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INCOME TAX (INTERNATIONAL AGREEMENTS) AMENDMENT ACT 1976 No. 52 of 1976 - SCHEDULE 1
SCHEDULE 1
Section 6
SCHEDULES TO BE ADDED AT THE END OF THE PRINCIPAL ACT
--------
SCHEDULE 10
Section 3
AGREEMENT BETWEEN AUSTRALIA 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 Australia and the Government of the Kingdom of the
Netherlands,
Desiring to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
CHAPTER I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of the
States.
ARTICLE 2
Taxes Covered
(1) The existing taxes to which this Agreement shall apply are-
(a) in Australia:
the Australian income tax, including the additional tax upon the undistributed
amount of the distributable income of a private company;
(b) in the Netherlands:
the Inkomstenbelasting (income tax);
the Loonbelasting (wages tax);
the Vennootschapsbelasting (corporation tax);
the Dividendbelasting (dividend tax).
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are imposed by one of the States after the date of signature of
this Agreement in addition to, or in place of, the existing taxes. At the end
of each calendar year, the competent authority of each State shall notify the
competent authority of the other State of any substantial changes which have
been made in the taxation laws of his State to which this Agreement applies.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires-
(a) the term ''Australia'' means the Commonwealth of Australia and, when
used in a geographical sense, includes-
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area adjacent to the territorial limits of Australia and
the said Territories in respect of which there is for the time
being in force, consistently with international law, a law of
Australia or of a State or part of Australia or of a Territory
aforesaid dealing with the exploitation of any of the natural
resources of the sea-bed and sub-soil of the continental shelf;
(b) the term ''the Netherlands'' means that part of the Kingdom of the
Netherlands that is situated in Europe and the part of the seabed and
its sub-soil under the North Sea over which the Kingdom of the
Netherlands has sovereign rights in accordance with international law;
(c) the terms ''State'', ''one of the States'' and ''other State'' mean
Australia or the Netherlands, as the context requires;
(d) the term ''person'' means an individual, a company and any other body
of persons;
(e) the term ''company'' means any body corporate or any entity which is
assimilated to a body corporate for tax purposes;
(f) the term ''tax'' means Australian tax or Netherlands tax, as the
context requires;
(g) the term ''Australian tax'' means tax imposed by Australia, being tax
to which this Agreement applies by virtue of Article 2;
(h) the term ''Netherlands tax'' means tax imposed by the Netherlands,
being tax to which this Agreement applies by virtue of Article 2;
(i) the term ''competent authority'' means, in the case of
Australia, the Commissioner of Taxation or his authorised
representative, and in the case of the Netherlands, the
Minister of Finance or his authorised representative;
(j) the terms ''enterprise of one of the States'' and ''enterprise of the
other State'' mean an enterprise carried on by a resident of Australia
or an enterprise carried on by a resident of the Netherlands, as the
context requires;
(k) words in the singular include the plural and words in the plural
include the singular.
(2) In this Agreement, the terms ''Australian tax'' and ''Netherlands tax'' do
not include any penalty or interest imposed under the law of either State
relating to the taxes to which this Agreement applies by virtue of Article 2.
(3) As regards the application of this Agreement by either of the States, any
term not otherwise defined shall, unless the context otherwise requires, have
the meaning which it has under the laws of that State relating to the taxes to
which this agreement applies.
ARTICLE 4
Residence
(1) For the purposes of this Agreement, a person is a resident of one of the
States-
(a) in the case of Australia, subject to paragraph (2), if the person is a
resident of Australia for the purposes of Australian tax; and
(b) in the case of the Netherlands, if the person is a resident of the
Netherlands for the purposes of Netherlands tax but not if he is
liable to tax in the Netherlands in respect only of income from
sources therein.
(2) In relation to income from sources in the Netherlands, a person who is
subject to Australian tax on income which is from sources in Australia shall
not be treated as a resident of Australia unless the income from sources in
the Netherlands is subject to Australian tax or, if that income is exempt from
Australian tax, it is so exempt solely because it is subject to Netherlands
tax.
(3) Where by reason of the provisions of paragraph (1) an individual is a
resident of both States, then his status shall be determined in accordance
with the following rules:
(a) he shall be deemed to be a resident solely of the State in which he
has a permanent home available to him;
(b) if he has a permanent home available to him in both States, or if he
does not have a permanent home available to him in either of them, he
shall be deemed to be a resident solely of the State with which his
personal and economic relations are the closer.
(4) Where by reason of the provisions of paragraph (1) a person other than an
individual is a resident of both States, then it shall be deemed to be a
resident solely 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 in which the business of the enterprise is
wholly or partly carried on.
(2) The term ''permanent establishment'' shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project
which exists for more then twelve months.
(3) An enterprise shall not be deemed to have a permanent establishment merely
by reason of-
(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 for collecting information, for
the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in one of
the States and to carry on business through that permanent establishment if-
(a) it carries on supervisory activities in that State for more than
twelve months in connection with a building site, or a construction,
installation or assembly project which is being undertaken in that
State; or
(b) substantial equipment is being used in that State for more than twelve
months by, for or under contract with the enterprise in exploration
for, or the exploitation of, natural resources, or in activities
connected with such exploration or exploitation.
(5) A person acting in one of the States on behalf of an enterprise of the
other State-other than an agent of an independent status to whom paragraph (6)
applies-shall be deemed to be a permanent establishment of that enterprise in
the first-mentioned State if-
(a) he has, and habitually exercises in that State, an authority to
conclude contracts on behalf of the enterprise, unless his activities
are limited to the purchase of goods or merchandise for the
enterprise; or
(b) in so acting, he manufactures or processes in that State for the
enterprise goods or merchandise belonging to the enterprise, provided
that this provision shall apply only in relation to the goods or
merchandise so manufactured or processed.
(6) An enterprise of one of the States shall not be deemed to have a permanent
establishment in the other 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, where that person is acting in the ordinary course of
his business as such a broker or agent.
(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 make either company a
permanent establishment of the other.
(8) The principles set forth in paragraphs (1) to (7) inclusive shall be
applied in determining for the purposes of this Agreement whether there is a
permanent establishment outside both States, and whether an enterprise, not
being an enterprise of one of the States, has a permanent establishment in one
of the States.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Real Property
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or of the exploitation of any
natural resource, may be taxed in the State in which the real property, mines,
quarries, or natural resources are situated.
(2) Income from a lease of land and income from any other direct interest in
or over land, whether or not improved, shall be regarded as income from real
property. Income from debt-claims of every kind, excluding bonds or
debentures, secured by mortgage of real property or of any other direct
interest in or over land, shall also be regarded as income from real property.
However, income from ships, boats or aircraft shall not be regarded as income
from real property.
(3) The provisions of paragraphs (1) and (2) shall also apply to the income
from real property of an enterprise and to income from real property used for
the performance of professional services.
ARTICLE 7
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 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 or
with other enterprises with which it deals.
