Negotiations for an income and capital tax treaty between Bosnia and Herzegovina (B&H) and Poland are underway. Once signed and in force, the new treaty will replace the former Yugoslavia – Poland Income and Capital tax treaty concluded on January 10 1985, in relations between B&H and Poland.
Below is a brief review of some terms agreed back in the 1980s, as in practice both countries continued to apply the former conventions.
The tax charged on dividends shall not exceed 5% of the gross amount of the dividends, in case if the recipient is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends and 15% of the gross amount of the dividends in all other cases.
As per interests, the treaty generally stipulates tax rate at 10 %. Where the payer is the state itself; a political subdivision or a local authority the interest shall be deemed to arise in that state. If the person paying the interest, has in a Contracting State a permanent establishment, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the state in which the permanent establishment is situated.
The royalty’s withholding tax rate has been set at 10%.
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 or she has a fixed base regularly available in the other contracting state for the purpose of performing activities or his or her stay in the other contracting state is for a period amounting to or exceeding in the aggregate 183 days in the fiscal year concerned.
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