The Zambia Denmark DTA

Signed on:                                    13th January 1974

Came into force on:                 18th October 1984

Effective in Zambia on:          1st April 1972

Effective in Denmark on:      1st January 1972

Definitions:

  1. Source Country means the country where income is being derived
  2. Residence Country means the country where the person who is deriving income is resident
  3. Permanent Establishment means a fixed place of business which gives rise to income tax liability

Summary of the terms of the treaty:

Class of Income Taxation and profit determination rules
1. Immovable property
  • Source country may tax
2. Business Profits
  • Source country may tax if permanent establishment exists, to the extent that the income is attributable to the permanent establishment
  • For taxation purposes, transactions between a permanent establishment and the parent establishment shall be priced at arm’s length
3. Shipping and Air Transport
  • Country of effective management may tax, if profits are associated with international traffic
  • Country of home harbor may tax if place of effective management is aboard a ship or Resident country of owner of enterprise if no such home harbor exists.
4. Associated or Related Businesses
  • Transfer pricing adjustments may be made where necessary
5. Dividends
  • Residence country may tax
  • Source Country up to 15% of dividend amount
6. Interest
  • Residence country may tax
  • Source Country may tax up 10%
  • Interest will be exempt of recipient of income is a government or a government agency of a treaty state
  • Source country may tax if interest is associated with the permanent establishment in the source country
7. Royalties
  • Residence country may tax
  • Source country may tax up 15%
  • Exempt if recipient is government
  • Source country may tax if royalties are associated with the permanent establishment in the source country
8. Gains from the Alienation of Property
  • Source country may tax if shares derive their value from immovable property that is situated in the source country
9. Independent Personal Services
  • Source Country may tax if:
    • Fixed base regularly available to a person is available in the source country
    • The person is available in the source country for 183 or more days in Source Country in a tax year.
    • The persons earnings from the residents of the source country exceed 10,000 Canadian Dollars or Zambia Kwacha equivalence in one tax year, regardless of whether the person has been in the source Country for less than 183 days.
Dependent Personal Services
  • Source Country may tax if employment is exercised in Source Country and:
    • Person is in country for a period up to 183 days or more in the Source Country
    • If the remuneration is paid by a resident of the source country or a permanent establishment in the source country
    • Country of effective management of enterprise may tax if remuneration is for employment exercised on international transport vessels.
11. Directors Fees
  • Residence Country may tax
12. Artistes and Athletes
  • Source Country may tax,
13. Pensions
  • Pension or similar remuneration that is subject to tax in the Residence Country shall be exempt in the Source Country.
14. Governmental Functions
  • Source Country may tax
15. Research Personnel and Students
  • Exempt in source country if person ahs been in source country for a period that is not less than two years
16. Income not Expressly Mentioned.
  • Resident country may tax
17. Personal Allowances.
  • Residents of the Treaty Countries may claim the same personal allowances, reliefs and
  • reductions for the purposes of tax.