CONVENTION

 

 

 

BETWEEN

 

 

 

…………………………………………………………

 

 

 

AND

 

 

 

THE KINGDOM OF BELGIUM

 

 

 

 

 

FOR THE AVOIDANCE OF DOUBLE TAXATION

 

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

 

AND FOR THE PREVENTION OF FISCAL EVASION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE GOVERNMENT OF ……………………………………………………

 

 

 

AND

 

 

 

THE GOVERNMENT OF THE KINGDOM OF BELGIUM,

 

 

 

DESIRING to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital and for the prevention of fiscal evasion,

 

 

 

HAVE AGREED as follows:

 

 


CHAPTER I. SCOPE OF THE CONVENTION

 

 

 

Article 1

 

Persons Covered

 

 

 

This Convention shall apply to persons who are residents of one or both of the Contracting States.

 

 

 

Article 2

 

Taxes Covered

 

 

 

1.   This Convention 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.   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 Convention shall apply are in particular:

 

 

 

a)   in the case of …………………………………………………………………:

 

(i)     ………………………………………………………………………;

 

(ii)    ……………………………………………………………………….;

 

(iii) ………………………………………………………………………;

 

(hereinafter referred to as “……………………………………………….tax”);

 

b) in the case of Belgium :

 

(i)     the individual income tax;

 

(ii)    the corporate income tax;

 

(iii) the income tax on legal entities;

 

(iv)   the income tax on nonresidents;

 

including the prepayments and the surcharges on these taxes and prepayments, (hereinafter referred to as “Belgian tax”).

 

 

 

4.   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.

 

 


CHAPTER II. DEFINITIONS

 

 

 

Article 3

 

General Definitions

 

 

 

1.   For the purposes of this Convention, unless the context otherwise requires :

 

 

 

a)

 

(i)     the term “Belgium” means the Kingdom of Belgium; used in a geographical sense, it means the territory of the Kingdom of Belgium, including the territorial sea and any other area in the sea and in the air within which the Kingdom of Belgium, in accordance with international law, exercises sovereign rights or its jurisdiction;

 

(ii)    the term “...............” means ...............; used in a geographical sense, it means the territory of ..............................................................................;

 

b) the terms “a Contracting State” and “the other Contracting State” mean Belgium or ......................... as the context requires;

 

c)   the term “person” includes an individual, a company and any other body of persons;

 

d) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes ;

 

e)   the term “enterprise” applies to the carrying on of any business;

 

f)   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;

 

g)   the term “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

 

h) the term “competent authority” means :

 

(i)     in the case of Belgium, the Minister of Finance or his authorised representative; and

 

(ii)    in the case of.........................,..............;

 

i)   the term “national”, in relation to a Contracting State, means :

 

 (i)    any individual possessing the nationality or citizenship of that Contracting State; and

 

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

 

j)   the term “business” includes the performance of professional services and of other activities of an independent character;

 

k) the term “pension fund” means any person established in a Contracting State :

 

(i)     that administers pension schemes or provides retirement benefits; or

 

(ii)    that earns income on behalf of one or more persons operated to administer pension schemes or provide retirement benefits; and

 

provided it is either:

 

(i)     in the case of Belgium, supervised by the Banking, Finance and Insurance Commission or by the National Bank of Belgium or registered with the Belgian tax Administration; or

 

(ii)    in the case of ………,

 

 

 

2.   As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

 

 

 

Article 4

 

Resident

 

 

 

1.   For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

 

 

 

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:

 

 

 

a)   he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

 

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 only of the State in which he has an habitual abode;

 

c)   if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

 

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.

 

 

 

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 only of the State in which its place of effective management is situated.

 

 


Article 5

 

Permanent Establishment

 

 

 

1.   For the purposes of this Convention, 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 :

 

 

 

a)   a place of management;

 

b) a branch;

 

c)   an office;

 

d) a factory;

 

e)   a workshop, and

 

f)   a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

 

 

 

3.   A building site or construction or installation project constitutes a permanent establishment only if it lasts more than 12 months.

 

 

 

4.   Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

 

 

 

a)   the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

 

b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

 

c)   the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

 

d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

 

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;

 

f)   the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

 

 

 

5.   Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 appliesis 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 establishment 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 of that paragraph.

 

 

 

6.   An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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.

 

 

 

7.   The fact that a company which is a resident of a Contracting State controls or is controlled by a company 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 company a permanent establishment of the other.

 

 

 

CHAPTER III. TAXATION OF INCOME

 

 

 

Article 6

 

Income from Immovable Property

 

 

 

1.   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.

 

 

 

2.   The term "immovable 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, 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.   The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

 

 

 

4.   The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

 

 

 

 

 

Article 7

 

Business Profits

 

 

 

1.   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 situated therein. If the enterprise carries on business as aforesaid, the profits that are attributable to the permanent establishment in accordance with the provisions of paragraph 2 may be taxed in that other State.

 

 

 

2.   For the purposes of this Article and Article 22, the profits that are attributable in each Contracting State to the permanent establishment referred to in paragraph 1 are the profits it might be expected to make, in particular in its dealings with other parts of the enterprise, if it were a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions, taking into account the functions performed, assets used and risks assumed by the enterprise through the permanent establishment and through the other parts of the enterprise.

 

 

 

3.   Where, in accordance with paragraph 2, a Contracting State adjusts the profits that are attributable to a permanent establishment of an enterprise of one of the Contracting States and taxes accordingly profits of the enterprise that have been charged to tax in the other State, the other State shall, to the extent necessary to eliminate double taxation on these profits, make an appropriate adjustment to the amount of the tax charged on those profits. In determining such adjustment, the competent authorities of the Contracting States shall if necessary consult each other.

 

 

 

4.   Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

 

 

 

Article 8

 

Shipping and Air Transport

 

 

 

1.   Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

2.   For the purpose of this Article, profits from the operation of ships or aircraft in international traffic shall include in particular:

 

 

 

a)   profits from the leasing of ships or aircraft engaged in international traffic on charter fully equipped, manned and supplied;

 

b) profits from the leasing of ships or aircraft on a bare boat charter basis if such leasing activity is an ancillary activity for the enterprise engaged in international traffic;

 

c)   profits from the leasing of containers if such leasing activity is an ancillary activity for the enterprise engaged in international traffic.

 

 

 

3.   If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

 

 

 

4.   The provisions of paragraph 1 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

 

 

 

a)   an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State,

 

 

 

or

 

 

 

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 the other Contracting State,

 

 

 

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

 

 

 

2.   Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the firstmentioned 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. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

 

 

 

3.   Profits included, in accordance with paragraph 1, in the profits of an enterprise shall not be taxed accordingly after a period of seven years as from January 1 of the year next following the year in which the profits would have accrued to such enterprise if the conditions made or imposed between the associated enterprises had been those which would have been made between independent enterprises.

 

 

 

4.   The provisions of paragraph 2 shall not apply in cases where one or more transactions leading to an adjustment of profits in accordance with paragraph 1 are regarded as fraudulent according to an administrative or judicial decision.

 

 


Article 10

 

Dividends

 

 

 

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.   However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.

 

 

 

Notwithstanding the preceding provisions of this paragraph, dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is:

 

 

 

a)   a company which is a resident of the other Contracting State and which holds, for an uninterrupted period of at least twelve months, shares representing directly at least 10 per cent of the capital of the company paying the dividends;

 

b) a pension fund that is a resident of the other Contracting State, provided that the shares or other rights in respect of which such dividends are paid are held for the purpose of an activity mentioned under Article 3, paragraph 1, k).

 

 

 

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

 

 

 

3.   The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders' shares or other rights, not being debtclaims, participating in profits, as well as income paid in the form of interest which is subjected to the same taxation treatment as income from shares by the tax legislation of the State of which the paying company is a resident.

 

 

 

4.   The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company 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.

 

 

 

5.   Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, 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 such other State.

 

 

 

6.   No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.

 

 

 

Article 11

 

Interest

 

 

 

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.   However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

 

 

 

3.   Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State in which it arises if it is:

 

 

 

a)   interest paid in respect of a credit or loan of any nature granted or extended by an enterprise to another enterprise;

 

b) interest paid to a pension fund, provided that the debtclaim in respect of which such interest is paid is held for the purpose of an activity mentioned under Article 3, paragraph 1, k);

 

c)   interest paid to the other Contracting State, to one of its political subdivisions or local authorities or to a public entity.

 

 

 

4.   The term “interest” as used in this Article means income from debtclaims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. However, the term “interest” shall not include for the purpose of this Article penalty charges for late payment or interest regarded as dividends under paragraph 3 of Article 10.

 

 

 

5.   The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein and the debtclaim 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.

 

 

 

6.   Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, 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 State in which the permanent establishment is situated.

 

 

 

7.   Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debtclaim for 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 lastmentioned 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 Convention.

 

 

 

8.   No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debtclaim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.

 

 

 

Article 12

 

Royalties

 

 

 

1.   Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State if such resident is the beneficial owner of the royalties.

 

 

 

2.   The term “royalties” as used in this Article means payments of any kind 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 films or tapes for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.

 

 

 

3.   The provisions of paragraph 1 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 a 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.

 

 

 

4.   Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, 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 borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

 

 

 

5.   Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other 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 lastmentioned 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 Convention.

 

 

 

6.   No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.

 

 

 

Article 13

 

Capital Gains

 

 

 

1.   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.

 

 

 

2.   Gains from the 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, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

 

 

 

3.   Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

4.   Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.

 

 

 

Article 14

 

Income from Employment

 

 

 

1.   Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

 

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 firstmentioned State if :

 

 

 

a)   the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the taxable period concerned, and

 

b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

 

c)   the remuneration is not borne by a permanent establishment which the employer has in the other State.

 

 

 

3.   Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

Article 15

 

Company Managers

 

 

 

1.   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 a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

 

 

 

The preceding provision shall also apply to payments derived in respect of the discharge of functions which, under the laws of the Contracting State of which the company is a resident, are regarded as functions of a similar nature as those exercised by a person referred to in the said provision.

 

 

 

2.   Remuneration derived by a person referred to in paragraph 1 from a company which is a resident of a Contracting State in respect of the discharge of daytoday functions of a managerial or technical, commercial or financial nature and remuneration received by a resident of a Contracting State in respect of his daytoday activity as a partner of a company, other than a company with share capital, which is a resident of a Contracting State, shall be taxable in accordance with the provisions of Article 14, as if such remuneration were remuneration derived by an employee in respect of an employment and as if references to the "employer" were references to the company.

