons;
(c) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purpose;
(d) 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;
(e) the term "national" means any individual possessing citizenship of a Contracting State and any legal person, partnership or association deriving its status as such from the law in force in a Contracting State;
(f) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(g) the term "competent authority" means:
(i) in the case of New Zealand, the Commissioner of Inland Revenue or his authorised representative;
(ii) in the case of Finland, the Ministry of Finance or its authorised representative.
2. In determining for the purposes of Articles 10, 11 or 12, whether dividends, interest or royalties are beneficially owned by a resident of New Zealand, dividends, interest or royalties in respect of which a trustee is subject to tax in New Zealand shall be treated as being beneficially owned by that trustee.
3. In the Convention, the terms "New Zealand tax" and "Finnish tax" do not include any charge imposed as a penalty under the law of either Contracting State relating to the taxes to which the Convention applies by virtue of Article 2.
4. As regards the application of the Convention by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that State concerning the taxes to which the Convention applies.
See Protocol to this Agreement.
Article 4Fiscal domicile
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 or any other criterion of a similar nature. An undivided estate of a deceased person shall, for the purposes of taxation in Finland, be deemed to be a resident of the Contracting State of which the deceased was a resident at the time of his death according to the preceding sentence or the provisions of paragraph 2. However, the term "resident of a Contracting State" 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 of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident 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 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 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, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
See Protocol to this Agreement.
Article 5Permanent 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.
3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months.
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;
(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 sub-paragraphs (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. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if:
(a) it carries on supervisory activities in that other State for more than twelve months in connection with a construction, installation or assembly project which is being undertaken in that other State; or
(b) substantial equipment or machinery is for more than twelve months in that other State being used by, for or under contract with the enterprise.
6. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 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.
7. 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.
8. 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 6Income from real property
1. Income derived by a resident of a Contracting State from real property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2.(a) The term "real property" shall, subject to the provisions of sub-paragraphs (b) and (c), have the meaning which it has under the law of the Contracting State in which the property in question is situated.
(b) The term "real property" shall in any case include property accessory to real property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of real property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources.
(c) Ships, boats and aircraft shall not be regarded as real property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of real property.
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 real property held by the company, the income from the direct use, letting, or use in any other form of such right of enjoyment may be taxed in the Contracting State in which the real property is situated.
5. The provisions of paragraphs 1 and 3 shall also apply to the income from real property of an enterprise and to income from real property used for the performance of independent personal services.
6. The provisions of paragraph 4 shall also apply to the income from a right of enjoyment referred to in that paragraph of an enterprise and to income from such right of enjoyment used for the performance of independent personal services.
See Protocol to this Agreement.
Article 7Business 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 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 provisions of those Articles shall not be affected by the provisions of this Article.
See Protocol to this Agreement.
Article 8Shipping and air transport
1. Profits from the operation of ships or aircraft in international traffic shall be taxable only the Contracting State in which the place of effective management of the enterprise is situated.
2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
3. The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or an international operating agency.
See Protocol to this Agreement.
Article 9Associated enterprises
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.
ARTICLE 17 OF THE MLI – CORRESPONDING ADJUSTMENTS
Where a [ Contracting State ] includes in the profits of an enterprise of that [ Contracting State ] – and taxes accordingly – profits on which an enterprise of the other [ Contracting State ] has been charged to tax in that other [ Contracting State ] and the profits so included are profits which would have accrued to the enterprise of the first-mentioned [ Contracting State ] if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other [ Contracting 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 [ the Convention ] and the competent authorities of the [ Contracting States ] shall if necessary consult each other.
Article 10Dividends
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 if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 15 percent of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
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 and other income assimilated to income from shares by the taxation law of the Contracting 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.
See Protocol to this Agreement.
Article 11Interest
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 recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 percent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. 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. However, this term does not include income dealt with in Article 10. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial 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.
5. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a statutory body, a local authority or 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.
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 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.
See Protocol to this Agreement.
Article 12Royalties
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 recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10 percent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
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, films or video tapes for use in connection with television or tapes for use in connection with radio 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 that State itself, a statutory body, a local authority or 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 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.
See Protocol to this Agreement.
Article 13Alienation of property
1. Income or gains derived by a resident of a Contracting State from the alienation of real property referred to in paragraph 2 of Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Income or gains derived by a resident of a Contracting State from the alienation of shares or other corporate rights referred to in paragraph 4 of Article 6 may be taxed in the Contracting State in which the real property held by the company is situated.
3. Income or gains from the alienation of personal 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 personal 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 income or 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.