(3) In the determination of the profits of a permanent establishment, there
shall be allowed as deductions expenses of the enterprise, which are incurred
for the purposes of the permanent establishment (including executive and
general administrative expenses so incurred) and which would be deductible if
the permanent establishment were an independent entity which paid those
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 this Article, except as provided in the Articles
referred to in this paragraph, the profits of an enterprise do not include
items of income dealt with in Articles 6, 8, 10, 11, 12, 13, 14, 16 and 17.
ARTICLE 8
Shipping and Air Transport
(1) Profits from the operation of ships or aircraft derived by a resident of
one of the States shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be taxed
in the other State where they are profits from operations of ships or aircraft
confined solely to places in that other State.
(3) The provisions of paragraphs (1) and (2) shall apply in relation to the
share of the profits from the operation of ships or aircraft derived by a
resident of a State through participation in a pool service, in a joint
transport operating organisation or in an international operating agency.
(4) For the purposes of this Article, profits derived from the carriage of
passengers, livestock, mail, goods or merchandise shipped in a State for
discharge at another place in that State shall be treated as profits from
operations of ships or aircraft confined solely to places in that State.
(5) The amount which shall be charged to tax in one of the States as profits
from the operation of ships or aircraft in respect of which a resident of the
other State may be taxed in the first-mentioned State under paragraph (2) or
(3) shall not exceed 5 per cent of the amount paid or payable (net of rebates)
in respect of carriage in such operations.
(6) Paragraph (5) shall not apply to profits derived from the operation of
ships or aircraft by a resident of one of the States whose principal place of
business is in the other State, nor shall it apply to profits derived from the
operation of ships or aircraft by a resident of a State if those profits are
derived otherwise than from the carriage of passengers, livestock, mail, goods
or merchandise.
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 operate
between the two enterprises in their commercial or financial relations
which differ from those which might be expected to operate between
independent enterprises dealing wholly independently with one another,
then any profits which, but for those conditions, might have been
expected to accrue 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 profits on which an enterprise of one of the States has been charged
to tax in that State are also included, by virtue of paragraph (1), in the
profits of an enterprise of the other State and taxed accordingly, and the
profits so included are profits which might have been expected to have accrued
to the enterprise of the other State if the conditions operative between the
enterprises had been those which might have been expected to have operated
between independent enterprises dealing wholly independently with one another,
then the first-mentioned State shall make an appropriate adjustment to the
amount of tax charged on those profits in the first-mentioned State. In
determining such an adjustment due regard shall be had to the other provisions
of this Agreement in relation to the nature of the income, and for this
purpose the competent authorities of the States shall if necessary consult
each other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of one of the States for
the purposes of its tax, being dividends to which a resident of the other
State is beneficially entitled, may be taxed in that other State.
(2) Such dividends may be taxed in the State of which the company paying the
dividends is a resident for the purposes of its tax, and according to the law
of that State, but the tax so charged shall not exceed 15 per cent of the
gross amount of the dividends. 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.
(3) The term ''dividends'' in this Article means-
(a) in the case of Australia, income from shares and other income
assimilated to income from shares by the taxation law of Australia;
and
(b) in the case of the Netherlands, income which is subject to dividend
tax.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the dividends, being a resident of one of the States,
carries on business through a permanent establishment situated in the other
State, being the State of which the company paying the dividends is a
resident, and the holding in respect of which the dividends are paid is
effectively connected with that permanent establishment. In such a case, the
provisions of Article 7 shall apply.
(5) Dividends paid by a company which is a resident of one of the States,
being dividends to which a person who is not a resident of the other State is
beneficially entitled, shall be exempt from tax in that other State except
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment situated in that other
State. Provided that this paragraph shall not apply in relation to dividends
paid by any company which is a resident of Australia for the purposes of
Australian tax and which is also a resident of the Netherlands for the
purposes of Netherlands tax.
ARTICLE 11
Interest
(1) Interest arising in one of the States, being interest to which a resident
of the other State is beneficially entitled, may be taxed in that other State.
(2) Such interest may be taxed in the State in which it arises, and according
to the law of that State, but the tax so charged shall not exceed 10 per cent
of the gross amount of the interest.
(3) The term ''interest'' in this Article includes interest from Government
securities, or from bonds or debentures, and interest from any other form of
indebtedness as well as all the income assimilated to interest by the taxation
law of the State in which the income arises. The term does not include income
to which Article 6 or Article 10 applies.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the interest, being a resident of one of the States,
carries on business through a permanent establishment situated in the other
State, being the State in which the interest arises, and the indebtedness
giving rise to the interest is effectively connected with that permanent
establishment. In such a case, the provisions of Article 7 shall apply.
(5) Interest shall be deemed to arise in a State when the payer is that State
itself or a political sub-division of that State or a local authority of that
State or a person who is a resident of that State. Where, however-
(a) that person paying the interest is a resident of one of the States and
has in the other State or outside both States a permanent
establishment in connection with which the indebtedness on which the
interest is paid was incurred, and the interest is borne by the
permanent establishment, then the interest shall be deemed to arise
where the permanent establishment is situated;
(b) the person paying the interest is not a resident of either of the
States but has in one of the States a permanent establishment in
connection with which the indebtedness on which the interest is paid
was incurred, and the interest is borne by the permanent
establishment, then the interest shall be deemed to arise where the
permanent establishment is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last- mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each of the States,
but subject to the other provisions of this Agreement.
ARTICLE 12
Royalties
(1) Royalties arising in one of the States, being royalties to which a
resident of the other States is beneficially entitled, may be taxed in that
other State.
(2) Such royalties may be taxed in the State in which they arise, and
according to the law of that State, but the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
(3) The term ''royalties'' in this Article means payments, whether periodical
or not, and however described or computed, to the extent to which they are
paid as consideration for the use of, or the right to use, any copyright,
patent, design or model, plan, secret formula or process, trade-mark, or other
like property or right, or industrial, commercial or scientific equipment, or
for the supply of scientific, technical, industrial or commercial knowledge or
information, or for the supply of any assistance of an ancillary and
subsidiary nature furnished as a means of enabling the application or
enjoyment of such knowledge or information or any other property or right to
which this Article applies, and includes any payments to the extent to which
they are paid as consideration for the use of, or the right to use, motion
picture films, films or video tapes for use in connection with television or
tapes for use in connection with radio broadcasting.
(4) The provisions of paragraphs (1) and (2) shall not apply if the person
beneficially entitled to the royalties, being a resident of one of the States,
carries on business through a permanent establishment situated in the other
State, being the State in which the royalties arise, and the asset giving rise
to the royalties is effectively connected with that permanent establishment.
In such a case, the provisions of Article 7 shall apply.
(5) Royalties shall be deemed to arise in a State when the payer is that State
itself or a political sub-division of that State or a local authority of that
State or a person who is a resident of that State. Where, however-
(a) the person paying the royalties is a resident of one of the States and
has in the other State or outside both States a permanent
establishment in connection with which the liability to pay the
royalties was incurred, and the royalties are borne by the permanent
establishment, then the royalties shall be deemed to arise where the
permanent establishment is situated;
(b) the person paying the royalties is not a resident of either of the
States but has in one of the States a permanent establishment in
connection with which the liability to pay the royalties was incurred,
and the royalties are borne by the permanent establishment, then the
royalties shall be deemed to arise where the permanent establishment
is situated.
