Article XXV, The Income Tax (Deductions Citation

The present Convention shall continue in effect indefinitely but either of the High Contracting Parties may, on or before 30th June in any calendar year not earlier than the year 1953, give to the other High Contracting Party, through diplomatic channels, written notice of termination and, in such event, the present Convention shall cease to be effective- (a) In Sweden: as respects tax on income for which preliminary tax is payable after the last day of February in the calendar year next following that in which the notice is given: as respects coupon tax pay~ble on or after 1st January in the calendar year next following that in which the notice is given; as respects capital tax assessed in or after the second calendar year following that in which the notice is given. (b) In the United Kingdom: as respects income tax for any year of assessment beginning on or after 6th April in the calendar. year next following that in as respects surtax for any year of assessment beginning on or after 6th April in the calendar year in which the notice is given; beginning on or after 1st April in the calendar year next following that in which the notice is given; (iii) profits not so arising or attributable by reference to which income tax is chargeable for any year of assessment beginning on or after 6th April in the next following calendar year. Done at London, in duplicate, in the English and Swedish languages, both texts being equally authentic, on the thirtieth day of March, one thousand nine hundred and forty-nine. APPLICATION- (L.S.) (L.S.) WILLIAM STRANG. GUNNAR HAGGLOF. I. (a) The provisions of the Convention incorporated in the First Schedule to this Order shall apply as modified below- (i) as if the contracting parties were Sierra Leone and the Government of Sweden; and as if the tax concerned in the case of Sierra Leone were the Income Tax and the duty on profits charged under the Concessions Ordinance, 1931 and the Diamond Industry Profits Tax; S.L.-VoL. VIII-33* 21~2 129 of 1955. (ii) as if references to the date of signature were references to the 18th day of December, 1953. year of assessment beginning in the calendar year next following the date of this Order and for subsequent years of assessment. (c) The extension shall continue in effect ind~finitely but may be terminated as respects Sierra Leone by written notice of termination given on or before the 30th June in any calendar year by either of the High Contracting Parties to the Convention to the other High Contracting Party through the diplomatic channel and in such event the extension shall cease to have effec.t in Sierra Leone as respects tax for the year of assessment beginning in the calendar year next following the date of such notice and for subsequent years of assessment. MoDIFICATIONS- 2. (a) In Article VII (1) of the Convention the words "exempt from United Kingdom Surtax " shall be understood for the purposes of this extension as though they read " shall not be liable to tax in the territory at a rate in excess of the rate applicabl!l to a company':. (b) Article VIII shall be deemed to be deleted. DENMARK. (DENMARK) ORDER. WHEREAS it is provided by sub-section (1) of section 32A of AND WHEREAS by a Convention dated the 27th day of March, 1950, between the Government of the United Kingdom and the Government of Denmark, arrangements were made among other things for the avoidance of Double Taxation: High Contracting Parties of the said Convention, subject to such modifications and conditions (including conditions as to * Section 32A has been renumbered 35. termination) as may be specified in the exchange of notes, to any territory, for whose international relations the United Kingdom is responsible, which imposes taxes substantially similar in character to those which are the subject of the said Convention: AND WHEREAS by an Exchange of Notes dated respectively the 18th November and the 22nd December, 1954, the said Convention with certain modifications was applied to Sierra Leone: Now, THEREFORE, in exercise of the powers conferred upon the Governor in Council by sub-section (I) of the said section 32A, * 1. This Order may be cited as the Income Tax (Double Taxation Relief) (Denmark) Order in Council, 1955. 2. It is hereby declared- Schedule to this Order, have been made with the Government of Denmark; CoNVENTION BETWEEN THE GovERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE KINGDOM OF DENMARK FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. Ireland and the Government of the Kingdom of Denmark, Have appointed for that purpose as their Plenipotentiaries: The Right Honourable Ernest Bevin, M.P., Principal Secretary of State for Foreign Affairs; The Government of the Kingdom of Denmark: His Excellency Count Eduard Reventlow, Ambassador Extraordinary and Plenipotentiary of Denmark in London; Who, having exhibited their respective full powers, found in good and due form, have agreed as follows- * Section32A if! ren-qmbered 35, 2194 Cap. 273] Income Tax 1. The taxes which are the subject of the present Convention are: (a) In Denmark: The national income tax (including the extraordinary company tax) (hereinafter referred .to as "Danish tax"). The income tax (including surtax) and the profits tax (hereinafter referred to as "United Kingdom tax"). 2. The present Convention shall also apply to any other taxes of a substantially similar character imposeq in Denmark or the United Kingdom subsequently to the date of signature of the present Convention. 1. In the present Convention, unless the context otherwise requires: (a) The term" United Kingdom" means Great Britain and Northern (b) The term "Denmark" means the Kingdom of Denmark, excluding the Faroe Islands and Greenland; (c) The terms · one of the territories" and "the other territory" mean the United Kingdom or Denmark, as the context requires; (d) The term" tax" means United Kingdom tax or Danish tax, as the context requires; (e) The term" person" includes any body of persons, corporate or not corporate; (/) The term " company " means any body corporate; (g) The terms " resident of the United Kingdom " and " resident of Denmark " mean respectively any person who is resident in the United Denmark for the purposes of Danish tax, and any person who is resident in Denmark for the purposes of Danish tax and not resident in the United Kingdom for the purposes of United Kingdom tax; a company shall be regarded as resident in the United Kingdom if its business is managed and controlled in the United Kingdom and as resident in Denmark if its business is managed and controlled in Denmark; (h) The terms " resident of one of the territories" and" resident of the other territory " mean a person who is a resident of the United Kingdom or a person who is a resident of Denmark, as the context requires; (i) The terms "United Kingdom enterprise" and "Danish enterprise " mean respectively an industrial or commercial enterprise or resident of Denmark, and the terms " enterprise of one of the territories " prise or a Danish enterprise, as the context requires; (j) The term " industrial or commercial profits " includes rents or royalties in respect of cinematograph films.; to an enterprise of one of the territories, means a branch, management, factory, or other fixed place of business, but does not include an agency unless the agent has, and habitually exercises, a general authority to negotiate and conclude contracts on behalf of such enterprise or has a stock of merchandise from which he regularly fills orders on its behalf. In this connection- (i) An enterprise of one of the territories sliall not be deemed to have a permanent establishment in the other territory merely a bonafide broker or general commission agent acting in the ordinary course of his business as such; (ii) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise; (iii} The fact that a company which is a resident of one of the territories has a subsidiary company which is a residilnt of the other territory or which carries on a trade or business in that otner territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of its parent company. 2. Where under this Convention any income is exempt from tax in one of the territories if (with or without other conditions) it is subject to tax in the other territory, and that income is subject to tax in that other territory by reference only to the amount thereof which is remitted to or received in that other territory, the exemption to be allowed under this Convention in the first-mentioned territory shall apply only to the amount so remitted or 3. In the application of the provisions of the present Convention by one of the High Contracting Parties any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws in force in the territory of that Party relating to the taxes which are the subject of the present Convention. 1. The industrial or commercial profits of a United Kingdom enterprise shall not be subject to Danish tax unless the enterprise carries on a trade or business in Denmark through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by Denmark, but only on so much of them as is attributable to that 2. The industrial or commercial profits of a Danish enterprise shall not be subject to United Kingdom tax unless the enterprise carries ~m a trade or business in the United Kingdom through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment. 3. Where an enterprise of one of the territories carries on a trade or 2196 Cap. 273] Income Tax 4. Where an enterprise of one of the territories derives profits, under contract concluded in that territory, from &ales of goods or merchandise stocked in a warehouse in the other territory for convenience of delivery and not for purposes of display, those profits shall not be attributed to a permanent establishment of the enterprise in that other territory, notwithstanding that the offers of purchase have been obtained by an agent in that other territory and transmitted by him to the enterprise for acceptance. 