S.L. 123.29 Art. 2Arrangements to have effect. The desiring to prevention of This Contracting (1) The (a) in (b) in (2) This taxes which or in place of, shall notify respective (3) apply to tax article 56 of (1) For the the territory of the Island of including Malta which, under the rights may be State" mean other bo

It is hereby declared:

(a) that the arrangements specified in the Agreement set out in the Schedule to this Order have been made with the Government of the Republic of Hungary with a view to affording relief from double taxation in relation to the following taxes imposed by the laws of the Republic of Hungary:

(i) the income tax on individuals;

(ii) the profit taxes;

(b) that it is expedient that those arrangements should have effect. SCHEDULE

AGREEMENT BETWEEN MALTA AND THE REPUBLIC OF HUNGARY FOR THE AVOIDANCE OF DOUBLE TAXATION

Government of Malta and the Government of the Republic of Hungary conclude an Agreement for the Avoidance of Double Taxation and the fiscal evasion with respect to taxes on income, have agreed as follows:

CHAPTER I

Scope of the Agreement

ARTICLE 1

Personal Scope Agreement shall apply to persons who are residents of one or both of the States.

ARTICLE 2

Taxes Covered existing taxes to which this Agreement shall apply are: Hungary:

(i) the income tax on individuals; and

(ii) the profit taxes (hereinafter referred to as "Hungarian tax");

Malta: the income tax

(hereinafter referred to as "Malta tax"). Agreement shall apply also to any identical or substantially similar are imposed after the date of signature of this Agreement in addition to, the existing taxes. The competent authorities of the Contracting States to each other any significant changes which have been made in their taxation laws. Notwithstanding the other provisions of this Article this Agreement shall not paid or payable in Malta at the rate provided for in sub-article (13) of the Income Tax Act.

CHAPTER II

Definitions

ARTICLE 3

General Definitions purposes of this Agreement, unless the context otherwise requires:

(a) the term "Hungary" when used in a geographical sense means the Republic of Hungary; and

(b) the term "Malta", when used in a geographical sense, means Malta, the Island of Gozo and the other islands of the Maltese archipelago the territorial waters thereof, and any area outside the territorial sea of in accordance with international law, has been or may hereafter be designated, the law of Malta concerning the Continental Shelf, as an area within which of Malta with respect to the sea-bed and subsoil and their natural resources exercised;

(c) the terms "a Contracting State" and "the other Contracting Hungary or Malta as the context requires;

(d) the term "person" includes an individual, a company and any persons;

(e) the term "company" means any body corporate or any entity which as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and "enterprise Contracting State" mean, respectively, an enterprise carried on by Contracting State and an enterprise carried on by a resident of the other State;

(g) the term "nationals" means all individuals who are citizens of State and all legal persons, partnerships, associations and other entities their status as such from the laws in force in that Contracting State;

(h) the term "international traffic" means any transport by a ship, road transport vehicle operated by an enterprise of a Contracting State, the ship, aircraft or road transport vehicle is operated solely between other Contracting State;

(i) the term "competent authority" means:

(i) in the case of Hungary, the Minister of Finance, or representative;

(ii) in the case of Malta, the Minister responsible for authorised representative.

(2) In the application of this Agreement by a Contracting State otherwise defined shall, unless the context otherwise requires, have which it has under the law of that State concerning the taxes Agreement applies.

ARTICLE 4

Resident

(1) For the purposes of this Agreement, the term "resident of State" means any person who, under the laws of that State, is liable to reason of his domicile, residence, place of management or any other similar nature. But this term does not include any person who is liable State in respect only of income from sources in that State.