(6) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person, the amount of the royalties paid, having regard to what they are paid
for, exceeds the amount which might have been expected to have been agreed
upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In that case, the excess part of the amount of the
royalties paid shall remain taxable according to the law of each of the
States, but subject to the other provisions of this Agreement.
ARTICLE 13
Alienation of Property
(1) Income from the alienation of real property may be taxed in the State in
which that property is situated.
(2) For the purposes of this Article-
(a) the term ''real property'' shall include-
(i) a lease of land or any other direct interest in or over land;
(ii) rights to exploit, or to explore for, natural resources; and
(iii) shares or comparable interests in a company, the assets of
which consist wholly or principally of direct interests in or
over land in one of the States or of rights to exploit, or to
explore for, natural resources in one of the States.
(b) real property shall be deemed to be situated-
(i) where it consists of direct interests in or over land-in the
State in which the land is situated;
(ii) where it consists of rights to exploit, or to explore for,
natural resources-in the State in which the natural resources
are situated or the exploration may take place; and
(iii) where it consists of shares or comparable interests in a
company, the assets of which consist wholly or principally of
direct interests in or over land in one of the States or of
rights to exploit, or to explore for, natural resources in one
of the States-in the State in which the assets or the principal
assets of the company are situated.
(3) Gains from the alienation of shares or ''jouissance'' rights in a company
the capital of which is wholly or partly divided into shares and which is a
resident of the Netherlands for the purposes of Netherlands tax, derived by an
individual who is a resident of Australia, may be taxed in the Netherlands.
ARTICLE 14
Independent Personal Services
Income derived by an individual who is a resident of one of the States in
respect of professional services or other independent activities of a similar
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 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.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18, 19 and 20, 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 from that exercise 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 that other State for a period or periods
not exceeding in the aggregate 183 days in the year of income or the
fiscal year, as the case may be, of that other State; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining the taxable profits
of a permanent establishment or a fixed base which the employer has in
that 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 in international traffic shall be taxable
only in that State.
ARTICLE 16
Directors' Remuneration
(1) Where a resident of the Netherlands is a ''director'' of a company, which
is a resident of Australia, and derives from that company fees and other
remuneration in respect of his services to the company, such fees and other
remuneration may be taxed in Australia.
(2) Where a resident of Australia is a ''bestuurder'' or a ''commissaris'' of
a company, which is a resident of the Netherlands, and derives from that
company fees and other remuneration in respect of his services to the company,
such fees and other remuneration may be taxed in the Netherlands.
(3) Where the remuneration mentioned in paragraph (1) or (2) 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) or (2) of this Article, the remuneration, to the
extent to which it is so deductible, shall be taxable only in the State in
which the permanent establishment is situated.
ARTICLE 17
Entertainers
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by
entertainers (such as theatrical, motion picture, radio or television
artistes, and musicians and athletes) from their personal activities as such
may be taxed in the State in which these activities are exercised.
(2) Notwithstanding anything contained in Articles 5 and 7, where the services
of an entertainer mentioned in paragraph (1) are provided in one of the States
by an enterprise of the other State, the profits derived by that enterprise
from providing those services may be taxed in the first-mentioned State if the
entertainer performing the services or a relative of such person, controls,
directly or indirectly, that enterprise.
(3) The term ''relative'' in this Article means a brother, sister, spouse,
ancestor or descendant.
ARTICLE 18
Pensions and Annuities
(1) Pensions, including pensions provided under the provisions of a public
social security system, but not including pensions to which Article 19
applies, paid to a resident of one of the States, and annuities so paid, shall
be taxable only in that State.
(2) The term ''annuity'' means a stated sum payable periodically at stated
times during life or during 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 19
Government Service
(1) Remuneration (including a pension) paid to any individual in respect of
services rendered in the discharge of governmental functions to one of the
States or to a political sub-division of one of the States or to a local
authority of one of the States may be taxed in that State. However, any such
remuneration, not being a pension, shall be taxable only in the other State if
the services are rendered in that other State and the recipient is a resident
of that other State who-
(a) is a citizen or national of that State; or
(b) did not become a resident of that State solely for the purpose of
performing the services.
(2) This Article shall not apply to remuneration (including a pension) in
respect of services rendered in connection with any trade or business carried
on by one of the States or a political sub-division of one of the States or a
local authority of one of the States. In such a case, the provisions of
Articles 15, 16 and 18 shall apply.
ARTICLE 20
Professors and Teachers
(1) Remuneration which a professor or teacher who is a resident of one of the
States and who visits the other State for a period not exceeding two years for
the purpose of teaching or carrying out advanced study or research at a
university, college, school or other educational institution, receives for
those activities shall be taxable only in the first-mentioned State.
(2) This Article shall not apply to remuneration which he receives for
conducting research if the research is undertaken primarily for the private
benefit of a specific person or persons.
ARTICLE 21
Students
Payments which a student who is, or was immediately before visiting one of the
States, a resident of the other State and who is temporarily present in the
first-mentioned State solely for the purpose of his education receives from
sources outside that first-mentioned State for the purpose of his maintenance
or education shall be exempt from tax in that first-mentioned State.
ARTICLE 22
Income of Dual Resident
Where a person, who by reason of the provisions of paragraph (1) of Article 4
is a resident of both States but by reason of the provisions of paragraph (3)
or (4) of that Article is deemed for the purposes of this Agreement to be a
resident solely of one of the States, derives income from sources in that
State or from sources outside both States, that income shall be taxable only
in that State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 23
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax
paid in a country outside Australia (which shall not affect the general
principle hereof), Netherlands tax paid, whether directly or by deduction, in
respect of income derived by a person who is a resident of Australia from
sources in the Netherlands (not including, in the case of a dividend, tax paid
in respect of the profits out of which the dividend is paid) shall be allowed
as a credit against Australian tax payable in respect of that income.
(2) 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 Agreement may be taxed in Australia.
(3) Without prejudice to the application of the provisions concerning the
compensation of losses in the unilateral regulations for the avoidance of
double taxation the Netherlands shall allow a deduction from the amount of tax
computed in conformity with paragraph (2) of this Article equal to such part
of that tax which bears the same proportion to the aforesaid tax, as the part
of the income which is included in the basis mentioned in paragraph (2) of
this Article and may be taxed in Australia according to Articles 6 and 7,
paragraphs (2) and (3) of Article 8, paragraph (4) of Article 10, paragraph
(4) of Article 11, paragraph (4) of Article 12, paragraph (1) of Article 13,
Article 14, paragraph (1) of Article 15, paragraph (1) of Article 16 and
Article 19 of this Agreement bears to the total income which forms the basis
mentioned in paragraph (2) of this Article.