 

 


Article 16

 

Artistes and Sportsmen

 

 

 

1.   Notwithstanding the provisions of Articles 7 and 14, 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.   Where 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 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

 

 

 

3.   Where a resident of a Contracting State derives income referred to in paragraph 1 or 2 and such income is taxable in the other Contracting State on a gross basis, that income shall, upon request before July 1 of the year next following the year in which the personal activities are exercised, be taxed on a net basis in that other State. In determining the taxable income of such resident in the other State, there shall be allowed as deductions those expenses deductible under the domestic laws of the other State which are incurred for the purposes of the activities exercised in the other State to the extent that such deductions are available to a resident of the other State exercising the same or similar activities under the same or similar conditions.

 

 

 

4.   The provisions of paragraphs 1 and 2 shall not apply if the activities exercised in a Contracting State are substantially supported from public funds of the other Contracting State or a political subdivision or a local authority thereof. In such case, income derived from such activities shall be taxable only in that other Contracting State.

 

 

 

Article 17

 

Pensions

 

 

 

1.   Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State shall be taxable only in that State. However such pensions and other similar remuneration may also be taxed in the other Contracting State if they arise in that State.

 

 

 

2.   Pensions and other similar remuneration shall be deemed to arise in a Contracting State when contributions paid to a pension scheme or under the social security legislation have given rise to tax relief in that State.

 

 


Article 18

 

Government Service

 

 

 

1.

 

a)   Salaries, wages and other similar remuneration paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

 

b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who :

 

(i)     is a national of that State; or

 

(ii)    did not become a resident of that State solely for the purpose of rendering the services.

 

 

 

2.

 

a)   Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

 

b) However, such pension and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

 

 

 

3.   The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

 

 

 

Article 19

 

Students

 

 

 

Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the firstmentioned 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 State, provided that such payments arise from sources outside that State.

 

 

 

Article 20

 

Other Income

 

 

 

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

 

 

 

2.   The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

 

 

 

3.   Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of the Convention and arising in the other Contracting State may be taxed in that other State if such items of income are not effectively taxed in the firstmentioned State.

 

 

 

CHAPTER IV. TAXATION OF CAPITAL

 

 

 

Article 21

 

Capital

 

 

 

1.   Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

 

 

 

2.   Capital represented by 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 may be taxed in that other State.

 

 

 

3.   Capital represented by ships and aircraft operated in international traffic, and by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

4.   All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

 

 

 

CHAPTER V. METHODS FOR ELIMINATION OF DOUBLE TAXATION

 

 

 

Article 22

 

Elimination of Double Taxation

 

 

 

1. In the case of ……………:

 

………………………………………………………………………………………….…………………………………………………………………………………...

 

 

 

2. In the case of Belgium :

 

 

 

a)   Where a resident of Belgium derives income, not being dividends, interest or royalties, or owns elements of capital which are taxed in ...................... in accordance with the provisions of this Convention, Belgium shall exempt such income or such elements of capital from tax but if such resident is an individual, Belgium shall only exempt such income from tax to the extent that such income is effectively taxed in ………………...

 

b) The exemption provided for in subparagraph a) shall also be granted with respect to income regarded as dividends under Belgian law which is derived by a resident of Belgium from a participation in an entity that has its place of effective management in ..……, and has not been taxed as such in ………, provided that the resident of Belgium is taxed in …….. on his share of the income of the entity. The exempted income is the income received after deduction of the costs incurred in Belgium or elsewhere in relation to the management of the participation in the entity.

 

c)   Notwithstanding the provisions of subparagraphs a) and b) and any other provision of the Convention, Belgium shall, for the determination of the additional taxes established by Belgian municipalities and conurbations, take into account the earned income (revenus professionnels – beroepsinkomsten) that is exempted from tax in Belgium in accordance with subparagraphs a) and b). These additional taxes shall be calculated on the tax which would be payable in Belgium if the earned income in question had been derived from Belgian sources.

 

Where in accordance with any provision of the Convention income derived or capital owned by a resident of Belgium is exempted from tax in Belgium, Belgium may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, apply the rate of tax which would have been applicable if such income or elements of capital had not been exempted.

 

d) Dividends derived by a company which is a resident of Belgium from a company which is a resident of .................. shall be exempted from the corporate income tax in Belgium under the conditions and within the limits provided for in Belgian law.

 

e)   Where a company which is a resident of Belgium derives from a company which is a resident of ………. dividends which are not exempted in accordance with subparagraph d), such dividends shall nevertheless be exempted from the corporate income tax in Belgium if the company which is a resident of ………….. is effectively engaged in the active conduct of a business in ……………….. In such case, such dividends shall be exempted under the conditions and within the limits provided for in Belgian law except those related to the fiscal regime applicable to the company which is a resident of ……………. or to the income out of which the dividends are paid. This provision shall only apply to dividends paid out of income generated by the active conduct of a business.

 

f)   Where a company which is a resident of Belgium derives from a company which is a resident of ………………… dividends which are included in its aggregate income for Belgian tax purposes and which are not exempted from the corporate income tax according to subparagraphs d) or e), the …………………… tax charged on such dividends in accordance with paragraph 2 of Article 10 shall be allowed as a credit against Belgian tax relating to such dividends. The credit allowed shall not exceed that part of the Belgian tax which is proportionally relating to such dividends.

 

g)   Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are interest or royalties, the ............... tax charged on that income shall be allowed as a credit against Belgian tax relating to such income.

 

h) Where, in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in ................... have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in subparagraph a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in ................. by reason of compensation for the said losses.

 

 

 

CHAPTER VI. SPECIAL PROVISIONS

 

 

 

Article 23

 

NonDiscrimination

 

 

 

1.   Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

 

 

 

2.   Stateless persons who are residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected.

 

 

 

3.   The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

 

 

 

4.   Contributions made by or on behalf of an individual who renders services in a Contracting State to a pension scheme

 

 

 

a) recognised for tax purposes in the other Contracting State,

 

b) in which the individual participated immediately before beginning to provide services in the firstmentioned State,

 

c) in which the individual participated at a time when that individual was providing services in, or was a resident of, the other State, and

 

d) that is accepted by the competent authority of the firstmentioned State as generally corresponding to a pension scheme recognized as such for tax purposes by that State,

 

 

 

shall, for the purposes of

 

 

 

e) determining the individual’s tax payable in the firstmentioned State, and

 

 

 

f) determining the profits of an enterprise which may be taxed in the firstmentioned State,

 

 

 

be treated in that State in the same way and subject to the same conditions and limitations as contributions made to a pension scheme that is recognised for tax purposes in that firstmentioned State.

 

 

 

For the purposes of this paragraph:

 

 

 

a) the term “a pension scheme” means an arrangement in which the individual participates in order to secure retirement benefits payable in respect of the services referred to in this paragraph; and

 

b) a pension scheme is recognised for tax purposes in a State if the contributions to the scheme would qualify for tax deduction, reduction of tax or any other tax relief in that State.

 

 

 

5.   Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 5 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the firstmentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the firstmentioned State.

 

 

 

6.   Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the firstmentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the firstmentioned State are or may be subjected.

 

 

 

7.   The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

 

 

 

Article 24

 

Mutual Agreement Procedure

 

 

 

1.   Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of either Contracting State. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.

 

 

 

2.   The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

 

 

 

3.   The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention.

 

 

 

4.   The competent authorities of the Contracting States shall agree on administrative measures necessary to carry out the provisions of the Convention and particularly on the proofs to be furnished by residents of either Contracting State in order to benefit in the other State from the exemptions or reductions of tax provided for in the Convention.

 

 

 

5.   The competent authorities of the Contracting States shall communicate directly with each other for the application of the Convention.

 

 

 

6. Where,

 

 

 

a)   under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of the Convention, and

 

b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within two years from the presentation of the case to the competent authority of the other Contracting State,

 

 

 

any unresolved issues arising from the case shall be submitted to arbitration if the person so requests within two years from the first day from which arbitration may be requested. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either Contracting State. Unless a person directly affected by the case informs the competent authority of a Contracting State, within three months from the communication of the mutual agreement that implements the arbitration decision, that he does not accept the mutual agreement, the arbitration decision shall be binding and shall be implemented notwithstanding any time limits in the domestic laws of both Contracting States. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this paragraph.

 

 

 

Article 25

 

Exchange of Information

 

 

 

1.   The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.

 

 

 

2.   Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.

 

 

 

3.   In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

 

 

 

a)   to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

 

b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

 

c)   to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

 

 

 

4.   If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

 

 

 

5.   In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, trust, foundation, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. To the extent necessary to obtain such information the tax administration of the requested Contracting State shall have the power to require the disclosure of information and to conduct investigations and hearings notwithstanding any contrary provisions in its domestic tax laws.

 

 

 

Article 26

 

Assistance in the Collection of Taxes

 

 

 

1.   The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

 

 

 

2.   The term “revenue claim” as used in this Article means any amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, together with interest, administrative penalties and costs of collection or conservancy related to such amount.

 

 

 

3.   When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

 

 

 

4.   When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the firstmentioned State or is owed by a person who has a right to prevent its collection.

 

 

 

5.   Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

 

 

 

6.   Proceedings with respect to the existence, validity or amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.

 

 

 

7.   Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the firstmentioned State, the relevant revenue claim ceases to be

 

 

 

a) in the case of a request under paragraph 3, a revenue claim of the firstmentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

 

b) in the case of a request under paragraph 4, a revenue claim of the firstmentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection,

 

 

 

the competent authority of the firstmentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the firstmentioned State shall either suspend or withdraw its request.

 

 

 

8.   In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

 

 

 

a)   to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

 

b) to carry out measures which would be contrary to public policy (ordre public);

 

c)   to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

 

d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

 

 

 

Article 27

 

Miscellaneous

 

 

 

1.   Notwithstanding any other provision of this Convention, where a partnership which is established in a Contracting State receives dividends, interest or royalties arising in the other Contracting State and the firstmentioned State does not subject the partnership as such to tax but subjects the partners to tax on their share in the partnership’s income, such partnership shall, for the application of Articles 10, 11 and 12, be treated as a company that is a resident of the firstmentioned State and as the beneficial owner of the dividends, interest or royalties arising in the other Contracting State (provided that, if a company that is a resident of the firstmentioned State had received the dividends, interest or royalties in the same circumstances, such company would have been considered to be the beneficial owner thereof).

 

 

 

2.   Notwithstanding any other provision of the Convention, a collective investment vehicle which is established in a Contracting State and is not liable to tax as such in that State and which receives income arising in the other Contracting State shall be treated for purposes of applying the Convention to such income as an individual resident of the Contracting State in which it is established and as the beneficial owner of the income it receives (provided that, if an individual who is a resident of the firstmentioned State had received the income in the same circumstances, such individual would have been considered to be the beneficial owner thereof).