(2) Where by reason of the provisions of paragraph (1) an resident of both Contracting States, then his status shall be determined

(a) he shall be deemed to be a resident solely of the Contracting which he has a permanent home available to him; if he has home available to him in both States, he shall be deemed to be a resident solely of the Contracting State with which his personal and economic relations are closer (centre of vital interests); the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident solely of the Contracting State which he has an habitual abode; he has an habitual abode in both States or in neither of them, he shall deemed to be a resident solely of the Contracting State of which he is national; 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. by reason of the provisions of paragraph (1) a person other than an a resident of both Contracting States, then it shall be deemed to be a of the Contracting State in which its place of effective management is

ARTICLE 5

Permanent Establishment the purposes of this Agreement the term "permanent establishment" place of business through which the business of the enterprise is partly carried on.

term "permanent establishment" includes especially: place of management; branch; office; factory; workshop; mine, an oil or gas well, a quarry or any other place of extraction of natural resources; building site or construction or installation or assembly project or supervisory activities in connection therewith, where such site, project activity continues for more than nine (9) months. Notwithstanding the preceding provisions of this Article, the term establishment" shall be deemed not to include: the use of facilities solely for the purpose of storage, display or delivery goods or merchandise belonging to the enterprise; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; 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 carrying on, for the enterprise, any other activity of a auxiliary character;

(f) the maintenance of a fixed place of business solely for any of activities mentioned in sub-paragraphs (a) to (e), provided overall activity of the fixed place of business resulting combination is of a preparatory or auxiliary character.

(4) An enterprise of a Contracting State shall be deemed to have establishment in the other Contracting State if:

(a) substantial equipment is in that other State being used by, contract with the enterprise for more than nine (9) months;

(b) it carries on supervisory activities in that State in connection use of equipment referred to in sub-paragraph (a).

(5) Notwithstanding the provisions of paragraphs (1) and (2) where other than an agent of an independent status to whom paragraph (6) acting on behalf of an enterprise and has, and habitually exercises, in State an authority to conclude contracts in the name of the enterprise, shall be deemed to have a permanent establishment in that State in activities which that person undertakes for the enterprise, unless the such person are limited to those mentioned in paragraph (3) which, through a fixed place of business, would not make this fixed place permanent establishment under the provisions of that paragraph.

(6) An enterprise of a Contracting State shall not be deemed permanent establishment in the other Contracting State merely because business in that other State through a broker, general commission agent agent of an independent status, where such persons are acting in the ordinary of their business. However, when the activities of such an agent are devoted or almost wholly on behalf of the enterprise, he shall not be considered an independent status if the transactions between the agent and the enterprise not made under arm’s length conditions.

(7) The fact that a company which is a resident of a Contracting or is controlled by a company which is a resident of the other Contracting which carries on business in that other State (whether through establishment or otherwise), shall not of itself constitute either permanent establishment of the other.

CHAPTER III

Taxation of Income

ARTICLE 6

Income from Immovable Property

(1) Income derived by a resident of a Contracting State from property including income from agriculture or forestry, situated Contracting State may be taxed in that other State.

(2) The term "immovable property" shall have the meaning which the law of the Contracting State in which the property in question is term shall in any case include property accessory to immovable property, and equipment used in agriculture and forestry, rights to which the respecting immovable property apply, usufruct of immovable property variable or fixed payments as consideration for the working of, or the or to explore for, mineral deposits, sources and other natural resources; and aircraft shall not be registered as immovable property. provisions of paragraph (1) shall apply to income derived from the letting, or use in any other form of immovable property. provisions of paragraphs (1) and (3) shall also apply to the income from property of an enterprise and to income from immovable property used performance of independent personal services.

ARTICLE 7

Business Profits profits of an enterprise of a Contracting State shall be taxable only in unless the enterprise carries on business in the other Contracting State permanent establishment situated therein. If the enterprise carries on aforesaid, the profits of the enterprise may be taxed in the other State but thereof as is attributable to that permanent establishment. Subject to the provisions of paragraph (3), where an enterprise of a State carries on business in the other Contracting State through a establishment situated therein, there shall in each Contracting State be that permanent establishment the profits which it might be expected to were a distinct and separate enterprise engaged in the same or similar under the same or similar conditions and dealing wholly independently enterprise of which it is a permanent establishment or with other enterprises deals. determination of the profits of a permanent establishment, there shall deductions expenses of the enterprise, being expenses which are the purposes of the permanent establishment (including executive and administrative expenses so incurred) and which would be deductible if the establishment were an independent entity which paid those expenses, incurred in the Contracting State in which the permanent establishment is elsewhere.

