- 1
- The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income or capital, which according to the provisions of this Convention may be taxed in Yugoslavia.
- 2
- However, where a resident of the Netherlands derives items of income or capital which according to Articles 6, 7, 10 (paragraph 6), 11 (paragraph 3), 12 (paragraph 5), 13 (paragraphs 1 and 2), 14 (paragraph 2), 15 (paragraphs 1 and 4), 16 (paragraph 1), 18 (paragraph 2), 21 (paragraph 2) and 22 (paragraphs 1 and 2) of this Convention may be taxed in Yugoslavia and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of Netherlands law for the avoidance of double taxation. For that purpose the said items of income or capital shall be deemed to be included in the total amount of the items of income or capital which are exempt from Netherlands tax under those provisions. The exemption provided for in the preceding provisions of this paragraph also applies to profits derived by a resident of the Netherlands from his participation in joint business operations in Yugoslavia and does not affect the tax incentives given under Yugoslav laws to encourage foreign investments in Yugoslavia.
- 3
- Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to Articles 10 (paragraph 2), 12 (paragraph 2), 15 (paragraph 3) and 17 (paragraphs 1 and 2) of this Convention may be taxed in Yugoslavia to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in Yugoslavia on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included would be the sole items of income which are exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
- 4
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- a)Where a resident of Yugoslavia derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, Yugoslavia shall, except in the case referred to in paragraph 5 of Article 13 and subject to the provisions under b), exempt such income or capital from tax but may, in calculating tax on the remaining income or capital of that person, apply the rate of tax which would have been applicable if the exempted income or capital had not been so exempted.
- b)Where a resident of Yugoslavia derives income which, in accordance with the provisions of Articles 10 and 12 may be taxed in the Netherlands, Yugoslavia shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in the Netherlands. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from the Netherlands.
- 5
- Where a resident of one of the States derives gains which may be taxed in the other State in accordance with paragraph 5 of Article 13, that other State shall allow a deduction from its tax on such gains to an amount equal to the tax levied in the first-mentioned State on the said gains.