4. Income or gains from the alienation of ships or aircraft operated in international traffic or personal property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
5. Income or gains from the alienation of any property other than that referred to in the preceding paragraphs, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 9 OF THE MLI – CAPITAL GAINS FROM ALIENATION OF SHARES OR INTERESTS OF ENTITIES DERIVING THEIR VALUE PRINCIPALLY FROM IMMOVABLE PROPERTY
For purposes of [ the Convention ], gains derived by a resident of a [ Contracting State ] from the alienation of shares or comparable interests, such as interests in a partnership or trust, may be taxed in the other [ Contracting State ] if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50 per cent of their value directly or indirectly from immovable property (real property) situated in that other [ Contracting State ].
See Protocol to this Agreement.
Article 14Independent personal services
1. Income derived by 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.
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.
Article 15Dependent personal services
1. Subject to the provisions of Articles 16, 18, 19 and 20, 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 the fiscal year concerned, or in the taxable period concerned, as the may be, 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 the this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
See Protocol to this Agreement.
Article 16Directors' fees
Directors' fees and other similar payments 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 (other than a partnership) which is a resident of the other Contracting State may be taxed in that other State.
Article 17Artistes and athletes
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 artist, or a musician, or as an athlete, 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 an athlete in his capacity as such accrues not to the entertainer or athlete 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 athlete are exercised.
Article 18Pensions
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, and subject to the provisions of paragraph 2 of Article 19, pensions and other payments made under the social security legislation of a Contracting State shall be taxable only in that State.
Article 19Government service
1.(a) Remuneration, other than a pension, paid by a Contracting State or a statutory body or a local authority thereof to an individual in respect of services rendered to that State or body or authority shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the Contracting State of which the individual is a resident if the services are rendered in that State and the individual:
(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 statutory body or a local authority thereof to an individual in respect of services rendered to that State or body or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the Contracting State of which the individual is a resident if he is a national of that State.
3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a statutory body or a local authority thereof.
Article 20Students
Payments which a student or business trainee, including a technical, agricultural or forestry trainee, who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
Article 21Other income
Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that State except that, if such income is derived from sources within the other Contracting State, it may also be taxed in that other State.
Article 22Finnish undivided estates
1. Where under the provisions of this Convention a resident of New Zealand is exempt or entitled to relief from Finnish tax, similar exemption or relief shall be applied to the undivided estate of any deceased person insofar as one or more of the beneficiaries is a resident of New Zealand.
2. Finnish tax on the undivided estate of a deceased person shall insofar as the income accrues to a beneficiary who is a resident of New Zealand be allowed as a credit against New Zealand tax payable in respect of that income, in accordance with Article 23.
3. The provisions of this Article shall not be construed as limiting the operation of paragraph 2 of Article 3.
Article 23Methods for elimination of double taxation
1. In the case of New Zealand, double taxation shall be eliminated as follows:
(a) Subject to any provisions of the law of New Zealand which may from time to time be in force and which relate to the allowance of a credit against New Zealand tax of tax paid in a country outside New Zealand (which shall not affect the general principle hereof), Finnish tax paid under the law of Finland and consistently with this Convention, whether directly or by deduction, in respect of income derived by a New Zealand resident from sources in Finland (excluding, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against New Zealand tax payable in respect of that income.
(b) For the purposes of this Article, profits, income or gains of a resident of New Zealand which are taxed in Finland in accordance with the Convention shall be deemed to arise from sources in Finland.
(c) Where a partnership is subjected to Finnish tax on income which under the Convention or under the law of New Zealand has its source in Finland, any member of that partnership who is subjected to New Zealand tax on his share of the profits of the partnership shall be allowed, as a credit against New Zealand tax, an amount equal to the same proportion of the Finnish tax paid by the partnership as his share of the profits of the partnership bears to the total profits of the partnership.
2. In the case of Finland, double taxation shall be eliminated as follows:
(a) Where a resident of Finland derives income which, in accordance with the provisions of this Convention, may be taxed in New Zealand, Finland shall, subject to the provisions of sub-paragraph (b), allow as a deduction from the tax on income of that person, an amount equal to the tax on income paid in New Zealand.
Such deduction shall not, however, exceed that part of the tax on income, as computed before the deduction is given, which is attributable to the income which may be taxed in New Zealand.
(b) Dividends paid by a company which is a resident of New Zealand to a company which is a resident of Finland shall be exempt from Finnish tax to the extent that the dividends would have been exempt from tax under Finnish taxation law if both companies had been residents of Finland.
(c) Notwithstanding any other provision of the Convention, an individual who is a resident of New Zealand and under Finnish taxation law with respect to the Finnish taxes referred to in Article 2 also is regarded as a resident of Finland may be taxed in Finland. However, Finland shall allow any New Zealand tax paid on the income as a deduction from Finnish tax in accordance with the provisions of sub-paragraph (a). The provisions of this sub-paragraph shall apply only to nationals of Finland.
(d) Where in accordance with any provisions of the Convention income derived by a resident of Finland is exempt from tax in Finland, Finland may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
Article 23 A (SopS 15–16/1988)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 are or may be subjected.