far as it has been customary in a Contracting State to determine the attributed to a permanent establishment on the basis of an of the total profits of the enterprise to its various parts, nothing in shall preclude that Contracting State from determining the profits to be an apportionment as may be customary. The method of apportionment however, be such that the result shall be in accordance with the contained in this Article. Nothing in this Article shall affect the application of any law of a State relating to the determination of the tax liability of a person, determination of such liability by the exercise of discretion or the estimate by the competent authority of that State in cases in which, information available to the competent authority of that State, it is not practicable to ascertain the profits to be attributed to a permanent provided that that law shall be applied, so far as the information competent authority permits, consistently with the principles of this profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise enterprise.

(7) For the purposes of the preceding paragraphs, the profits to the permanent establishment shall be determined by the same method unless there is good and sufficient reason to the contrary.

(8) The provisions of this Article shall not affect the provisions Contracting State regarding the taxation of profits from the business of

(9) Where profits include items of income which are dealt with other Articles of this Agreement, then the provisions of those Articles affected by the provisions of this Article.

ARTICLE 8

International Traffic

(1) Profits of an enterprise of a Contracting State from the operation aircraft or road transport vehicles in international traffic shall be taxable State.

(2) The provisions of paragraph (1) shall also apply to profits participation in a pool, a joint business or an international operating agency.

ARTICLE 9

Associated Enterprises

(1) Where -

(a) an enterprise of a Contracting State participates directly the management, control or capital of an enterprise Contracting State, or

(b) the same persons participate directly or indirectly in the control or capital of an enterprise of a Contracting enterprise of the other Contracting State, and in either case conditions are made or imposed between the two their commercial or financial relations which differ from those which between independent enterprises, then any profits which would, conditions, have accrued to one of the enterprises, but, by reason of those have not so accrued, may be included in the profits of that enterprise accordingly.

(2) Nothing in this Article shall affect the application of Contracting State relating to the determination of such liability by the discretion or the making of an estimate by the competent authority cases which, from the information available to the competent authority it is not possible or not practicable to determine the income to be attributed enterprise, provided that that law shall be applied, so far as the information to the competent authority permits, consistently with the principles of

(3) Where a Contracting State includes in the profits of an enterprise State, and taxes accordingly, profits on which an enterprise of the other State has been charged to tax in that other State and the profits so profits which would have accrued to that enterprise of the first mentioned conditions made between the two enterprises had been those which would made between independent enterprises, then that other State adjustment to the amount of the tax charged therein on those profits. In such adjustment, due regard shall be had to the other provisions of this the competent authorities of the Contracting States shall if necessary other.

ARTICLE 10

Dividends

Dividends paid by a company which is a resident of a Contracting State to a other Contracting State may be taxed in that other State.

However, such dividends may also be taxed in the Contracting State of company paying the dividends is a resident and according to the laws of where the dividends are paid by a company resident of Hungary to a resident of Malta who is the beneficial owner thereof, the Hungarian tax charged shall not exceed:

(i) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25% of the capital of the company paying the dividends;

(ii) 15 per cent of the gross amount of the dividends in all other cases;

where the dividends are paid by a company which is a resident of Malta a resident of Hungary who is the beneficial owner thereof Malta tax the gross amount of the dividends shall not exceed that chargeable on the profits out of which the dividends are paid.

paragraph shall not affect the taxation of the company in respect of the which the dividends are paid. term "dividends" as used in this Article means income from shares shares or "jouissance" rights, mining shares, founders’ shares or other being debt-claims, participating in profits, as well as income from other rights which is subjected to the same taxation treatment as income from laws of the State of which the company making the distribution is a provisions of paragraphs (1) and (2) shall not apply if the beneficial dividends, being a resident of a Contracting State, carries on business Contracting State of which the company paying the dividends is a through a permanent establishment situated therein, or performs in that independent personal services from a fixed base situated therein, and the respect of which the dividends are paid is effectively connected with such establishment or fixed base. In such a case the provisions of Article 7 or the case may be, shall apply.