 

 

 

For the purposes of this paragraph the term “collective investment vehicle” means:

 

 

 

a)   in the case of Belgium, any undertaking for collective investment that is supervised by the Banking, Finance and Insurance Commission or by the National Bank of Belgium or that is registered with the Belgian tax Administration; and

 

b) in the case of ……….., ……………...,

 

 

 

and includes any other person of either Contracting State which the competent authorities of the Contracting States agree to regard as a collective investment vehicle.

 

 

 

Notwithstanding the preceding provisions of this paragraph, the provisions of Article 10, paragraph 2, b) and Article 11, paragraph 3, b) remain applicable to dividends and interest mentioned therein.

 

 

 

3.   Notwithstanding the other provisions of the Convention, the benefits of the Convention shall not apply if income is paid or derived in connection with an artificial arrangement.

 

 


Article 28

 

Members of diplomatic Missions and Consular Posts

 

 

 

1.   Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

 

 

 

2.   For the purposes of the Convention, persons who are members of diplomatic missions or consular posts of a Contracting State in the other Contracting State or in a third State and who are nationals of the sending State, shall be deemed to be residents of the sending State if they are subjected therein to the same obligations in respect of taxes on income and on capital as are residents of that State.

 

 

 

3.   The Convention shall not apply to international organisations, to organs or officials thereof and to persons who are members of diplomatic missions or consular posts of a third State, being present in a Contracting State and not treated in either Contracting State as residents in respect of taxes on income or on capital.

 

 

 

CHAPTER VII. FINAL PROVISIONS

 

 

 

Article 29

 

Entry into Force

 

 

 

1.   Each Contracting State shall notify the other Contracting State of the completion of the procedures required by its laws for the bringing into force of this Convention. The Convention shall enter into force on the date on which the later of these notifications is received.

 

 

 

2.   The provisions of the Convention shall have effect:

 

 

 

a) with respect to taxes due at source, on income credited or payable on or after January 1 of the year next following the year in which the Convention entered into force;

 

b) with respect to other taxes on income, on income of taxable periods beginning on or after January 1 of the year next following the year in which the Convention entered into force;

 

c) with respect to other taxes, on taxes due in respect of taxable events taking place on or after January 1 of the year next following the year in which the Convention entered into force.

 

 

 

Article 30

 

Termination

 

 

 

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving to the other Contracting State, written notice of termination not later than June 30 of any calendar year from the fifth year following that in which the Convention entered into force. In the event of termination before July 1 of such year, the Convention shall cease to have effect:

 

 

 

a)   with respect to taxes due at source, on income credited or payable on or after January 1 of the year next following the year in which the notice of termination is given;

 

b) with respect to other taxes on income, on income of taxable periods beginning on or after January 1 of the year next following the year in which the notice of termination is given;

 

c)   with respect to other taxes, on taxes due in respect of taxable events taking place on or after January 1 of the year next following the year in which the notice of termination is given.

 

 

 

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention.

 

 

 

SIGNED in duplicate at ....................................., this ................................, in the English language.

 

 

 

 

 

FOR THE GOVERNMENT OF …………………………………………………..:

 

 

 

 

 

...............

 

 

 

 

 

FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM :

 

 

 

 

 

...............

 

 


PROTOCOL

 

 

 

 

 

At the moment of signing the Convention between ..................................... and the Kingdom of Belgium for the avoidance of double taxation with respect to taxes on income and on capital and for the prevention of fiscal evasion, the undersigned have agreed upon the following provisions which shall form an integral part of the Convention.

 

 

 

1.   Ad Article 3, paragraph 2:

 

 

 

In the interpretation of the provisions of the Convention which are identical or in substance similar to the provisions of the OECD Model Tax Convention, the tax administrations of the Contracting States shall endeavour to follow the general principles of the Commentaries on the Articles of that Model Convention provided the Contracting States did not include in those Commentaries any observations expressing a disagreement with those principles and to the extent the Contracting States do not agree on a divergent interpretation in the framework of paragraph 3 of Article 24.

 

 

 

2.   Ad Article 4, paragraph 1:

 

 

 

It is understood that a person is “liable to tax” in a Contracting State where that person is subjected to the tax laws in force in that Contracting State even if, according to those laws, all or part of its income or capital is exempted from tax.

 

 

 

It is understood that the term “resident of a Contracting State” includes a pension fund established in that State.

 

 

 

3.   Ad Article 14, paragraphs 1 and 2:

 

 

 

It is understood that an employment is exercised in a Contracting State when the activity in respect of which the salaries, wages and other similar remuneration are paid, is effectively carried on in that State. The activity is effectively carried on in that State where the employee is physically present in that State for carrying on the activity, irrespective of the place in which the contract of employment was made, the residence of the employer or of the person paying the remuneration, the place or time of payment of the remuneration, or the place where the results of the employee’s work are exploited. If an activity is effectively carried on in a Contracting State, only that part of the remuneration that is attributable to such activity may be taxed in that State.

 

 

 

4.   Ad Articles 14 and 15:

 

 

 

It is understood that a compensation paid by reason of the termination of an employment, or of a mandate in a company, may be taxed in the Contracting State in which the employment is exercised, or of which the company is a resident, if and to the extent that the salaries or fees derived during the calendar year preceding the termination of that employment or mandate in respect of that employment or mandate may be taxed in that State according to the provisions of Article 14 or Article 15, as the case may be.

 

 

 

5.   Ad Article 20, paragraph 3 and Article 22, paragraph 2, a):

 

 

 

For the application of paragraph 3 of Article 20 and paragraph 2, a) of Article 22, an item of income is effectively taxed in a Contracting State where such item of income is subjected to tax in that Contracting State and does not benefit as such from an exemption from tax therein.

 

 

 

6.   Ad Article 22, paragraph 2, a) and b):

 

 

 

For the application of paragraph 2, a) and b) of Article 22, an item of income is taxed in …………. where such item of income is subjected in …………. to the tax regime that is normally applicable to such item of income according to ………….. tax laws.

 

 

 

7.   Ad Article 22, paragraph 2, f):

 

 

 

For the application of the credit allowed under paragraph 2, f), the dividends included in the aggregate income for Belgian tax purposes shall include the ……………tax charged on such dividends in accordance with paragraph 2 of Article 10.

 

 

 

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Protocol.

 

 

 

 

 

SIGNED in duplicate at ....................................., this ................................, in the English language.

 

 

 

 

 

FOR THE GOVERNMENT OF …………………………………………………..:

 

 

 

 

 

...............

 

 

 

 

 

FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM :

 

 

 

 

 

………..

 

 

 

 

                                                                                                                                                    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agreement

 

 

 

between

 

 

 

the Federal Republic of Germany

 

 

 

and

 

………………………………………….. -

 

 

 

for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital

 

The Federal Republic of Germany

 

 

 

and

 

 

 

………………………………………...–,

 

 

 

 

 

Desiring to further develop their economic relationship, to enhance their cooperation in tax matters and to ensure an effective and appropriate collection of tax,

 

 

 

 

 

Intending to allocate their respective taxation rights in a way that avoids both double taxation as well as non taxation, –

 

 

 

 

 

 

 

Have agreed as follows:

 

Article 1

 

Persons Covered

 

 

 

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 and on capital imposed on behalf of a Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities, irrespective of the manner in which they are levied.

 

 

 

(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 total amounts of wages or salaries, as well as taxes on capital appreciation.

 

 

 

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

 

 

 

1.   in the Federal Republic of Germany:

 

a) the income tax (Einkommensteuer);

 

b) the corporate income tax (Körperschaftsteuer);

 

c) the trade tax (Gewerbesteuer), and

 

d) the capital tax (Vermögensteuer);

 

including the supplements levied thereon (hereinafter referred to as “German tax”);

 

2.   in [jurisdiction]

 

(hereinafter referred to as “[jurisdiction] tax”).

 

 

 

(4)    The Agreement shall apply also to any identical or substantially similar taxes that are imposed 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 shall notify each other, to the extent required for the application of the Agreement, of any significant changes that have been made in their taxation laws.

 

 

 

Article 3

 

General Definitions

 

 

 

(1)    For the purposes of this Agreement, unless the context otherwise requires:

 

 

 

1.   the terms “a Contracting State” and “the other Contracting State”, when used in a geographical sense, mean the Federal Republic of Germany or [jurisdiction], as the context requires, and they include the territory of the Contracting State concerned, as well as the area of the sea-bed, its subsoil and the superjacent water column adjacent to the territorial sea, wherein the Contracting State concerned exercises sovereign rights and jurisdiction in conformity with international law and its national legislation for the purpose of exploring, exploiting, conserving and managing the living and non-living natural resources or for the production of energy from renewable sources;

 

2.   the term “person” includes an individual, a company and any other body of persons;

 

3.   the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

 

4.   the term “enterprise” applies to the carrying on of any business;

 

5.   the term “business” includes the performance of professional services and of other activities of an independent character;

 

6.   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;

 

7.   the term “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

 

8.   the term “competent authority” means:

 

a)   in the Federal Republic of Germany, the Federal Ministry of Finance or the agency to which it has delegated its powers;

 

b) in [jurisdiction]

 

9.   the term “national” means:

 

a)   in relation to the Federal Republic of Germany, any German within the meaning of the Basic Law for the Federal Republic of Germany and any legal person, partnership and association deriving its status as such from the laws in force in the Federal Republic of Germany;

 

b) in relation to [jurisdiction], any individual possessing [jurisdiction] nationality or citizenship and any legal person, partnership and association deriving its status as such from the laws in force in [jurisdiction].

 

 

 

(2)    As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

 

 

 

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 State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State, any of its “Länder” and any of their political subdivisions or local authorities. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

 

 

 

(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 only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the 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 State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

 

3.   if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

 

4.   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.

 

 

 

(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 only of the State in which its 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)    A building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months.

 

 

 

(4)    Notwithstanding the preceding provisions of this Article, 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 subparagraphs 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)    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 establishment 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 of that paragraph.

 

 

 

(6)    An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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.

 

 

 

(7)    The fact that a company which is a resident of a Contracting State controls or is controlled by a company 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 company a permanent establishment of the other.

 

 


Article 6

 

Income from Immovable Property

 

 

 

(1)    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.

 

 

 

(2)    The term “immovable 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, 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)    The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

 

 

 

(4)    The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

 

 

 

Article 7

 

Business Profits

 

 

 

(1)    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 situated therein. If the enterprise carries on business as aforesaid, the profits that are attributable to the permanent establishment in accordance with the provisions of paragraph 2 may be taxed in that other State.

 

 

 

(2)    For the purposes of this Article and Article 22, the profits that are attributable in each Contracting State to the permanent establishment referred to in paragraph 1 are the profits it might be expected to make, in particular in its dealings with other parts of the enterprise, if it were a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions, taking into account the functions performed, assets used and risks assumed by the enterprise through the permanent establishment and through the other parts of the enterprise.