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.
3. Except where the provisions of Article 9, paragraph 6 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting State shall, for the purposes of determining the taxable profits of the first-mentioned resident, 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 enterprises of the first-mentioned State carrying on the same activities, the capital of which is owned or controlled by residents of the first-mentioned State, are or may be subjected.
5. This Article shall not apply to any provision of the taxation laws of a Contracting State which:
(a) is reasonably designed to prevent or defeat the avoidance or evasion of taxes; or
(b) is in force on 5 December 1986 or is substantially similar in general purpose or intent to any such provision but is enacted after that date;
provided that any such provision (except where that provision is in an international agreement) does not allow for different treatment of residents or nationals of the other Contracting State as compared with the treatment of residents or nationals of any third State.
6. Nothing in this Article shall be construed as preventing a Contracting State from distinguishing in its taxation laws between residents and non-residents solely on the basis of their residence and to levy taxes or grant exemption, relief, reduction or allowance for tax purposes accordingly.
7. In this Article the terms "taxation" and "taxes" mean the taxes to which this Convention applies.
Article 24Mutual agreement procedure
1.
The first sentence of paragraph 1 of Article 24 of this Convention is REPLACED by the first sentence of paragraph 1 of Article 16 of the MLI
Where a resident of a Contracting State 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.
ARTICLE 16 OF THE MLI – MUTUAL AGREEMENT PROCEDURE
Where a person considers that the actions of one or both of the [ Contracting States ] result or will result for that person in taxation not in accordance with the provisions of [ this Convention ], that person may, irrespective of the remedies provided by the domestic law of those [ Contracting States ], present the case to the competent authority of either [ Contracting State ].
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. In particular, the competent authorities of the Contracting States may consult together to endeavour to agree to the same allocation of income between a resident of a Contracting State and any associated person, referred to in Article 9. 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 for the purpose of giving effect to the provisions of the Convention.
PART VI. ARBITRATION
Article 19 (Mandatory Binding Arbitration) of the MLI
1. Where:
a) under [ paragraph 1 of Article 24 of this Convention ], a person has presented a case to the competent authority of a [ Contracting State ] on the basis that the actions of one or both of the [ Contracting States ] have resulted for that person in taxation not in accordance with the provisions of [ the Convention ]; and
b) the competent authorities are unable to reach an agreement to resolve that case pursuant to [ paragraph 2 of Article 24 of this Convention ], within a period of two years beginning on the start date referred to in paragraph 8 or 9 [ of Article 19 of the MLI ], as the case may be (unless, prior to the expiration of that period the competent authorities of the [ Contracting States ] have agreed to a different time period with respect to that case and have notified the person who presented the case of such agreement),
any unresolved issues arising from the case shall, if the person so requests in writing, be submitted to arbitration in the manner described in [ Part VI of the MLI ], according to any rules or procedures agreed upon by the competent authorities of the [ Contracting States ] pursuant to the provisions of paragraph 10 [ of Article 19 of the MLI ].
2. Where a competent authority has suspended the mutual agreement procedure referred to in paragraph 1 [ of Article 19 of the MLI ] because a case with respect to one or more of the same issues is pending before court or administrative tribunal, the period provided in subparagraph b) of paragraph 1 [ of Article 19 of the MLI ] will stop running until either a final decision has been rendered by the court or administrative tribunal or the case has been suspended or withdrawn. In addition, where a person who presented a case and a competent authority have agreed to suspend the mutual agreement procedure, the period provided in subparagraph b) of paragraph 1 [ of Article 19 of the MLI ] will stop running until the suspension has been lifted.
3. Where both competent authorities agree that a person directly affected by the case has failed to provide in a timely manner any additional material information requested by either competent authority after the start of the period provided in subparagraph b) of paragraph 1 [ of Article 19 of the MLI ], the period provided in subparagraph b) of paragraph 1 [ of Article 19 of the MLI ] shall be extended for an amount of time equal to the period beginning on the date by which the information was requested and ending on the date on which that information was provided.
4. a) The arbitration decision with respect to the issues submitted to arbitration shall be implemented through the mutual agreement concerning the case referred to in paragraph 1 [ of Article 19 of the MLI ]. The arbitration decision shall be final.
b) The arbitration decision shall be binding on both [ Contracting States ] except in the following cases:
i) if a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision. In such a case, the case shall not be eligible for any further consideration by the competent authorities. The mutual agreement that implements the arbitration decision on the case shall be considered not to be accepted by a person directly affected by the case if any person directly affected by the case does not, within 60 days after the date on which notification of the mutual agreement is sent to the person, withdraw all issues resolved in the mutual agreement implementing the arbitration decision from consideration by any court or administrative tribunal or otherwise terminate any pending court or administrative proceedings with respect to such issues in a manner consistent with that mutual agreement.
ii) if a final decision of the courts of one of the [ Contracting States ] holds that the arbitration decision is invalid. In such a case, the request for arbitration under paragraph 1 [ of Article 19 of the MLI] shall be considered not to have been made, and the arbitration process shall be considered not to have taken place (except for the purposes of Articles 21 (Confidentiality of Arbitration Proceedings) and 25 (Costs of Arbitration Proceedings) [ of the MLI ]). In such a case, a new request for arbitration may be made unless the competent authorities agree that such a new request should not be permitted.
iii) if a person directly affected by the case pursues litigation on the issues which were resolved in the mutual agreement implementing the arbitration decision in any court or administrative tribunal.