a company which is a resident of a Contracting State derives profits from the other Contracting State, that other State may not impose any tax dividends paid by the company except insofar as such dividends are paid to a other State or insofar as the holding in respect of which the dividends effectively connected with a permanent establishment or a fixed base other State, nor subject the company’s undistributed profits to a tax company’s undistributed profits, even if the dividends paid or the profits consist wholly or partly of profits or income arising in such

ARTICLE 11

Interest

(1) Interest arising in a Contracting State and paid to a resident Contracting State may be taxed in that other State.

(2) However, such interest may be taxed in the Contracting State arises and according to the laws of that State, but if the recipient is owner of the interest, the tax so charged shall not exceed ten (10) gross amount of the interest.

(3) Notwithstanding the provisions of paragraph (2):

(a) interest arising in Malta and derived by the Government including local authorities thereof, the Central Bank or institution controlled by the Hungarian Government, or interest on loans guaranteed by the Hungarian Government, shall from tax in Malta;

(b) interest arising in Hungary and paid to the Malta Government, Central Bank of Malta or the Malta Development Corporation exempt from Hungarian tax.

(4) The term "interest" as used in this Article means income from every kind, whether or not secured by mortgage and whether or not carrying to participate in the debtor’s profits, and in particular, income from securities and income from bonds or debentures, including premiums attaching to such securities, bonds or debentures.

(5) The provisions of paragraphs (1) and (2) shall not apply if owner of the interest, being a resident of a Contracting State, carries the other Contracting State in which the interest arises, through establishment situated therein, or performs in that other State independent services from a fixed base situated therein, and the debt-claim in respect the interest is paid is effectively connected with such permanent establishment fixed base. In such case the provisions of Article 7 or Article 14, as the shall apply.

(6) Interest shall be deemed to arise in a Contracting State when that State itself, a political subdivision, a local authority, or a resident Where, however, the person paying the interest, whether he is a Contracting State or not, has in a Contracting State a permanent establishment fixed base in connection with which the indebtedness on which the was incurred, and such interest is borne by such permanent establishment base then such interest shall be deemed to arise in the State in which establishment or fixed base is situated.

(7) Where, by reason of a special relationship between the beneficial owner or between both of them, and some other person, the interest paid having regard to the debt-claim for which it is paid, exceeds which would have been agreed upon by the payer and the beneficial absence of such relationship, the provisions of this Article shall apply last-mentioned amount. In such case, the excess part of the payments taxable according to the laws of each Contracting State, due regard being other provisions of this Agreement. ARTICLE 12

Royalties Royalties arising in a Contracting State and paid to a resident of the other State may be taxed in that other State. However, such royalties may also be taxed in the Contracting State in which according to the laws of that State, but if the recipient is the beneficial royalties the tax so charged shall not exceed ten (10) per cent of the of the royalties.

term "royalties" in this Article means payments en credits, whether not, and however described or computed, to the extent to which they consideration for -the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right; the use of, or the right to use, any industrial, commercial or scientific equipment; the supply of scientific, technical, industrial or commercial knowledge information; the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of any such property or right as is mentioned in sub-paragraph (b), or any such knowledge or information as is mentioned in sub-paragraph (c); the use of, or the right to use:

(i) motion picture films;