5. No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within that other territory by the enterprise. enterprise of the other territory. and in either case, conditions are made or imposed between the two enterprises, in their commercial or financial relations, which differ from those which would be made between independent enterprises, then any profits which would but for those conditions have accrued to one of the enterprises but by reason of those conditions have not so accrued may be included in the profits of that enterprise and taxed accordingly. 1. The industrial and commercial profits of a company which is a resident of Denmark shall, so long as undistributed profits of United Kingdom enterprises are affectively charged to United Kingdom Profits Tax at a lower rate than distributed profits of such enterprises, be charged to United Kingdom Profits Tax only at that lower rate. 2. Where a company which is a resident of Denmark controls, directly or indirectly, not less than 50 per cent. of the entire voting power of a company which is a resident of the United Kingdom, distributions by the latter company to the former company shall be left out of account in computing United Kingdom Profits Tax effectively chargeable on the latter company at the rate appropriate to distributed profits. 3. If the industrial and commercial profits of a company which is a resident of the United Kingdom become chargeable to a form of Danish tax under which, in the case of companies which are residents of Denmark, the undistributed or undistributable income is charged to tax at a lower rate than the distributed or distributable income of such companies, these industrial and commercial profits shall be charged to Danish tax only at the lower rate. 4. Where a compan.y which is a resident of the United Kingdom beneficially owns not less than 50 pei: cent. of the entire ordinary share capital of a company which is a resident of Denmark, distributed or distributable income payable by the latter company to the former company shall be left out of account in computing the liability of the latter company to Danish tax at any higher rate appropriate to distributed or distributable income, anil this shall apply, in particular, in computing the liability of the latter company to that part of the Danish extraordinary tax on companies known as Udbytterate. 1. Notwithstanding the provisions of Articles III, IV and V, profits which a resident of one of the territories derives from operating ships or aircraft shall be exempt from tax in the other territory. 2. The Agreement dated 18th December, 1924*, between the United Kingdom and Denmark for the reciprocal exemption from Income Tax in certain cases of profits accruing from the business of shipping shall not have effect for any year or period for which the present Convention has effect. 1. (a) Dividends paid by a company which is a resident of the United Kingdom to a resident of Denmark, who is subject to tax in Denmark in respect thereof and does not carry on a trade or b"Q.siness in the United Kingdom through a permanent establishment situated therein, shall be exempt from United Kingdom surtax. (b) Dividends paid by a company which is a resident oi Denmark to a resident of the United Kingdom, who is subject to tax in the United Kingdom in respect thereof and does not carry on a trade or business in Denma:rkthrough a permanent establishment situated therein, shall not be chargeable to tax in addition to the tax on the profits out of which the dividends are paid at a rate exceeding 5 per cent.: Provided that where the resident of the United Kingdom is a company which beneficially owns not less than 50 per cent. of the entire ordinary share capital of the company paying the dividends, the dividends shall be exempt from any such tax on dividends. 2. Where a company which is a resident of one of the territories derives imposed in that other territory any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or in part, profits or income so derived. 1. Any interest or royalty derived from sources within one of the terrishall be exempt from tax in that first-mentioned territory; but no exemption shall be allowed in respect of interest paid by a company which is a resident of one of the territories to a company which is a resident of the other territory where the latter company controls, either directly or indirectly, more than 50 per cent. of the entire voting power of the former company. 2. In this Article- (a) The term" interest" includes interest on bonds, securities, notes, • S.R. & O. 1925 (No. 102) p. 595. 2198 Cap. 273] Income Tax (b) The term "royalty" means any royalty or other amount paid as consideration for the use of, or for the privilege of using, any copyright patent, design, secret process or formula, trade mark or other lik~ property, but does not include any royalty or other amount paid in respect of the operation of a mine or quarry or of any other extraction of natural resources. 3. Where any interest or royalty exceeds a fair and reasonable consideration in respect of the indebtedness or rights for which it is paid, the exemption provided by the present Article shall apply only to so much of the interest or royalty as represents such fair and reasonable consideration. 4. Any capital sum derived from one of the territories from the sale of patent rights by a resident of the other territory, who does not carry on a trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory. Income of whatever nature derived from real property within one of the territories (except interest on mortgages secured on real property) shall be chargeable to tax in accordance with the laws of that territory. Where the said income is also chargeable to tax in the other territory, credit for the tax payable in the first-mentioned territory shall be given against the tax payable on that income in the other territory in accordance with Article XVII. A resident of one of the territories who does not carry on a trade or therein shall be exempt in that other territory from any tax on gains from the sale, transfer, or exchange of capital assets. · 1. Remuneration, including pensions, paid by, or out of funds created by, one of the High Contracting Parties to any individual in respect of services exempt from tax in the territory of the other High Contracting Party, unless the individual is a national of that other Party without being also a national of the first-mentioned Party. 2. The provisions of this Article shall not apply to payments in respect either of the High Contracting Parties for purposes of profit. 1. An individual who is a resident of the United Kingdom shall be exempt from Danish tax on profits or remuneration in respect of personal (including professional) services performed within Denmark in any year of (a) he is present within Denmark for a period or periods not exceeding in the aggregate 183 days during that year, and (c) 'the profits or remuneration are subject to United Kingdom tax. 2. An individual who is a resident of Denmark shall be exempt from Denmark, and (c) the profits or remuneration are subject to Danish tax. 3. The provisions of this Article shall not apply to the profits or re- ARTICLE XIII. . 1. Any pension (other than a pension of the kind referred to in paragraph 1 of Article XI) and any annuity, derived from sources within Denmark by an individual who is a resident of the United Kingdom and subject to United Kingdom tax in respect thereof, shall be exempt from Danish tax. 2. Any pension (other than a pension of the kind referred to in paragraph 1 of Article XI) and any annuity, derived from sources within the United Kingdom by an individual who is a resident· of Denmark and subject to Danish tax in respect thereof, shall be exempt from United Kingdom tax. 3. The term " annuity " means a stated sum payable periodically at A professor or teacher from one of the territories, who receives remuneration for teaching, during a period of temporary residence not exceeding two years, at a university, college,. school or other educational institution in A student or business apprentice froni one of the territories, who is receiving full-ti,w.e education or training in the other territory, shall be exempt 1. Individuals who are residents of Denmark shall be entitled to the same personal allowances, reliefs and reductions for the purposes of United Kingdom income tax as British subjects not resident in the United Kingdom. 2. Individuals who are residents of the United Kingdom shall be entitled to the same personal allowances and reliefs for the purposes of Danish tax as Danish nationals not resident in Denmark. 1. The laws of the High Contracting Parties shall continue to govern the taxation of income arising in either of the territories, except where express provision to the contrary is made in this Convention. Where income is subject to tax in both territories, relief from double taxation shall be given in accordance with the following paragraphs- 2200 Cap. 273] Income Tax 2. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against, United Kingdom tax of tax payable in a territory outside the United Kingdom, Danish tax payable, whether directly or by deduction, in respect of income from sources within Denmark shall be allowed as a credit against the United Kingdom tax payable in respect of that income. Where such income is an ordinary dividend paid by a company resident in Denmark, the credit shall take into account (in addition to any Danish tax appropriate to the dividend) the Danish tax payable by the company in respect of its profits; and, where it is a dividend paid on participating preference shares and representing both a dividend at the fixed raie to which the shares are entitled and an additional participation in profits, the Danish as the dividend exceeds that fixed rate. 3. United Kingdom tax payable, whether directly or by deduction, in respect of income from sources within the United Kingdom shall be allowed as a deduction from the Danish tax payable in respect of that income: Provided that the amount of the deduction shall not exceed the proportion of the Danish tax which such income chargeable to Danish tax bears to the total income chargeable to Danish tax. For the purposes of this paragraph only, the expression" Danish tax " shall include the Danish inter-municipal income 4. In the case of a person who is resident in the Uniied Kingdom for the purposes of United Kingdom tax and is also resident in Denmark for the purposes of Danish tax, the provisions of paragraph 2 of this Article shall apply in relation to income which that person derives from sources within Denmark, and the provisions of paragraph 3 of this Article shall apply in relation to income which he derives from sources within tlJ.e United Kingdom. If such person derives income from sources outside both the United Kingdom and Denmark, tax may be imposed on that income in both the territories (subject to the laws in force in the territories and to any Convention which may exist between either of the High Contracting Parties and the territory from which the income is derived). A credit shall be allowed in accordance with paragraph 2 of this Article against any United Kingdom tax payable in respect of that income, equal.to that proportion of the United Kingdom tax or the Danish tax on that income, whichever is the less, which such person's income from sources within the United Kingdom bears to the sum of his income from sources within the United Kingdom and his income from sources within Denmark; and a deduction shall be allowed in accordance with paragraph 3 of this Article against any Danish tax payable in respect of that income equal to that proportion of the United Kingdom tax or the Danish tax on that income, whichever is the less, which such person's income from sources within Denmark bears to the sum of his income from sources within the United Kingdom and his income from sources within Denmark. 5. For the purposes of this Article, profits or remuneration for personal deemed to be income from sources within that territory, and the services of an individual whose services are wholly or mainly performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory. ARTICLE XVIII. 1. The taxation au~thorities of the High Contracting Parties shall exchange such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary _____D_o_u_b_le_T_a_x_a_tio_n_R_el_?:ej_(D_-_en_ma_rk_)__[_C_ap_._2_7_3_ _____j(._~-,-~.;,c\;,:,) "~<i:..~':)/ for carrying out the provisions of the present Convention or for the prevention of fraud or for the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of the present Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than those concerned with the assessment and collection of the taxes which are the subject of the present Convention. No information as aforesaid shall be exchanged which would disclose any trade, business, industrial or professional secret or trade process. 2. As used in this Article, the term " taxation authorites " means, in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorised representatives; in the case of Denmark, the Director-General of Taxation or his authorised representative; and, in the case of any territory to which the present Convention is extended under Article XX, the competent authority for the administration in such territory of the taxes to which the present Convention applies. 1. The nationals of one of the High Contracting Parties shall not be subjected in the territory of the other High Contracting Party to any taxation or any requirement connected therewith which is other, higher, or more burdensome than the taxation and connected requirements to which the nationals of the latter Party are or may be subjected. 2. The enterprises of one of the territories, whether carried on by a company, a body of persons or by individuals alone or in partnership, shall not be subjected in the other territory, in respect of profits or capital attributable to their permanent establishments in that other territory, to any taxation which is other, higher or more burdensome than the taxation to which the enterprises of that other territory similarly carried on are or may be subjected in respect of the like profits or capital. 3. The income, profits and capital of an enterprise of one of the territories, the capital of which is wholly or partly owned or controlled, directly or indirectly, by a resident or residents of the other territory shall not be subjected in the first-mentioned territory to any taxation which is other, higher or more burdensome than the taxation to which other enterprises of that first-mentioned territory are or may be subjected in respect of the like income, profits and capital. 4. Nothing in paragraph 1 or paragraph 2 of this Article shall be construed as obliging one of the High Contracting Parties to grant to nationals of the other High Contracting Party who are not resident in the territory of the former Party the same personal allowances, reliefs and reductions for tax purposes as are granted to his own nationals. 5. In this Article the term" nationals" means- (a) in relation to Denmark, all Danish .citizens and all legal persons, partnerships, associations and other entities deriving their status as such from the law in force in Denmark or in any Danish territory to which the present Convention applies by reason of extension made under Article XX; British-protected persons residing in the United Kingdom or any British territory to which the present Convention applies by reason of extension made under Article XX, and all legal persons, partnerships, associations and other entities deriving their status as such from the law in force in any British territory to which the present Convention applies. 2202 Cap. 273] Income Tax 6. In this Article the term " taxation " means taxes of every kind and 1. The present Convention may be extended, either in its entirety or with modifications, to any territory of one of the High Contracting Parties to which this Article applies and which imposes taxes substantially similar in character to those which are the subject of the present Convention, and any such extension shall take effect from such date and subject to such modifications and conditions (including conditions as to termination) as may be specified and agreed between the High Contracting Parties in notes to be exchanged for this purpose. 2. The termination in respect of Denmark or the United Kingdom of the present Convention under Article XXII shall, unless otherwise expressly agreed by both High Contracting Parties, terminate the application of the present Convention to any territory to which the Convention has been extended under this Article. · 3. The territories to which this Article applies are: (a) in relation to the United Kingdom: any territory other than the United Kingdom for whose international relations the United Kingdom is responsible; (b) in relation to Denmark: any territory other than Denmark for whose international relations Denmark is responsible. 1. The present Convention shall be ratified and the instruments of ratification shall be exchanged at London as soon as possible. 2. Upon exchange of ratifications the present Convention shall have or after the 6th April, 1949; as respects surtax for any year of assessment beginning on or after the 6th April, 1948; and beginning on or after the 1st April, 1949; (iii) profits not so arising or attributable by reference to which income tax is, or but for the present Convention would be, chargeable for any year of assessment beginning on or after the 6th April, 1949. after the 1st April, 1949. The present Convention shall continue in effect indefinitely but either of the High Contracting Parties may, on or before the 30th June in any calendar year not earlier than the year 1953, give to the other High Contracting Party, through diplomatic channels, written notice of termination and, in such event, the present Convention shall cease to be effectiveor after the 6th April in the calendar year next following that in as respects surtax for any year of assessment beginning on or after the 6th April in the calendar year in which the notice is given; (i} profits arising in any chargeable accounting period beginning on or after the 1st April in the calendar year next following that in which the notice is given; (iii) profits not so arising or attributable by reference to which income tax is chargeable for any year of assessment beginning on or after the 6th April in the next following calendar year. after the 1st April in the calendar year next following that in which the notice is given. Done at London in duplicate, in the English and Danish languages, both texts being equally authentic, on the twenty-seventh day of March, one thousand nine hundred and fifty. (L.s.) ERNEST BEVIN. (L.S.) E. REVENTLOW. !. (a) The provlSlons of the Convention incorporated in the First Schedule to this Order shall apply as modified below- (i) as if the Contracting Parties were Sierra Leone and the Government of Denmark; (ii) as if the tax concerned in the case of Sierra Leone were the Income tax and the duty on profits charged under the Concessions Ordinance, 1931, and the Diamond Industry Profits Tax; (iii) as if the taxes concerned in the case of Denmark included the Defence Tax; 160 of 1957. (iv) as if references to the date of signature were references to the 22nd day of December, 1954; (v) as if references to the 6th day of April were references to the 1st day of April; year of assessment 1954-55 and for subsequent years of assessment, (and will have effect in Denmark as respects Danish tax for any taxation year beginning on or after the first day of April, 1954). (c) The extension shall continue in effect indefinitely but may be terminated as respects Sierra Leone