- 1
- Notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention. The competent authority of a Contracting State shall consult with the competent authority of the other Contracting State before denying a benefit under this paragraph.
- 2
- Where a benefit under this Convention is denied to a person under paragraph 1, the competent authority of the Contracting State that would otherwise have granted this benefit shall nevertheless treat that person as being entitled to this benefit, or to different benefits with respect to a specific item of income or capital, if such competent authority, upon request from that person and after consideration of the relevant facts and circumstances, determines that such benefits would have been granted in the absence of the transaction or arrangement referred to in paragraph 1. The competent authority of the Contracting State to which the request has been made will consult with the competent authority of the other State before rejecting a request made under this paragraph by a resident of that other State.
- 3
- Where
-
- a)an enterprise of a Contracting State derives an item of income from the other Contracting State and the first-mentioned State treats such item of income as attributable to a permanent establishment of the enterprise situated in a third jurisdiction; and
- b)the profits attributable to that permanent establishment are exempt from tax in the first-mentioned State;the benefits of this Convention shall not apply to that item of income if the third jurisdiction:
- (i)has a general statutory rate of the tax on companies which is below 9 per cent, or;
- (ii)provides an exemption from taxation to resident companies for substantially all foreign source income (including interest and royalties); or
- (iii)is placed on annex I of the EU list of non-cooperative tax jurisdictions in taxation matters.
- 4
- The provisions of paragraph 3 shall not apply if the item of income derived from the other State emanates from, or is incidental to, the active conduct of a business carried on through the permanent establishment (other than the business of making, managing or simply holding investments for the enterprise’s own account, unless these activities are banking, insurance or securities activities carried on by a bank, insurance enterprise or registered securities dealer, respectively).
- 5
- If benefits under this Convention are denied pursuant to the provisions of paragraph 3 with respect to an item of income derived by a resident of a Contracting State, the competent authority of the other Contracting State may, nevertheless, grant these benefits with respect to that item of income if, in response to a request by such resident, such competent authority determines that granting such benefits is justified in light of the reasons why such resident did not satisfy the requirements of this paragraph (such as the existence of losses). The competent authority of that Contracting State to which a request has been made under the preceding sentence shall consult with the competent authority of the other Contracting State before denying a benefit under paragraph 3 or either granting or denying the request made under this paragraph.