(ii) films or video tapes for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or total or partial forbearance in respect of the use or supply of any property or right referred to in this paragraph. provisions of paragraphs (1) and (2) shall not apply if the beneficial royalties, being a resident of a Contracting State, carries on business in Contracting State in which the royalties arise, through a permanent situated therein, or performs in that other State independent personal a fixed base situated therein, and the right or property in respect of royalties are paid is effectively connected with such permanent or fixed base. In such case the provisions of Article 7 or Article 14, as be, shall apply. Royalties shall be deemed to arise in a Contracting State when the payer is itself, a political subdivision, a local authority or a resident of that State. however, the person paying the royalties, whether he is a resident of a State or not, has in a Contracting State a permanent establishment or connection with which the obligation to pay the royalties was incurred, royalties are borne by such permanent establishment or fixed base, then shall be deemed to arise in the State in which the permanent or fixed base is situated. by reason of a special relationship between the payer and the owner or between both of them and some other person, the amount of the having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the beneficial owner in the absence of such relationship, the provisions shall apply only to the last-mentioned amount. In such case, the excess payments shall remain taxable according to the laws of each Contracting regard being had to the other provisions of this Agreement.

ARTICLE 13

Alienation of Property

(1) Income or gains from the alienation of immovable property, paragraph (2) of Article 6, may be taxed in the Contracting State property is situated.

(2) Income or gains from the alienation of shares or comparable company, the assets of which consist wholly or principally of immovable may be taxed in the Contracting State in which the assets or the principal the company are situated.

(3) Income or gains from the alienation of movable property forming business property of a permanent establishment which an enterprise of State has in the other Contracting State or of movable property pertaining base available to a resident of a Contracting State in the other Contracting the purpose of performing independent personal services, including gains from the alienation of such a permanent establishment (alone or the whole enterprise) or of such fixed base, may be taxed in the other

(4) Income or gains from the alienation of ships, aircraft and vehicles operated in international traffic or movable property pertaining operation of such means of transportation shall be taxable only in the State of which the enterprise is a resident.

(5) Income or gains from the alienation of any property other than to in paragraphs (1), (2), (3) and (4), shall be taxable only in the Contracting which the alienator is a resident.

ARTICLE 14

Independent Personal Services

(1) Income derived by a resident of a Contracting State professional services or other activities of an independent character shall only in that State. However, such income may be taxed in the other Contracting in the following circumstances:

(a) if he has a fixed base regularly available to him in the other State for the purpose of performing his activities (in which much of the income as is attributable to that fixed base may that other Contracting State); or

(b) if his stay in the other Contracting State is for a period amounting to or exceeding in the aggregate 183 days calendar year; or

(c) if the remuneration for his services in the other Contracting derived from residents of that State and exceeds the equivalent currency of that State of five thousand U.S. dollars (US$ the calendar year, notwithstanding that his stay in that period or periods amounting in the aggregate to less during that year. term "professional services" includes especially independent scientific, artistic, educational or teaching activities as well as the independent physicians, dentists, lawyers, engineers, architects and accountants.

ARTICLE 15

Dependent Personal Services Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages similar remuneration derived by a resident of a Contracting State in respect employment shall be taxable only in that State unless the employment is the other Contracting State. If the employment is so exercised, such as is derived therefrom may be taxed in that other State. Notwithstanding the provisions of paragraph (1), remuneration derived by a Contracting State in respect of an employment exercised in the other State shall be taxable only in the first-mentioned State if: the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned; and the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. Notwithstanding the preceding provisions of this Article, remuneration respect of an employment exercised aboard a ship, aircraft or road vehicle operated in international traffic by an enterprise of a Contracting taxed in that State.

ARTICLE 16

Directors’ Fees fees and similar payments derived by a resident of one of the States in his capacity as a member of the board of directors, or other body however described, of a company which is a resident of the other State, may be taxed in that other State.

ARTICLE 17

Artistes and Athletes

Notwithstanding the provisions of Articles 14 and 15, income derived by a Contracting State as an entertainer, such as a theatre, motion picture, television artiste, or musician or as an athlete, from his personal activities as in the other Contracting State, may be taxed in that other State. income in respect of personal activities exercised by an entertainer or his capacity as such accrues not to the entertainer or athlete himself but person, that income may, notwithstanding the provisions of Articles 7, 14 taxed in the Contracting State in which the activities of the entertainer or exercised, if that person is directly or indirectly controlled by the athlete.

