- 1
- 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 Convention, may be taxed in Switzerland.
- 2
- However, where a resident of the Netherlands derives items of income which according to paragraphs 1, 3 and 4 of Article 6, paragraph 1 of Article 7, paragraphs 1 and 2 of Article 8, paragraph 7 of Article 10, paragraph 4 of Article 11, paragraph 4 of Article 12, paragraphs 1, 2, 3 and 4 of Article 13, paragraph 1 of Article 14, paragraphs 1 and 3 of Article 15, paragraph 1 (subparagraph a) of Article 19 and paragraph 2 of Article 21 of this Convention may be taxed in Switzerland 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 the Netherlands law for the elimination of double taxation. For that purpose the said items of income shall be deemed to be included in the 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 which according to paragraph 2 of Article 10, paragraph 1 of Article 16, paragraphs 1 and 2 of Article 17 and paragraph 1 of Article 18 of this Convention may be taxed in Switzerland 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 Switzerland on these items of income, but shall, in case the provisions of the Netherlands law for the elimination of double taxation provide so, not exceed the amount of the deduction 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 the Netherlands law for the elimination of double taxation.
- This paragraph shall not restrict allowance now or hereafter accorded by the provisions of the Netherlands law for the elimination of double taxation, but only as far as the calculation of the amount of the deduction of Netherlands tax is concerned with respect to the aggregation of income from more than one jurisdiction and the carry forward of the tax paid in Switzerland on the said items of income to subsequent years.
- 4
- Notwithstanding the provisions of paragraph 2, the Netherlands shall allow a deduction from the Netherlands tax for the tax paid in Switzerland on items of income which according to paragraph 1 of Article 7, paragraph 7 of Article 10, paragraph 4 of Article 11, paragraph 4 of Article 12, paragraph 4 of Article 13 and paragraph 2 of Article 21 of this Convention may be taxed in Switzerland to the extent that these items are included in the basis referred to in paragraph 1, insofar as the Netherlands under the provisions of the Netherlands law for the elimination of double taxation allows a deduction from the Netherlands tax of the tax levied in another jurisdiction on such items of income. For the computation of this deduction the provisions of paragraph 3 of this Article shall apply accordingly.
- 5
- In the case of Switzerland, double taxation shall be eliminated as follows:
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- a)Where a resident of Switzerland derives income which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, Switzerland shall, subject to the provisions of subparagraphs b) and c), exempt such income from tax but may, in calculating tax on the remaining income of that resident, apply the rate of tax which would have been applicable if the exempted income had not been so exempted. However, such exemption shall apply to gains and income referred to in paragraph 4 of Article 13 and paragraphs 1 and 2 of Article 17 only if actual taxation of such gains and income in the Netherlands is demonstrated.
- b)Where a resident of Switzerland derives dividends which, in accordance with the provisions of Article 10, may be taxed in the Netherlands, Switzerland shall allow, upon request, a relief to such resident. The relief may consist of:
- (i)a deduction from the tax on the income of that resident of an amount equal to the tax levied in the Netherlands in accordance with the provisions of Article 10; such deduction shall not, however, exceed that part of the Swiss tax, as computed before the deduction is given, which is appropriate to the income which may be taxed in the Netherlands; or
- (ii)a lump sum reduction of the Swiss tax; or
- (iii)a partial exemption of such dividends from Swiss tax, in any case consisting at least of the deduction of the tax levied in the Netherlands from the gross amount of the dividends.Switzerland shall determine the applicable relief and regulate the procedure in accordance with the Swiss provisions relating to the carrying out of international conventions of the Swiss Confederation for the elimination of double taxation.
- c)Where a resident of Switzerland derives periodic payments in accordance with the provisions of the second sentence of paragraph 1 of Article 18, which may be taxed in the Netherlands, Switzerland shall allow, upon request, a relief consisting of the deduction of one-third of the net amount of such pensions or annuities.
- 6
- The provisions of paragraph 2 and of subparagraph a of paragraph 5 shall not apply to items of income derived by a resident of a Contracting State where the other Contracting State applies the provisions of this Convention to exempt such items of income from tax or applies the provisions of paragraph 2 of Article 10 to such income.
