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Canadian Treaty Series |
E102312 - CTS 1987 No. 23
CONVENTION BETWEEN CANADA AND THE KINGDOM OF THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of Canada and the Government of the Kingdom of the Netherlands,
DESIRING to replace by a new convention the existing Convention between the Government of Canada and the Government of the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at Ottawa on 2 April 1957, as modified by the Supplementary Convention signed at Ottawa on 28 October 1959 and as further modified by the Supplementary Convention signed at Ottawa on 3 February 1965;
HAVE AGREED as follows:
CHAPTER I
SCOPE OF THE CONVENTION
Article 1
Personal scope
This Convention shall apply to persons who are residents of one or both of the States.
Article 2
Taxes covered
1. This Convention shall apply to taxes on income imposed on behalf of each of the States, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, 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 Canada:
- the income taxes imposed by the Government of Canada,
(hereinafter referred to as “Canadian tax”);
(b) in the Netherlands:
- the income tax (de inkomstenbelasting),
- the wages tax (de loonbelasting),
- the company tax (de vennootschapsbelasting), including the Government share in the net profits of the exploitation of natural resources levied pursuant to the Mining Act 1810 (Mijnwet 1810) with respect to concessions issued from 1967, or pursuant to the Netherlands Continental Shelf Mining Act of 1965 (Mijnwet Continentaal Plat, 1965),
- the dividend tax (de dividendbelasting),
(hereinafter referred to as “Netherlands tax”).
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 States or the competent authorities of the States shall notify each other of any substantial changes which have been made in their respective taxation laws.
CHAPTER II
DEFINITIONS
Article 3
General definitions
1. For the purposes of this Convention, unless the context otherwise requires:
(a) the term “State” means Canada or the Netherlands, as the context requires; the term “States” means Canada and the Netherlands;
(b) the term “Canada” used in a geographical sense, means the territory of Canada, including any area beyond the territorial seas of Canada which, under the laws of Canada and in accordance with international law, is an area within which Canada may exercise rights with respect to the sea-bed and sub-soil and their natural resources;
(c) the term “the Netherlands” means the part of the Kingdom of the Netherlands that is situated in Europe and the part of the sea-bed and its sub-soil under the North Sea, over which the Kingdom of the Netherlands has sovereign rights in accordance with international law;
(d) the term “person” includes an individual, a company and any other body of persons, and in the case of Canada an estate and a trust;
(e) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
(f) the terms “enterprise of one of the States” and “enterprise of the other State” mean respectively an enterprise carried on by a resident of one of the States and an enterprise carried on by a resident of the other State;
(g) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in one of the States, except when the ship or aircraft is operated solely between places in the other State;
(h) the term “national” means:
1. any individual possessing the nationality of one of the States;
2. any legal person, partnership and association deriving its status as such from the laws in force in one of the States;
(i) the term “competent authority” means:
1. in the case of Canada, the Minister of National Revenue or his authorized representative;
2. in the Netherlands, the Minister of Finance or his authorized representative.
2. As regard the application of the Convention by a State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies.
Article 4
Resident
1. For the purposes of this Convention, the term “resident of one of the States” 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.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident 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 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 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 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 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 States, the competent authorities of the States shall endeavour to settle the question by mutual agreement having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of such agreement, such person shall be deemed not to be a resident of either State for the purposes of Articles 6 to 21 inclusive and Articles 23 and 24.
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 twelve 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 sub-paragraphs (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, when 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 one of the States 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 one of the States 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 one of the States controls or is controlled by a company which is a resident of the other 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 one of the States from immovable property (including income from agriculture or forestry) situated in the other State may be taxed in that other State.
2. For the purposes of this Convention, the term “immovable property” shall have the meaning which it has under the law of the 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 and to income from immovable property used for the performance of independent personal services.
Business profits
1. The profits of an enterprise of one of the States shall be taxable only in that State unless the enterprise carries on business in the other State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of one of the States carries on business in the other State through a permanent establishment situated therein, there shall in each 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 situated in one of the States, there shall be allowed as deductions expenses of the enterprise (other than expenses which would not be deductible under the law of that State if the permanent establishment were a separate enterprise) which are incurred for the purposes of the permanent establishment including executive and general administrative expenses, whether incurred in the State in which the permanent establishment is situated or elsewhere.
4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
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.