Notwithstanding the provisions of paragraphs (1) and (2) of this Article, income mentioned in this Article shall be exempt from tax in the Contracting which the activity of the entertainer or athlete is exercised provided that is supported in a considerable part out of public funds of this State State or the activity is exercised under a cultural agreement or arrangement the Contracting States.

ARTICLE 18

Pensions

(1) Subject to the provisions of paragraph (2) of Article 19, pensions similar remuneration paid to a resident of a Contracting State in consideration past employment shall be taxable only in that State.

(2) Notwithstanding the provisions of paragraph (1), pensions payments made under the social security legislation of a Contracting taxable only in that State.

ARTICLE 19

Government Service

(1) (a) Remuneration, other than a pension, paid by a Contracting political subdivision or a local authority thereof to an individual services rendered to that State or subdivision or authority shall be that State.

(b) However, such remuneration shall be taxable only in the other State if the services are rendered in that State and the individual is a State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the rendering the services.

(2) (a) Any pension paid by, or out of funds created by a Contracting a political subdivision or a local authority thereof to an individual services rendered to that State or subdivision or authority shall be that State.

(b) However, such pension shall be taxable only in the other Contracting the individual is a resident of, and a national of, that State.

(3) The provisions of Articles 15, 16 and 18 shall apply to remuneration pensions in respect of services rendered in connection with a business a Contracting State or a political subdivision or a local authority thereof.

(4) Where remuneration is paid under a development assistance programme Contracting State, out of funds exclusively supplied by that State to volunteer seconded to the other Contracting State with the consent State, such remuneration shall be deemed to have been paid by the first-mentioned State and shall be taxable only in that State.

ARTICLE 20

Teachers

(1) Remuneration which a professor or teacher who is or was before visiting a Contracting State a resident of the other Contracting is present in the first-mentioned State for a period not exceeding two carrying out advanced study or research or for teaching at a university, or other educational institution received for such work shall not be State, provided that such remuneration is derived by him outside that

Article shall not apply to income from research if such research is primarily for the private benefit of a specific person or persons.

ARTICLE 21

Students and Trainees individual who is resident of a Contracting State immediately before making a other Contracting State and is temporarily present in the other State a student at a recognised university, college, school or other similar recognised educational institution in that other State; a business or technical apprentice; or a recipient of a grant, allowance or award for the primary purpose of study, research or training from the Government of either State or from scientific, educational, religious, or charitable organisation or under a technical assistance programme entered into by the Government of either State, exempt from tax in that other State on: remittances from abroad for the purposes of his maintenance, education, study, research or training; the amount of such grant, allowance or award; and any remuneration not exceeding the equivalent in the currency of that other State of two thousand U.S. dollars (US$ 2,000) in respect of services in that other State provided the services are performed in connection with his study, research or training or are necessary for the purpose of his maintenance.

ARTICLE 22

Other Income of income of a resident of a Contracting State, wherever arising, not the foregoing Articles of this Agreement shall be taxable only in that provisions of paragraph (1) shall not apply to income, other than income immovable property as defined in paragraph (2) of Article 6, if the recipient of being a resident of a Contracting State, carries on business in the other State through a permanent establishment situated therein, or performs in independent personal services from a fixed base situated therein, and property in respect of which the income is paid is effectively connected permanent establishment or fixed base. In such case, the provisions of Article 14, as the case may be, shall apply. CHAPTER IV

Elimination of Double Taxation

ARTICLE 23

Elimination of Double Taxation

(1) In the case of Hungary double taxation shall be eliminated as

(a) where a resident of Hungary derives income which, in accordance the provisions of this Agreement may be taxed in Malta, subject to the provisions of sub-paragraphs (b) and (c), income from tax;

(b) where a resident of Hungary derives items of income accordance with the provisions of Article 10, may be taxed Hungary shall allow as a deduction from the tax on the resident an amount equal to the tax paid in Malta. Such not, however, exceed that part of the tax, as computed deduction is given which is attributable to such items of from Malta; and

(c) where in accordance with any provision of this Agreement derived by a resident of Hungary is exempt from tax Hungary may nevertheless, in calculating the amount remaining income of such resident, take into account income.

