Agreement between the Government of the People's Republic of China and the Government of the Republic of Croatia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income

Agreement between the Government of the People's Republic of China and the Government of the Republic of Croatia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income

January 9,1995

The Government of the People's Republic of China and the Government of the Republic of Croatia,Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,Have agreed as follows:

Article 1 Personal Scope
This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2 Taxes Covered
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.
3. The existing taxes to which the Agreement shall apply are:
(1) in the Republic of China:
A. the individual income tax;
B. the income tax for enterprises with foreign investment and foreign enterprises;
C. the local income tax;
(hereinafter referred to as"Chinese tax")
(2) in the Republic of Croatia:
A. the income tax;
B. the profit tax.
(hereinafter referred to as"Croatian tax")
4. This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes.

Article 3 General Definitions
1. For the purposes of this Agreement, unless the context otherwise requires:
(1) the term"China" means the People's Republic of China; when used in a geographical sense, means all the territory of the People's Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, within which the People's Republic of China has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with international law;
(2) the term"Croatia" meas the whole territory of Croatia in its internationally recognized boundaries, including its territorial sea, in which the Croatian laws relating to taxation apply, and any area beyond its territorial sea, within which the Republic of Croatia has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with international law;
(3) the terms"a Contracting State" and"the other Contracting State" mean China or Croatia, as the context requires;
(4) the term"tax" means Chinese tax or Croatinan tax, as the context requires;
(5) the term"person" includes an individual, a company and any other body of persons;
(6) the term"company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(7) 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;
(8) the term"national" means all individual possessing the nationality of a Contracting State and all juridical persons created or organized under the laws of that Contracting State, as well as organizations without juridical personality treated for tax purposes as juridical persons created or organized under the lasw of that Contracting State;
(9) the term"international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State except when the ship or aircraft is operated solely between places in the other Contracting State;
(10) the term"competent authority" means, in the case of China, the State Administration of Taxation or its authorized representative, and in the case of Croatia, the Minister of Finance or his authorized representative.
2. As regards the application of the Agreement by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that Contracting State concerning the taxes to which the Agreement applies.

Article 4 Resident
1. For the purposes of this Agreement, the term"resident of a Contracting State"means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of head office(i.e, place of effcetive management) or any other criterion of a similar nature.
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:
(1) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident only of the Contracting State with which his personal and economic relations are closer(centre of vital interests);
(2) 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 Contracting State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(3) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;
(4) if he is a national of both Contracting 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 Contracting State in which the place of head office(i.e, place of effective management) is situated.

Article 5 Permanent Establishment
1. For the purposes of this Agreement, 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:
(1) a place of management;
(2) a branch;
(3) an office;
(4) a factory;
(5) a workshop; and
(6) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3. The term"permanent establishment" likewise encompasses:
(1) A building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than 12 months;
(2) the furnishing of services, including consultant services, by an enterprise of a Contracting State through employees or other personnel engaged in the other Contracting State, provided that such activities continue for the same project or a connected project for a period or periods aggregating more than 12 months within any 24 month period;
(3) the use of an installation or drilling rig or ship in a Contracting State to explore for or exploit natural resources constitutes a permanent establishment only if such use is for more than 12 months.
4. Notwithstanding the preceding provisions of 1 to 3, the term"permanent establishment" shall be deemed not to include:
(1) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(2) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(3) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(4) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(5) 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;
(6) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs(1) to(5), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5.
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