 

 

 

(3)    Where, in accordance with paragraph 2, a Contracting State adjusts the profits that are attributable to a permanent establishment of an enterprise of one of the Contracting States and taxes accordingly profits of the enterprise that have been charged to tax in the other State, the other Contracting State shall, to the extent necessary to eliminate double taxation, make an appropriate adjustment if it agrees with the adjustment made by the first-mentioned State; if the other Contracting State does not so agree, the Contracting States shall endeavour to eliminate any double taxation resulting therefrom by mutual agreement.

 

 

 

(4)    Where profits include items of income which 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, Inland Waterways Transport and Air Transport

 

 

 

(1)    Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

(2)    Profits from the operation of boats engaged in inland waterways transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

(3)    For the purposes of this Article, profits from the operation of ships, aircraft or boats shall include income from

 

 

 

1.   the occasional rental of ships, aircraft or boats on a bare-boat basis, and

 

2.   the use or rental of containers (including trailers and ancillary equipment used for transporting the containers), if such income is attributable to the profits from the operation of ships, boats or aircraft.

 

 

 

(4)    If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.

 

 

 

(5)    The provisions of paragraph 1 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.   an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

 

2.   the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

 

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

 

 

 

(2)    Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are 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. 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 each other.

 

 

 

Article 10

 

Dividends

 

 

 

(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)    However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

 

 

 

1.   5[1] per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends;

 

2.   15 per cent of the gross amount of the dividends in all other cases.

 

 

 

In the case of dividends paid by a German Real Estate Aktiengesellschaft with listed share capital, a German Investment Fund, or a [jurisdiction], only subparagraph 2) applies. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

 

 

 

(3)    The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, founders’ shares or other income which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident, as well as distributions on certificates of an investment fund.

 

 

 

(4)    The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company 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.

 

 

 

(5)    Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, 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 undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

 

 

 

Article 11

 

Interest

 

 

 

(1)    Interest derived and beneficially owned by a resident of a Contracting State shall be taxable only in that State.

 

 

 

(2)    The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. However, the term “interest” does not include income dealt with in Article 10.

 

 

 

(3)    The provisions of paragraph 1 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State through 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.

 

 

 

(4)    Where, by reason of a special relationship between the 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 for 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)    Royalties derived and beneficially owned by a resident of a Contracting State shall be taxable only in that State.

 

 

 

(2)    The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.

 

 

 

(3)    The provisions of paragraph 1 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 through a 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.

 

 

 

(4)    Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other 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)    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.

 

 

 

(2)    Gains from the 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, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

 

 

 

(3)    Gains from the alienation of ships or aircraft operated in international traffic, boats engaged in inland waterways transport or movable property pertaining to the operation of such ships, aircraft or boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

(4)    Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.

 

 

 

(5)    Gains from the alienation of any property, other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.

 

 

 

(6)    Where an individual was a resident of a Contracting State for a period of at least 5 years and has become a resident of the other Contracting State, paragraph 5 shall not affect the right of the first-mentioned State to treat the individual as having alienated shares at the time of the change of residence. If the individual is so taxed in the first-mentioned State, the other State shall, in the event of an alienation of shares after the change of residence, calculate the capital gain on the basis of the value which the first-mentioned State applied at the time of the change of residence.

 

 

 

Article 14

 

Income from Employment

 

 

 

(1)    Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

 

 

 

(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.   the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and

 

2.   the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

 

3.   the remuneration is not borne by a permanent establishment which the employer has in the other State.

 

 

 

(3)    Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, or aboard a boat engaged in inland waterways transport, may be taxed in the Contracting State in which the place of effective management of the enterprise which operates the ship, aircraft or boat is situated.

 

 

 

(4)    Contributions that are made on behalf of an individual who exercises an employment in one Contracting State, to a pension scheme established in and recognised for tax purposes in the other Contracting State shall, for the purposes of determining the individual’s taxable income, be treated in the first-mentioned State in the same way and subject to the same conditions and limitations as contributions made to a pension scheme that is recognised for tax purposes in that State, provided that the individual was not a resident of the first-mentioned State immediately before taking up the employment, and contributions on behalf of the individual have already been made to the pension scheme.

 

 

 

(5)    The term “pension scheme” means

 

 

 

1.   in the Federal Republic of Germany schemes under section 1 of the German law on employment-related pensions (Betriebsrentengesetz);

 

2.   in [jurisdiction]……..

 

 

 

(6)    The following shall be deemed to be a tax benefit within the meaning of paragraph 4:

 

 

 

1.   in the Federal Republic of Germany an exemption of contributions made pursuant to number 63 of section 3 of the Income Tax Act (Einkommensteuergesetz);

 

2.   in [jurisdiction]……..

 

 

 

Article 15

 

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

 

 

 

Article 16

 

Artistes and Sportsmen

 

 

 

(1)    Notwithstanding the provisions of Articles 7 and 14, 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)    Where income in respect of personal activities within the meaning of paragraph 1 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 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

 

 

 

(3)    Income derived by a person as a consideration for live broadcasting rights or any other exploitation of the activities of the entertainer or sportsman may be taxed in the State in which the activities of the entertainer or sportsman are exercised.

 

 

 

(4)    Paragraphs 1 and 2 shall not apply to income accruing from the exercise of activities by artistes or sportsmen in a Contracting State where the visit to that State is financed entirely or mainly from public funds of the other Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities, or by an organisation which in that other State is recognised as a charitable organisation. In such a case the income may be taxed only in the Contracting State of which the individual is a resident.

 

 

 

Article 17

 

Pensions, Annuities and similar Payments

 

 

 

(1)    Subject to paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment or annuities shall be taxable only in that State.

 

 

 

(2)    Notwithstanding the provisions of paragraph 1, benefits paid under the social security legislation of a Contracting State may also be taxed in that State.

 

 

 

(3)    Notwithstanding the provisions of paragraph 1, pensions, similar remuneration or annuities may also be taxed in the other State if they are attributable in whole or in part to contributions which, in that State and for more than 15 years in total,

 

 

 

1.   did not form part of the taxable income, or

 

2.   were tax-deductible, or

 

3.   were afforded some other form of beneficial treatment by that State.

 

 

 

Sentence 1 shall not apply if the beneficial treatment under subparagraphs 1) through 3) was clawed back because the person ceased to be a resident of that State.

 

 

 

(4)    Notwithstanding the provisions of paragraph 1, recurrent or non-recurrent payments made by one of the Contracting States, one of its “Länder”, or one of their political subdivisions or local authorities to a resident of the other Contracting State as compensation for political persecution (including restitution payments) or for injustice or damage sustained as a result of war or for damage as a result of military or civil alternative service or of a crime, a vaccination or for similar reasons shall be taxable only in the first-mentioned State.

 

 

 

(5)    Maintenance payments, including those for children, made by a resident of a Contracting State to a resident of the other Contracting State shall be exempted from tax in that other Contracting State. However, to the extent that the maintenance payments are deductible in the first-mentioned State in calculating the taxable income of the payer, they shall be taxable only in the other Contracting State. Tax allowances in mitigation of social burdens are not deemed to be deductions for the purposes of this paragraph.

 

 

 

(6)    The term “annuities” means certain amounts payable periodically at stated times, for life or for a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

 

 

 

Article 18

 

Government Service

 

 

 

(1)

 

1.   Salaries, wages and other similar remuneration, paid by a Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities to an individual in respect of services rendered to that State, “Land” or political subdivision or local authority shall be taxable only in that State.

 

2.   However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

 

a)   is a national of that State; or

 

b) did not become a resident of that State solely for the purpose of rendering the services.

 

 

 

(2)

 

1.   Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities to an individual in respect of services rendered to that State, “Land” or political subdivision or local authority shall be taxable only in that State.

 

2.   However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

 

 

 

(3)    The provisions of paragraphs 1 and 2 shall likewise apply to salaries, wages, pensions and other similar remuneration paid by the following legal persons under public law to their employees:

 

 

 

1.   in the case of the Federal Republic of Germany:

 

a)   the Deutsche Bundesbank,

 

b) Association of Chambers of Industry and Commerce for the promotion of Foreign Economic Relations through the Network of Foreign Chambers of Commerce

 

2. in the case of [jurisdiction]

 

 

 

Sentence 1 shall apply to salaries, wages, pensions and other similar remuneration paid by other legal entities under public law which carry out functions of a governmental nature if mutually agreed by the competent authorities.

 

 

 

(4)    The provisions of Articles 14, 15, 16, and 17 shall apply to salaries, wages, pensions, and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities or another legal person under the public law of that State.

 

 

 

(5)    The provisions of paragraphs 1 and 2 shall apply to salaries, wages, pensions, and other similar remuneration paid to an individual in respect of services rendered to the Goethe Institute and the German Academic Exchange Service (“Deutscher Akademischer Austausch-dienst”), or to other comparable institutions if mutually agreed by the competent authorities. Where this remuneration is not taxed in the State of establishment of the institution, Article 14 shall apply.

 

 

 

Article 19

 

Visiting Professors, Teachers and Students

 

 

 

(1)    An individual who, at the invitation of a Contracting State or of a university, college, school, museum or other cultural or educational institution of that Contracting State or under an official programme of cultural exchange, visits that Contracting State for a period not exceeding two years for the purpose of teaching, lecturing or engaging in research at that institution and who is, or was immediately before that visit, a resident of the other Contracting State shall be exempt from tax in the first-mentioned State on his remuneration for such activity, provided that such remuneration is derived by him from outside that State.

 

 

 

(2)    Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned 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 State, provided that such payments arise from sources outside that State.

 

 

 

Article 20

 

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.

 

 

 

(2)    The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

 

 

 

Article 21

 

Capital

 

 

 

(1)    Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

 

 

 

(2)    Capital represented by 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 may be taxed in that other State.

 

 

 

(3)    Capital represented by ships and aircraft operated in international traffic and by boats engaged in inland waterways transport, and by movable property pertaining to the operation of such ships, aircraft and boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

(4)    All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

 

 

 

Article 22

 

Elimination of Double Taxation in the State of Residence

 

 

 

(1)    Where a resident of the Federal Republic of Germany derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in [jurisdiction][2], the following shall apply:

 

 

 

1.   Except as provided in subparagraph 3), the income shall be exempted from the basis upon which German tax is imposed. In the case of dividends, this applies only to such dividends as are paid to a company (not including partnerships) resident in the Federal Republic of Germany by a company resident in [jurisdiction] at least 10 percent of the capital of which is owned directly by the company resident in the Federal Republic of Germany. The exemption from the basis provided by the first sentence of this subparagraph shall not apply to dividends paid by a tax exempt company or to dividends that the distributing company may deduct for [jurisdiction] tax purposes or for dividends that are attributed under the law of the Federal Republic of Germany to a person that is not a company resident in the Federal Republic of Germany. There shall be exempted from the assessment basis of the German taxes on capital such capital as is taxable in [jurisdiction] under paragraphs 1 and 2 of Article 21, as well as any shareholding the dividends of which, if paid, would be exempted from the tax base, according to the foregoing sentences.