Further, the Netherlands shall allow a deduction from the Netherlands tax so
computed for such items of income, as may be taxed in Australia according to
paragraph (2) of Article 10, paragraph (2) of Article 11, paragraph (2) of
Article 12 and Article 17, and are included in the basis mentioned in
paragraph (2) of this Article. The amount of this deduction shall be the
lesser of the following amounts:
(a) the amount equal to the Australian tax;
(b) the amount of the Netherlands tax which bears the same proportion to
the amount of tax computed in conformity with paragraph (2) of this
Article, as the amount of the said items of income bears to the amount
of income which forms the basis mentioned in paragraph (2) of this
Article.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 24
Mutual Agreement Procedure
(1) Where a resident of a State considers that the actions of the competent
authority of one or both of the States result or will result for him in
taxation not in accordance with this Agreement, he may, notwithstanding the
remedies provided by the national laws of those States, present his case to
the competent authority of the State of which he is a resident. The case must
be presented within three years from the first notification of the action.
(2) The competent authority shall endeavour, if the taxpayer's claim appears
to it to be justified and if it is not itself able to arrive at an appropriate
solution, to resolve the case with the competent authority of the other State,
with a view to the avoidance of taxation not in accordance with this
Agreement. The solution so reached shall be implemented notwithstanding any
time limits in the national laws of the States.
(3) The competent authorities of the States shall jointly endeavour to resolve
any difficulties or doubts arising as to the interpretation or application of
this agreement.
(4) The competent authorities of the States may communicate with each other
directly for the purpose of giving effect to the provisions of this Agreement.
ARTICLE 25
Exchange of Information
(1) The competent authorities of the States shall exchange such information as
is necessary for the carrying out of this Agreement or of the domestic laws of
the States concerning the taxes to which this Agreement applies insofar as the
taxation thereunder is not contrary to this Agreement. The exchange of
information is not restricted by Article 1. Any information received by the
competent authority of a 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, enforcement or
prosecution in respect of, or the determination of appeals in relation to, the
taxes to which this Agreement applies and shall be used only for such
purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to
impose on a State the obligation-
(a) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other State;
(b) to supply particulars which are 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 to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and Consular Officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
ARTICLE 27
Regulations
The competent authority of the Netherlands may prescribe regulations necessary
to carry out in the Netherlands the provisions of this Agreement.
ARTICLE 28
Territorial Extension
(1) This Agreement may be extended, either in its entirety or with any
necessary modifications, to the part of the Kingdom of the Netherlands which
is not situated in Europe and which imposes taxes substantially similar in
character to those to which this Agreement 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 the diplomatic channel.
(2) Unless otherwise agreed, the termination of this Agreement shall not also
terminate the application of the Agreement to the part of the Kingdom of the
Netherlands to which it has been extended under this Article.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 29
Entry into Force
This Agreement shall come into force on the date on which the Government of
Australia and the Government of the Kingdom of the Netherlands exchange notes
through the diplomatic channel notifying each other that the last of such
things has been done as is necessary to give this Agreement the force of law
in Australia and in the Netherlands, as the case may be, and thereupon this
Agreement shall have effect-
(a) in both States, in respect of withholding tax on dividends and
interest, on dividends and interest derived on or after 1 July 1975;
(b) in Australia, in respect of tax on income of any year of income
beginning on or after 1 July 1975;
(c) in the Netherlands, in respect of taxes, other than the dividend tax,
for taxable years and periods beginning on or after 1 January 1975.
ARTICLE 30
Termination
This Agreement shall continue in effect indefinitely, but the Government of
Australia or the Government of the Kingdom of the Netherlands may, on or
before 30 June in any calendar year after the year 1979, give to the other
Government through the diplomatic channel written notice of termination and,
in that event, this Agreement shall cease to be effective-
(a) in both States, in respect of withholding tax on dividends, interest
and royalties, on dividends, interest and royalties derived on or
after 1 July in the calendar year next following that in which the
notice of termination is given;
(b) in Australia, in respect of tax on income of any year of income
beginning on or after 1 July in the calendar year next following that
in which the notice of termination is given;
(c) in the Netherlands, in respect of taxes, other than withholding taxes
referred to in sub-paragraph (a), for taxable years and periods
beginning after the end of the calendar year in which the notice of
termination is given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Agreement.
DONE in duplicate at Canberra this seventeenth day of March, one thousand nine
hundred and seventy-six, in the English and Netherlands languages, both texts
being equally authentic.
Phillip Lynch R. C. Pekelharing
FOR THE GOVERNMENT FOR THE GOVERNMENT OF THE
OF AUSTRALIA KINGDOM OF THE NETHERLANDS
PROTOCOL
THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE KINGDOM OF THE
NETHERLANDS
HAVE AGREED AT THE SIGNING of the Agreement between the two States for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income upon the following provisions which shall form an integral
part of the said Agreement.
(1) With reference to Articles 6 to 8 and 10 to 17,
income derived by a resident of the Netherlands which under those Articles may
be taxed in Australia, shall for the purposes of the income tax law of
Australia be deemed to be income from sources in Australia.
(2) With reference to Articles 7 and 9,
where the information available to the competent authority of a State is
inadequate to determine the profits of an enterprise on which tax may be
imposed in that State in accordance with Article 7 or Article 9, nothing in
those Articles shall affect the application of any law of that State relating
to the determination of the tax liability of a person, provided that that law
shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of those Articles.
(3) With reference to Articles 7 and 23,
profits of an enterprise of one of the States from carrying on a business of
any form of insurance other than life insurance may be taxed in the other
State in accordance with the law of that other State relating specifically to
the taxation of any person who carries on such business, and Article 23 shall
apply for the elimination of double taxation as if the profits so taxed were
attributable to a permanent establishment of the enterprise in the State
imposing the tax.
(4) With reference to Articles 10, 11 and 12,
applications for the restitution of tax levied by the Netherlands contrary to
the provisions of those Articles must be lodged with the competent authority
of the Netherlands within a period of three years after the expiration of the
calendar year in which the tax has been levied.
(5) With reference to Article 23,
(a) where income derived by a resident of Australia may, under the
provisions of Articles 6 to 8 and 10 to 17, be taxed in the
Netherlands such income shall, for the purposes of paragraph (1) of
Article 23 and of the provisions of the income tax law of Australia
dealing with the avoidance of double taxation, be deemed to be income
from sources in the Netherlands;
(b) in so far as the Netherlands income tax or company tax is concerned,
the basis mentioned in paragraph (2) of Article 23 is the ''onzuivere
inkomen'' or ''winst'' in terms of the Netherlands income tax law or
company tax law, respectively.
(6) General.
(a) Where one of the States is entitled to tax the profits of an
enterprise, that State may treat as profits of the enterprise, profits
from the alienation of capital assets of the enterprise, not being
profits that consist of income to which paragraph (1) of Article 13
applies.