5. The competent authority that received the initial request for a mutual agreement procedure as described in subparagraph a) of paragraph 1 [ of Article 19 of the MLI ] shall, within two calendar months of receiving the request:
a) send a notification to the person who presented the case that it has received the request; and
b) send a notification of that request, along with a copy of the request, to the competent authority of the other [ Contracting State ].
6. Within three calendar months after a competent authority receives the request for a mutual agreement procedure (or a copy thereof from the competent authority of the other [ Contracting State ]) it shall either:
a) notify the person who has presented the case and the other competent authority that it has received the information necessary to undertake substantive consideration of the case; or
b) request additional information from that person for that purpose.
7. Where pursuant to subparagraph b) of paragraph 6 [ of Article 19 of the MLI ], one or both of the competent authorities have requested from the person who presented the case additional information necessary to undertake substantive consideration of the case, the competent authority that requested the additional information shall, within three calendar months of receiving the additional information from that person, notify that person and the other competent authority either:
a) that it has received the requested information; or
b) that some of the requested information is still missing.
8. Where neither competent authority has requested additional information pursuant to subparagraph b) of paragraph 6 [ of Article 19 of the MLI ], the start date referred to in paragraph 1 [ of Article 19 of the MLI ] shall be the earlier of:
a) the date on which both competent authorities have notified the person who presented the case pursuant to subparagraph a) of paragraph 6 [ of Article 19 of the MLI ]; and
b) the date that is three calendar months after the notification to the competent authority of the other [ Contracting State ] pursuant to subparagraph b) of paragraph 5 [ of Article 19 of the MLI ].
9. Where additional information has been requested pursuant to subparagraph b) of paragraph 6 [ of Article 19 of the MLI ], the start date referred to in paragraph 1 [ of Article 19 of the MLI ] shall be the earlier of:
a) the latest date on which the competent authorities that requested additional information have notified the person who presented the case and the other competent authority pursuant to subparagraph a) of paragraph 7 [ of Article 19 of the MLI ]; and
b) the date that is three calendar months after both competent authorities have received all information requested by either competent authority from the person who presented the case.
If, however, one or both of the competent authorities send the notification referred to in subparagraph b) of paragraph 7 [ of Article 19 of the MLI ], such notification shall be treated as a request for additional information under subparagraph b) of paragraph 6 [ of Article 19 of the MLI ].
10. The competent authorities of the [ Contracting States ] shall by mutual agreement pursuant to [ Article 24 of the Convention ] settle the mode of application of the provisions contained in [ Part VI of the MLI ], including the minimum information necessary for each competent authority to undertake substantive consideration of the case. Such an agreement shall be concluded before the date on which unresolved issues in a case are first eligible to be submitted to arbitration and may be modified from time to time thereafter.
12. [ Notwithstanding ] the other provisions of [ Article 19 of the MLI ]:
a) any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for by [ the MLI ] shall not be submitted to arbitration, if a decision on this issue has already been rendered by a court or administrative tribunal of either [ Contracting State ];
b) if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the [ Contracting States ], a decision concerning the issue is rendered by a court or administrative tribunal of one of the [ Contracting States ], the arbitration process shall terminate.
Article 20 (Appointment of Arbitrators) of the MLI
1. Except to the extent that the competent authorities of the [ Contracting States ] mutually agree on
different rules, paragraphs 2 through 4 [ of Article 20 of the MLI ] shall apply for the purposes of [ Part VI of the MLI ].
2. The following rules shall govern the appointment of the members of an arbitration panel:
a) The arbitration panel shall consist of three individual members with expertise or experience in international tax matters.
b) Each competent authority shall appoint one panel member within 60 days of the date of the request for arbitration under paragraph 1 of Article 19 [ of the MLI ]. The two panel members so appointed shall, within 60 days of the latter of their appointments, appoint a third member who shall serve as Chair of the arbitration panel. The Chair shall not be a national or resident of either [ Contracting State ].
c) Each member appointed to the arbitration panel must be impartial and independent of the competent authorities, tax administrations, and ministries of finance of the [ Contracting States ] and of all persons directly affected by the case (as well as their advisors) at the time of accepting an appointment, maintain his or her impartiality and independence throughout the proceedings, and avoid any conduct for a reasonable period of time thereafter which may damage the appearance of impartiality and independence of the arbitrators with respect to the proceedings.