Article 8
Shipping and air transport
1. Notwithstanding the provisions of Articles 7 and 12, profits from the operation of ships or aircraft in international traffic shall be taxable only in the State in which the place of effective management of the enterprise is situated.
2. For the purposes of this Convention, profits derived by an enterprise of one of the States from the operation of ships or aircraft in international traffic include profits from:
(a) the rental of ships or aircraft operated in international traffic;
(b) the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used in international traffic; and
(c) the rental of ships, aircraft or containers (including trailers and related equipment for the transport of containers) provided that such profits are incidental to profits referred to in paragraph 1, or sub-paragraphs (a) or (b) of this paragraph.
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 State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the 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 one of the States participates directly or indirectly in the management, control or capital of an enterprise of the other State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the States
and an enterprise of the other 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.
It is understood, however, that the fact that associated enterprises have concluded arrangements, such as cost sharing arrangements or general services agreements, for or based on the allocation of executive, general administrative, technical and commercial expenses, research and development expenses and other similar expenses, is not in itself a condition as meant in the preceding sentence.
2. Where one of the States includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other 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 Convention.
3. A State shall not change the profits of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its national laws and, in any case, after six years from the end of the year in which the profits which would be subject to such change would have accrued to an enterprise of that State. However, the provisions of the preceding sentence shall not apply in the case of fraud or wilful default.
Article 10
Dividends
1. Dividends paid by a company which is a resident of one of the States to a resident of the other State may be taxed in that other State.
2. However, such dividends may also be taxed in the State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed:
(a) 10 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 25 per cent of the capital of the company paying the dividends;
(b) 15 per cent of the gross amount of the dividends in all other cases.
3. The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
4. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights participating in profits, as well as 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.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of one of the States, carries on business in the other 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.
6. Where a company which is a resident of one of the States derives profits or income from the other 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 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.
7. Nothing in this Convention shall be construed as preventing one of the States from imposing a tax on the earnings of a company attributable to permanent establishments in that State, in addition to the tax which would be chargeable on the earnings of a company which is a resident of that State, provided that the rate of such additional tax so imposed shall not exceed the percentage limitation provided for under paragraph 2(a) of the amount of such earnings which have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term “earnings” means the profits attributable to such permanent establishments in that State (including gains from the alienation of property forming part of the business property, referred to in paragraph 2 of Article 13, of such permanent establishments) in accordance with Article 7 in a year and previous years after deducting therefrom:
(a) business losses attributable to such permanent establishments (including losses from the alienation of property forming part of the business property of such permanent establishments) in such year and previous years,
(b) all taxes chargeable in that State on such profits, other than the additional tax referred to herein,
(c) the profits reinvested in that State, provided that where that State is Canada, the amount of such deduction shall be determined in accordance with the existing provisions of the law of Canada regarding the computation of the allowance in respect of investment in property in Canada, and any subsequent modification of those provisions which shall not affect the general principle hereof, and
(d) five hundred thousand Canadian dollars ($500,000) or its equivalent in Netherlands currency, less any amount deducted
1. by the company, or
2. by a person related thereto from the same or a similar business as that carried on by the company
under this sub-paragraph (d); for the purposes of this sub-paragraph (d) a company is related to another company if one company directly or indirectly controls the other, or both companies are directly or indirectly controlled by the same person or persons, or if the two companies deal with each other not at arm’s length.
Article 11
Interest
1. Interest arising in one of the States and paid to a resident of the other State may be taxed in that other State.
2. However, such interest may also be taxed in the State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 15 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in one of the States and paid to a resident of the other State who is the beneficial owner thereof shall be taxable only in that other State to the extent that such interest:
(a) is paid by a purchasing enterprise to a selling enterprise in connection with the sale on credit of any equipment or merchandise, except where the sale is made between persons dealing with each other not at arm’s length; or
(b) is paid in respect of a bond, debenture or other similar obligation of the government of one of the States, or of a political subdivision or local authority thereof; or
(c) is paid to the other State or a political subdivision or local authority thereof, the central bank of that other State or to any instrumentality (including a financial institution) controlled by that State or subdivision or authority thereof; or
(d) is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by any financial institution specified and agreed in letters exchanged between the competent authorities of the States.