(b) If, in an Agreement for the avoidance of double taxation that is
subsequently made between Australia and a third State being a State
that at the date of signature of this Protocol is a member of the
Organisation for Economic Co-operation and Development, Australia
shall agree to limit the rate of its taxation-
(i) on dividends paid by a company which is a resident of Australia
for the purposes of Australian tax to which a company that is a
resident of the third State is entitled, to a rate less than
that provided in paragraph (2) of Article 10; or
(ii) on interest arising in Australia to which a resident of the
third State is entitled, to a rate less than that provided in
paragraph (2) of Article 11; or
(iii) on royalties arising in Australia to which a resident of the
third State is entitled, to a rate less than that provided in
paragraph (2) of Article 12,
the Government of Australia shall immediately inform the Government of the
Kingdom of the Netherlands in writing through the diplomatic channel and shall
enter into negotiations with the Government of the Kingdom of the Netherlands
to review the provisions specified in sub-paragraphs (i), (ii) and (iii) above
in order to provide the same treatment for the Netherlands as that provided
for the third State.
DONE in duplicate at Canberra this seventeenth day of March, one thousand nine
hundred and seventy-six, in the English and Netherlands languages, both text
being equally authentic.
Phillip Lynch R. C. Pekelharing
FOR THE GOVERNMENT FOR THE GOVERNMENT OF THE
OF AUSTRALIA KINGDOM OF THE NETHERLANDS
SCHEDULE 11
Section 3
AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF
THE FRENCH REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of Australia and the Government of the French Republic,
Desiring to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
Taxes to which Agreement applies.
(1) The existing taxes to which this Agreement applies are-
(a) in Australia:
the Australian income tax, including the additional tax upon the undistributed
amount of the distributable income of a private company;
(b) in France:
(i) the income tax; and
(ii) the corporation tax,
including any withholding tax, prepayment (precompte) or advance payment with
respect to the aforesaid taxes.
(2) This Agreement shall also apply to any identical or substantially similar
taxes which are subsequently imposed by one of the Contracting States in
addition to, or in place of, the existing taxes to which this Agreement
applies.
ARTICLE 2
Definitions.
(1) In this Agreement, unless the context otherwise requires-
(a) the term ''Australia'' means the Commonwealth of Australia and
includes-
(i) the Territory of Norfolk Island;
(ii) the Territory of Christmas Island;
(iii) the Territory of Cocos (Keeling) Islands;
(iv) the Territory of Ashmore and Cartier Islands;
(v) the Coral Sea Islands Territory; and
(vi) any area outside the territorial limits of the Commonwealth of
Australia and any of the said Territories in respect of which
there is for the time being in force a law of the Commonwealth
of Australia or of a State or part of the Commonwealth of
Australia or of a Territory aforesaid which is conformable with
international law and which deals with the exploitation of any
of the natural resources of the sea-bed and sub-soil of the
continental shelf;
(b) the term ''France'' means the European and Overseas Departments
(Guadeloupe, Guiana, Martinique and Reunion) of the French Republic
and includes any area outside the territorial limits of France in
respect of which there is for the time being in force a law of France
which is conformable with international law and which deals with the
exploitation of any of the natural resources of the sea-bed and
sub-soil of the continental shelf, not including an area referred to
in any such law as being adjacent to the Overseas Territories of the
French Republic;
(c) the terms ''Contracting State'', ''one of the Contracting States'' and
''other Contracting State'' mean Australia or France, as the context
requires;
(d) the term ''person'' includes an individual, a company and any other
body of persons;
(e) the term ''company'' means any body corporate or any entity which is
treated as a company for tax purposes;
(f) the terms ''enterprise of a Contracting State'' and ''enterprise of
the other Contracting State'' means an industrial or commercial
enterprise carried on by a resident of Australia or an industrial or
commercial enterprise carried on by a resident of France, as the
context requires;
(g) the term ''Australian tax'' means tax imposed by Australia, being tax
to which this Agreement applies by virtue of Article 1;
(h) the term ''French tax'' means tax imposed by France, being tax to
which this Agreement applies by virtue of Article 1;
(i) the term ''competent authority'' means, in the case of
Australia, the Commissioner of Taxation or his authorized
representative; in the case of France, the Minister of Economy
and Finance or his authorized representative; and, in the case
of any Territory to which this Agreement is extended under
Article 27, the competent authority for the administration in
such Territory of the taxes to which this Agreement applies.
(2) In this Agreement, the terms ''Australian tax'' and ''French tax'' do not
include any penalty or interest imposed under the law of either Contracting
State relating to the taxes referred to in Article 1.
(3) In the application of the provisions of this Agreement by a Contracting
State any term not otherwise defined shall, unless the context otherwise
requires, have the meaning which it has under the laws of that Contracting
State relating to the taxes to which this Agreement applies by virtue of
Article 1.
ARTICLE 3
Residence.
(1) (a) For the purposes of this Agreement, a person is a resident of
Australia if he is a resident of Australia for purposes of Australian tax.
However, in relation to income from sources in France, a person who is subject
to Australian tax on income which is from sources in Australia shall be
treated as a resident of Australia only if the income from sources in France
is subject to Australian tax or, where that income is exempt from Australian
tax, it is so exempt solely because it is subject to French tax.
(b) For the purposes of this Agreement, a person is a resident of France
if he is domiciled in France for the purposes of French tax.
(2) Where by reason of the provisions of paragraph (1) an individual is a
resident of both Contracting States, then his case shall be determined in
accordance with the following rules:
(a) he shall be deemed to be a resident solely of the Contracting State in
which he has a permanent home available to him;
(b) if he has a permanent home available to him in both Contracting
States, or if he does not have a permanent home available to him in
either of them, he shall be deemed to be a resident solely of the
Contracting State with which his personal and economic relations are
the closer.
(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 solely of the Contracting State in which its place of
effective management is situated.
ARTICLE 4
Permanent establishment.
(1) For the purposes of this Agreement the term ''permanent establishment''
means a fixed place of business in which the business of the enterprise is
wholly or partly carried on.
(2) The term ''permanent establishment'' shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of natural resources;
(g) an agricultural, pastoral or forestry property;
(h) a building site or construction, installation or assembly project
which exists for more than six months.
(3) An enterprise shall not be deemed to have a permanent establishment merely
by reason of-
(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 for collecting information, for
the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
activities which have a preparatory or auxiliary character for the
enterprise, such as advertising or scientific research.
(4) An enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent
establishment if-
(a) it carries on supervisory activities in that State for more than six
months in connection with a building site, or a construction,
installation or assembly project which is being undertaken, in that
State; or
(b) substantial equipment is being used in that State for more than six
months by, for or under contract with the enterprise.
(5) A person acting in a Contracting State on behalf of an enterprise of the
other Contracting State-other than an agent of an independent status to whom
paragraph (6) applies-shall be deemed to be a permanent establishment of that
enterprise in the first-mentioned State if-
(a) he has, and habitually exercises in that State, an authority to
conclude contracts on behalf of the enterprise, unless his activities
are limited to the purchase of goods or merchandise for the
enterprise; or
(b) in so acting he manufactures or processes in that State for the
enterprise goods or merchandise belonging to the enterprise.
(6) 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, where that person is acting
in the ordinary course of his business as such a broker or agent.
(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 make
either company a permanent establishment of the other.
ARTICLE 5
Income from real property.
(1) Income from real property, including royalties and other payments in
respect of the operation of mines or quarries or of the exploitation of any
natural resource, may be taxed by the Contracting State in which the real
property, mines, quarries or natural resources are situated.
