Albania

Agreement

Between The Republic of Albania
and the Republic of Turkey
For the Avoidance of Double Taxation
With Respect to Taxes on Income and on Capital

The Government of the Republic of Albania
and

The Government of the Republic of Turkey

Desiring to conclude an Agreement for the avoidance of double taxation with respect to taxes on income and on capital

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. 1.This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. 2.There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

         3. The existing taxes to which the Agreement shall apply are in particular:

1. a)in the case of Turkey:
2. i)the income tax (Gelir Vergisi);
3. ii)the corporation tax (Kurumlar Vergisi);
4. iii)the levies imposed on the corporation tax and the income tax;

(Hereinafter referred to as “Turkish Tax”).

1. b)in the case of Albania:

i) the profit tax;

ii) taxes on the income of physical persons in the private sectors of trade, artisan and other services; iii) individual income tax;

(Hereinafter referred to as “Albanian Tax”).

4. The Agreement shall apply also to any identical or substantially similar taxes which jre loosed after the date of signature of the Agreement in addition to, or in place of, the existing taxes- The competent authorities of the Contracting States may agree in writing to have the Agreement apply to any other taxes imposed on income and on capital after the date of signature of the Agreement. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

Article 3

                                        GENERAL DEFINITIONS

1. 1.for the purposes of this Agreement, unless the context otherwise

requires:

1. a)i) the term “Turkey” means the’ Turkish territory, territorial

sea as well as the maritime areas over which it has jurisdiction or sovereign rights for the purpose of exploring, exploiting, conserving and managing natural resources, pursuant to international law;

ii) the term “Albania” when used in a geographical sense means the territory of Albania including any area beyond the territorial seas of the Republic of Albania which, in accordance with international law and the laws of the Republic of Albania, is an area within which the Republic of Albania may exercise rights with respect to the seabed and subsoil and their natural resources;

1. b)the terms “a Contracting State “ and “ the other Contracting State” mean Turkey or Albania, as the context requires;

C) the term “tax” means Albanian tax and Turkish tax, as the context requires;

1. d)the term “person” includes an individual, a company and any other body of persons;
2. e)the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
3. f)the tern, “national” means;

i) any individual possessing the nationality of a Contracting State;

ii) any legal person, partnership or association deriving its
status as such from the laws in force in a Contracting State;

g) the terms “enterprise of a Contracting State” and “enterprise of tne oilier 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;

1. h)the term “competent authority“ means:

i) in  Turkey,                  the Minister   of   Finance     or       his        authorised

representative;

ii) in  Albania,                 the Minister  of   Finance     or       his         authorised

representative;

1. i)the term “international traffic” means any transport by a ship, an aircraft or a road vehicle by a Turkish or Albanian enterprise, except when the ship, aircraft or road vehicle is operated solely between places situated in the territory of Turkey or of Albania.

?. As regards the application of this 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 tnat State concerning the taxes to winch the Agreement applies.

Article 4 RESIDENT

1. 1.For the purposes of tins Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable td tax therein hy reason of his domicile, residence, place of incorporation (registration), place of management or any other criterion of a similar nature.
2. 2.Uhere by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status sUll be determined as f ollows:

a 1 he shall be deemed to be a resident of the State m which he has a permanent home available to him; if he has a permanent hoine 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);

1. 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 Contracting State in which lie has an habitual abode;
2. c)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 State of which he i s a national;
3. 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.
4. 3.Uhere 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 oe a resident of the Contracting State in which it has been incorporated (registered) or, where that person has not been incorporated (registered) in either State, the conpetent authorities of the Contracting States shall by mutual agreement endeavour to settle the question and to determine the mode of application of the Agreement to such person.