by written notice of termination given on or before the 30th June in any calendar year not earlier than the year 1957 by either of the High Contracting Parties to the Convention to the other High Contracting Party through the diplomatic channel and in such event the extension shall cease to have effect in Sierra Leone as respects tax for the year of assessment beginning in the calendar year next following the date of such notice and for subsequent years of assessment, (and will cease to have effect in Denmark as respects Danish tax for any taxation year beginning on or after the first day of April in the calendar year next following that in which the notice is given). Modifications- 2. (a) In Article VII (1) of the Convention the words "exempt from United Kingdom Surtax" shall be understood for the purposes of this extension as though they read " shall not be liable to tax in the territory at a rate in excess of the rate applicable to a company ". · (b) In Articles VIII and IX all references to interest shall be deemed to be deleted. NORWAY. (NORWAY) ORDER. WHEREAS it is provided by sub-section (I) of section 32A of AND WHEREAS by a Convention dated the 2nd day of May, 1951, between the Government of the United Kingdom and the Government of Norway, arrangements were made among other things for the avoidance of Double Taxation: *Section 32A is renumbered 35. Contracting Parties of the said Convention, subject to such modifications and conditions (including conditions as to termination) as may be specified in the exchange of notes, to any territory, for whose international .relations the United Kingdom is responsible, which imposes taxes substantially similar in character to those which are the subject of the said Convention: AND WHEREAS by an Exchange of Notes dated the 18th day of May, 1955, the said Convention with certain modifications was applied to Sierra Leone: Now THEREFORE, in exercise of the powers conferred upon the Governor in Council by sub-section ( l) of the said section 32A, * 1. This Order may be cited as the Income Tax (Double Taxation Relief) (Norway) Order in Council, 1957. 2. it is hereby declared- Schedule of this Order, have been made with the Government of Norway; (b) that it rs expedient that those arrangements should AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM AND THE NORWEGIAN GOVERNMENT FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EvASION WITH RESPECT TO TAXES ON INCOME. Ireland and the Government of Norway, Have agreed as follows- (1) The taxes which are the subject of the present Convention are- (a) In Norway: The national income tax, including the national defence tax on income, the communal income tax, the old age pension tax, the war pension tax, and the seamen's tax, and, for the purposes of Article XIX, the national property * Section 32A is renumbered 35. S.L.-VoL. VIII-34 2206 Cap. 273] Income Tax tax, including the national defence tax on property (hereinafter referred to as " Norwegian tax"); The income tax (including surtax) and the profits tax (hereinafter referred to as" United Kingdom tax"). (2) The present Convention shall also apply to any other taxes of a substantially similar character imposed in Norway or the United Kingdom subsequently to the date of signature of the present Convention. (1) In the present Convention, uniess the context otherwise requires- (a) The term'' United Kingdom " means Great Britain and Northern (b) The term" Norway" means the Kingdom of Norway, excluding Spitsbergen and Bear Island and J~n Mayen and the Norwegian dependencies outside Europe; (c) The terms " one of the territories" and "the other territory" mean the United Kingdom or Norway, as the context requires; (d) The term" tax" means United Kingdom tax or Norwegian tax, as the context requires; not corporate; {f) The term" company" means any body corporate; (g) The terms " resident of the United Kingdom " and " resident of Norway" mean respectively any person who is resident in the United Norway for the purposes of Norwegian tax, and any person who is resident in Norway for the purposes of Norwegian tax and not resident in the United Kingdom for the purposes of United Kingdom tax; a company shall be regarded as resident in the United Kingdom if its business is managed and controlled in the United Kingdom and as resident in Norway if its business is managed and controlled in Norway; (h) The terms "resident of one of the territories" and "resident of the other territory " mean a person who is a resident of the United Kingdom or a person who is a resident of Norway, as the context requires; (i) The terms "United Kingdom enterprise" and "Norwegian resident of Norway, and the terms" enterprise of one of the territories" prise or a Norwegian enterprise, as the context requires; (j) The term "industrial or· commercial profits" includes rents or royalties in respect of cinematograph films; to an enterprise of one of the territories, means a branch, management, factory, or other fixed place of business, but does not include an agency unless the agent has, and habitually exercises, a general authority to negotiate and conclude contracts on behalf of such enterprise i' or has a stock of merchandise from which he regularly fills orders on its behalf. In this connection- (i) An enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely a bona fide broker or general commission agent acting in the ordinary course of his business as such. (ii) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise. (iii) The fact that a company which is a resident of one of the territories has a subsidiary company which is a resident of the other territory or which carries on a trade or business in that other territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of its parent company. (2) Where under the present Convention any rncome is exempt from tax in one of the territories if (with or without other conditions) it is subject to tax in the other territory, and that income is subject to tax in that other in that other territory, the exemption to be allowed under this Convention in the first-mentioned territory shall apply only to the amount so remitted or (3) In the application of the provisions of the present Convention by one of the Contracting Parties any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws in force in the territory of that party relating to the taxes which are the subject of the present Convention. (1) The industrial or commercial profits of a United Kingdom enterprise shall not be subject to Norwegian tax unless the enterprise carries on a trade or business in Norway through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by Norway, but only on so much of them as is attributable to that (2) The industrial or commercial profits of a Norwegian enterprise shall not be subject to United Kingdom tax unless the enterprise carries on a trade or business in the United Kingdom through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment. (3) Where an enterprise of one of the territories carries on a trade or (4) Where an enterprise of one of the territories derives profits, under contracts concluded in that territory, from sales of goods or merchandise S.L.-VoL. VIII-34* 2208 Cap. 273] Income Tax stocked in a warehouse in the other territory for convenience of delivery and not for purposes of display, those profits shall not be attributed to a permanent establishment of the enterprise in that other territory, notwithstanding that the offers of purchase have been obtained by an agent in that other territory and transmitted by him to the enterprise for acceptance. (5) No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within that other territory by the enterprise. ment, control or capital of an ente~prise of one of the territories and an enterprise of the other territory, and, in either case, conditions are made or imposed between the two enterprises, in their commercial or financial relations, which differ from those which would be made between independent enterprises, then any profits which would but for those conditions have accrue<! to one of the enterprises but by reason of those conditions have not so accrued may be included in the profit of that enterprise and taxed accordingly. Notwithstanding the provisions of Articles III and IV, profits which a resident of one of the territories derives from operating ships or aircraft (1) (a) Dividends paid by a company which is a resident of the United Kingdom to a resident of Norway, who is subject to tax in Norway in respect thereof and does not carry on a trade or business in the United Kingdom through a permanent establishment situated therein, shall be exempt from (b) Norwegian tax on dividends paid by a company which is a resident of Norway to a resident of the United Kingdom, who is subject to tax in the United Kingdom in respect thereof and does not carry on trade or business in Norway through a permanent establishment situated therein, shall not exceed 5 per cent. Provided that, where the resident of the United Kingdom is a company which controls, directly or indirectly, not less than 50 per cent. of the entire voting power of the company paying the dividends, the dividends shall be exempt from Norwegian tax. imposed in that other territory any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of an undistributed profits tax on undistributed profits of the company whether or not those dividends or undistributed profits represent, in whole or in part, profits or income so derived. (1) Any interest or royalty derived from sources within one of the terrishall be exempt from tax in that first-mentioned territory. (2) In this Article- (a) The term " interest " includes interest on bonds, securities, notes, (b) The term "royalty" means any royalty or other amount paid as consideration for the use of, or for the privilege of using any copyright, patent, design, secret process or formula, trade mark or other like property but