Canadian Treaty Series
E103285 - CTS 2001 No. 8
PROTOCOL BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF AUSTRIA AMENDING THE CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL SIGNED AT VIENNA ON THE 9TH DAY OF DECEMBER 1976
THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF AUSTRIA, hereinafter referred to as the "Parties",
DESIRING to amend the Convention between Canada and the Republic of Austria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, signed at Vienna on the 9th day of December 1976 (hereinafter referred to as "the Convention"),
HAVE AGREED as follows:
1. Paragraph 2 of Article 10 of the Convention shall be deleted and replaced by the following:
"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) except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada, 5 per cent of the gross amount of the dividends if the beneficial owner is a company that controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends; and
(b) 15 per cent of the gross amount of the dividends, in all other cases.
The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid."
2. Paragraph 6 of Article 10 of the Convention shall be deleted and replaced by the following:
"6. Notwithstanding any provision in this Convention, a Contracting State may impose on the earnings of a company attributable to permanent establishments in that State, or on the alienation of immovable property situated in that State by a company carrying on a trade in immovable property, tax in addition to the tax which would be chargeable on the earnings of a company that 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 subparagraph (a) of paragraph 2 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:
(a) the earnings attributable to the alienation of such immovable property situated in that State as may be taxed by that State under the provisions of Article 6 or of paragraph 1 of Article 13; and
(b) 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:
(i) 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,
(ii) all taxes chargeable in that State on such profits, other than the additional tax referred to herein,
(iii) the profits reinvested in that State, provided that the amount of such deduction shall be determined in accordance with the existing provisions of the laws of that State, as they may be amended from time to time without changing the general principle hereof, regarding the computation of the allowance in respect of investment in property in that State, and
(iv) five hundred thousand Canadian dollars ($500,000) or its equivalent in the currency of the Republic of Austria, less any amount deducted:
(A) by the company, or
(B) by a person related thereto from the same or a similar business as that carried on by the company under this clause."
1. Paragraph 2 of Article 11 of the Convention shall be deleted and replaced by the following:
"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. "
2. New subparagraphs (e) and (f) shall be added to paragraph 7 of Article 11 of the Convention as follows:
"(e) interest arising in a Contracting State and paid to a resident of the other Contracting State which was constituted and is operated exclusively to administer or provide benefits under one or more pension, retirement or other employee benefits plans shall not be taxable in the first-mentioned State provided that
(i) the resident is the beneficial owner of the interest and is generally exempt from tax in the other State, and
(ii) the interest is not derived from carrying on a trade or a business or from a related person;
(f) interest arising in a Contracting State shall be taxable only in the other Contracting State if:
(i) the recipient is an enterprise of that other State and is the beneficial owner of the interest, and
(ii) the interest is paid with respect to indebtedness arising from the sale on credit, by that enterprise, of any merchandise or industrial, commercial or scientific equipment to an enterprise of the first-mentioned State, except where the sale or indebtedness is between related persons. "
Paragraphs 2 and 3 of Article 12 of the Convention shall be deleted and replaced by the following:
"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 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 other artistic work (but not including royalties in respect of motion picture films nor royalties in respect of works on film or videotape or other means of reproduction for use in connection with television broadcasting), and
(b) royalties for the use of, or the right to use, computer software or any patent or for information concerning industrial, commercial or scientific experience (but not including any such information provided in connection with a rental or franchise agreement)
arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner of the royalties shall be taxable only in that other State."
1. Paragraph 4 of Article 13 of the Convention shall be deleted and replaced by the following:
"4. Gains derived by a resident of a Contracting State from the alienation of:
(a) shares (other than shares listed on an approved stock exchange in a Contracting State) forming part of a substantial interest in the capital stock of a company the value of which shares is derived principally from immovable property situated in the other State, or
(b) a substantial interest in a partnership or trust, 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 referred to in subparagraph (a) or an interest in a partnership or trust referred to in subparagraph (b) but does not include any property, other than rental property, in which the business of the company, partnership or trust is carried on."
2. A new paragraph 7 shall be added to Article 13 of the Convention as follows:
"7. Where an individual who ceases to be a resident of a Contracting State, and immediately thereafter becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for the purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, sold and repurchased the property for an amount equal to its fair market value at that time."
Article 26 of the Convention shall be deleted and replaced by the following:
Exchange of Information and Administrative Assistance
1. The competent authorities of the Contracting States shall exchange such information as is relevant for carrying out the provisions of this Convention or of the domestic laws in the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The carrying out of provisions of the domestic laws of the Contracting State concerning taxes includes penal investigations with regard to fiscal offenses relating to taxes covered by the Convention. The competent authorities of the Contracting States may agree on information which shall be furnished on a regular basis. The exchange of information is not restricted by Article 1. Any information received 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) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to taxes. 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 a Contracting State the obligation
(a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;
(b) to supply information that is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; or
(c) to supply information that 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).
3. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall obtain the information to which the request relates in the same way as if its own taxation were involved, even though the other State does not, at that time, need such information. If specifically requested by the competent authority of a Contracting State, the competent authority of the other Contracting State shall endeavour to provide information under this Article in the form requested, such as depositions of witnesses and copies of unedited original documents (including books, papers, statements, records, accounts or writings), to the same extent such depositions and documents can be obtained under the laws and administrative practices of that other State with respect to its own taxes.
4. The preceding paragraphs of this Article shall likewise apply to assistance carried out under penal investigation procedures carried out by either judicial (including assistance in respect of pending judicial proceedings in tax matters) or administrative bodies. However, requests for arrests of persons are not covered by the Convention.
5. The Contracting States undertake to lend each other support and assistance in the collection of taxes to the extent necessary to ensure that relief granted by the Convention from taxation imposed by a Contracting State does not enure to the benefit of persons not entitled thereto, provided that:
(a) the requesting State shall produce a copy of a document certified by its competent authority specifying that the sums referred to for the collection of which it is requesting the intervention of the other State, are finally due and enforceable;
(b) a document produced in accordance with the provisions of this paragraph shall be rendered enforceable with the laws of the requested State. It is specified that under current Austrian legislation, such documents must be rendered enforceable by the Regional Finance Directorates (Finanzlandesdirektionen);
(c) the requested State shall effect recovery in accordance with the rules governing the recovery of similar tax debts of its own; however, tax debts to be recovered shall not be regarded as privileged debts in the requested State. In the Republic of Austria, judicial execution shall be requested by the Finanzprokuratur or by the finance office delegated to act on his behalf; and
(d) appeals concerning the existence or amount of the debt shall lie only to the competent tribunal of the requesting State.
The provisions of this paragraph shall not impose upon either Contracting State the obligation to carry out administrative measures different from those used in the collection of its own taxes, or which would be contrary to its sovereignty, security, public policy or its essential interests."
1. This Protocol shall be ratified and the instruments of ratification shall be exchanged as soon as possible.
2. The Protocol shall enter into force 60 days after the exchange of the instruments of ratification and its provisions shall have effect:
(a) in respect of tax withheld at the source on amounts paid or credited to non-residents, on or after the first day of the second month following that in which the Protocol enters into force, and
(b) in respect of other tax, for taxation years beginning on or after the first day of the second month following that in which the Protocol enters into force.
IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed this Protocol.
DONE in duplicate at Vienna, this 15th day of June 1999, in the English, French and German languages, each version being equally authentic.
FOR THE GOVERNMENT OF CANADA
FOR THE GOVERNMENT OF THE REPUBLIC OF AUSTRIA