 

2. The Federal Republic of Germany retains the right to take into account in the determination of its rate of tax the items of income and capital which under the provisions of this Agreement are exempted from German tax.

 

3. With respect to the following items of income, there shall be allowed as a credit against German tax on income, subject to the provisions of German tax law regarding credit for foreign tax, [jurisdiction] tax paid under the laws of [jurisdiction] and in accordance with the provisions of this Agreement on such items of income:

 

a)   dividends within the meaning of Article 10 to which subparagraph 1) does not apply;

 

b) capital gains to which paragraph 4 of Article 13 applies;

 

c)   income to which Article 15 applies;

 

d) income to which Article 16 applies;

 

e)   income to which paragraphs 2 and 3 of Article 17 apply.

 

For the purposes of application of this subparagraph 3), income or capital of a resident of the Federal Republic of Germany that, under this Agreement, may be taxed in [jurisdiction] shall be deemed to be income from sources within [jurisdiction] or capital situated in [jurisdiction].

 

4.   The provisions of subparagraph 1) are to be applied to items of income within the meaning of Article 7 and Article 10 and to profits from the alienation of property within the meaning of paragraph 2 of Article 13 only to the extent that the items of income or profits were derived from the production, processing, working or assembling of goods and merchandise, the exploration and extraction of natural resources, banking and insurance, trade or the rendering of services or if the items of income or profits are economically attributable to these activities. This applies only if a business undertaking that is adequately equipped for its business purpose exists. This applies accordingly to capital underlying the income within the meaning of Article 7 and Article 10. If subparagraph 1) is not to be applied, double taxation shall be eliminated by means of a tax credit as provided for in subparagraph 3).

 

5.   Notwithstanding subparagraph 1), double taxation shall be eliminated by a tax credit as provided for in subparagraph 3), if

 

a)   in the Contracting States items of income or capital, or elements thereof, are placed under different provisions of this Agreement and if, as a consequence of this different placement, such income or capital would be subject to double taxation, non-taxation or lower taxation and in the case of double taxation this conflict cannot be resolved by a procedure pursuant to paragraphs 2 or 3 of Article 24;

 

b) [jurisdiction] may, under the provisions of the Agreement, tax items of income or capital, or elements thereof, but does not actually do so;

 

c)   after consultation, the Federal Republic of Germany notifies [jurisdiction] through diplomatic channels of items of income or capital, or elements thereof, to which it intends to apply the provisions on tax credit under sub-paragraph 3). Double taxation is then eliminated for the notified items of income or capital, or elements thereof, by allowing a tax credit from the first day of the calendar year following that in which the notification was made.

 

 

 

(2)    Where a resident of [jurisdiction] derives income [or owns capital] which, in accordance with the provisions of this Agreement, may be taxed in the Federal Republic of Germany, the following shall apply:

 

 

 

Article 23

 

Non-discrimination

 

 

 

(1)    Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

 

 

 

(2)    Stateless persons who are residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected.

 

 

 

(3)    The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

 

 

 

(4)    Except where the provisions of paragraph 1 of Article 9, paragraph 4 of Article 11, or paragraph 4 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

 

 

 

(5)    Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

 

 

 

(6)    The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

 

 

 

Article 24

 

Mutual Agreement Procedure

 

 

 

(1)    Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

 

 

 

(2)    The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

 

 

 

(3)    The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

 

 

 

(4)    The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.

 

 


(5)    Where,

 

 

 

1.   under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Agreement, and

 

2.   the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within two years from the presentation of the case to the competent authority of the other Contracting State, and

 

3.   it is not a particular case that the competent authorities agree, before the date on which arbitration proceedings would otherwise have begun, is not suitable for determination by arbitration, and

 

4.   it is not a case to which Convention 90/436/EEC of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises applies,

 

 

 

any unresolved issues arising from the case shall be submitted to arbitration if the person so requests. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either State. Unless a person directly affected by the case does not accept the arbitration decision, that decision shall be binding on both Contracting States and shall be implemented notwithstanding any time limits in the domestic laws of these States. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this paragraph.

 

 

 

Article 25

 

Exchange of Information

 

 

 

(1)    The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of a Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

 

 

 

(2)    Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. For these purposes information may be disclosed in administrative or criminal investigations, in public court proceedings or in judicial decisions, if this is provided for in the respective laws of the Contracting States. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes, when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying Contracting State authorises such use. Use for other purposes without the prior approval of the supplying Contracting State is permissible only if it is needed in the individual case at hand to avert an imminent threat to a person of loss of life, bodily harm or loss of personal freedom, or to protect significant assets and there is danger inherent in any delay. In such a case the competent authority of the supplying Contracting State must be asked without delay for retroactive authorisation of the change in purpose. If authorisation is refused, the information may no longer be used for the other purpose and the receiving agency shall erase the data supplied without delay. Any damage which has been caused by use of the information for the other purpose must be compensated.

 

 

 

(3)    In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

 

 

 

1.   to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

 

2.   to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

 

3.   to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

 

 

 

(4)    If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

 

 

 

(5)    In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

 

 

 

Article 26

 

Assistance in the Collection of Taxes

 

 

 

(1)    The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

 

 

 

(2)    The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of a Contracting State, one of its “Länder”, or one of their political subdivisions or local authorities, insofar as such taxation is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

 

 

 

(3)    When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

 

 

 

(4)    When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

 

 

 

(5)    Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

 

 

 

(6)    Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.

 

 

 

(7)    Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be

 

 

 

1.   in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

 

2.   in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection

 

 

 

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

 

 

 

(8)    In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

 

 

 

1.   to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

 

2.   to carry out measures which would be contrary to public policy (ordre public);

 

3.   to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

 

4.   to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

 

 

 

Article 27

 

Procedural Rules for Taxation at Source; Investment Funds

 

 

 

(1)    If in one of the Contracting States the taxes on dividends, interest, royalties, or other items of income derived by a resident of the other Contracting State are levied by withholding at source, then the right to apply the withholding of tax at the rate provided for under the domestic law of that State is not affected by the provisions of this Agreement.

 

 

 

(2)    The tax so withheld at source shall be refunded on the taxpayer’s application to the extent that its levying is limited or eliminated by this Agreement. The period for application for a refund of the tax withheld is four years from the end of the calendar year in which the dividends, interest, royalties, or other items of income have been received.

 

 

 

(3)    Notwithstanding paragraph 1, each Contracting State shall provide for procedures to the effect that dividends, interest, royalties or any other items of income which are subject under this Agreement to no tax or only to reduced tax in the State of source may be made without deduction of tax or with deduction of tax only at the rate provided in the relevant Article.

 

 

 

(4)    The Contracting State in which the income arises may require the taxpayer to provide certification of his residence in the other Contracting State issued by the competent authority of that other State.

 

 

 

(5)    A German investment fund or a [jurisdiction] investment fund shall be granted the benefits under this Agreement for items of income arising from the other Contracting State as follows:

 

 

 

1.   to the extent the shares or other beneficial interests in the investment fund are owned by persons who are residents of that Contracting State or of any other State and who, had they derived the income directly, would be entitled to the same benefits under this Agreement or any Agreement that the Contracting State, from which the income arises, has concluded with the State of which the person is a resident; or

 

2.   in full, if at least 90 percent of the shares or other beneficial interests in the investment fund are owned by persons who are residents of that Contracting State or of any other State and who, had they derived the income directly, would be entitled to the same benefits under this Agreement or any Agreement that the Contracting State, from which the income arises, has concluded with the State of which the person is a resident; or

 

3.   in full, if at least 75 percent of the shares or other beneficial interests in the investment fund are owned by persons who are residents of that Contracting State and who, had they derived the income directly, would be entitled to the same benefits under this Agreement.

 

 

 

(6)    The competent authorities of the Contracting States may determine the mode of implementation of this Article by mutual agreement.

 

 

 

Article 28

 

Application of the Agreement in Special Cases

 

 

 

(1)    This Agreement shall not be interpreted as to prevent

 

 

 

1.   a Contracting State from applying its domestic legal provisions on the prevention of tax evasion or tax avoidance;

 

2.   the Federal Republic of Germany from imposing its taxes on amounts to be included in the income of a resident of the Federal Republic of Germany under parts 4, 5, and 7 of the German External Tax Relations Act (Außensteuergesetz).

 

 

 

(2)    If the foregoing provisions result in double taxation, the competent authorities shall consult each other pursuant to paragraph 3 of Article 24 on how to avoid double taxation.

 

 

 

Article 29

 

Members of Diplomatic Missions and Consular Posts

 

 

 

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

 

 

 

Article 30

 

Protocol

 

 

 

The attached Protocol shall be an integral part of this Agreement.

 

 

 

Article 31

 

Entry into Force

 

 

 

(1)    This Agreement shall be ratified and the instruments of ratification shall be exchanged as soon as possible.

 

 

 

(2)    This Agreement shall enter into force on the day of the exchange of the instruments of ratification and shall have effect in both Contracting States:

 

 

 

1.   in the case of taxes withheld at source, in respect of amounts paid on or after the first day of January in the calendar year next following the year in which this Agreement enters into force;

 

2.   in the case of other taxes, in respect of taxes levied for periods beginning on or after the first day of January in the calendar year next following the year in which this Agreement enters into force.

 

 

 

[3.    With the entry into force of this Agreement, the Agreement between the Federal Republic of Germany and [jurisdiction] on the Avoidance of Double Taxation with respect to Taxes on Income and Capital [adapt title as necessary] signed in [place] on [date] shall expire. Its provisions shall continue to be applicable until this Agreement shall become effective as provided for in paragraph 2 of this Article. The provisions of the [date] Agreement shall continue to apply to all tax cases having occurred prior to the date upon which this Agreement has entered into force.]

 

 

 

Article 32

 

Termination

 

 

 

(1)    This Agreement shall remain in force until terminated by a Contracting State.

 

 

 

(2)    Either Contracting State may terminate the Agreement, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year beginning after the expiration of a period of five years from the date of entry into force of the Agreement. In such event, this Agreement shall cease to have effect in both Contracting States:

 

1.   in the case of taxes withheld at source, in respect of amounts paid on or after the first day of January in the calendar year next following the year in which notice of termination is given;

 

2.   in the case of other taxes, in respect of taxes levied for periods beginning on or after the first day of January in the calendar year next following the year in which notice of termination is given.