3. In the event that the competent authority of a [ Contracting State ] fails to appoint a member of the arbitration panel in the manner and within the time periods specified in paragraph 2 [ of Article 20 of the MLI ] or agreed to by the competent authorities of the [ Contracting States ], a member shall be appointed on behalf of that competent authority by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either [ Contracting State ].
4. If the two initial members of the arbitration panel fail to appoint the Chair in the manner and within the time periods specified in paragraph 2 [ of Article 20 of the MLI ] or agreed to by the competent authorities of the [ Contracting States ], the Chair shall be appointed by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either [ Contracting State ].
Article 21 (Confidentiality of Arbitration Proceedings) of the MLI
1. Solely for the purposes of the application of the provisions of [ Part VI of the MLI ] and of the provisions of [ the Convention ] and of the domestic laws of the [ Contracting States ] related to the exchange of information, confidentiality, and administrative assistance, members of the arbitration panel and a maximum of three staff per member (and prospective arbitrators solely to the extent necessary to verify their ability to fulfil the requirements of arbitrators) shall be considered to be persons or authorities to whom information may be disclosed. Information received by the arbitration panel or prospective arbitrators and information that the competent authorities receive from the arbitration panel shall be considered information that is exchanged under the provisions of [ the Convention ] related to the exchange of information and administrative assistance.
2. The competent authorities of the [ Contracting States ] shall ensure that members of the arbitration panel and their staff agree in writing, prior to their acting in an arbitration proceeding, to treat any information relating to the arbitration proceeding consistently with the confidentiality and nondisclosure obligations described in the provisions of [ the Convention ] related to exchange of information and administrative assistance and under the applicable laws of the [ Contracting States ].
Article 22 (Resolution of a Case Prior to the Conclusion of the Arbitration) of the MLI
For the purposes of [ Part VI of the MLI ] and the provisions of [ the Convention ] that provide for resolution of cases through mutual agreement, the mutual agreement procedure, as well as the arbitration proceeding, with respect to a case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the [ Contracting States ]:
a) the competent authorities of the [ Contracting States ] reach a mutual agreement to resolve the case; or
b) the person who presented the case withdraws the request for arbitration or the request for a mutual agreement procedure.
Article 23 (Type of Arbitration Process) of the MLI
1. Except to the extent that the competent authorities of the [ Contracting States ] mutually agree on different rules, the following rules shall apply with respect to an arbitration proceeding pursuant to [ Part VI of the MLI ]:
a) After a case is submitted to arbitration, the competent authority of each [ Contracting State ] shall submit to the arbitration panel, by a date set by agreement, a proposed resolution which addresses all unresolved issue(s) in the case (taking into account all agreements previously reached in that case between the competent authorities of the [ Contracting States ]). The proposed resolution shall be limited to a disposition of specific monetary amounts (for example, of income or expense) or, where specified, the maximum rate of tax charged pursuant to [ the Convention ], for each adjustment or similar issue in the case. In a case in which the competent authorities of the [ Contracting States ] have been unable to reach agreement on an issue regarding the conditions for application of a provision of [ the Convention ] (hereinafter referred to as a “threshold question”), such as whether an individual is a resident or whether a permanent establishment exists, the competent authorities may submit alternative proposed resolutions with respect to issues the determination of which is contingent on resolution of such threshold questions.
b) The competent authority of each [ Contracting State ] may also submit a supporting position paper for consideration by the arbitration panel. Each competent authority that submits a proposed resolution or supporting position paper shall provide a copy to the other competent authority by the date on which the proposed resolution and supporting position paper were due. Each competent authority may also submit to the arbitration panel, by a date set by agreement, a reply submission with respect to the proposed resolution and supporting position paper submitted by the other competent authority. A copy of any reply submission shall be provided to the other competent authority by the date on which the reply submission was due.
c) The arbitration panel shall select as its decision one of the proposed resolutions for the case submitted by the competent authorities with respect to each issue and any threshold questions, and shall not include a rationale or any other explanation of the decision. The arbitration decision will be adopted by a simple majority of the panel members. The arbitration panel shall deliver its decision in writing to the competent authorities of the [ Contracting States ]. The arbitration decision shall have no precedential value.
5. Prior to the beginning of arbitration proceedings, the competent authorities of the [ Contracting States ] shall ensure that each person that presented the case and their advisors agree in writing not to disclose to any other person any information received during the course of the arbitration proceedings from either competent authority or the arbitration panel. The mutual agreement procedure under [ the Convention ], as well as the arbitration proceeding under [ Part VI of the MLI ], with respect to the case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the [ Contracting States ], a person that presented the case or one of that person’s advisors materially breaches that agreement.
