On March 14, 2022, the Singaporean Ministry of Finance issued a press release announcing that the Convention between the Republic of Singapore and the Hellenic Republic for the elimination of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital signed on 30 May 2019 (Hereafter: the Convention), entered into force on 14 March 2022.
Based on Article 29 of the Convention (“ENTRY INTO FORCE”) the fact that the Convention will enter into force on March 14, 2022 means that the provisions of the Convention shall have effect:
(a) in the Hellenic Republic:
(i) in respect of taxes withheld at source, for amounts paid or credited on or after January 1, 2023;
(ii) in respect of other taxes, for taxes levied for periods beginning on or after January 1, 2023; and
(iii) in respect of Article 27 (“Exchange of Information”), for requests made on or after March 14, 2022 concerning information for taxes relating to taxable periods beginning on or after January 1, 2023; or where there is no taxable period, for all charges to tax arising on or after January 1, 2023; and
(b) in Singapore:
(i) in respect of taxes withheld at source, for amounts paid, deemed to be paid or liable to be paid (whichever is the earliest) on or after January 1, 2023;
(ii) in respect of taxes chargeable (other than taxes withheld at source), for taxes levied for periods beginning on or after January 1, 2023; and
(iii) in respect of Article 27 (Exchange of Information), for requests made on or after the date on which this Convention enters into force concerning information for taxes relating to taxable periods beginning on or after January 1, 2023; or where there is no taxable period, for all charges to tax arising on or after January 1, 2023.
Pre-amble
The Pre-amble to the Convention reads as follows:
“desiring to further develop their economic relationship and to enhance their cooperation in tax matters; intending to conclude a Convention for the elimination of double taxation with respect to taxes on income and on capital without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this Convention for the indirect benefit of residents of third jurisdictions),
have agreed as follows:”
Taxes covered
Based on Article 2, Paragraph 3 of the Convention (“TAXES COVERED”), the existing taxes to which the Convention shall apply are:
(a) In the case of the Hellenic Republic:
(i) the income and capital tax on natural persons;
(ii) the income and capital tax on legal persons; (hereinafter referred to as "Hellenic tax").
(b) In the case of Singapore:
(i) the income tax; (hereinafter referred to as "Singapore tax").
Article 2, Paragraph 4 subsequently arranges that the Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.
Residency
Article 4, Paragraph 3 of the Convention (“RESIDENT”) arranges that 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 only of the State in which its place of effective management is situated. If its place of effective management cannot be determined, the competent authorities of the Contracting States shall settle the question by mutual agreement.
Permanent establishment
Article 5, Paragraph 3 of the Convention (“PERMANENT ESTABLISHMENT”) arranges that a building site, a construction, assembly or installation project or supervisory activities in connection therewith constitute a permanent establishment only if such site, project or activities last more than twelve months.
Article 5, Paragraph 4 of the Convention subsequently arranges that the furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose constitutes a permanent establishment only if activities of that nature continue (for a project or any connected projects) within the other Contracting State for a period or periods aggregating more than 183 days in any twelve month period.
Immovable property
Article 6, Paragraph 1 of the Convention (“INCOME FROM IMMOVABLE PROPERTY”) arranges that income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
With respect to immovable property Article 13, Paragraph 1 of the Convention (“CAPITAL GAINS”) arranges that gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
Article 13, Paragraph 4 of the Convention subsequently arranges that gains derived by a resident of a Contracting State from the alienation of shares or comparable interests, other than shares or comparable interests quoted on a recognised Stock Exchange, deriving more than 50% of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.
Associated enterprises
Article 9, Paragraph 2 of the Convention (“ASSOCIATED ENTERPRISES”) contains a so-called appropriate adjustment clause.
Dividends
If the beneficial owner of the dividends is a resident of the other Contracting State, Article 10, Paragraph 2 of the Convention (“DIVIDENDS”) maximizes the withholding tax a Source State is allowed to withhold over dividends to:
(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;
(b) 10 per cent of the gross amount of the dividends in all other cases.
Interest
Article 11, Paragraph 2 of the Convention (“INTEREST”) maximizes the withholding tax a Source State is allowed to withhold over interest payments to 7.5 per cent of the gross amount of the interest if the beneficial owner of the interest is a resident of the other Contracting State.
Royalties
If the beneficial owner of the royalties is a resident of the other Contracting State, Article 12, Paragraph 2 of the Convention (“ROYALTIES”) maximizes the withholding tax a Source State is allowed to withhold over the royalties to 7.5 per cent of the gross amount of the royalties.
Entitlement to benefits
Article 25 of the Convention (“ENTITLEMENT TO BENEFITS”) contains a so-called Principal Purpose Test.
Other
Furthermore the Convention contains a.o. provisions regarding Income from Hydrocarbons and Natural Resources (Article 22) a Mutual Agreement Procedure (Article 26) and regarding the Exchange of Information (Article 26).
Click here to be forwarded to the text of the Convention as available on the website of the Inland Revenue Department of the Inland Revenue Authority of Singapore.
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