4. (a) Notwithstanding the provisions of paragraph 2, interest arising in Canada and paid by a company which is a resident of Canada to a resident of the Netherlands which is the beneficial owner thereof, with which that company is dealing at arm’s length, on any obligation where the evidence of the indebtedness was issued by the company after June 23, 1975, shall, if under the terms of the obligation or any agreement relating thereto, the company may not, under any circumstances, be obliged to pay more than 25 per cent of the principal amount thereof until after 5 years from the date of issue except in the event of a failure or default under the said terms or agreement or if the said terms or agreement become unlawful or are changed by legislation, a court, statutory board or commission, be taxable only in the Netherlands.
(b) Notwithstanding the provisions of Article 31 Canada may at any time give to the Netherlands, through diplomatic channels, written notice of suspension of sub-paragraph (a) for any period for which the taxation legislation of Canada does not provide for an exemption from non-resident withholding tax on interest as dealt with in that sub-paragraph. In such event sub-paragraph (a) shall not have effect in respect of such interest paid on obligations issued after the later of six months after the date of such notice and 31 December of the calendar year in which the notice is given.
(c) For the purposes of this paragraph, where all or any portion of the interest payable on an obligation is contingent or dependent upon the use of or production from property in Canada, the interest shall be deemed not to be interest.
5. 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, as well as income which is subjected to the same taxation treatment as income from money lent by the laws of the States in which the income arises. 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.
6. The provisions of paragraphs 1, 2, 3 and 4 shall not apply if the beneficial owner of the interest, being a resident of one of the States, carries on business in the other 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 such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
7. Interest shall be deemed to arise in one of the States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of one of the States or not, has in one of the States 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.
8. 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 State, due regard being had to the other provisions of this Convention.
Article 12
Royalties
1. Royalties arising in one of the States and paid to a resident of the other State may be taxed in that other State.
2. However, such royalties may also be taxed in the State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
3. Notwithstanding the provisions of paragraph 2,
(a) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or artistic work (but not including royalties in respect of motion picture films and works on film or videotape for use in connection with television) arising in one of the States and paid to a resident of the other State who is the beneficial owner thereof shall be taxable only in that other State; or
(b) royalties arising in one of the States and paid to the Government of the other State or to a body of that other State approved by the competent authorities of the two States, shall be taxable only in that other State.
4. 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 motion picture films and works on film or videotape for use in connection with television, any patent, trade mark, 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.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the royalties, being a resident of one of the States, carries on business in the other 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 such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Royalties shall be deemed to arise in one of the States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of one of the States or not, has in one of the States a permanent establishment or a fixed base in connection with which the obligation 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.
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 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 State, due regard being had to the other provisions of this Convention.
Article 13
Capital gains
1. Gains derived by a resident of one of the States from the alienation of immovable property situated in the other 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 one of the States has in the other State or of movable property pertaining to a fixed base available to a resident of one of the States in the other 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 or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the State in which the place of effective management of the enterprise is situated. For the purposes of this paragraph the provisions of paragraph 3 of Article 8 shall apply.
4. Gains derived by a resident of one of the States from the alienation of:
(a) shares (other than shares quoted on an approved stock exchange in the other State) forming part of a substantial interest in the capital stock of a company which is a resident of that other State the value of which shares is derived principally from immovable property situated in that other State; or
(b) a substantial interest in a partnership, trust or estate, established under the law in the other State, the value of which is derived principally from immovable property situated in that other State,
may be taxed in that other State. For the purposes of this paragraph, the term “immovable property” includes the shares of a company the value of which shares is derived principally from immovable property or a substantial interest in a partnership, trust or estate referred to in sub-paragraph (b), but does not include property (other than rental property) in which the business of the company, partnership, trust or estate is carried on; and a substantial interest exists when the resident and persons related thereto own 10 per cent or more of the shares of any class of the capital stock of a company or have an interest of 10 per cent or more in a partnership, trust or estate.
5. Where a resident of one of the States alienates property which may in accordance with this Article be taxed in the other State and which was owned by a resident of the first-mentioned State on the date of signature of the Convention, the amount of the gain which is liable to tax in that other State in accordance with this Article shall be reduced by the proportion of the gain attributable (on a monthly basis), or such greater portion of the gain as is shown to the satisfaction of the competent authority of the other State to be reasonably attributable, to the period ending on December 31 of the year in which the Convention enters into force. However, this provision shall not apply to gains from the alienation of property which in accordance with the existing Convention may already be taxed in the other State.
