- 1
- The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income which, according to the provisions of this Agreement, may be taxed in Bermuda.
- 2
- However, where a resident of the Netherlands derives items of income which according to paragraphs 1, 3 and 4 of Article 5 of this Agreement may be taxed in Bermuda and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of the Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the amount of the items of income which are exempt from Netherlands tax under those provisions.
- 3
- Further, the Netherlands shall allow a reduction from the Netherlands tax so computed for the items of income which according to paragraph 1 of Article 6, paragraphs 1 and 2 of Article 7 and paragraph 3 of Article 8 of this Agreement may be taxed in Bermuda to the extent that these items are included in the basis referred to in paragraph 1. The amount of this reduction shall be equal to the tax paid in Bermuda on these items of income, but shall, in case the provisions of the Netherlands law for the avoidance of double taxation provide so, not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempt from Netherlands tax under the provisions of the Netherlands law for the avoidance of double taxation.
- This paragraph shall not restrict allowance now or hereafter accorded by the provisions of the Netherlands law for the avoidance of double taxation, but only as far as the calculation of the amount of the reduction of Netherlands tax is concerned with respect to the aggregation of income from more than one country and the carry forward of the tax paid in Bermuda on the said items of income to subsequent years.
- 4
- In Bermuda double taxation shall be avoided in accordance with the laws of Bermuda.