Article 5

PERMANENT ESTABLISHMENT

1. 1.For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through winch the business of an enterprise is wholly or partly carried on,
2. 2.The term “permanent establishment” lm-ludes especially:
   1. a)a place of management;
   2. b)a branch;
   3. c)an office;
   4. d)a factory;
   5. e)a workshop;
   6. f)a mine, an oil or gas well, a quarry or any other place of

extraction of natural resources.     _____________

1. 3.A building site, construction or installation project constitutes a permanent establishment only if it lasts more than twelve months.
2. 4.Notwithstanding the preceding provisions of this Article, the tern “permanent establishment” shall be deemed not to include:
   1. a)the use of facilities solely for tne purpose of storage, display or delivery of goods or merchandise belonginy to the enterprise;
   2. b)the maintenance of a stock of goods or merchandise belonging to the enterprise solely for tne purpose of storage, display or delivery;
   3. c)the maintenance of a stock of goods or Merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
   4. d)the maintenance of a fixed place of ousiness solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
   5. 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;
   6. f)the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-para graphs a) to c), provided that the overall activity of the fixed place of business resulting from this coebination’is of a preparatory or auxiliary character.
   7. 5.Notwithstanding the provisions of paragraphs 1 and 2, where a person- other than an agent of an independent status to whom paragraph 6 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 establishmet 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 ol that paragraph.
   8. 6.An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other 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.
   9. 7.The fact that a coup any which is a resident of a Contracting State controls or is controlled by a coupany 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 coupany a permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

1. 1.Income derived by a resident of a Contract my State from inroovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. 2.The term “imnovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, fishing places of every kind, rights to which the provisions of general law respecting landed property apply, usufruct of immovable 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; ships, boats and aircraft shall not be regarded as Immovable property.
3. 3.The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of nmnovable property.
4. 4.The provisions of paragraphs 1 and 3 shall also apply to the income from imnovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7 BUSINESS PROFITS

1. 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 si Lusted therein. If tlie 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. 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. 3.in determining the profits of a permanent establishment, there sliall 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. 4.No profits shall be attributed to a permanent establishment by

reason of the mere purchase by that permanent establishment of goods or merchandise fur the enterprise.                       _____________

1. i.Where profits include items of income winch are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8

shipping, air and land transport

1. 1.Profits derived by an enterprise of a Contracting State from the operation of ships, aircraft or road vehicles in international traffic shall be taxable only in Lh<il SlaLo.
2. 2.The provisions of paragraph 1 of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

Article 9

ASSOCIATED ENTERPRISES

1,   Where

1. a)an enterprise of a Contracting State pa mci pates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
2. 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 tlie other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their comnorcial or financial relations whieii differ from those which would be made between independent enterprises, then any profits which would, but for tnost conditions, have accrued to one of the enterprises, but, t>y reason of those conditions, have not so accrued, may be included in the profits of that enterprise anu taxed accordingly.

2.Where a Contracting State includes in the profits of an enterprise of that State-and taxes accordingly-profits on winch an enterprise of the other Contracting State has beer charged to tax in that other State and the profits so included are by the first-mentioned State claimed to be profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits, where that other State considers the adjustment justified. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult eacn other.

Article 10 D1V1DENDS

1. 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. 2.However, such dividends may also be taxed in the Contracting State of uhicli the conpany 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:
   1. a)5 per cent of the gross amount of the dividends if the recipient is a conpany (other than a partnership) which holds directly at least 26 per cent of the capital of the conpany paying the dividends;
   2. b)15 per cent of the gross amount of-the dividends in all other cases.

This paragraph shall not affect the taxation of the conpany in respect of the profits out of which the dividends are paid.

1. 3.The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from otner corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the conpany making the distribution is a resident, and in the case of Turkey income derived from an investment fund and investment trust.
2. 4.Profits of a conpany of a Contracting State carrying on business in the other Contracting State through a permanent establishment situated therein may, after having been taxed under Article 7, be taxed on the remaining amount in the Contracting State in which the permanent establishment is situated and in accordance with paragraph 2.
3. 5.The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of e Contracting State, carries on business m the other Contracting State of which the conpany paying the dividends is a resident, through a permanent establishment situated therein,’ and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

C. Subject Lo the provisions of paragraph 4 of this Article where a cunpany which is a resident of a Contracting State derives profits or income frum the other Contracting State, that other State may not lupuse any tax on tlie dividends paid by the conpany, 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

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 that other State.