6. Where a resident of one of the States alienates property in the course of a corporate organization, reorganization, amalgamation, division or similar transaction and profit, gain or income with respect to such alienation is not recognized for the purpose of taxation in that State, if requested to do so by the person who acquires the property, the competent authority of the other State may agree, subject to terms and conditions satisfactory to such competent authority, to defer the recognition of the profit, gain or income with respect to such property for the purpose of taxation in that other State until such time and in such manner as may be stipulated in the agreement.
7. 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 State of which the alienator is a resident.
8. The provisions of paragraph 7 shall not affect the right of either of the States to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other State and has been a resident of the first-mentioned State at any time during the six years immediately preceding the alienation of the property.
Article 14
Independent personal services
1. Income derived by a resident of one of the States in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other State for the purpose of performing his activities. If he has or had such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base.
2. 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 one of the States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other 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 one of the States in respect of an employment exercised in the other 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 the calendar 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 by a resident of one of the States in respect of an employment exercised aboard a ship or aircraft operated in international traffic, shall be taxable only in that State.
Article 16
Directors’ fees
1. Directors’ fees or other remuneration derived by a resident of one of the States in his capacity as a member of the board of directors, a “bestuurder” or a “commissaris” of a company which is a resident of the other State may be taxed in that other State.
2. Where the remuneration mentioned in paragraph 1 is derived by a person who exercises activities of a regular and substantial character in a permanent establishment situated in the State other than the State of which the company is a resident and the remuneration is deductible in determining the taxable profits of that permanent establishment, then, notwithstanding the provisions of paragraph 1, the remuneration, to the extent to which it is so deductible, may be taxed in the State in which the permanent establishment is situated.
Article 17
Artistes and athletes
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of one of the States as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the State in which the activities of the entertainer or athlete are exercised.
3. The provisions of paragraph 2 shall not apply if the entertainer or the athlete establishes that neither he, nor any person associated with him or related to him, participates directly or indirectly in the profits of the person referred to in that paragraph.
Article 18
Pensions, annuities, social security payments and alimony
1. Pensions, annuities and other similar payments, as well as lump sum payments out of a pension plan or arising on the surrender, cancellation, redemption, sale or other alienation of an annuity, arising in one of the States and paid to a resident of the other State may be taxed in that other State.
2. However, such income may also be taxed in the State in which it arises, and according to the law of that State, but in the case of pensions, annuities and other similar payments the tax so charged shall not exceed 15 per cent of the amount thereof which is taxable under the law of that State.
3. The limitation provided for in paragraph 2 shall not apply to pensions paid by, or out of funds created by the Netherlands or a political subdivision or a local authority of the Netherlands to an individual. This paragraph shall not apply:
(a) to pensions paid to an individual who is a resident of, and a national of, Canada; and
(b) to pensions in respect of services rendered in connection with a business not being activities of a governmental nature.
4. Pensions and allowances received from Canada under the Pension Act, the Civilian War Pensions and Allowances Act or the War Veterans Allowance Act and compensation received under regulations made under section 7 of the Aeronautics Act may be taxed in Canada.
5. Pensions and other similar payments paid under the social security legislation of:
(a) Canada, to an individual who is a resident of the Netherlands, may be taxed in Canada;
(b) the Netherlands, to an individual who is a resident of Canada, shall be taxable only in the Netherlands.
6. Alimony and other similar payments arising in one of the States and paid to an individual who is a resident of the other State shall be taxable only in that other State.
Article 19
Government service
1. (a) Remuneration, other than a pension, paid by one of the States or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority may be taxed in that State.
(b) However, such remuneration shall be taxable only in the other State if the services are rendered in that State and the individual is a resident of that State who:
1. is a national of that State; or
2. did not become a resident of that State solely for the purpose of rendering the services.
2. The provisions of Articles 15 and 16 shall apply to remuneration in respect of services rendered in connection with a business carried on by one of the States or a political subdivision or a local authority thereof.
Article 20
Students
Payments which a student, apprentice or business trainee who is or was immediately before visiting one of the States a resident of the other 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
Income from estates and trusts
1. Income from an estate or a trust which is a resident of Canada accruing to a resident of the Netherlands who is the beneficiary thereof, may be taxed in the Netherlands.
