- 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 Convention, may be taxed in Canada.
- 2
- However, where a resident of the Netherlands derives items of income which according to Article 6, Article 7, paragraph 5 of Article 10, paragraph 6 of Article 11, paragraph 5 of Article 12, paragraphs 1, 2 and 4 of Article 13, Article 14, paragraph 1 of Article 15, paragraph 3 of Article 18 and Article 19 of this Convention may be taxed in Canada 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 Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the total amount of the items of income which are exempt from Netherlands tax under those provisions.
- 3
- Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to paragraph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article 12, paragraph 8 of Article 13, Article 16, Article 17, paragraph 2 of Article 18, paragraph 2 of Article 21 and paragraph 2 of Article 21A of this Convention may be taxed in Canada 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 Canada 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 were the sole items of income exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
- 4
- Notwithstanding the provisions of paragraph 2, the Netherlands shall allow a deduction from the Netherlands tax for the tax paid in Canada on items of income which according to Article 7, paragraph 5 of Article 10, paragraph 6 of Article 11, paragraph 5 of Article 12 and Article 14 of this Convention may be taxed in Canada to the extent that these items are included in the basis referred to in paragraph 1, if and insofar as the Netherlands under the provisions of the Netherlands law for the avoidance of double taxation allows a deduction from the Netherlands tax of the tax levied in another country on such items of income. For the computation of this deduction the provisions of paragraph 3 shall apply accordingly.
- 5
- In the case of Canada, double taxation shall be avoided as follows:
-
- a)subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions – which shall not affect the general principle hereof – and unless a greater deduction or relief is provided under the laws of Canada, tax payable in the Netherlands on profits, income or gains arising in the Netherlands shall be deducted from any Canadian tax payable in respect of such profits, income or gains; and
- b)where, in accordance with any provision of the Convention, income derived by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income take into account the exempted income.
- 6
- For the purposes of paragraph 5
-
- a)profits, income or gains of a resident of Canada which may be taxed in the Netherlands in accordance with the Convention shall be deemed to arise in the Netherlands, and
- b)the taxes referred to in paragraphs 3b) and 4 of Article 2 shall be considered income taxes and in determining the amount of these taxes the investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law (‘Wet investeringsrekening’), and the investment levies as meant in the Netherlands Industrial Deconcentration Act (‘Wet selectieve investeringsrekening’) shall not be taken into account.