does not include any royalty or other amount paid in respect of the operation of a mine or quarry or of any other extraction of natural resources. (3) Where any interest or royalty exceeds a fair and reasonable consideration in respect of the indebtedness or rights for which it is paid, the exemption provided by the present Article shall apply only to so much of the interest or royalty as represents such fair and reasonable consideration. (4) Any capital sum derived from sources within one of the territories from the sale of patent rights by a resident of the other territory, who does not carry on a trade or business in the first-mentioned territory through a (1) Where under the provisions of the present Convention a resident of the United Kingdom is exempt or entitled to relief from Norwegian tax, similar exemption or relief shall be applied to the undivided estates of deceased persons in so far as one or more of the beneficiaries is a resident of the United Kingdom. (2) Norwegian tax on the undivided estate of a deceased person shall, in so far as the income accrues to a beneficiary who is resident in the United Kingdom, be allowed as a credit under Article XVI. "(1) Remuneration, including pensions, paid by, or out of funds created by, one of the Contracting Parties to any individual in respect of services exempt from tax in the territory of the other Contracting Party, unless the individual is a national of that other Party without being also a national of the first-mentioned Party. (2) The provisions of this Article shall not apply to payments in respect either of the Contracting Parties for purposes of profit. (1) An individual who is a resident of the United Kingdom shall be exempt from Norwegian tax on profits or remuneration in respect of personal (including professional) services performed within Norway in any year of 2210 Cap. 273] Income Tax (a} he is present within Nor}Vay for a period or periods not exceeding (c) the profits or remuneration are subject to United Kingdom tax. (2) An individual who is a resident of Norway shall be exempt from Norway, and (c) the profits or remuneration are subject to Norwegian tax. (3) The provisions of this article shall not apply to the profits or re- A resident of one of the territories shall be exempt from tax in the other territory in respect of remuneration for services performed on ships or aircraft operating outside the other territory. (1) Any pension (other than a pension of the kind referred to in paragraph (1) of Article IX) and any annuity, derived from sources within Norway by an individual who is a resident of the United Kingdom and subject to United Kingdom tax in respect thereof, shall be exempt from Norwegian tax. (2) Any pension (other than a pension of the kind referred to in paragraph (1) of Article IX) and any annuity, derived from sources within the United Kingdom by an individual who is a resident of Norway and subject to Norwegian tax in respect thereof, shall be exempt from United Kingdom (3) The term "annuity" means a stated sum payable periodically at ARTICLE XIII. A professor or teacher from one of the territories, who receives remuneration forteaching, during a period of temporary residence not exceeding two years, at a university, college, school, or other educational institution in A student or apprentice from one of the territories, who is receiving fulltime education or training in the other territory, shall be exempt from tax in that other territory on payments made to him from abroad for the purposes of his maintenance, education or training. (1) Individuals who are residents of Norway sh~ll be entitled to the same personal allowances, reliefs and reductions for the purposes of United Kingdom tax as British subjects not resident in the United Kingdom. (2) Individuals who are residents of the United Kingdom shall be entitled to the same personal allowances, reliefs and reductions for the purposes of Norwegian t!J.X as Norwegian nationals not resident in Norway. (1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax or tax payable in a territory outside the United Kingdom, Norwegian tax payable, whether directly or by deduction, in respect of income from sources within Norway shall be allowed as a credit against any United Kingdom tax payable in respect of that income. Wb.ere such income is an ordinary dividend paid by a company resident in Norway, the credit shall take into account (in addition to any Norwegian tax appropriate to the dividend) the Norwegian tax payable by the company in respect of its profits; and, where it is a dividend paid on participating the shares are entitled and an additional participation in profits, theN orwegian as the dividend exceeds that fixed rate: Provided that for the purposes of this paragraph of this Article, the credit to be allowed for Norwegian communal income tax shall not exceed one-half of the said communal income tax. (2) Wb.ere United Kingdom tax is payable, whether directly or by deduction, in respect of income from sources within the United Kingdom and that income is chargeable also to Norwegian tax, the Norwegian tax payable by the person entitled to such income on his total income chargeable to Norwegian tax shall be reduced by an amount which bears the same proportion to that Norwegian tax as the income from sources within the United Kingdom bears to the said total income. Provided that theN orwegian Ministry of Finance and Customs may decide that the deduction shall not exceed the amount of the United Kingdom tax. Wb.ere such income is an ordinary dividend paid by a company resident in the United Kingdom, the deduction, in the event that it is restricted to the amount of the United Kingdom tax, shall take into account (in addition to the United Kingdom tax appropriate to the dividend) the United Kingdom profits tax payable by the company in respect of its profits; and, where it is a dividend paid on participating preference shares and representing both a dividend at a fixed rate to which the shares are entitled and an additional participation in profits, the profits tax so payable by the company shall likewise be taken into account in so far as the dividend exceeds that fixed rate. (3) Where income is derived from sources . outside both the United Kingdom and Norway by a person who is resident in the United Kingdom for the purposes of United Kingdom tax and also resident in Norway for the purposes of Norwegian tax, the income may be taxed in both countries (subject to any Convention which may exist between either of the Contracting Parties and the territory or territories from which the income is derived). A credit shall be allowed in accordance with paragraph (1) of this Article against any United Kingdom tax payable in respect of that income, equal to 2212 Cap. 273] Income Tax that proportion of the United Kingdom tax or the Norwegian tax, whichever is the less, which such person's income "from sources within the United Kingdom bears to the sum of his income from sources within the United Kingdom and his income from sources within Norway; and a deduction shall be allowed in accordance with paragraph (2) of this Article against any Norwegian tax payable in respect· of that income equal to that. proportion of the United Kingdom tax or the Norwegian tax, whichever is the less, which such person's income from sources within Norway bears to the sum of his income from sources within the United Kingdom and his income from sources within Norway. (4) For the purposes of this Article, profits or remuneration for personal deemed to be income from sources within that territory, except that the remuneration of a director of a company shall be deemed to be income from sources within the territory in which the company is resident, and the services of an individual whose services are wholly or mainly performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory. (I) The taxation authorities of the Contracting Parties shall exchange such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary for carrying out the provisions of the present Convention or for the prevention of fraud or for the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of the present Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than persons (including a Court) concerned with the assessment, determination and collection of the taxes which are the subject of the present Convention. No information as aforesaid shall be exchanged which would disclose any trade, business, industrial or professional secret or trade process. (2) As used in this Article, the term " taxation authorities " means, in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorised representative; in the case of Norway, the Ministry of Finance and Customs; and, in the case of any territory to which the present Convention is extended under Article XX, the competent authority for the administration in such territory of the taxes to which the present Convention applies. ARTICLE XVIII. The Agreement of 18th December, 1924,* between Great Britain and Norway for the reciprocal exemption from income tax in certain cases of profits accruing from the business of shipping, and the Agreement of 21st December, 1938, t between the United Kingdom and Norway for the reciprocal exemption from taxes in certain cases of profits arising through agencies, shall not have effect- (a) in Norway, for any period for which the present Convention has effect in that country; (b) in the United Kingdom, in relation to any tax for any period for which the present Convention has effect as respects that tax. *S.R. & 0. 1925 (103}, p. 600. tS.R. & 0. 