 

 

 

Done at [place] on [date], in duplicate, in the German, [foreign language] and [English] languages, each text being authentic. In case of divergent interpretations of the German and [foreign language] texts, the English text shall prevail.

 

 

 

 

 

 

 

For the Federal Republic of Germany                  For

 

Protocol

 

 

 

to the Agreement

 

 

 

between

 

 

 

the Federal Republic of Germany

 

 

 

and

 

 

 

…………………………………

 

 

 

for the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Taxes on Income and Capital

 

 

 

The Federal Republic of Germany and [jurisdiction] (the “Contracting States”) have in addition to the Agreement of [date] for the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Taxes on Income and Capital agreed on the following provisions, which shall form an integral part of the Agreement:

 

 

 

1. With reference to Article 10 and 11

 

 

 

Notwithstanding the provisions of Article 10 and 11 of this Agreement, dividends and interest may be taxed in the Contracting State in which they arise, and according to the law of that State, if they

 

 

 

a)      are derived from rights or debt claims carrying a right to participate in profits, including income derived by a silent partner (“stiller Gesellschafter”) from his participation as such, or income from loans with an interest rate linked to the borrower’s profit (“partiarische Darlehen”) or profit sharing bonds (“Gewinnobligationen”) within the meaning of the tax law of the Federal Republic of Germany, and

 

b)     are deductible in the determination of profits of the debtor of such dividends or interest.

 

 

 

2. With reference to paragraph 2 of Article 10 and Article 27

 

 

 

The term “investment fund” means

 

 

 

a)      with respect to the Federal Republic of Germany an “Investmentfonds” or a German “Investmentaktiengesellschaft” to which the provisions of the Investment Act (“Investmentgesetz”) apply;

 

b)     with respect to [jurisdiction]

 

 

 

[With reference to Article 13][3]

 

 

 

3. With reference to Article 20

 

 

 

Where the recipient and the payer of a dividend or of interest are both residents of the Federal Republic of Germany and the dividend or the interest is attributed to a permanent establishment that the recipient of the dividend or the interest has in [jurisdiction], the Federal Republic of Germany may tax such dividend or interest at the rates provided for in paragraphs 2 and 3 of Article 10 or in paragraph 1 of this Protocol. The [jurisdiction] shall give a credit for such tax according to the provisions of subparagraph 3 of paragraph 1 of Article 22.

 

 

 

[With reference to paragraph 1 of Article 22[4]

 

 

 

The exemption for dividends shall not cease to apply because the dividends are not taxed in [jurisdiction] on account of the Council Directive of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (90/435/EWG) in the respective applicable version.]

 

 

 

4. With reference to letter b of subparagraph 5) of paragraph 1 of Article 22

 

 

 

It is understood that items of income or capital, or elements thereof, are taxed when they are included in the taxable base by reference to which the tax is computed. They are not actually taxed if they are either not taxable or exempt from tax.

 

 

 

5. With reference to paragraph 5 of Article 23

 

 

 

It is understood that paragraph 5 of Article 23 shall not be construed as obligating a Contracting State to permit cross-border consolidation of income or similar benefits between enterprises.

 

 

 

6. With reference to Article 25

 

 

 

a)      The receiving agency may use data in compliance with paragraph 2 of Article 25 only for the purpose stated by the supplying agency and shall be subject to the conditions prescribed by the supplying agency and that conform with Article 25.

 

b)     The supplying agency shall be obliged to exercise vigilance as to the accuracy of the data to be supplied and their foreseeable relevance within the meaning of paragraph 1 of Article 25 and the proportionality to the purpose for which they are supplied. Data are foreseeably relevant if in the concrete case at hand there is the serious possibility that the other Contracting State has a right to tax and there is nothing to indicate that the data are already known to the competent authority of the other Contracting State or that the competent authority of the other Contracting State would learn of the taxable object without the information. If it emerges that inaccurate data or data which should not have been supplied have been supplied, the receiving agency shall be informed of this without delay. That agency shall be obliged to correct or erase such data without delay.

 

c)      The receiving agency shall on request inform the supplying agency on a case-by-case basis about the use of the supplied data and the results achieved thereby.

 

d)     The receiving agency shall inform the person concerned of the collecting of data at the supplying agency. The person concerned need not be informed if and as long as on balance it is considered that the public interest in not informing him outweighs his right to be informed.

 

e)      Upon application the person concerned shall be informed of the supplied data relating to him and of the use to which such data are to be put. The second sentence of paragraph d) shall apply accordingly.

 

f)      The receiving agency shall bear liability under its domestic laws in relation to any person suffering unlawful damage in connection with the supply of data under the exchange of data pursuant to this Agreement. In relation to the damaged person, the receiving agency may not plead to its discharge that the damage was caused by the supplying agency.

 

g)      The supplying and the receiving agencies shall be obliged to keep official records of the supply and receipt of personal data.

 

h)     Where the domestic law of the supplying agency contains special deadlines for the deletion of the personal data supplied, that agency shall inform the receiving agency accordingly. In any case, supplied personal data shall be erased once they are no longer required for the purpose for which they were supplied.

 

i)      The supplying and the receiving agencies shall be obliged to take effective measures to protect the personal data supplied against unauthorised access, unauthorised alteration and unauthorised disclosure.

 



[1] Depending upon the circumstances in the individual case, a zero rate may also be considered.

[2] The following language is to be added if paragraph 2 of Article 10 provides for a zero rate: „or is exempt from [jurisdiction] tax under paragraph 2 of Article 10”

 

[3] To the extent required: Rule regarding avoidance of certain consequences the introduction of the exemption method may trigger.

[4] May be required in the case of EU member states.

 

 

UNITED NATIONS MODEL DOUBLE TAX CONVENTION

 

BETWEEN DEVELOPED AND DEVELOPING COUNTRIES

 

 

 

 

 

 

 

 

 

 

 

TITLE OF THE CONVENTION

 

 

 

 

 

Convention between (State A) and (State B) with respect to taxes on income and capital[1]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PREAMBLE OF THE CONVENTION[2]

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Chapter I - SCOPE OF THE CONVENTION

 

 

 

Article 1 - PERSONS COVERED

 

 

 

This Convention shall apply to persons who are residents of one or both of

 

the Contracting States.

 

 

 

Article 2 - TAXES COVERED

 

 

 

1.   This Convention 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.   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 Convention shall apply are in particular:

 

(a)    (in State A): ............................................

 

(b)    (in State B): ............................................

 

 

 

4.   The Convention shall apply also to any identical or substantially similar taxes which 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 significant changes made to their tax law.

 

 

 

Chapter II - DEFINITIONS

 

 

 

Article 3 - GENERAL DEFINITIONS

 

 

 

1.   For the purposes of this Convention, unless the context otherwise requires:

 

(a)    The term “person” includes an individual, a company and any other body of persons;

 

(b)    The term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

 

(c)    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;

 

(d)    The term “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

 

(e)    The term “competent authority” means:

 

(i)     (In State A): ............................................

 

(ii)    (In State B): ............................................

 

(f)     The term “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.

 

 

 

2.   As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

 

 

 

Article 4 - RESIDENT

 

 

 

1.   For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

 

 

 

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:

 

(a)    He shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

 

(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 only of the State in which he has an habitual abode;

 

(c)    If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

 

(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.

 

 

 

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 only of the State in which its place of effective management is situated.

 

 


Article 5 - PERMANENT ESTABLISHMENT

 

 

 

1.   For the purposes of this Convention, 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:

 

(a)    A place of management;

 

(b)    A branch;

 

(c)    An office;

 

(d)    A factory;

 

(e)    A workshop;

 

(f)     A mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

 

 

 

3.   The term “permanent establishment” also encompasses:

 

(a)    A building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than six months;

 

(b)    The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than 183 days in any 12-month period commencing or ending in the fiscal year concerned.

 

 

 

4.   Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

 

(a)    The use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

 

(b)    The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

 

(c)    The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

 

(d)    The maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

 

(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.

 

(f)     The maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.


 

 

5.   Notwithstanding the provisions of paragraphs 1 and 2, where a person—other than an agent of an independent status to whom paragraph 7 applies—is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

 

(a)    Has and habitually exercises in that State an authority to conclude contracts in the name of 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 of that paragraph; or

 

(b)    Has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

 

 

 

6.   Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

 

 

 

7.   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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph.

 

 

 

8.   The fact that a company which is a resident of a Contracting State controls or is controlled by a company 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 company a permanent establishment of the other


Chapter III - TAXATION OF INCOME

 

 

 

Article 6 - INCOME FROM IMMOVABLE PROPERTY

 

 

 

1.   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.

 

 

 

2.   The term “immovable 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, 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.   The provisions of paragraph 1 shall also apply to income derived from the direct use, letting or use in any other form of immovable property.

 

 

 

4.   The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

 

 

 

Article 7 - BUSINESS PROFITS

 

 

 

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 situated therein. If the 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 (a) that permanent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment.

 

 

 

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.   In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business 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. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

 

 

 

4.   In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

 

 

 

5.   For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

 

 

 

6.   Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

 

 

 

(NOTE: The question of whether profits should be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods and merchandise for the enterprise was not resolved. It should therefore be settled in bilateral negotiations.)

 

 


Article 8 - SHIPPING, INLAND WATERWAYS TRANSPORT AND AIR TRANSPORT

 

 

 

Article 8 (alternative A)

 

 

 

1.   Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

2.   Profits from the operation of boats engaged in inland waterways transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

3.   If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or a boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.

 

 

 

4.   The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

 

 

 

Article 8 (alternative B)

 

 

 

1.   Profits from the operation of aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

2.   Profits from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated unless the shipping activities arising from such operation in the other Contracting State are more than casual. If such activities are more than casual, such profits may be taxed in that other State. The profits to be taxed in that other State shall be determined on the basis of an appropriate allocation of the overall net profits derived by the enterprise from its shipping operations. The tax computed in accordance with such allocation shall then be reduced by ___ per cent. (The percentage is to be established through bilateral negotiations.)

 

 

 

3.   Profits from the operation of boats engaged in inland waterways transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

4.   If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.

 

 

 

5.   The provisions of paragraphs 1 and 2 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:

 

(a)             an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

 

(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 the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

 

 

 

2.   Where a Contracting State includes in the profits of an enterprise of that State—and taxes accordingly—profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are 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. In determining such adjustment, due regard shall be had to the other provisions of the Convention and the competent authorities of the Contracting States shall, if necessary, consult each other.

 

 

 

3.   The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.

 

 

 

Article 10 - DIVIDENDS

 

 

 

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.   However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

 

(a)             ___ per cent (the percentage is to be established through bilateral negotiations) of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends;

 

(b) ___ per cent (the percentage is to be established through bilateral negotiations) of the gross amount of the dividends in all other cases.