2. However, such income may also be taxed in Canada, and according to the laws of Canada, but the tax so charged shall not exceed 15 per cent of the gross amount of the income.
3. Notwithstanding the provisions of paragraph 2, such income shall be exempt from tax in Canada to the extent of any amount paid, credited, or required to be distributed to such beneficiary out of income from sources outside Canada.
CHAPTER IV
ELIMINATION OF DOUBLE TAXATION
Article 22
Elimination of double taxation
1. The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income which, according to the provisions of this Convention, may be taxed in Canada.
2. However, where a resident of the Netherlands derives items of income which according to Article 6, Article 7, paragraph 5 of Article 10, paragraph 6 of Article 11, paragraph 5 of Article 12, paragraphs 1, 2 and 4 of Article 13, Article 14, paragraph 1 of Article 15, paragraph 4 and subparagraph (a) of paragraph 5 of Article 18 and Article 19 of this Convention may be taxed in Canada and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the total amount of the items of income which are exempt from Netherlands tax under those provisions.
3. Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to paragraph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article 12, paragraph 8 of Article 13, Article 16, Article 17, paragraph 2 of Article 18 and paragraph 2 of Article 21 of this Convention may be taxed in Canada to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in Canada on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
4. In the case of Canada, double taxation shall be avoided as follows:
(a) subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions - which shall not affect the general principle hereof - and unless a greater deduction or relief is provided under the laws of Canada, tax payable in the Netherlands on profits, income or gains arising in the Netherlands shall be deducted from any Canadian tax payable in respect of such profits, income or gains;
(b) subject to the existing provisions of the law of Canada regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions - which shall not affect the general principle hereof - a for the purpose of computing Canadian tax, a company resident in Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate resident in the Netherlands.
5. For the purposes of paragraph 4:
(a) profits, income or gains of a resident of Canada which are taxed in the Netherlands in accordance with the Convention shall be deemed to arise in the Netherlands;
(b) the taxes referred to in paragraphs 3 (b) and 4 of Article 2 shall be considered income taxes and in determining the amount of these taxes the investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law (“Wet investeringsrekening”), and the investment levies as meant in the Netherlands Industrial Deconcentration Act (“Wet selectieve investeringsrekening”) shall not be taken into account.
CHAPTER V
OFFSHORE ACTIVITIES
Article 23
Offshore activities
Notwithstanding any other provision of this Convention:
1. An enterprise of one of the States which carries on activities offshore in the other State in connection with the exploration or exploitation of the sea-bed and sub-soil and their natural resources situated in that other State shall, subject to paragraphs 2 and 4, be deemed to be carrying on, in respect of those activities, business in that other State through a permanent establishment situated therein.
2. The provisions of paragraph 1 shall not apply where the activities referred to therein are carried on in the other State for a period or periods not exceeding in the aggregate 30 days in any 12 months’ period. For the purposes of this paragraph:
(a) where an enterprise carrying on activities referred to in paragraph 1 in the other State is associated with another enterprise carrying on substantially similar activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, except to the extent that those activities are carried on at the same time as its own activities;
(b) an enterprise shall be regarded as associated with another enterprise if one participates directly or indirectly in the management, control or capital of the other or if the same persons participate directly or indirectly in the management, control or capital of both enterprises.
3. A resident of one of the States who carries on activities offshore in the other State in connection with the exploration or exploitation of the sea-bed and sub-soil and their natural resources situated in that other State which consist of professional services or other activities of an independent character shall be deemed to be performing those activities from a fixed base in the other State. However, this paragraph shall not apply where such activities are carried on in the other State for a period or periods not exceeding in the aggregate 30 days in any 12 months’ period.
4. Profits from the transportation of supplies or personnel to a location where activities in connection with the exploration or exploitation of the sea-bed and subsoil and their natural resources are being carried on in one of the States, or from the operation of tugboats and similar vessels in connection with such activities, shall be taxable in accordance with the provisions of Article 8 and part II of the Protocol.
5. (a) Subject to sub-paragraph (b) of this paragraph, salaries, wages and other similar remuneration derived by a resident of one of the States in respect of an employment connected with the exploration or exploitation of the sea-bed and sub-soil and their natural resources situated in the other State may, to the extent that the employment is exercised offshore in that other State, be taxed in that other State.