(2) In the case of Malta, double taxation shall be eliminated as follows: Subject to the provisions of the law of Malta regarding the allowance against Malta tax in respect of foreign tax, where, in accordance with of this Agreement, there is included in a Malta assessment income within Hungary, the Hungarian tax on such income shall be allowed against the relative Malta tax payable thereon.

(3) For the purpose of allowance as a credit the tax payable Malta, as the context requires, shall be deemed to include the tax which payable in a Contracting State but has been reduced or waived by that legal provisions for tax incentives.

(4) Where the Agreement provides that income arising in a Contracting shall be relieved from tax in that State, either in full or in part, and, under force in the other Contracting State, such income is subject to tax by reference amount thereof which is remitted to or received in that other State reference to the full amount thereof, then the relief to be allowed mentioned State shall apply only to so much of the income as is received in the other State.

CHAPTER V

Special Provisions

ARTICLE 24

(1) Nationals of a Contracting State shall not be subjected Contracting State to any taxation or any requirement connected therewith other or more burdensome than the taxation and connected requirements that other State in the same circumstances are or may be subjected. This shall, notwithstanding the provisions of Article l, also apply to persons residents of one or both of the Contracting States.

taxation on a permanent establishment which an enterprise of a State has in the other Contracting State shall not be less favourably other State than the taxation levied on enterprises of that other State same activities. where the provisions of paragraph (1) of Article 9, paragraph (7) of or paragraph (6) of Article 12 apply, interest, royalties and other paid by an enterprise of a Contracting State to a resident of the other State shall, for the purpose of determining the taxable profits of such deductible under the same conditions as if they had been paid to a first-mentioned State.

Enterprises of a Contracting State, the capital of which is wholly or partly controlled, directly or indirectly by one or more residents of the other State, shall not be subjected in the first-mentioned State to any taxation requirement connected therewith which is more burdensome than the taxation connected requirements to which other similar enterprises of that first-State are or may be subjected. Nothing in this Article shall be construed as obliging a Contracting State to individuals who are resident of the other Contracting State any personal reliefs and reductions for tax purposes on account of civil status, family responsibilities or any other personal circumstances which it grants to its own provisions of this Article shall, notwithstanding the provisions of apply to taxes of every kind and description.

ARTICLE 25

Mutual Agreement Procedure a person considers that the actions of one or both of the Contracting or will result for him in taxation not in accordance with the provisions Agreement, he may, irrespective of the remedies provided by the domestic States, present his case to the competent authority of the Contracting he is a resident or if his case comes under paragraph (1) of Article 24, Contracting State of which he is a national. The case must be presented years from the first notification of the action resulting in taxation not in with the provisions of the Agreement.

competent authority shall endeavour, if the objection appears to it to be if it is not itself able to arrive at a satisfactory solution, to resolve the mutual agreement with the competent authority of the other Contracting view to the avoidance of taxation which is not in accordance with the Any agreement reached shall be implemented notwithstanding any time domestic law of the Contracting States. competent authorities of the Contracting States shall endeavour to mutual agreement any difficulties or doubts arising as to the or application of the Agreement. They may also consult together for of double taxation in cases not provided for in the Agreement.

competent authorities of the Contracting States may communicate with directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 26

Exchange of Information

(1) The competent authorities of the Contracting States shall information as is necessary for carrying out the provisions of this Agreement the domestic laws of the Contracting States concerning taxes covered Agreement insofar as the taxation thereunder is not contrary to the Agreement. exchange of information is not restricted by Article 1. Any information Contracting State shall be treated as secret in the same manner as obtained under the domestic laws of that State and shall be disclosed or authorities (including courts and administrative bodies) involved assessment or collection of, the enforcement or prosecution in respect determination of appeals in relation to, the taxes covered by the Agreement. persons or authorities shall use the information only for such purposes. disclose the information in public court proceedings or in judicial decisions.