 

 

 

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

 

 

 

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

 

 

 

3.   The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt claims, participating in profits, as well  as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

 

 

 

4.   The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

 

 

5.   Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base 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 such other State.

 

 

 

Article 11 - INTEREST

 

 

 

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.   However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed ___ per cent (the percentage is to be established through bilateral negotiations) of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

 

 

 

3.   The term “interest” as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

 

 

 

4.   The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with (a) such permanent establishment or fixed base, or with (b) business activities referred to in (c) of paragraph 1 of Article 7. In such cases the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

 

 

5.   Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, 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 or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

 

 

 

6.   Where, by reason of a special relationship between the 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 for 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 Convention.

 

 

 

Article 12 - ROYALTIES

 

 

 

1.   Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

 

 

 

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 beneficial  owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed ___ per cent (the percentage is to be established through bilateral negotiations) of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

 

 

 

3.   The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

 

 

 

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 a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with (a) such permanent establishment or fixed base, or with (b) business activities referred to in (c) of paragraph 1 of Article 7. In such cases the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

 

 

5.   Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, 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 or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

 

 

 

6.   Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other 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 Convention.

 

 

 

Article 13 - CAPITAL GAINS

 

 

 

1.   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.

 

 

 

2.   Gains from the 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.

 

 

 

3.   Gains from the alienation of ships or aircraft operated in international traffic, boats engaged in inland waterways transport or movable property pertaining to the operation of such ships, aircraft or boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

4.   Gains from the alienation of shares of the capital stock of a company, or of an interest in a partnership, trust or estate, the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. In particular:

 

(a) Nothing contained in this paragraph shall apply to a company, partnership, trust or estate, other than a company, partnership, trust or estate engaged in the business of management of immovable properties, the property of which consists directly or indirectly principally of immovable property used by such company, partnership, trust or estate in its business activities.

 

(b) For the purposes of this paragraph, “principally” in relation to ownership of immovable property means the value of such immovable property exceeding 50 per cent of the aggregate value of all assets owned by the company, partnership, trust or estate.

 

 

 

5.   Gains, other than those to which paragraph 4 applies, derived by a resident of a Contracting State from the alienation of shares of a company which is a resident of the other Contracting State, may be taxed in that other State if the alienator, at any time during the 12-month period preceding such alienation, held directly or indirectly at least ___ per cent (the percentage is to be established through bilateral negotiations) of the capital of that company.

 

 

 

6.   Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident.

 

 

 

Article 14 - INDEPENDENT PERSONAL SERVICES

 

 

 

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 except in the following circumstances, when such income may also be taxed in the other Contracting State:

 

(a) If he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or

 

(b) If his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelvemonth period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

 

 

 

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 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

 

 

 

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:

 

(a)             The recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; and

 

(b) The remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

 

(c) The remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

 

 

 

3.   Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, or aboard a boat engaged in inland waterways transport, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

Article 16 - DIRECTORS’ FEES AND REMUNERATION OF TOP-LEVEL MANAGERIAL OFFICIALS

 

 

 

1.   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 of a company which is a resident of the other Contracting State may be taxed in that other State.

 

 

 

2.   Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top-level managerial position of a company which is a resident of the other Contracting State may be taxed in that other State.

 

 

 

Article 17 - ARTISTES AND SPORTSPERSONS

 

 

 

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 sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

 

 

 

2.   Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

 

 

 

Article 18 - PENSIONS AND SOCIAL SECURITY PAYMENTS

 

 

 

Article 18 (alternative A)

 

 

 

1.   Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

 

 

 

2.   Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political subdivision or a local authority thereof shall be taxable only in that State.

 

 

 

Article 18 (alternative B)

 

 

 

1.   Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment may be taxed in that State.

 

 

 

2.   However, such pensions and other similar remuneration may also be taxed in the other Contracting State if the payment is made by a resident of that other State or a permanent establishment situated therein.

 

 

 

3.   Notwithstanding the provisions of paragraphs 1 and 2, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political subdivision or a local authority thereof shall be taxable only in that State.


Article 19 - GOVERNMENT SERVICE

 

 

 

1.

 

(a)             Salaries, wages and other similar remuneration paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

 

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:

 

(i)     is a national of that State; or

 

(ii)    did not become a resident of that State solely for the purpose of rendering the services.

 

 

 

2.

 

(a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

 

(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that other State.

 

 

 

3.   The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages, pensions, and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

 

 

 

Article 20 - STUDENTS

 

 

 

Payments which a student or business trainee or apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned 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 State, provided that such payments arise from sources outside that 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 Convention shall be taxable only in that State.

 

 

 

2.   The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

 

 

3.   Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may also be taxed in that other State.

 

 

 

Chapter IV- TAXATION OF CAPITAL

 

 

 

Article 22 - CAPITAL

 

 

 

1.   Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

 

 

 

2.   Capital represented by 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 by 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 may be taxed in that other State.

 

 

 

3.   Capital represented by ships and aircraft operated in international traffic and by boats engaged in inland waterways transport, and by movable property pertaining to the operation of such ships, aircraft and boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

 

 

 

[4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.]

 

 

 

(The question of the taxation of all other elements of capital of a resident of a Contracting State is left to bilateral negotiations. Should the negotiating parties decide to include in the Convention an article on the taxation of capital, they will have to determine whether to use the wording of paragraph 4 as shown or wording that leaves taxation to the State in which the capital is located.)

 

 

 

Article 23 A - EXEMPTION METHOD

 

 

 

1.   Where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall, subject to the provisions of paragraphs 2 and 3, exempt such income or capital from tax.

 

 

 

2.   Where a resident of a Contracting State derives items of income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in that other State. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from that other State.

 

 

 

3.   Where in accordance with any provision of this Convention income derived or capital owned by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

 

 

 

Article 23 B - CREDIT METHOD

 

 

 

1.   Where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in that other State; and as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in that other State. Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in that other State.

 

 

 

2.   Where, in accordance with any provision of this Convention, income derived or capital owned by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

 

 

 

Chapter VI - SPECIAL PROVISIONS

 

 

 

Article 24 - NON-DISCRIMINATION

 

 

 

1.   Nationals of a Contracting State shall not be subjected in the other

 

Contracting State to any taxation or any requirement connected therewith

 

which is other or more burdensome than the taxation and connected requirements

 

to which nationals of that other State in the same circumstances, in

 

particular with respect to residence, are or may be subjected. This provision

 

shall, notwithstanding the provisions of Article 1, also apply to persons who

 

are not residents of one or both of the Contracting States.

 

 

 

2.   Stateless persons who are residents of a Contracting State shall not

 

be subjected in either Contracting State to any taxation or any requirement

 

connected therewith which is other or more burdensome than the taxation

 

and connected requirements to which nationals of the State concerned in the

 

same circumstances, in particular with respect to residence, are or may be

 

subjected.

 

 

 

3.   The taxation on a permanent establishment which an enterprise

 

of a Contracting State has in the other Contracting State shall not be less

 

favourably levied in that other State than the taxation levied on enterprises

 

of that other State carrying on the same activities. This provision shall not be

 

construed as obliging a Contracting State to grant to residents of the other

 

Contracting State any personal allowances, reliefs and reductions for taxation

 

purposes on account of civil status or family responsibilities which it

 

grants to its own residents.

 

 

 

4.   Except where the provisions of paragraph 1 of Article 9, paragraph 6

 

of Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other

 

disbursements paid by an enterprise of a Contracting State to a resident of

 

the other Contracting State shall, for the purpose of determining the taxable

 

profits of such enterprise, be deductible under the same conditions as if they

 

had been paid to a resident of the first-mentioned State. Similarly, any debts

 

of an enterprise of a Contracting State to a resident of the other Contracting

 

State shall, for the purpose of determining the taxable capital of such enterprise,

 

be deductible under the same conditions as if they had been contracted

 

to a resident of the first-mentioned State.

 

 

 

5.   Enterprises of a Contracting State, the capital of which is wholly or

 

partly owned or controlled, directly or indirectly, by one or more residents

 

of the other Contracting State, shall not be subjected in the first-mentioned

 

State to any taxation or any requirement connected therewith which is other

 

or more burdensome than the taxation and connected requirements to which

 

other similar enterprises of the first-mentioned State are or may be subjected.

 

 

 

6.   The provisions of this Article shall, notwithstanding the provisions of

 

Article 2, apply to taxes of every kind and description.

 

 

 

Article 25 - MUTUAL AGREEMENT PROCEDURE

 

 

 

Article 25 (alternative A)

 

 

 

1.   Where a person considers that the actions of one or both of the

 

Contracting States result or will result for him in taxation not in accordance

 

with the provisions of this Convention, he may, irrespective of the remedies

 

provided by the domestic law of those States, present his case to the competent

 

authority of the Contracting State of which he is a resident or, if his case

 

comes under paragraph 1 of Article 24, to that of the Contracting State of

 

which he is a national. The case must be presented within three years from

 

the first notification of the action resulting in taxation not in accordance

 

with the provisions of the Convention.

 

 

 

2.   The competent authority shall endeavour, if the objection appears to

 

it to be justified and if it is not itself able to arrive at a satisfactory solution,

 

to resolve the case by mutual agreement with the competent authority of the

 

other Contracting State, with a view to the avoidance of taxation which is

 

not in accordance with this Convention. Any agreement reached shall be

 

implemented notwithstanding any time limits in the domestic law of the

 

Contracting States.

 

 

 

3.   The competent authorities of the Contracting States shall endeavour

 

to resolve by mutual agreement any difficulties or doubts arising as to

 

the interpretation or application of the Convention. They may also consult

 

together for the elimination of double taxation in cases not provided for in

 

the Convention.

 

 

 

4.   The competent authorities of the Contracting States may communicate

 

with each other directly, including through a joint commission

 

consisting of themselves or their representatives, for the purpose of reaching

 

an agreement in the sense of the preceding paragraphs. The competent

 

authorities, through consultations, may develop appropriate bilateral procedures,

 

conditions, methods and techniques for the implementation of the

 

mutual agreement procedure provided for in this Article.

 

 

 

Article 25 (alternative B)

 

 

 

1.   Where a person considers that the actions of one or both of the

 

Contracting States result or will result for him in taxation not in accordance

 

with the provisions of this Convention, he may, irrespective of the remedies

 

provided by the domestic law of those States, present his case to the competent

 

authority of the Contracting State of which he is a resident or, if his case

 

comes under paragraph 1 of Article 24, to that of the Contracting State of

 

which he is a national. The case must be presented within three years from

 

the first notification of the action resulting in taxation not in accordance

 

with the provisions of the Convention.