(b) Salaries, wages and other similar remuneration derived by a resident of one of the States in respect of an employment exercised aboard a ship or aircraft engaged in the international transportation of supplies or personnel to a location where activities connected with the exploration or exploitation of the sea-bed and sub-soil and their natural resources are being carried on in one of the States, or in respect of an employment exercised aboard a tugboat or similar vessel in connection with such activities, shall be taxable only in the State of which the employee is a resident.
6. For the items of income which may be taxed in Canada according to paragraphs 1 and 3, the Netherlands shall allow a deduction from its tax which shall be computed in conformity with the rules laid down in paragraph 3 of Article 22.
7. Where documentary evidence is produced that tax has been paid in Canada on the items of income which may be taxed in Canada according to sub-paragraph (a) of paragraph 5, the Netherlands shall allow a reduction of its tax which shall be computed in conformity with the rules laid down in paragraph 2 of Article 22.
8. For the items of income which may be taxed in the Netherlands according to paragraphs 1 and 3 and sub-paragraph (a) of paragraph 5, double taxation shall be avoided in Canada in accordance with the provisions of sub-paragraph (a) of paragraph 4 of Article 22.
CHAPTER VI
SPECIAL PROVISIONS
Article 24
Non-discrimination
1. Nationals of one of the States shall not be subjected in the other 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 are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to individuals who are not residents of one or both of the States.
2. The taxation on a permanent establishment which an enterprise of one of the States has in the other 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 one of the States to grant to residents of the other 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.
3. Enterprises of one of the States, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other 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, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State, are or may be subjected.
4. Contributions in a year in respect of services rendered in that year paid by, or on behalf of, an individual who is a resident of one of the States or who is temporarily present in that State, to a pension plan that is recognized for tax purposes in the other State shall, during a period not exceeding in the aggregate 60 months, be treated in the same way for tax purposes in the first-mentioned State as a contribution paid to a pension plan (that is, in the case of Canada, not an employee benefit plan) that is recognized for tax purposes in that first-mentioned State, provided that:
(a) such individual was contributing to the pension plan before he became a resident of or temporarily present in the first-mentioned State; and
(b) the competent authority of the first-mentioned State agrees that the pension plan corresponds to a pension plan recognized for tax purposes by that State.
For the purposes of this paragraph, “pension plan” includes a pension plan created under a public social security system.
Article 25
Mutual agreement procedure
1. Where a person considers that the actions of one or both of the 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, address to the competent authority of the State of which he is a resident an application in writing stating the grounds for claiming the revision of such taxation or, if his case comes under paragraph 1 of Article 24, to that of the State of which he is a national. The case must be presented within two 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 State, with a view to the avoidance of taxation which is not in accordance with the Convention.
3. A State shall not, after the expiry of the time limits provided in its national laws and, in any case, after six years from the end of the taxable period in which the income concerned has accrued, increase the tax base of a resident of either of the States by including therein items of income which have also been charged to tax in the other State. This paragraph shall not apply in the case of fraud or wilful default.
4. The competent authorities of the States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. In particular, the competent authorities may agree to the same attribution of income, deductions, credits or allowances of an enterprise of one of the States to its permanent establishment in the other State or between related enterprises as provided for in Article 9. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.
Article 26
Exchange of information
1. The competent authorities of the States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information received by one of the States 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) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. 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.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on one of the States the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other 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 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).
Article 27
Diplomatic agents and consular officers
1. Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.
2. Notwithstanding Article 4, an individual who is a member of a diplomatic or consular mission of one of the States in the other State or in a third State and who is a national of the sending State, shall be deemed for the purposes of the Convention to be a resident of the sending State if he is subject therein to the same obligations in respect of taxes on income as are residents of that State.
3. The Convention shall not apply to international organisations, organs and officials thereof and members of a diplomatic or consular mission of a third State, being present in one of the States, if they are not subjected therein to the same obligations in respect of taxes on income as are residents of that State.
Article 28
Miscellaneous rules
1. Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts consisting of foreign accrual property income of a foreign affiliate of a resident of Canada, included in the income of such resident according to section 91 of the Canadian Income Tax Act.
2. Articles 6 to 21 of the Convention shall not apply to non-resident-owned investment corporations as defined under section 133 of the Canadian Income Tax Act, or under any similar provision enacted by Canada after the signature of the Convention.
3. The competent authorities of the States shall by mutual agreement settle the mode of application of Articles 10, 11, 12 and 21.