(2) Income from a lease of land and income from any other direct interest in
or over land shall be regarded as income from real property.
ARTICLE 6
Industrial or commercial 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
that permanent establishment.
(2) 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 of the enterprise, including executive
and general administrative expenses, which are deductible according to the law
of the State in which the permanent establishment is situated, whether
incurred in that State or elsewhere.
(4) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to the permanent
establishment of an enterprise, the competent authority may apply to that
enterprise for that purpose the provisions of the taxation law of that State,
provided that that law shall be applied, so far as the information available
to the competent authority permits, in accordance with the principles of this
Article.
(5) 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.
(6) For the purposes of this Article, except as provided in the Articles
referred to in this paragraph, the profits of an enterprise do not include
income or profits dealt with in Articles 5 and 7 and 9 to 16.
(7) Notwithstanding the preceding provisions of this Article, profits of an
enterprise of a Contracting State from carrying on a business of any form of
insurance other than life insurance may be taxed in the other Contracting
State in accordance with the law of that other State relating specifically to
the taxation of any person who carries on such a business, provided that if
the law in force in either Contracting State at the date of signature of this
Agreement relating to the taxation of such a person is varied (otherwise than
in minor respects so as not to affect its general character), the Contracting
States shall consult with each other with a view to agreeing to such amendment
of this paragraph as may be necessary.
ARTICLE 7
Shipping.
(1) Profits from the operation of ships derived by a resident of a Contracting
State shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1), such profits may be taxed
in the other Contracting State where they are profits from operations of ships
confined solely to places in that other State.
(3) In this Article, profits derived from the carriage by ships of passengers,
cargo or mail shipped in a Contracting State for discharge at another place in
that State shall be treated as profits from operations of ships confined
solely to places in that State.
(4) The amount which shall be charged to tax in a Contracting State under
paragraph (2) shall not exceed 5 per cent of the amount paid or payable (net
of rebates) in respect of the carriage.
(5) Paragraph (4) shall not apply to profits from the operation of ships
derived by a resident of a Contracting State if-
(a) his principal place of business is in the other Contracting State; or
(b) those profits are derived from activities other than the carriage of
passengers, cargo or mail. In such cases, the provisions of Article 6
shall apply.
ARTICLE 8
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 exist between the two enterprises in their commercial or
financial relations which differ from those which may be expected
between independent enterprises dealing wholly independently with one
another, then any profits which might, but for those conditions, be
expected to accrue 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) If the information available to the competent authority of a Contracting
State is inadequate to determine the profits to be attributed to an
enterprise, the competent authority may apply to that enterprise for that
purpose the provisions of the taxation law of that State, provided that that
law shall be applied, so far as the information available to the competent
authority permits, in accordance with the principles of this Article.
(3) Where, according to the provisions of paragraph (1), profits are included
by a Contracting State in the profits of an enterprise, the other Contracting
State shall, on a claim being made by the other enterprise concerned,
consistently with its law consider the inclusion so made and the provision of
relief to that other enterprise in relation to the taxation of profits which
the other State determines to be profits which, but for the particular
conditions referred to in paragraph (1), might have been expected to accrue to
the first-mentioned enterprise.
ARTICLE 9
Dividends.
(1) Dividends paid by a company which is a resident of Australia for purposes
of Australian tax, and dividends paid out of profits from sources in Australia
by any other company which is a resident of France, being dividends to which a
resident of France is beneficially entitled, may be taxed in Australia, but
the tax so charged shall not exceed 15 per cent of the gross amount of the
dividends.
(2) Dividends paid by a company which is domiciled in France for the purposes
of French tax, being dividends to which a resident of Australia is
beneficially entitled, may be taxed in France, but the tax so charged shall
not exceed 15 per cent of the gross amount of the dividends.
(3) The term ''dividends'' in this Article means income from shares and other
income assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a resident.
(4) The provisions of paragraphs (1) and (2) shall not apply if the resident
beneficially entitled to the dividends has in the other Contracting State a
permanent establishment with which the holding by virtue of which the
dividends are paid is effectively connected. In such a case, the provisions of
Article 6 shall apply.
(5) Where a company which is a resident of Australia has a permanent
establishment in France, it may be subjected therein to any withholding tax
provided by the laws of France but the tax shall not exceed 15 per cent of
two-thirds of the profits of the permanent establishment after payment of the
French corporation tax on those profits.
(6) Where an individual who is a resident of Australia receives from a company
which is a resident of France a dividend to which he is beneficially entitled
and which, if received by a resident of France would entitle the resident to a
tax credit (avoir fiscal)-
(a) the individual shall be entitled to a payment by the Government of
France equal to that tax credit (avoir fiscal) subject to the
deduction of tax at the rate provided for in paragraph (2) of this
Article;
(b) the amount of the tax credit (avoir fiscal) shall be included in the
assessable income of the individual for purposes of Australian tax;
and
(c) the amount of the tax credit (avoir fiscal) shall, for the purposes of
Article 23, be treated as income from sources in France.
(7) Where a person (other than an individual) who is a resident of Australia
receives from a company which is a resident of France a dividend to which it
is beneficially entitled and a prepayment (precompte) is levied on that
dividend-
(a) the person shall be entitled to a payment by the Government of France
equal to the amount of that prepayment (precompte) subject to the
deduction of tax at the rate provided for in paragraph (2) of this
Article;
(b) the amount payable before deduction of that withholding tax shall be
included as a dividend in the assessable income of the person for
purposes of Australian tax; and
(c) that amount shall, for the purposes of Article 23, be treated as
income from sources in France.
ARTICLE 10
Interest.
(1) Interest arising in a Contracting State, being interest to which a
resident of the other Contracting State is beneficially entitled, may be taxed
in the first-mentioned State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.
(2) The term ''interest'' in this Article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not carrying a right to participate in profits, and interest from
any other form of indebtedness as well as all other income assimilated to
interest by the taxation law of the Contracting State in which the income
arises.
(3) The provisions of paragraph (1) shall not apply if the person beneficially
entitled to the interest has in the Contracting State in which the interest
arises a permanent establishment with which the indebtedness from which the
interest arises is effectively connected. In such a case, the provisions of
Article 6 shall apply.
(4) Interest shall be deemed to arise in a Contracting State when the payer is
that Contracting State itself, a State of that Contracting State, a political
subdivision or a local authority of that Contracting State or a person who is
a resident of that Contracting State for purposes of its tax. Where, however,
the person paying the interest, whether he is a resident of a Contracting
State or not, has in a State other than that of which he is a resident a
permanent establishment in connection with which the indebtedness on which the
interest is paid was incurred, and the interest is borne by the permanent
establishment, then the interest shall be deemed to arise in the State in
which the permanent establishment is situated.
(5) Where, owing to a special relationship between the payer and the person
beneficially entitled to the interest or between both of them and some other
person, the amount of the interest paid, having regard to the indebtedness for
which it is paid, exceeds the amount which might have been expected to have
been agreed upon by the payer and the person so entitled in the absence of
such relationship, the provisions of this Article shall apply only to the
last- mentioned amount. In that case, the excess part of the amount of the
interest paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
ARTICLE 11
Royalties.