939 (No. 1319) II, p. 1734. (1) The nationals of one of the Contracting Parties shall not be subjected in the territory of the other Contracting Party to any taxation or any requirement connected therewith which is other, higher or more burdensome than the taxation and connected requirements to which the nationals of the latter Party are or may be subjected. (2) The enterprises of one of the territories shall not be subjected in the other territory, in respect of profits or capital attributable to their permanent establishments in that other territory, to any taxation which is other higher or more burdensome than the taxation to which the enterprise of that other territory is or may be subjected in respect of the like profits or capital. (3) The income, profits and capital of an enterprise of one of the territories, the capital of which is wholly or partly owned or controlled, directly or indirectly, by a resident or residents of the other territory shall not be subjected in the first-mentioned territory to any taxation which is other, higher or more burdensome than the taxation to which other enterprises of that first-mentioned territory are or may be subjected in respect of the like income profits and capital. (4) Nothing in paragraph (1) or paragraph (2) of this Article shall be construed as obliging one of the Contracting Parties to grant to nationals of the other Contracting Party who are not resident in the territory of the former Party the same personal allowances, reliefs and reductions for tax purposes as are granted to its own nationals. (5) In this Article the term" nationals" means- (a) in relation to Norway, all Norwegian citizens and all juridical persons domiciled in Norway; British protected persons residing in the United Kingdom or any British territory to which the present Convention applies by reason of extension made under Article XX, and all legal persons, partnerships and associations deriving their status as such from the law in force in any British territory which the present Convention applies. (6) In this Article the term " taxation " means taxes of every kind and (1) The present Convention may be extended, either in its entirety or with modifications, to any territory for whose international relations the United Kingdom is responsible and which imposes taxes substantially similar in character to those which are the subject of the present Convention, and any such extension shall take effect from such date and subject to such modifications and .conditions (including conditions as to termination) as may be specified and agreed between the Contracting Parties in notes to be exchanged for this purpose. (2) The termination in respect of Norway or the United Kingdom of the present Convention under Article XXII shall, unless otherwise expressly agreed by both Contracting Parties, terniinate the application of the present Convention to any territory to which the Convention as been extended under this Article. 2214 Cap. 273] Income Tax (1) The present Convention shall be ratified and the instruments of ratifications shall be exchanged at Oslo as soon as possible. (2) The present Convention shall enter into force upon the exchange of ratifications and the foregoing provisions thereof shall have effectas respects income tax for any year of assessment beginning on or after 6th April, 1950; as respects surtax for any year of assessment beginning on or after 6th April, 1949; and (i) profits arising in any chargeable accounting period beginning on or after 1st April, 1950; (ii) profits attributable to so much of any chargeable accounting period falling partly before and partly after that date as falls after ~hat date; (iii) profits not so arising or attributable by reference to which income taxis, or but for the present Convention would be, chargeable for any year of assessment beginning on or after 6th April, 1950; (b) In Norway: for the taxable years beginning on or after 1st January, 1950. The present Convention shall continue in force indefinitely but either of the Contracting Parties may, on or before 30th June in any calendar year not earlier than the year 1954, give to the other Contracting Party, through diplomatic channeJs, written notice of termination, provided that such notice of termination may be given in any year before 1954 if there should be any important change in the laws of the other Contracting Party affecting the application of Article XVI. In such event, the present Convention shall cease to be effectiveas respects income tax for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given; as respects surtax for any year of assessment beginning on or after 6th April in the calendar year in which the notice is given: and as respects profits tax, in respect of the following profits- (i) profits arising in any chargeable accounting period beginning on or after 1st April in the calendar year next following that in (ii) profits attributable to so much of any chargeable accounting period falling partly before and partly after that date as falls after that date; (iii) profits not so arising or attributable by reference to which income tax is chargeable for any year of assessment beginning on or after 6th April in the next following calendar year; Double Taxation Relief (N"orway) [Cap. 273 (b) In Norway: for the taxable years beginning on or after 1st January in the calendar year next following that in which the notice is given. In witness whereof the undersigned, being duly authorised by their respective Governments, have signed the present Convention and have affixed thereto their seals. · Done at London, in duplicate, in the English and Norwegian languages, both texts being equally authoritative, on the 2nd day of May, 1951. (L.s.) HERBERT MORRISON. (L.s.) P. PREBENSEN. !. (a) The provisions of the Convention incorporated in the First Schedule to this Order shall apply as modified below- (i) as if the Contracj.;ing Parties were Sierra Leone and the Government of Norway; and as if the tax concerned in the case of Sierra Leone were the Income Tax and the duty on profits charged under·the Concessions Ordinance, 1931, and the Diamond Industry Profits Tax; (ii) as if references to the date of signature were references to the 18th day of May, 1955. (b) The extension shall have effect in Sierra Leone as respects tax for the year of assessment 1955-56 and for subsequent years of assessment, (and will have effect in Norway as respects Norwegian tax for the taxable years beginning on or after 1st January, 1954). (c) The extension shall continue in effect indefinitely but may be terminated as respects Sierra Leone by written notice of termination given on or before the 30th June in any calendar year not earlier that the year 1957 by either of the Contracting Parties to the Convention to the other Contracting Party through the diplomatic channel and in such event the extension shall cease to have effect in Sierra Leone as respects tax for the year of assessment beginning in the calendar year next following the date of such notice for and. for subsequent years of assessment, (and for the taxable years beginning on or after 1st January in the calendar year in which the notice is given). Modifications: 2. (a) In article VI (1) of the Convention the words "shall be exempt from United Kingdom Surtax " shall be understood for the purposes of this extension as though they read " shall not be liable to tax in the territory at a rate in excess of the rate applicable to a company. (b) (i) In Article VII all references to interest shall be deemed to be deleted; and (ii) in paragraph 2 of Article XVI references to income (except in the phrase " total income ") shall be deemed not to include interest. 129 of 1958. . UNITED STATES OF AMERICA. THE INCOME TAX (DOUBLE TAXATION RELIEF) (U.S.A.) ORDER IN COUNCIL, 1958. WHEREAS it is provided by sub-section (I) of section 32A. of AND WHEREAS by a Convention dated the 16th day of April, 1945, and a protocol thereto dated the 6th day of June, 1946, and a further protocol thereto dated the 25th May, 1954, and a further protocol thereto dated the 19th day of August, 1957, between the Government of the United Kingdom and the Government of the United States, arrangements were made among other things for the avoidance of Double Taxation: AND WHEREAS provision is made in the said Convention as amended by the said protocols for the application by means of a notification of extension given by either of the said Governments to the other Government and acceptance thereof by the other Government of the said Convention as amended, subject to such modifications, if any, as may be specified in the notification, to all or any of its Colonies, overseas territories, protectorates or territories in respect of which it exercises a mandate or trusteeship, which impose taxes substantially similar ill character to those which are the subject of the said Convention: AND WHEREAS by acceptance of a notification dated the 3rd day of December, 1958, the said Convention as amended, with certain modifications, was applied to Sierra Leone: Now, THEREFORE, in exercise of the powers conferred upon the Governor in Council by sub-section (I) of the said section 32A, the following Order is hereby made- 1. This Order may be cited as the Income Tax (Double Taxation Relief) (U.S.A.) Order in Council, 1958. * Section 32a is renumbered 35, Double Taxation Relief (United States of America) [Cap. 273 2217 2. It is hereby declared- Schedule to this Order, have been made with the Government of the United States of America; · PART I. CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NoRTHERN IRELAND AND THE GovERNMENT OF THE UNITED STATES oF AMERICA FOR THE AvoiDANCE OF DoUBLE TAXATiON AND THE PREVENTION OF FISCAL EvASION WITH RESPECT TO TAXES ON INCOME. Ireland and the Government of the United States of America, Have appointed for that purpose as the1r Plenipotentiaries: The Right Honourable the Earl of Halifax, K.G., Ambassador Extraordinary in Washington; and The Government of the United States of America: Mr. Edward R. Stettinius, Junior Secretary of State; Who, having exhibited their respective full powers, found in good and due form, have agreed as follows- 1. The taxes which are the subject of the present Convention are- (a) In the United States of America: The Federal income taxes, including surtaxes and excess profits taxes (hereinafter referred to as United States tax). The income tax (including surtax), the excess profits tax and the national defence ·contribution (hereinafter referred to as United Kingdom tax). 