Article 11
INTEREST

1. 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. 2.however, such interest ii&y also bo taxed in the Contracting State in which it arises and according to the laws oi that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. 3.Notwithstanding the provisions of paragraph 2, interest arising in :
   1. a)Albania and paid to the Government of Turkey, to the Central Bank of Turkey or to the Turkish Cximbank shall be exenpted from Albanian tax;
   2. b)Turkey and paid to the Government of Albania, to the Central Bank of Albania, to the Commercial National Bank of Albania or to the Savings Bank of Albania shall be exempted from Turkish tax.
   3. 4.The term ”interest” as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind with a similar nature which is subjected to the same taxation treatment as interest.

G. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, beiny a resident of a Contracting Stale, carries on business in the other Contracting State in which the interest arises, tnrough a permanent establishment situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

G. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Uhere, 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

7. Where, by reason of a special relationship between tlie 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 lor 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 Agreement.

Article 12 ROYALTIES

1. 1.Royalties arising in a Contracting State and paid to a resident of the other Contract lily State may be taxed in that other State.
2. 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 per cent of the gross amount of the royalties.
3. 3.The term “royalties” as used in this Article means payments of any hind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and tapes for radio arid television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, coianercial or scientific experience.
4. 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 o permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
5. 5.Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State, lihere, 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 in connection with which the liability to pay the royalties was incurred, and such royalties are born by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. 6.Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some cither 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 Agreement.

Article 13
CAPITAL GAINS

1. 1.Gains derived by a resident of a Contracting State from tike

dl lunation of iiiinovablu property referred to iri Article 6 and situated in the other Contracting State         may be taxed      in that other State.

1. 2.Gainsthe alienation of movable 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                             movable 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 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.

1. 3.Gains derived by an enterprise of a Contracting State from the alienation of ships, aircraft’or road vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft or road vehicles, shall be taxable only in that State.
2. 4.Gains from the alienation of any property other than that referred tu in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

1. 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. 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 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 1C, IS. 19 and 20, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an enployment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the enployment is so exercised, such reirunemion as is derived therefrom may be taxed in that other State.

1. 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:
   1. a)the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12month period commencing or ending in the calendar year concerned, and
   2. b)the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
   3. c)the renuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
   4. 3.notwithstanding the preceding provisions of this Article, renuneration derived in respect of an employment exercised aboard a ship, aircraft or road vehicle operated in international traffic, may be taxed in the Contracting State in which the enterprise is a resident.

Article 16

DIRECTORS’ 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 similar body of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17

ARTISTES AND SPORTSMEN

1. 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 artiste, or a musician, or as a sportsman from his personal activities as such’exercised in the other Contracting State, may be taxed in that other State.
2. 2.Uhcre income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, n and 16, be taxed in the Contracting State in. winch the activities of the entertainer or sportsman are exercised.
3. 3.Notwithstanding the provisions of paragraphs 1 and 2 income derived by an entertainer or a sportsman from his personal activities as such being a resident of a Contracting State shall be exempt from tax in the other Contracting State in which these activities are exercised if the activities are exercised within the framework of a visit which is substantially supported by the other Contracting State, a political subdivision, a local authority or a public institution thereof.

Article 18
PENSIONS

Subject to the provisions of paragraph 1 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of post employment shall he taxable only in that State-

Article 19 GOVERNMENT SERVICE

1. 1.Remuneration, including pensions, paid by, or out of funds created by, a Contracting State or its political subdivision or local authority thereof to an individual in respect of services rendered to that State or subdivision or authority thereof in the discharge of functions of a governmental nature shall be taxable only in that State.
2. 2.The provisions of Articles 15, 16 arid 18 shall apply to renuneration and pensions in respect of services rendered in connection with a business tarried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20

STUDENTS, TRAINEES, BUSINESS APPRENTICES AND TEACHERS

1. Payments which a student, trainee or business apprentice who is a pesident of a Contracting State and who is present in the other Contracting 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 ‘ other State, provided that such payments arise from sources outside that other State.

2. Likewise, reiiunoration received by a teacher or by an instructor who is a resident of a Contracting State and who is present in the other Contracting State and the primary purpose of teaching or engaging in scientific research for a period or periods not exceeding two years shall be exenpt from tax in that other State on his remunerations from personal services for teaching or research, provided that such payments arise from sources outside that other State.

Article 21
OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.