(1) Royalties arising in a Contracting State, being royalties to which a
resident of the other Contracting State is beneficially entitled, may be taxed
in the first-mentioned State, but the tax so charged shall not exceed 10 per
cent of the gross amount of the royalties.
(2) The term ''royalties'' in this Article means payments, whether periodical
or not, and however described or computed, to the extent to which they are
paid as consideration for the use of, or the right to use, any copyright,
patent, design or model, plan, secret formula or process, trade-mark, or other
like property or right, or industrial, commercial or scientific equipment, or
for the supply of scientific, technical, industrial or commercial knowledge,
information or assistance and includes any payments to the extent to which
they are paid as consideration for the use of, or the right to use, motion
picture films, films or video tapes for use in connection with television or
tapes for use in connection with radio broadcasting.
(3) The provisions of paragraph (1) shall not apply if the person beneficially
entitled to the royalties has in the Contracting State in which the royalties
arise a permanent establishment with which the asset giving rise to the
royalties is effectively connected. In such a case, the provisions of Article
6 shall apply.
(4) Royalties shall be deemed to arise in a Contracting State when the payer
is that Contracting State itself, a State of that Contracting State, a
political subdivision or a local authority of that Contracting State or a
person who is a resident of that Contracting State for purposes of its tax.
Where, however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a State other than that of which he is a
resident a permanent establishment in connection with which the liability to
pay the royalties was incurred, and the royalties are borne by the permanent
establishment, then the royalties shall be deemed to arise in the State in
which the permanent establishment is situated.
(5) Where, owing to a special relationship between the payer and the person
beneficially entitled to the royalties or between both of them and some other
person, the amount of the royalties paid, having regard to what they are paid
for, exceeds the amount which might have been expected to have been agreed
upon by the payer and the person so entitled in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In that case, the excess part of the amount of the
royalties paid shall remain taxable according to the law of each Contracting
State, but subject to the other provisions of this Agreement.
ARTICLE 12
Alienation of real property.
(1) Income from the alienation of real property (including income from the
alienation of a lease of land or of any other direct interest in or over land)
may be taxed by the Contracting State in which the real property is situated.
(2) Income from the alienation of shares or comparable interests in a real
property co-operative or in a company the assets of which consist wholly or
principally of property referred to in paragraph (1) may be taxed by the
Contracting State in which that property is situated.
ARTICLE 13
Independent personal services.
Income derived by an individual who is a resident of a Contracting State in
respect of professional services or other independent activities of a similar
character shall be taxable only in that State unless he has a fixed base
regularly available to him in the other Contracting State for the purpose of
performing his activities. If he has 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.
ARTICLE 14
Dependent personal services.
(1) Subject to the provisions of Articles 15, 17, 18 and 19, remuneration
derived by an individual who is 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 from that exercise may be taxed in that other
State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by
an individual who is 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 that other State for a period or periods
not exceeding in the aggregate 183 days in the year of income (where
Australia is the other State) or in the fiscal year (where France is
the other State);
(b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of that other State; and
(c) the remuneration is not deductible in determining taxable profits of a
permanent establishment or a fixed base which the employer has in that
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic by a resident of one of the Contracting States may be
taxed in that State.
ARTICLE 15
Directors' fees.
Directors' fees and 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
Public entertainers.
(1) Notwithstanding the provisions of Articles 13 and 14, income derived by
public entertainers (such as theatre, motion picture, radio or television
artists and musicians and athletes) from their personal activities as such may
be taxed in the Contracting State in which these activities are exercised.
(2) Notwithstanding anything contained in this Agreement, where the services
of a public entertainer mentioned in paragraph (1) are provided in a
Contracting State by an enterprise of the other Contracting State, the profits
derived by that enterprise from providing those services may be taxed in the
first-mentioned State if the public entertainer performing the services
controls, directly or indirectly, that enterprise.
ARTICLE 17
Pensions and annuities.
(1) Pensions and annuities paid to a resident of a Contracting State shall be
taxable only in that State.
(2) The term ''annuity'' means any stated sum payable periodically at stated
times during life or during 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.
(3) Notwithstanding anything in this Agreement-
(a) the pensions referred to in paragraphs (4), (5) and (6) of Article 81
of the French General Tax Code shall be exempt from Australian tax so
long as they are exempt from French tax;
(b) the pensions and other payments referred to in paragraphs (a) and (b)
of sub-section 23AD (3) of the Australian
Income Tax Assessment Act 1936, as amended, where they are paid by
Australia, shall be exempt from French tax so long as they are exempt
from Australian tax.
(4) Notwithstanding paragraph (1), while paragraph (q) of section 23 of the
Australian Income Tax Assessment Act 1936, as amended, and in force at the
date of signature of this Agreement continues to have effect in relation to
retirement pensions derived by residents of Australia from sources out of
Australia, any retirement pension derived by a resident of a Contracting State
from sources in the other Contracting State shall, if the person deriving the
pension so elects, be taxable only in the last-mentioned State.
ARTICLE 18
Remuneration paid by Governments.
(1) Remuneration (other than a pension or annuity) paid by Australia, a State
of Australia or a political subdivision or local authority of Australia or of
a State to any individual in respect of services rendered in the discharge of
governmental functions shall be exempt from French tax unless the services are
rendered in France by an individual who is a French national or is permanently
resident in France.
(2) Remuneration (other than a pension or annuity) paid by France or a local
authority thereof to any individual in respect of services rendered in the
discharge of governmental functions shall be exempt from Australian tax unless
the services are rendered in Australia by an individual who is an Australian
citizen or is ordinarily resident in Australia.
(3) This Article shall not apply to remuneration in respect of services
rendered in connection with any trade or business carried on by a Government,
a political subdivision or an authority referred to in paragraph (1) or (2).
ARTICLE 19
Visiting professors and teachers.
(1) Where a professor or teacher who is a resident of a Contracting State
visits the other Contracting State for a period not exceeding two years for
the purpose of teaching or conducting research at a university, college,
school or other educational institution, remuneration which he receives for so
teaching or conducting research shall be exempt from tax in that other State.
(2) This Article shall not apply to remuneration which he receives for
conducting research if the research is undertaken primarily for the private
benefit of a specific person or persons.
ARTICLE 20
Students.
Payments which a student who is, or was immediately before visiting one of the
Contracting States, a resident of the other Contracting State and who is
temporarily present in the first-mentioned Contracting State solely for the
purpose of his education receives from sources outside that first-mentioned
State for the purpose of his maintenance or education shall not be taxed in
that first-mentioned State.
ARTICLE 21
Income of dual residents.
Where a person, who by reason of the provisions of paragraph (1) of Article 3
is a resident of both Contracting States but, by reason of the provisions of
paragraph (2) or (3) of that Article, is deemed for the purposes of this
Agreement to be a resident solely of one of the Contracting States, derives
income-
(a) from sources in that Contracting State, or
(b) from sources outside both Contracting States, that income shall be
taxable only in that Contracting State.
ARTICLE 22
Source of income.