Article 25 (Costs of Arbitration Proceedings) of the MLI
In an arbitration proceeding under [ Part VI of the MLI ], the fees and expenses of the members of the arbitration panel, as well as any costs incurred in connection with the arbitration proceedings by the [ Contracting States ], shall be borne by the [ Contracting States ] in a manner to be settled by mutual agreement between the competent authorities of the [ Contracting States ]. In the absence of such agreement, each [ Contracting State ] shall bear its own expenses and those of its appointed panel member. The cost of the chair of the arbitration panel and other expenses associated with the conduct of the arbitration proceedings shall be borne by the [ Contracting States ] in equal shares.
Article 26 (Compatibility) of the MLI
2. Any unresolved issue arising from a mutual agreement procedure case otherwise within the scope of the arbitration process provided for in [ Part VI of the MLI ] shall not be submitted to arbitration if the issue falls within the scope of a case with respect to which an arbitration panel or similar body has previously been set up in accordance with a bilateral or multilateral convention that provides for mandatory binding arbitration of unresolved issues arising from a mutual agreement procedure case.
3. [ Nothing ] in [ Part VI of the MLI ] shall affect the fulfilment of wider obligations with respect to the arbitration of unresolved issues arising in the context of a mutual agreement procedure resulting from other conventions to which the [ Contracting States ] are or will become parties.
Subparagraph a) of paragraph 2 of Article 28 (Cases eligible to arbitration) of the MLI
Pursuant to subparagraph a) of paragraph 2 of Article 28 of the MLI, the Republic of Finland formulates the following reservations with respect to the scope of cases that shall be eligible for arbitration under the provisions of Part VI of the MLI:
1. Finland reserves the right to exclude from the scope of [ Part VI of the MLI ] cases involving the application of domestic anti-avoidance rules of either [ Contracting State ]. For this purpose, Finland's domestic anti-avoidance rules shall include Act on Assessment Procedure (verotusmenettelystä annettu laki (1558/1995)) sections 27–30, Act on the Taxation of Business Profits and Income from Professional Activities (elinkeinotulon verottamisesta annettu laki (360/1968)) section 6 a, subsection 9 and section 52 h and Act on the Taxation of Shareholders in Controlled Foreign Companies (ulkomaisten väliyhteisöjen osakkaiden verotuksesta annetun laki (1217/1994)). Any subsequent provisions replacing, amending or updating these anti-avoidance rules would also be included in this reservation. Finland shall notify the Depositary of any such subsequent provisions.
2. Finland reserves the right to exclude from the scope of [ Part VI of the MLI ] cases involving conduct for which the taxpayer or a person acting on the taxpayer’s behalf has been found guilty by a court of tax fraud or other tax related criminal offence in either [ Contracting State ]. For this purpose, Finland's domestic rules shall include the Criminal Code (rikoslaki (39/1889)) chapter 29 sections 1–4. Any subsequent provisions replacing, amending or updating these rules would also be included in this reservation. Finland shall notify the Depositary of any such subsequent provisions.
3. Finland reserves the right to exclude from the scope of [ Part VI of the MLI ] cases concerning items of income [ ] where there is no double taxation. Double taxation means that both [ Contracting States ] have imposed taxes in respect of the same taxable income [ ] giving rise to either additional tax charge, increase in tax liabilities or cancellation or reduction of losses, which could be used to offset taxable profits.
4. Finland reserves the right to exclude from the scope of [ Part VI of the MLI ]:
a) with respect to taxes withheld at source on amounts paid or credited to non-residents, cases which concern taxable events giving rise to such taxes that occur before the reference date;
b) with respect to all other taxes, cases which concern taxes levied with respect to taxable periods that begin before the reference date.
For the purposes of this reservation, “the reference date” is the latest of:
i) the date of entry into effect of [ the MLI ] in both [ Contracting States ] with respect to such taxes;
ii) the first day of January of the calendar year next following the expiration of a period of six calendar months beginning on the date of the communication by the Depositary of the latest definitive reservation withdrawal or notification which results in the application of [ Part VI of the MLI ] between both [ Contracting States ]; and
iii) where the case is a type of case that would be potentially eligible for arbitration as a result of the withdrawal, subsequent to the entry into effect of [ Part VI of the MLI ] as between both [ Contracting States ], of a [ Contracting State’s ] reservation made pursuant to Article 28(2) or Article 19(12) [ of the MLI ], the first day of January of the calendar year next following the expiration of a period of six calendar months beginning on the date of the communication of the Depositary of the withdrawal of the reservation.
5. Finland reserves the right to exclude from the scope of [ Part VI of the MLI ] all cases where an application has been filed under the Convention on the Elimination of Double Taxation in Connection with the Adjustment of Profits of Associated Enterprises (90/436/EEC) – as amended, or under other instruments agreed by the member states of the European Union or under domestic rules which implement such instruments.
