- 1
- Where a resident of Iceland derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, Iceland shall, subject to the provisions of paragraph 2, exempt such income or capital from tax, but may in calculating the tax on the remaining income or capital of this person, apply the rate of tax which would have been applicable if the exempted income or capital had not been so exempted.
- 2
- Where a resident of Iceland derives income which, in accordance with the provisions of Article 10, paragraph 5 of Article 13, paragraph 3 of Article 15, Article 16, Article 17 and paragraph 2 of Article 18 of this Convention, may be taxed in the Netherlands, Iceland shall allow as a deduction from the tax on 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 attributable to such income derived from the Netherlands.
- 3
- 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 Iceland.
- 4
- However, where a resident of the Netherlands derives items of income or owns items of capital which according to Article 6, Article 7, paragraph 7 of Article 10, paragraph 4 of Article 11, paragraph 4 of Article 12, paragraphs 1 and 2 of Article 13, Article 14, paragraphs 1 and 3 of Article 15, paragraph 3 of Article 18, subparagraph a) of paragraph 1 and subparagraph a) of paragraph 2 of Article 19, paragraph 2 of Article 22 and paragraphs 1 and 2 of Article 23 of this Convention may be taxed in Iceland and are included in the basis referred to in paragraph 3, the Netherlands shall exempt such items of income or capital 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.
- 5
- Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to paragraphs 2 and 3 of Article 10, paragraph 5 of Article 13, Article 16, Article 17 and paragraph 2 of Article 18 of this Convention may be taxed in Iceland to the extent that these items are included in the basis referred to in paragraph 3. The amount of this deduction shall be equal to the tax paid in Iceland 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 which are exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
- 6
- Notwithstanding the provisions of paragraph 4, the Netherlands shall allow a deduction from the Netherlands tax for the tax paid in Iceland on items of income which according to Article 7, paragraph 7 of Article 10, paragraph 4 of Article 11, paragraph 4 of Article 12, Article 14 and paragraph 2 of Article 22 of this Convention may be taxed in Iceland to the extent that these items are included in the basis referred to in paragraph 3, if and insofar as the Netherlands under the provisions of 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 5 of this Article shall apply accordingly.