(1) Income derived by a resident of a Contracting State which, under Articles
5 to 7 and 9 to 16 may be taxed in the other Contracting State, shall be
deemed to be income from sources in that other State.
(2) Profits included in the profits of an enterprise of a Contracting State
under paragraph (1) of Article 8 shall for purposes of the taxation of that
enterprise be deemed to be income of that enterprise derived from sources in
that Contracting State.
(3) The provisions of sub-paragraph (a) of paragraph (2) of Article 23 shall
not apply in relation to income derived by a resident of France from sources
in any of the Territories described in sub-paragraph (a) of paragraph (1) of
Article 2, or from sources in the area described in that sub-paragraph, if
Australian tax does not apply in relation to that income.
ARTICLE 23
Relief from double taxation.
(1) Subject to the provisions of the law of Australia from time to time in
force which relate to the allowance of a credit against Australian tax of tax
paid in a country outside Australia, French tax paid, whether directly or by
deduction, in respect of income derived by a person who is a resident of
Australia from sources in France (not including, in the case of a dividend,
tax paid in respect of the profits out of which the dividend is paid) shall be
allowed as a credit against Australian tax payable in respect of that income.
(2) In the case of France, double taxation shall be avoided in the following
manner:
(a) Income derived by a resident of France other than that mentioned in
sub-paragraph (b) below shall be exempt from the French taxes
mentioned in sub-paragraph (b) of paragraph (1) of Article 1 where the
income may, under this Agreement, be taxed in Australia.
(b) As regards income to which Article 9, 10, 11, 15 or 16 applies, France
may tax the income but shall allow to a resident of France receiving
the income from Australia a tax credit corresponding to the amount of
tax levied by Australia. The tax credit, not exceeding the amount
levied by France on such income, shall be allowed against a tax
mentioned in sub-paragraph (b) of paragraph (1) of Article 1, in the
base of which that income is included.
(c) Notwithstanding the provisions of sub-paragraph (a), French tax may be
computed on income chargeable in France by virtue of this Agreement at
the rate appropriate to the total income chargeable in accordance with
French law.
(d) Where a company which is a resident of France redistributes dividends
received from a company which is a resident of Australia and has paid
a prepayment (precompte H) in respect of the redistribution under
deduction of the Australian tax credit referred to in sub-paragraph
(b), the shareholders who are residents of France shall be entitled to
a tax credit (avoir fiscal) in accordance with the French tax law as
if the deduction under sub-paragraph (b) had not been made.
(3) In the event that a Contracting State should cease to allow a company
which is a resident of that State relief from its tax in respect of dividends
paid to it by a company which is a resident of the other Contracting State,
being relief available under the taxation law of the first-mentioned State as
in force at the date of signature of this Agreement, that State will
immediately advise the other State of the change and enter into negotiations
with it to establish new provisions concerning the relief to be allowed in the
first-mentioned State under this Article in respect of that State's tax on the
dividends.
ARTICLE 24
Complaints by taxpayers.
(1) Where a resident of a Contracting State considers that the actions of one
or both of the Contracting States result or will result for him in taxation
not in accordance with this Agreement, he may, notwithstanding the remedies
provided by the national laws of those States, present his case to the
competent authority of the Contracting State of which he is a resident.
(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 an appropriate
solution, to resolve the case with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with this Agreement.
(3) The competent authorities of the Contracting States shall jointly
endeavour to resolve any difficulties arising as to the application of this
Agreement.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of giving effect to the provisions of this
Agreement.
ARTICLE 25
Exchange of information.
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Agreement or of the
domestic laws of the Contracting States concerning the taxes to which this
Agreement applies in so far as the taxation thereunder is not contrary to this
Agreement. Any information received by the competent authority of 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, enforcement or prosecution in respect
of, or the determination of appeals in relation to, the taxes to which this
Agreement applies and shall be used only for such purposes.
(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 or the
administrative practice of that or of the other Contracting State;
(b) to supply particulars which are 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 to
supply information the disclosure of which would be contrary to public
policy.
ARTICLE 26
Diplomatic and consular privileges.
(1) Nothing in this Agreement shall affect diplomatic or consular privileges
under the general rules of international law or under the provisions of
special international agreements.
(2) This Agreement shall not apply to international organizations, to organs
or officials thereof or to persons who are members of a diplomatic or consular
mission of a third State and who, being present in a Contracting State, are
not treated in either Contracting State as residents in respect of taxes on
income.
ARTICLE 27
Extension to Territories.
(1) This Agreement may be extended, either in its entirety or with any
necessary modifications by agreement between the Contracting States, to-
(a) any Territory for whose international relations Australia is
responsible; or
(b) any Overseas Territory of the French Republic, which imposes taxes
substantially similar in character to those to which this Agreement
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 between the Contracting
States in Letters to be exchanged through diplomatic channels for this
purpose.
(2) Unless otherwise agreed by both Contracting States, if this Agreement is
terminated under Article 29 this Agreement shall cease to be effective in
relation to any Territory to which it has been extended under paragraph (1).
ARTICLE 28
Entry into force.
(1) This Agreement shall enter into force on the date on which notes are
exchanged through the diplomatic channel notifying that the last of all such
things has been done in Australia and France as is necessary to bring the
Agreement into force in Australia and France so far as its provisions affect
Australian tax and French tax respectively and shall thereupon have effect-
(a) in Australia-
(i) in respect of withholding tax on income that is derived by a
non-resident, in respect of income derived on or after 1
January 1973;
(ii) in respect of other Australian tax, for any year of income
beginning on or after 1 July 1972;
(b) in France-
(i) for withholding tax and prepayment (precompte H) relating to
any amounts payable on or after 1 January 1973;
(ii) in respect of other French tax for the assessment year 1972 and
subsequent years.
(2) Nothing in this Agreement shall affect the operation of the Agreement
between the Governments of the Contracting States for the avoidance of double
taxation of income derived from international air transport signed in Canberra
on 27 March 1969.
ARTICLE 29
Duration of Agreement.
This Agreement shall continue in effect indefinitely, but either Contracting
State may, on or before 30 June in any calendar year after the year 1977, give
to the other Contracting State notice of termination and, in that event, this
Agreement shall cease to be effective-
(a) in Australia-
(i) in respect of withholding tax on income that is derived by a
non-resident, in respect of income derived on or after the
commencement of the financial year beginning on 1 July in the
calendar year next following that in which the notice is given;
(ii) in respect of other Australian tax, for the year of income
beginning on 1 July in the calendar year next following that in
which the notice is given, and subsequent years of income;
(b) in France-
(i) for withholding tax and prepayment (precompte H) relating to
any amounts payable on or after 1 July in the calendar year
next following that in which the notice is given;
(ii) in respect of other French tax for the assessment year next
following the calendar year in which the notice is given, and
subsequent years.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this
Agreement.
DONE in duplicate at Canberra this Thirteenth day of April, One thousand nine
hundred and seventy-six in the English and French languages, both texts being
equally authoritative.
PHILLIP R. LYNCH RAYMOND
BARRE
For the Government of For the Government of
Australia the French Republic
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