Pursuant to subparagraph a) of paragraph 2 of Article 28 of the MLI, New Zealand formulates the following reservations with respect to the scope of cases that shall be eligible for arbitration under the provisions of Part VI of the MLI:
New Zealand reserves the right to exclude from the scope of [ Part VI of the MLI ] any case involving the application of New Zealand’s general anti‐avoidance rule contained in section BG 1 of the Income Tax Act 2007. Any subsequent provisions replacing, amending or updating these anti-avoidance rules would also be included in this reservation. New Zealand shall notify the Depositary of any such subsequent provisions.
New Zealand reserves the right to exclude from the scope of [ Part VI of the MLI ] any case involving the application of anti-avoidance rules [ contained in section GB 54 of the Income Tax Act 2007 ] concerning the avoidance of a permanent establishment in New Zealand. Any subsequent provisions replacing, amending or updating these anti-avoidance rules would also be included in this reservation. New Zealand shall notify the Depositary of any such provisions.
Article 25Exchange 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 as well as to prevent fiscal evasion. 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) involved in 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 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 26Diplomatic and consular officers
Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officers under the general rules of international law or under the provisions of special international agreements.
ARTICLE 7 OF THE MLI – PREVENTION OF TREATY ABUSE (Principal purposes test provision)
Notwithstanding any provisions of [ the Convention ], a benefit under [ the Convention ] shall not be granted in respect of an item of income [ ] if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of [ the Convention ].
Article 27Territorial extension
1. This Convention may be extended, either in its entirety or with any necessary modifications, to any territory for whose international relations either Contracting State is responsible, which imposes taxes substantially similar in character to those to which the Convention applies. Any such extension shall take effect from such date and subject to such modifications and conditions (including conditions as to termination) as may be specified and agreed between the Contracting States in notes to be exchanged through diplomatic channels or in any manner in accordance with their constitutional procedures.
2. Unless otherwise agreed by both Contracting States, the termination of the Convention by one of them under Article 29 shall also terminate, in the manner provided for in that Article, the application of the Convention to any territory to which it has been extended under this Article.
3. Paragraph 2 of Article 2 shall apply to any taxes imposed by any territory to which the Convention is extended under this Article.
Article 28Entry into force
1. The Governments of the Contracting States shall notify each other that the constitutional requirements for the entry into force of this Convention have been complied with.
2. The Convention shall enter into force thirty days after the date of the later of the notifications referred to in paragraph 1 and its provisions shall apply:
(a) in New Zealand:
to income assessable for any income year beginning on or after 1 April in the calendar year next following that in which the Convention enters into force;
(b) in Finland:
(i) in respect of taxes withheld at source, to income derived on or after 1 January in the calendar year next following the year in which the Convention enters into force;
(ii) in respect of other taxes on income, to taxes chargeable for any taxable year beginning on or after 1 January in the calendar year next following the year in which the Convention enters into force.
Article 29Termination
This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination on or before 30 June in any year after the period of five years from the date on which the Convention enters into force. In such event, the Convention shall cease to apply:
(a) in New Zealand:
to income assessable for any income year beginning on or after 1 April in the calendar year next following that in which the notice of termination is given;
(b) in Finland:
(i) in respect of taxes withheld at source, to income derived on or after 1 January in the calendar year next following the year in which the notice is given;
(ii) in respect of other taxes on income, to taxes chargeable for any taxable year beginning on or after 1 January in the calendar year next following the year in which the notice is given.
In witness whereof the undersigned, duly authorised thereto, have signed this Convention.
Done in duplicate at Helsinki this twelfth day of March 1982 in the English language.
Protocol
to the Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
At the signing today of the Convention between the Government of Finland and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed upon the following additional provisions which shall form an integral part of that Convention.
It is agreed that:
1. With reference to Article 2:
For the purposes of sub-paragraph (a) of paragraph 1 of Article 2, the New Zealand income tax does not include the bonus issue tax.
2. With reference to Articles 3, 4, 8, 13 and 15:
The term "place of effective management" means, in the case of a person other than an individual, the place of that person's practical day to day management, irrespective of where the overriding control is exercised.
3. With reference to Article 6:
The term "enjoyment" means the enjoyment resulting from a right to use or occupy the real property held by the company.
4. With reference to Article 7:
Because New Zealand has a special basis for taxing insurance companies and because the provisions of Article 7 are not consistent with that basis, nothing in Article 7 shall affect the operation of any law of a Contracting State relating to the calculation of income and the computation of profits from insurance, provided that if the relevant laws in force in either State at the date of signature of that Convention are varied (otherwise than in minor respects so as not to affect its general character) the Contracting States shall consult each other with a view to agreeing to any amendment of this paragraph that may be appropriate.
5. With reference to Article 10:
The term "tax on the company's undistributed profits" shall not include the New Zealand bonus issue tax.