2. The present Convention shall also apply to any other taxes of a substantially similar character imposed by either Contracting Party subsequently to the date of signature of .the present Convention or by the Government of any territory to which the present Convention is extended under Article XXII. 2218 Cap. 273] Income Tax 1. In the present Convention, unless the context otherwise requires- (a) The term" United States" means the United States of America, and when used in a geographical sense means the States, the Territories of Alaska and of Hawaii, and the District of Columbia. (b) The term "United Kingdom" means Great Britain and Northern Ireland, excluding the Channel Islands and the Isle of Man. (c) The terms "territory of one of the Contracting Parties" and " territory of the other Contracting Party" mean the United States or the United Kingdom as the context requires. (d) The term "United States corporation" means a corporation, association or other like entity created or organised in or under the laws of the United States. (e) The terms "United Kingdom corporation" means any kind of juridical person created under the laws of the United Kingdom. (f) The terms " corporation of one Contracting Party " and " corporation of the other Contracting Party" mean a United States corporation or a United Kingdom corporation as the context requires. (g) The term " resident of the United Kingdom " means any person (other than a citizen of the United States or a United States corporation) who is a resident in the United Kingdom for the purposes of United Kingdom tax and not resident in the United States for the purposes of United States tax. A corporation is to be regarded as resident in the United Kingdom if its business is managed and controlled in the United Kingdom. (h) The term " resident of the United States " means any individual who is resident in the United States for the purposes of United States . tax and not resident in the United Kingdom for the purposes of United Kingdom tax, and any United States corporation and any partnership created or organised in or under the laws of the United States, being a corporation or partnership which is not resident in the United Kingdom for the purposes of United Kingdom tax. · (i) The term "United Kingdom enterprise" means an industrial or commercial enterprise or undertaking carried on by a resident of the United Kingdom. (j) The term "United States enterprise" means an industrial or commercial enterprise or undertaking carried on by a resident of the United States. (k) The terms " enterprise of one of the Contracting Parties" and " enterprise of the other Contracting Party " mean a United States enterprise or a United Kingdom enterprise, as the context requires. (l) The term "permanent establishment" when used with respect to an enterprise of one of the Contracting Parties means a branch, management, factory or other fixed place of business, but does not include an agency unless the agent has, and habitually exercises, a general authority to negotiate and conclude contracts on behalf of such enterprise or has a stock of merchandise from which he regularly fills orders on its behalf. An enterprise of one of the Contracting Parties shall not be deemed to have a permanent establishment in the territory of the other Contracting Party merely because it carries on business ~ Double Taxation Relief (United States of America) [Cap 273 dealings in the territory of such other Contracting Party through a bona fide commission agent, broker or custodian acting in the ordinary course of his business as such. The fact that an enterprise of one of the Contracting Parties maintains in the territory of the other Contracting Party a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute such fixed place of business a permanent establishment of such enterpriBe. The fact that a corporation of one Contracting Party has a subsidiary corporation which is a corporation of the other Contracting Party or which is engaged in trade or business in the territory of such other Contracting Party (whether constitute that subsidiary corporation a permanent establishment of its parent corporation. 2. For the purposes of Articles VI, VII, VIII, IX and XIV a resident of the United Kingdom shall not be deemed to be engaged in trade or business in the United States in any taxable year unless such resident has a permanent establishment situated therein in such taxable year. The same principle shall be applied, mutatis mutandis, by the United Kingdom in the case of a resident of the United States. 3. In the application of the provisions of the present Convention by one of the Contracting Parties any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting Party relating to the taxes which are subject of the present Convention. 1. A United Kingdom enterprise shall not be subject to United States tax in respect of its industrial or commercial profits unless it is engaged in trade or business in the United States through a permanent establishment situated therein. If it is so engaged, United States tax may be imposed upon the entire income of such enterprise from sources within the United States. 2. A United States enterprise shall not be subject to United Kingdom tax in respect of its industrial or commercial profits unless it is engaged in trade or business in the United Kingdom through a permanent establishment situated therein. If it is so engaged, United Kingdom tax may be imposed upon the entire income of such enterprise from sources within the United Kingdom: Provided that nothing in this paragraph shall affect any provisions of the law of the United Kingdom regarding the imposition of United Kingdom excess profits tax and national defence contribution in the case of inter-connected companies. 3. Where an enterprise of one of the Contracting Parties is engaged in trade or business in the territory of the other Contracting Party through a permanent establishment situated therein, there shall be attributed to such permanent establishment the industrial or commercial profits which it might be expected to derive if it were an independent enterprise engaged dealing at arm's length with the enterprise of which it is a permanent establishment, and the profits so attributed shall, subject to the law of such other Contracting Party, be deemed to be income from sources within the territory of such other Contracting Party. 4. In determining the industrial or commercial profits from sources within the territory of one of the Contracting Parties of an enterprise of the 2220 Cap. 273] Income Tax other Contracting Party, no profits shall be deemed to arise from the mere purchase of goods or merchandise within the territory of the former Contracting Party by such enterprise. Where an enterprise of one of the Contracting Parties, by reason of its participation in the management, control or capital of an enterprise of the other Contracting Party, makes with or imposes on the latter, in their commercial or financial relations, conditions different from those, which would be made with an independent enterprise, any profits, which would but for those conditions have accrued to one of the enterprises but by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 1. Notwithstanding the provisions of Articles III and IV of the present Convention, profits, which an individual (other than a citizen of the United States) resident in the United Kingdom or a United Kingdom corporation derives from operating ships documented or aircraft registered under the laws of the United Kingdom, shall be exempt from United States tax. 2. Notwithstanding the provisions of Articles III and IV of the present Convention, profits, which a citizen of the United States not resident in the United Kingdom or a United States corporation derives from operating ships documented or aircraft registered under the laws of the United States, shall be exempt from United Kingdom tax. 3. This Article shall be deemed to have superseded, on and after the first day of January, 1945, as to United States tax, and on and after the 6th day of April, 1945, as to United Kingdom tax, the arrangements relating to reciprocal exemption of shipping profits from income tax effected between the Government of the United States and the Government of the United Kingdom by exchange of Notes dated August 11, 1924, November 18, 1924, November 26, 1924, January 15, 1925, February 13, 1925, and March 16, 1925, which shall accordingly cease to have effect. 1. The rate of United States tax on dividends derived from a United States corporation by a resident of the United Kingdom who is subject to United Kingdom tax on such dividends and not engaged in trade or business in the United States shall not exceed 15 per cent.: Provided that such rate of tax shall not exceed 5 per cent. if such resident is a corporation controlling, directly or indirectly, at least 95 per cent. of the entire voting power in the corporation paying the dividend, and not more than 25 per cent. of the gross income of each paying corporation is derived from interest and dividends, other than interest and dividends received from its own subsidiary corporations. Such reduction of the rate to 5 per cent. shall not apply if the relationship of the two corporations has been arranged or is maintained primarily with the intention of securing such reduced rate. 2. Dividends derived from sources within the United Kingdom by an individual, who is (a) a resident of the United States, (b) subject to United States tax with respect to such dividends and (c) not engaged in trade or business in the United Kingdom, shall be exempt from United Kingdom surtax. Dmtble Taxation Relief (United States of America) [Cap. 273 3. Either of the Contracting Parties may terminate this Article by giving written notice of termination to the other Contracting Party, through diplomatic channels, on or before the thirtieth day of June in any year after the year 1945, and in such event paragraph (1) hereof shall cease to be effective as to United States tax on and after the first day of January, and paragraph (2) hereof shall cease to be effective a.s to the United Kingdom tax on and after the 6th day of April, in the year next following that in which such notice is given. 