It is agreed that double taxation shall be avoided in the following manner:
- A.In the case of the Netherlands:
- 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 Czechoslovakia.
- 2.Without prejudice to the application of the provisions concerning the compensation of losses in the unilateral regulations for the avoidance of double taxation the Netherlands shall allow a deduction from the amount of tax computed in conformity with paragraph 1 of this Article equal to such part of that tax which bears the same proportion to the aforesaid tax, as the part of the income or capital which is included in the basis mentioned in the first paragraph of this Article and may be taxed in Czechoslovakia according to Articles 6 and 7, paragraph 7 of Article 10, paragraph 3 of Article 11, paragraph 5 of Article 12, paragraphs 1 and 2 of Article 14, Article 15, paragraph 1 of Article 16, paragraph 1 of Article 17, subparagraphs a) of paragraphs 1 and 2 of Article 20, paragraphs 1 and 2 of Article 24, of this Convention bears to the total income or capital which forms the basis mentioned in paragraph 1 of this Article.
- 3.Further the Netherlands shall allow a deduction from the tax computed in accordance with the preceding paragraphs of this Article with respect to the items of income which may be taxed in Czechoslovakia according to paragraph 2 of Article 10, paragraph 2 of Article 12, paragraph 5 of Article 14, and Article 18, and are included in the basis mentioned in paragraph 1 of this Article. The amount of this deduction shall be the lesser of the following amounts:
- a)the amount equal to the Czechoslovak tax;
- b)the amount of the Netherlands tax which bears the same proportion to the amount of tax computed in conformity with paragraph 1 of this Article, as the amount of the said items of income bears to the amount of income which forms the basis mentioned in paragraph 1 of this Article.
- B.In the case of Czechoslovakia:
- 1.Subject to the provisions of the domestic laws regarding the elimination of double taxation, the items of income or of capital which according to the provisions of this Convention may also be taxed in the Netherlands may be included, when imposing taxes on residents, in the tax base upon which such taxes are imposed, but it is allowed to deduct from the amount of tax computed on such a base an amount equal to the tax paid in the Netherlands. Such deduction shall not, however, exceed that part of the domestic tax, as computed before the deduction is given, which is appropriate to the income or capital which, in accordance with the provisions of this Convention, may be taxed in the Netherlands.
- 2.Where in accordance with any provision of the Convention income derived or capital owned by a resident is exempt from tax here, the exempted income or capital may nevertheless be taken into account here in calculating the amount of tax on the remaining income or capital of such resident.