6. With reference to Articles 10, 11 and 12:
If in any future double taxation convention with any other State, being a member of the Organisation for Economic Co-operation and Development,
(a) Finland should limit its taxation at source of dividends, or
(b) New Zealand should limit its taxation at source of dividends, interest or royalties to a rate lower than the one provided for in any of such Articles,
the two Governments will undertake to review the appropriate provisions with a view to providing the same treatment.
Paragraph 7 has been deleted (SopS 15–16/1988).
This Protocol shall remain in force as long as the Convention, signed today, remains in force.
Done in duplicate at Helsinki this twelfth day of March 1982 in the English language.
Footnotes
- 1.
In accordance with paragraphs 1 and 3 of Article 35 of the MLI, paragraph 1 of Article 6 of the MLI has effect with respect to the application of this Convention by the Republic of Finland:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by the Republic of Finland, for taxes levied with respect to taxable periods beginning on or after 1 January 2020;
and,
In accordance with paragraph 1 of Article 35 of the MLI, paragraph 1 of Article 6 of the MLI has effect with respect to the application of the Convention by New Zealand:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by New Zealand, for taxes levied with respect to taxable periods beginning on or after 1 December 2019.
- 2.
In accordance with paragraphs 1 and 3 of Article 35 of the MLI, paragraph 1 of Article 17 of the MLI has effect with respect to the application of this Convention by the Republic of Finland:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by the Republic of Finland, for taxes levied with respect to taxable periods beginning on or after 1 January 2020;
and,
In accordance with paragraph 1 of Article 35 of the MLI, paragraph 1 of Article 17 of the MLI has effect with respect to the application of the Convention by New Zealand:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by New Zealand, for taxes levied with respect to taable periods beginning on or after 1 December 2019.
- 3.
In accordance with paragraph 9 of Article 28 and paragraph 6 of Article 29 of the MLI, paragraph 4 of Article 9 of the MLI has effect with respect to the application of this Convention by the Republic of Finland:
a) with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2024; and
b) with respect to all other taxes levied by the Republic of Finland, for taxes levied with respect to taxable periods beginning on or after 1 January 2024;
and,
In accordance with paragraph 9 of Article 28 and paragraph 6 of Article 29 of the MLI, paragraph 4 of Article 9 of the MLI has effect with respect to the application of the Convention by New Zealand:
a) with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2024; and
b) with respect to all other taxes levied by New Zealand, for taxes levied with respect to taxable periods beginning on or after 1 January 2024.
- 4.
In accordance with paragraphs 1 and 3 of Article 35 of the MLI, first sentence of paragraph 1 of Article 16 of the MLI has effect with respect to the application of this Convention by the Republic of Finland:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by the Republic of Finland, for taxes levied with respect to taxable periods beginning on or after 1 January 2020;
and,
In accordance with paragraph 1 of Article 35 of the MLI, first sentence of paragraph 1 of Article 16 of the MLI has effect with respect to the application of the Convention by New Zealand:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by New Zealand, for taxes levied with respect to taxable periods beginning on or after 1 December 2019.
- 5.
In accordance with paragraph 1 of Article 36 of the MLI, the provisions of Part VI (Arbitration) of the MLI has effect with respect to this Convention:
a) with respect to cases presented to the competent authority of a Contracting State on or after 1 June 2019; and
b) with respect to cases presented to the competent authority of a Contracting State prior to 1 June 2019, on the date when both Contracting States have notified the Secretary-General of the OECD that they have reached mutual agreement pursuant to paragraph 10 of Article 19 of the MLI (Mandatory Binding Arbitration), along with information regarding the date or dates on which such cases shall be considered to have been presented to the competent authority of a Contracting State (as described in subparagraph a) of paragraph 1 of Article 19 of the MLI (Mandatory Binding Arbitration)) according to the terms of that mutual agreement.
However, the scope of cases eligible for arbitration under the provisions of Part VI of the MLI is limited due to reservations formulated in accordance with subparagraph a) of paragraph 2 of Article 28 of the MLI by the Contracting States. See these reservations at the end of this box.
- 6.
In accordance with paragraphs 1 and 3 of Article 35 of the MLI, paragraph 1 of Article 7 of the MLI has effect with respect to the application of this Convention by the Republic of Finland:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by the Republic of Finland, for taxes levied with respect to taxable periods beginning on or after 1 January 2020;
and,
In accordance with paragraph 1 of Article 35 of the MLI, paragraph 1 of Article 7 of the MLI has effect with respect to the application of the Convention by New Zealand:
a) with respect to taxes withheld at source on amounts paid or credited to nonresidents, where the event giving rise to such taxes occurs on or after 1 January 2020; and
b) with respect to all other taxes levied by New Zealand, for taxes levied with respect to taxable periods beginning on or after 1 December 2019.