- 1
- Double taxation for residents of Turkey shall be eliminated as follows:
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- a)Where a resident of Turkey derives items of income, not being income covered by paragraph b) hereafter, which in accordance with the provisions of this Agreement, may be taxed in the Netherlands, Turkey shall exempt such income from tax but may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted. For dividends the foregoing provision of this sub-paragraph shall apply to a resident of Turkey which directly holds at least 10 per cent of the capital of a company which is resident of the Netherlands.
- b)The tax paid in the Netherlands according to the provisions of this Agreement, shall be deducted from the tax paid in Turkey for the taxes imposed on income which is shown below, under the provisions of Turkish tax laws concerning the deduction of foreign taxes:
- (i)dividends which are not covered by sub-paragraph a);
- (ii)interest;
- (iii)royalties;
- (iv)gains from the alienation of property mentioned in paragraph 5 of Article 13 which may be taxed in the Netherlands. Such deductions shall not, however, exceed that part of the income tax computed in Turkey before the deduction is given, which is appropriate to the income which may be taxed in the Netherlands.
- c)For the purposes of this paragraph in determining the taxes on income paid to the Netherlands, the investment premiums and bonuses and desinvestment payments as meant in the Netherlands Investment Account Law (Wet Investeringsrekening) shall not be taken into account. For the purposes of this paragraph, the taxes referred to in sub-paragraph b) of paragraph 3 and paragraph 4 of Article 2 shall be considered taxes on income.
- 2
- Double taxation for residents of the Netherlands shall be eliminated as follows:
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- a)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 Agreement may be taxed in Turkey.
- b)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, Article 16, paragraph 3 of Article 18, Article 19 and paragraph 2 of Article 22 of this Agreement may be taxed in Turkey and are included in the basis referred to in sub-paragraph a) 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 provision.
- c)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 5 of Article 13, paragraph 3 of Article 15, Article 17 and paragraph 2 of Article 18 of this Agreement may be taxed in Turkey to the extent that these items are included in the basis referred to in sub-paragraph a). The amount of this deduction shall be equal to the tax paid in Turkey 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.
- d)Where, by reason of the relief given under the provisions of Turkish laws for the purpose of encouraging investment in Turkey the Turkish tax actually levied on dividends paid by a company which is a resident of Turkey, on interest arising in Turkey or on royalties arising in Turkey is lower than the tax Turkey may levy according to sub-paragraphs a) and b) of paragraph 2 of Article 10, sub-paragraphs a) en b) of paragraph 2 of Article 11 and paragraph 2 of Article 12, respectively, then the amount of the tax paid in Turkey on such dividends, interest and royalties shall be deemed to have been paid at the rates of tax mentioned in the said provisions.
- However, if the general tax rates under Turkish laws applicable to the afore-mentioned dividends, interest and royalties are reduced below those mentioned in this sub-paragraph, these lower rates shall apply for the purposes of this sub-paragraph. The provisions of this sub-paragraph shall only apply for a period of ten years after the date on which the Agreement became effective. This period may be extended by mutual agreement between the competent authorities.
- 3
- Where a resident of one of the States derives gains which may be taxed in the other State in accordance with paragraph 6 of Article 13, that other State shall allow a deduction from its tax on such gains to an amount equal to the tax levied in the first-mentioned State on the said gains.
