- 1
- Gains derived by a resident of one of the States from the alienation of immovable property situated in the other State may be taxed in that other State.
- 2
- Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of one of the States has in the other State or of movable property pertaining to a fixed base available to a resident of one of the States in the other State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
- 3
- Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the State in which the place of effective management of the enterprise is situated. For the purposes of this paragraph the provisions of paragraph 3 of Article 8 shall apply.
- 4
- Gains derived by a resident of one of the States from the alienation of
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- a)shares (other than shares listed on an approved stock exchange in one of the States) forming part of a substantial interest in the capital stock of a company that is a resident of the other State, the value of which shares is derived principally from immovable property situated in the other State, or
- b)a substantial interest in a partnership, trust or estate that was established under the law in the other State, or a controlling interest in a partnership or trust that was not established under the law in the other State, the value of which in either case is derived principally from immovable property situated in the other State,
- may be taxed in that other State. For the purposes of this paragraph, the term ‘immovable property’ includes the shares of a company the value of which shares is derived principally from immovable property or a substantial interest in a partnership, trust or estate referred to in subparagraph b), but does not include property (other than rental property) in which the business of the company, partnership, trust or estate is carried on; a substantial interest exists when the resident and persons related thereto own 10% or more of the shares of any class of the capital stock of a company or have an interest of 10% or more in a partnership, trust or estate; and a controlling interest exists when the resident and persons related thereto have an interest of 50 per cent or more in a partnership, trust or estate.
- 5
- Where a resident of one of the States alienates property which may in accordance with this Article be taxed in the other State and which was owned by a resident of the first-mentioned State on the date of signature of the Convention, the amount of the gain which is liable to tax in that other State in accordance with this Article shall be reduced by the proportion of the gain attributable (on a monthly basis), or such greater portion of the gain as is shown to the satisfaction of the competent authority of the other State to be reasonably attributable, to the period ending on December 31 of the year in which the Convention enters into force. However, this provision shall not apply to gains from the alienation of property which in accordance with the existing Convention may already be taxed in the other State.
- 6
- Where a resident of one of the States alienates property in the course of a corporate or other organization, reorganization, amalgamation, division or similar transaction and profit, gain or income with respect to such alienation is not recognized for the purpose of taxation in that State, if requested to do so by the person who acquires the property, the competent authority of the other State may agree, subject to terms and conditions satisfactory to such competent authority, to defer the recognition of the profit, gain or income with respect to such property for the purpose of taxation in that other State until such time and in such manner as may be stipulated in the agreement.
- 7
- Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the State of which the alienator is a resident.
- 8
- The provisions of paragraph 7 shall not affect the right of either of the States to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other State and has been a resident of the first-mentioned State at any time during the six years immediately preceding the alienation of the property.
