- 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 Estonia.
- 2
- However, where a resident of the Netherlands derives items of income which according to Article 6, Article 7, paragraph 6 of Article 10, paragraph 6 of Article 11, paragraph 5 of Article 12, paragraphs 1 and 2 of Article 13, Article 14, paragraph 1 of Article 15, paragraph 3 of Article 18, paragraphs 1 (sub-paragraph a) and 2 (sub-paragraph a) of Article 19 and paragraph 2 of Article 22 of this Convention may be taxed in Estonia 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 or capital which according to paragraph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article 12, paragraph 5 of Article 13, Article 16, Article 17, paragraph 2 of Article 18 and paragraphs 1 and 2 of Article 23 of this Convention may be taxed in Estonia 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 Estonia on these items of income or capital, but shall not exceed the amount of the reduction which would be allowed if the items of income or capital so included were the sole items of income or capital which are exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
- 4
- In Estonia double taxation shall be avoided as follows:
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- a)Where a resident of Estonia derives income which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, Estonia shall, subject to the provisions of sub-paragraphs b) and c) exempt such income from tax.
- b)Where a resident of Estonia derives income or owns capital which in accordance with the provisions of:
- (i)subparagraph b) of paragraph 2 of Article 10; or
- (ii)paragraph 2 of Articles 11 or 12; or
- (iii)paragraphs 1 or 2 of Article 17; or
- (iv)paragraphs 1 or 2 of Article 23 may be taxed in the Netherlands, Estonia shall allow as a deduction from the tax on the income or capital of that resident an amount equal to the tax paid in the Netherlands. Such deduction in either case shall not, however, exceed the part of the income or capital tax in Estonia as computed before the deduction is given, which is attributable to the income or the capital which may be taxed in the Netherlands.
- c)Where in accordance with any provision of the Convention income derived by a resident of Estonia is exempt from tax in Estonia, Estonia may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