4. The competent authorities of each of the States, in accordance with the practices of that State, may prescribe regulations necessary to carry out the other provisions of the Convention.
5. The competent authorities of the States may communicate with each other directly for the purpose of applying the Convention.
Article 29
Territorial extension
1. This Convention may be extended, either in its entirety or with any necessary modifications, to the Netherlands Antilles and/or Aruba, if those countries impose taxes substantially similar in character to those to which the Convention applies. Any such extension shall take effect from such date and subject to such modifications and conditions, including conditions as to termination, as may be specified and agreed in notes to be exchanged through diplomatic channels.
2. Unless otherwise agreed the termination of the Convention shall not also terminate any extension of the Convention to the Netherlands Antilles and/or Aruba.
CHAPTER VII
FINAL PROVISIONS
Article 30
Entry into force
1. This Convention shall enter into force on the thirtieth day after the latter of the dates on which the respective Governments have notified each other in writing that the formalities constitutionally required in their respective States have been complied with, and, subject to the provisions of paragraphs 3, 4, 5 and 6, its provisions shall have effect:
(a) in respect of tax withheld at the source on amounts paid or credited on or after the first day of January in the calendar year in which the Convention has entered into force;
(b) in respect of other taxes for taxation years beginning on or after the first day of January in the calendar year in which the Convention has entered into force.
2. Subject to the provisions of paragraph 3, 4, 5 and 6 the existing Convention shall cease to have effect as respects taxes to which this Convention in accordance with the provisions of paragraph 1 applies.
3. Where, however, any greater relief from tax would have been afforded by any provision, except those dealt with in paragraphs 4, 5 and 6, of the existing Convention than is due under this Convention, any such provision as aforesaid shall continue to have effect for any taxation year beginning before the entry into force of this Convention.
4. Where a dividend is paid by a company which is a resident of one of the States on the date of signature of this Convention, and where the conditions set out in sub-paragraphs (a), (b) and (c) of paragraph 3 of Article VII of the existing Convention are met with respect to the dividend, paragraph 3 of Article VII of the existing Convention shall apply to the dividend in the year of signature of this Convention and in the three following calendar years and for the purposes of that paragraph:
(a) gains derived by a company which is a resident of one of the States from the alienation of shares in a company which is not a resident of that State shall be deemed to be income received or receivable by the former company as, or in lieu of the payment of, dividends by the latter company, and
(b) a reference to “company” in this paragraph and in paragraph 3 of Article VII shall be taken to include a reference to a successor company thereof resulting from a merger.
However, this paragraph shall not apply in any event to a dividend paid after December 31, 1988.
5. Where any greater relief from tax would have been afforded by any provision of the existing Convention to a resident of the Netherlands in respect of interest (other than debenture interest) from any mortgage of immovable property situated in Canada and where the mortgage secured an obligation in existence on the date of signature of this Convention, that provision shall continue to apply for such interest received in the year of signature of this Convention and in the 18 calendar months following that year. However, this paragraph shall not apply in any event with respect to interest received after June 30, 1987 or interest received before that date that relates to a period after that date.
6. Where any greater relief from tax would have been afforded by any provision of the existing Convention to a resident of one of the States in respect of payments of any kind received as consideration for the use of, or right to use, industrial, commercial or scientific equipment, made pursuant to an agreement in existence on the date of signature of this Convention, that provision shall continue to apply with respect to any such payment made in the year of signature of this Convention and in the three following calendar years. However, this paragraph shall not apply in any event with respect to any such payment made after December 31, 1988 or any payment made before that date for the use of, or the right to use, equipment after that date.
7. The existing Convention shall terminate on the last date on which it has effect in accordance with the foregoing provisions of this Article.
8. The termination of the existing Convention as provided in paragraph 7 shall not revive the Agreement between the Government of Canada and the Government of the Kingdom of the Netherlands constituted by an exchange of notes, dated 23rd September, 1929, for reciprocal exemption from income tax of income arising from the operation of ships. Upon the entry into force of this Convention that Agreement shall terminate.
9. In this Convention the term “the existing Convention” means the Convention between Canada and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Ottawa on as modified by the Supplementary Convention signed at Ottawa on October 28, 1959 and as further modified by the Supplementary Convention signed at Ottawa on February 3, 1965.