 

 

 

2.   The competent authority shall endeavour, if the objection appears to

 

it to be justified and if it is not itself able to arrive at a satisfactory solution,

 

to resolve the case by mutual agreement with the competent authority of the

 

other Contracting State, with a view to the avoidance of taxation which is

 

not in accordance with this Convention. Any agreement reached shall be

 

implemented notwithstanding any time limits in the domestic law of the

 

Contracting States.

 

 

 

3.   The competent authorities of the Contracting States shall endeavour

 

to resolve by mutual agreement any difficulties or doubts arising as to

 

the interpretation or application of the Convention. They may also consult

 

together for the elimination of double taxation in cases not provided for in

 

the Convention.

 

 

 

4.   The competent authorities of the Contracting States may communicate

 

with each other directly, including through a joint commission consisting

 

of themselves or their representatives, for the purpose of reaching an

 

agreement in the sense of the preceding paragraphs. The competent authorities,

 

through consultations, may develop appropriate bilateral procedures,

 

conditions, methods and techniques for the implementation of the mutual

 

agreement procedure provided for in this Article.

 

 

 

5.   Where,

 

(a) under paragraph 1, a person has presented a case to the competent

 

authority of a Contracting State on the basis that the actions of one or

 

both of the Contracting States have resulted for that person in taxation

 

not in accordance with the provisions of this Convention, and

 

(b) the competent authorities are unable to reach an agreement to

 

resolve that case pursuant to paragraph 2 within three years from

 

the presentation of the case to the competent authority of the other

 

Contracting State,

 

any unresolved issues arising from the case shall be submitted to arbitration

 

if either competent authority so requests. The person who has presented

 

the case shall be notified of the request. These unresolved issues shall not,

 

however, be submitted to arbitration if a decision on these issues has already

 

been rendered by a court or administrative tribunal of either State. The arbitration decision shall be binding on both States and shall be implemented

 

notwithstanding any time limits in the domestic laws of these States unless

 

both competent authorities agree on a different solution within six months

 

after the decision has been communicated to them or unless a person directly

 

affected by the case does not accept the mutual agreement that implements

 

the arbitration decision. The competent authorities of the Contracting States

 

shall by mutual agreement settle the mode of application of this paragraph.

 

 

 

Article 26 - EXCHANGE OF INFORMATION

 

 

 

1.   The competent authorities of the Contracting States shall exchange

 

such information as is foreseeably relevant for carrying out the provisions

 

of this Convention or to the administration or enforcement of the domestic

 

laws of the Contracting States concerning taxes of every kind and description

 

imposed on behalf of the Contracting States, or of their political subdivisions

 

or local authorities, insofar as the taxation thereunder is not contrary

 

to the Convention. In particular, information shall be exchanged that would

 

be helpful to a Contracting State in preventing avoidance or evasion of such

 

taxes. The exchange of information is not restricted by Articles 1 and 2.

 

 

 

2.   Any information received under paragraph 1 by a Contracting State

 

shall be treated as secret in the same manner as information obtained under

 

the domestic laws of that State and it shall be disclosed only to persons or

 

authorities (including courts and administrative bodies) concerned with

 

the assessment or collection of, the enforcement or prosecution in respect

 

of, or the determination of appeals in relation to, the taxes referred to in

 

paragraph 1, or the oversight of the above. Such persons or authorities shall

 

use the information only for such purposes. They may disclose the information

 

in public court proceedings or in judicial decisions.

 

 

 

3.   In no case shall the provisions of paragraphs 1 and 2 be construed so

 

as to impose on a Contracting State the obligation:

 

(a) To carry out administrative measures at variance with the laws and

 

administrative practice of that or of the other Contracting State;

 

(b) To supply information which is not obtainable under the laws or

 

in the normal course of the administration of that or of the other

 

Contracting State;

 

(c) To supply information which would disclose any trade, business,

 

industrial, commercial or professional secret or trade process, or

 

information, the disclosure of which would be contrary to public

 

policy (ordre public).

 

 

 

4.   If information is requested by a Contracting State in accordance with

 

this Article, the other Contracting State shall use its information gathering

 

measures to obtain the requested information, even though that other State

 

may not need such information for its own tax purposes. The obligation contained

 

in the preceding sentence is subject to the limitations of paragraph 3

 

but in no case shall such limitations be construed to permit a Contracting

 

State to decline to supply information solely because it has no domestic interest

 

in such information.

 

 

 

5.   In no case shall the provisions of paragraph 3 be construed to permit

 

a Contracting State to decline to supply information solely because the

 

information is held by a bank, other financial institution, nominee or person

 

acting in an agency or a fiduciary capacity or because it relates to ownership

 

interests in a person.

 

 

 

6.   The competent authorities shall, through consultation, develop

 

appropriate methods and techniques concerning the matters in respect of

 

which exchanges of information under paragraph 1 shall be made

 

 


Article 27 - ASSISTANCE IN THE COLLECTION OF TAXES[3]

 

 

 

1.   The Contracting States shall lend assistance to each other in the collection

 

of revenue claims. This assistance is not restricted by Articles 1 and 2.

 

The competent authorities of the Contracting States may by mutual agreement

 

settle the mode of application of this Article.

 

 

 

2.   The term “revenue claim” as used in this Article means an amount

 

owed in respect of taxes of every kind and description imposed on behalf of

 

the Contracting States, or of their political subdivisions or local authorities,

 

insofar as the taxation thereunder is not contrary to this Convention or any

 

other instrument to which the Contracting States are parties, as well as interest,

 

administrative penalties and costs of collection or conservancy related to

 

such amount.

 

 

 

3.   When a revenue claim of a Contracting State is enforceable under the

 

laws of that State and is owed by a person who, at that time, cannot, under

 

the laws of that State, prevent its collection, that revenue claim shall, at the

 

request of the competent authority of that State, be accepted for purposes of

 

collection by the competent authority of the other Contracting State. That

 

revenue claim shall be collected by that other State in accordance with the

 

provisions of its laws applicable to the enforcement and collection of its own

 

taxes as if the revenue claim were a revenue claim of that other State.

 

 

 

4.   When a revenue claim of a Contracting State is a claim in respect of

 

which that State may, under its law, take measures of conservancy with a view

 

to ensure its collection, that revenue claim shall, at the request of the competent

 

authority of that State, be accepted for purposes of taking measures of

 

conservancy by the competent authority of the other Contracting State. That

 

other State shall take measures of conservancy in respect of that revenue

 

claim in accordance with the provisions of its laws as if the revenue claim

 

were a revenue claim of that other State even if, at the time when such measures

 

are applied, the revenue claim is not enforceable in the first-mentioned

 

State or is owed by a person who has a right to prevent its collection.

 

 

 

5.   Notwithstanding the provisions of paragraphs 3 and 4, a revenue

 

claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall

 

not, in that State, be subject to the time limits or accorded any priority applicable

 

to a revenue claim under the laws of that State by reason of its nature

 

as such. In addition, a revenue claim accepted by a Contracting State for the

 

purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable

 

to that revenue claim under the laws of the other Contracting State.

 

 

 

6.   Proceedings with respect to the existence, validity or the amount of a

 

revenue claim of a Contracting State shall not be brought before the courts or

 

administrative bodies of the other Contracting State.

 

 

 

7.   Where, at any time after a request has been made by a Contracting

 

State under paragraph 3 or 4 and before the other Contracting State has collected

 

and remitted the relevant revenue claim to the first-mentioned State,

 

the relevant revenue claim ceases to be:

 

(a) in the case of a request under paragraph 3, a revenue claim of the firstmentioned

 

State that is enforceable under the laws of that State and

 

is owed by a person who, at that time, cannot, under the laws of that

 

State, prevent its collection, or

 

(b) in the case of a request under paragraph 4, a revenue claim of the firstmentioned State in respect of which that State may, under its laws,

 

take measures of conservancy with a view to ensure its collection,

 

the competent authority of the first-mentioned State shall promptly

 

notify the competent authority of the other State of that fact and, at

 

the option of the other State, the first-mentioned State shall either

 

suspend or withdraw its request.

 

 

 

8.   In no case shall the provisions of this Article be construed so as to

 

impose on a Contracting State the obligation:

 

(a) to carry out administrative measures at variance with the laws and

 

administrative practice of that or of the other Contracting State;

 

(b) to carry out measures which would be contrary to public policy (ordre

 

public);

 

(c)             o provide assistance if the other Contracting State has not pursued

 

all reasonable measures of collection or conservancy, as the case may

 

be, available under its laws or administrative practice;

 

(d) to provide assistance in those cases where the administrative burden

 

for that State is clearly disproportionate to the benefit to be derived by

 

the other Contracting State.

 

 

 

Article 28 - MEMBERS OF DIPLOMATIC MISSIONSAND CONSULAR POSTS

 

 

 

Nothing in this Convention shall affect the fiscal privileges of members of

 

diplomatic missions or consular posts under the general rules of international

 

law or under the provisions of special agreements.

 

 


Chapter VII - FINAL PROVISIONS

 

 

 

Article 29 - ENTRY INTO FORCE

 

 

 

1.   This Convention shall be ratified and the instruments of ratification

 

shall be exchanged at ______________________ as soon as possible.

 

 

 

2.   The Convention shall enter into force upon the exchange of instruments

 

of ratification and its provisions shall have effect:

 

(a) (In State A): ............................................

 

(b) (In State B): .............................................

 

 

 

Article 30 – TERMINATION

 

 

 

This Convention shall remain in force until terminated by a Contracting

 

State. Either Contracting State may terminate the Convention, through diplomatic

 

channels, by giving notice of termination at least six months before

 

the end of any calendar year after the year ____. In such event, the Convention

 

shall cease to have effect:

 

(a) (In State A): ............................................

 

(b) (In State B): ............................................

 

 

 

TERMINAL CLAUSE

 

 

 

(NOTE: The provisions relating to the entry into force and termination and

 

the terminal clause concerning the signing of the Convention shall be drafted

 

in accordance with the constitutional procedure of both Contracting States.)

 

 

 



[1]     States wishing to do so may follow the widespread practice of including in the title a reference to either the avoidance of double taxation or to both the avoidance of double taxation and the prevention of fiscal evasion.

 

[2]     The Preamble of the Convention shall be drafted in accordance with the constitutional procedures of the Contracting States.

 

[3]       In some countries, national law, policy or administrative considerations may not allow or justify the type of assistance envisaged under this Article or may require that this type of assistance be restricted, e.g. to countries that have similar tax systems or tax administrations or as to the taxes covered. For that reason, the Article should only be included in the Convention where each State concludes that, based on the factors described in paragraph 1 of the Commentary on the Article, they can agree to provide assistance in the collection of taxes levied by the other State

 

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