(2) In no case shall the provisions of paragraph (1) be construed on a Contracting State the obligation:

(a) to carry out administrative measures at variance with administrative practice of that or of the other Contracting

(b) to supply information which is not obtainable under the normal course of the administration of that or of the other State;

(c) to supply information which would disclose any trade, industrial, commercial or professional secret or trade information, the disclosure of which would be contrary to (ordre public).

ARTICLE 27

Diplomatic and Consular Officials Nothing in this Agreement shall affect the fiscal privileges of diplomatic consular officials under the general rules of international law or under of special agreements.

CHAPTER VI

Final Provisions

ARTICLE 28

Entry into Force

(1) The Governments of the Contracting States shall notify each constitutional requirements for the entry into force of this Agreement complied with.

(2) The Agreement shall enter into force thirty days after the notifications referred to in paragraph (1) and its provisions shall have

(a) in Hungary:

(i) in respect of taxes withheld at source, to amounts derived on or after 1 January in the calendar year next following the year in which the Agreement enters into force; and

(ii) in respect of other taxes on income, to such taxes chargeable for any taxable year beginning on or after 1 January in the calendar year next following the year in which the Agreement enters into force; Malta: respect of taxes for any year of assessment beginning on or after 1 January in the second calendar year following the year in which this Agreement enters into force.

ARTICLE 29

Termination Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of a period of five years from the date of its entry into force. In such event, the Agreement shall cease to have effect:

Hungary:

(i) in respect of taxes withheld at source, to amounts of income derived on or after 1 January in the calendar year next following the year in which the notice is given; and

(ii) in respect of other taxes on income, to such 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; Malta: respect of taxes for any year of assessment beginning on or after 1 January in the second calendar year following the year in which the notice is given.

WITNESS WHEREOF the undersigned, duly authorized thereto, have signed Agreement. duplicate at Budapest this 6th day of August, 1991, in the English

Joseph Cassar Török Béla GOVERNMENT OF FOR THE GOVERNMENT OF THE MALTA REPUBLIC OF HUNGARY PROTOCOL

At the signing today of the Agreement between the Government of Government of the Republic of Hungary for the avoidance of double respect to taxes on income the undersigned have agreed upon provisions which shall form an integral part of the Agreement:

(1) Concerning paragraph (3) of Article 2, sub-article (13) of article Income Tax Act provides that the tax upon the chargeable income engaged in the production of petroleum produced in Malta shall be at cents on every lira of such part of his chargeable income as is derived Under the law in force in Malta, no double taxation arrangement shall so far as it applies to tax paid or payable in respect of gains or profits the rate provided for in sub-article (13) of article 56 of the Act.

(2) Concerning Article 5 it is understood that the term "place includes also a place of production.

(3) Concerning Article 7 where a building site, construction, assembly project constitutes a permanent establishment, only those attributed to that permanent establishment which derive from the building site, construction, installation or assembly project. No profit can be attributed to the permanent establishment by reason goods or merchandise, machinery or equipment notwithstanding that was carried out by the enterprise or by a third person.

(4) Concerning Article 8 operation in international traffic of ships road transport vehicles includes the activity of agencies of international enterprises and other auxiliary activities of these enterprises namely transport between a town and the airport in so far as these above-mentioned closely connected with international transport.

(5) Concerning paragraph (2)(b) of Article 10 it is understood that will be a change in the imputation system presently applied in Malta authorities of the Contracting States will consult each other in order taxation of dividends in view of avoiding double taxation.

IN WITNESS whereof the undersigned, duly authorised thereto, have Protocol. DONE in duplicate at Budapest this 6th day of August, 1991, language.

Joseph Cassar Török Béla FOR THE GOVERNMENT OF FOR THE GOVERNMENT MALTA REPUBLIC OF HUNGARY