Article 31
Termination
This Convention shall remain in force until terminated by one of the States. Either 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 expiration of the fifth year after the year of the entry into force. In such event the Convention shall cease to have effect:
(a) in respect of tax withheld at the source on amounts paid or credited on or after the first day of January in the calendar year next following that in which the notice of termination has been given;
(b) in respect of other taxes for taxation years beginning on or after the first day of January in the calendar year next following that in which the notice of termination has been given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Convention.
DONE at The Hague this 27th day of May, 1986, in duplicate, in the English, French and Netherlands languages, each version being equally authentic.
Lawrence A. H. Smith
FOR THE GOVERNMENT OF CANADA
Hans van den Broek
FOR THE GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS
PROTOCOL
At the moment of signing the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, this day concluded between Canada and the Kingdom of the Netherlands, the undersigned have agreed that the following provisions shall form an integral part of the Convention.
I. With reference to Article 3, paragraph 1(e)
In the French version of the Convention, the term “société” includes a “corporation” within the meaning of Canadian law,
II. With reference to Article 3, paragraph 1(g) and Articles 5, 8 and 23
Ferry-boats, deep-sea ferry-boats or other vessels devoted principally to the transportation of passengers or goods exclusively between places in one of the States shall, when so operated, not be considered to be operated in international traffic; the landing site or sites situated in one of the States and used regularly in such operation by such boats or vessels shall, for the enterprise operating such boats or vessels, constitute a permanent establishment in that State.
III. With reference to Article 4
An individual living aboard a ship without any real domicile in either of the States shall be deemed to be a resident of the State in which the ship has its home harbour.
IV. With reference to Article 6, paragraph 1
The provisions of paragraph 1 of Article 6 shall also apply to income or profits from the alienation of property referred to therein.
V. With reference to Article 6
In the event that one of the States ceases to permit residents of the other State who are liable to tax in the first-mentioned State on income from immovable property situated therein to compute, in accordance with and subject to the domestic legislation of the first-mentioned State, the tax on such income on a net basis, then a resident of the other State who is so liable to tax on such income may compute the tax on such income in accordance with and subject to the domestic legislation of the first mentioned State as it read at the time that State ceased to permit the computation. Interest on any mortgage or other indebtedness secured by immovable property situated in one of the States shall be deemed to arise in that State to the extent that, pursuant to any computation referred to in the preceding sentence, such interest is deducted in computing the tax on income of a resident of the other State from immovable property situated in the first-mentioned State.
VI. With reference to Article 7
It is understood that in the case of profits from survey, supply, installation or construction activities, only so much of them shall be attributable to a permanent establishment as results from the actual performance of such activities by that permanent establishment. Accordingly, profits from deliveries of goods, whether or not in connection with these activities, to that permanent establishment by the head office, another permanent establishment or a third person shall not be attributed to that permanent establishment.
VII. With reference to Articles 10, 11, 12 and 21
Where tax has been levied in excess of the amount of tax chargeable under the provisions of Articles 10, 11, 12 and 21, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, within a period of three years after the expiration of the calendar year in which the tax has been levied.
VIII. With reference to Article 11, paragraph 3
The term “instrumentality” means any entity created or organized by the Government of either State or political subdivision or local authority of either State in order to carry out functions of a governmental nature.
IX. With reference to Article 12, paragraph 4
Payments received as a consideration for technical services, including studies or surveys of a scientific, geological or technical nature, or for engineering contracts including blueprints related thereto, or for consultancy or supervisory services shall be deemed not to be payments received as a consideration for information concerning industrial, commercial or scientific experience, except to the extent that the amounts of such payments are based on production, sales, performance, profits or any other similar basis related to the use of the said information.
X. With reference to Article 13, paragraph 4
The term “persons related thereto” means in the case of companies, related companies as meant in sub-paragraph (d) of paragraph 7 of Article 10 and in the case of an individual, his spouse and relatives in the direct line and in the second degree in the collateral line.
XI. With reference to Article 18.
It is understood that the term “pensions, annuities and other similar payments” includes only periodic payments.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Protocol.
DONE at The Hague this 27th day of May, 1986, in duplicate, in the English, French and Netherlands languages, each version being equally authentic.
Lawrence A. H. Smith
FOR THE GOVERNMENT OF CANADA
Hans van den Broek
FOR THE GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS
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