1. Interest (on bonds, securities, notes, debentures, or on any other form of indebtedness) derived from sources within the United States by a resident of the United Kingdom who is subject to United Kingdom tax on such interest and not engaged in trade or business in the United States, shall be exempt from United States tax; but such exemption shall not apply to such interest paid by a United States corporation to a corporation resident in the United Kingdom controlling, directly or indirectly, more than 50 per cent. of the entire voting power in the paying corporation. 2. Interest (on bonds, securities, notes, debentures, or on any other form of indebtedness) derived from sources within the United Kingdom by a resident of the United States who is subject to United States tax on such interest and not engaged in trade or business in the United Kingdom, shall be exempt from United Kingdom tax; but such exemption shall not apply to such interest paid by a corporation resident in the United Kingdo.m to a United States corporation controlling, directly or indirectly, more than 50 per cent. of the entire voting power in the paying corporation. 1. Royalties and other amounts paid as consideration for the use of, or for the privilege of using, copyrights, patents, designs, secret processes and formulae, trade-marks, and other like property, and derived from sources within the United States by a resident of the United Kingdom who is subject to United Kingdom tax on such royalties or other amounts and not engaged in trade or business in the United States, shall be exempt from United States 2. Royalties and other amounts paid as consideration for the use of, or for the privilege of using, copyrights, patents, designs, secret processes and formulae, trade-marks, and other like property, and derived from sources within the United Kingdom by a resident of the United States who is subject to United States tax on such royalties or other amounts and not engaged in trade or business in the United Kingdom, shall be exempted from United Kingdom tax. 3. For the purposes of this Article the term " royalties " shall be deemed to include rentals in respect of motion picture films. 1. The rate of United States tax on royalties in respect of the operation of mines or quarries or of other extraction of natural resources, and on rentals from real property or from an interest in such property, derived from sources within the United' States by a resident of the United Kingdom who is subject to United Kingdom tax with respect to such royalties or rentals and not engaged in trade or business in the United States, shall not exceed 15 per cent.: Provided that any such resident may elect for any taxable year to be subject to United States tax as if such resident were engaged in trade or business in the United States. S.L.-VoL. VIII-35 2222 Cap. 273] Income Tax 2. Royalties in respect of the operation of mines or quarries or of other extraction of natural resources, and rentals from real property or from an interest in such property, derived from sources within the United Kingdom by an individual who is (a) a resident of the United States, (b) subject to United States tax with respect to such royalties and rentals, and (c) not engaged in trade or business in. the United Kingdom, shall be exempt from 1. Any salary, wage, similar remuneration, or pension, paid by the Government of the United States to an individual (other than a British subject who is not also a citizen of the United States) in respect of services rendered to the United States in the discharge of governmental functions, shall be exempt from United Kingdom tax. 2. Any salary, wage, similar remuneration, or pension, paid by the - Government of the United Kingdom to an individual (other than a citizen of the United States who is not also a British subject) in respect of services rendered to the United Kingdom in the discharge of governmental functions, shall be exempt from United States tax. 3. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by· either of the Contracting Parties for purposes of-profit. 1. An individual who is a resident of the United Kingdom shall be -,~ exempt from United States tax upon compensation for personal (including professional) services performed during the taxable year within the United States if (a) he is present within the United States for a period or periods not exceeding in the aggregate 183 days during such taxable year, and (b) such services are performed for or on behalf of a person resident in the United Kingdom. 2. An individual who is a resident of the United States shall be exempt from United Kingdom tax upon profits, emoluments or other remuneration in respect of personal (inclmiing professional) services performed within the United Kingdom in any year of assessment if (a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year, and (b) such services are performed for or on behalf of a person resident in the United States. 3. The provisions of this Article shall not apply to the compensation, profits, emoluments or other remuneration of public entertainers such as stage, motion picture or radio artists, musicians and athletes. 1. Any pension (other than a .pension to which Article X applies}, and any life annuity, derived· from sources within the United States by an individual who is a resident of the United Kingdom shall be exempt from United States tax. 2. Any pension (other than a pension to which Article X applies}, and any life annuity, derived from sources within the United Kingdom by an individual who is a resident of the United States shall be exempt from United Kingdom tax. 3. The term "life annuity" means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in consideration of money paid. ARTICLE XIII. 1. Subject to section 131 of the United States Internal Revenue Code as in effect on the first day of January, 1945, United Kingdom tax' shall be allowed as a credit against United States tax. For this purpose, the recipient of a dividend paid by a corporation which is a resident of the United Kingdom shall be deemed to have paid the United Kingdom income tax appropriate to such dividend if such recipient elects to include in his gross income for the purposes of United States tax the amount of such United Kingdom income tax. 2. Subject to such provisions (which shall not affect the general principle hereof) as may be enacted in the United Kingdom, United States tax payable in respect of income from sources within the United States shall be allowed as a credit against any United Kingdom tax payable in respect of that income. Where such income is an ordinary dividend paid by a United States corporation, such credit shall·take into account (in addition to any United States income tax deducted from or imposed on such dividend) the United States income tax imposed on such corporation in respect of its profits, and where it is a dividend paid on participating preference shares and representing both a dividend at the fixed rate to which the shares are entitled and an additional participation in profits, such tax on profits shall likewise be taken into account in so far as the dividend exceeds such fixed rate. 3. For the purposes of this Article, compensation, profits, emoluments and other remuneration for personal (including professional) services shall be deemed to be income from sources within the territory of the Contracting Party where such services are performed. A resident of the United Kingdom not engaged in trade or business in the United States shall be exempt from United States tax on gains from the sale or exchange of capital assets. Dividends and interest paid on or after the first day of January, 1945, by a United Kingdom corporation shall be exempt from United States tax except where the recipient is a citizen of or a resident of the United States or a United States corporation. A United Kingdom corporation shall be exempt from United States tax on its accumulated or undistributed earnings, profits, income or surplus, if individuals who are residents of the United Kingdom control, directly or indirectly, throughout the last half of the taxable year, more than 50 per cent. of the entire voting power in such corporation. 1. The United States income tax liability for any taxable year beginning prior to the 1st January, 1936, of any individual (other than a citizen of the United States) resident in the United Kingdom, or of any United Kingdom S.L.-VoL. VIII-35* ·~ corporation, remaining unpaid on the date of signature of the present Convention, may be adjusted on a basis satisfactory to the United States Commissioner of Internal Revenue: Provided that the amount to be paid in settlement of such liability shall not exceed the amount of the liability which would have been determined if- (a) the United States Revenue Act of 1936 (except in the case of a United Kingdom corporation in which more than 50 per cent. of the entire voting power was controlled, directly or indirectly, throughout the later half of the taxable year, by citizens or residents of the United States), and (b) Articles XV and XVI of the present Convention had been in effect for such year. If the taxpayer was not, within the meaning of such Revenue Act, engaged in trade or business in the United States and had no office or place of business therein during the taxable year, the amount of interest and penalties shall not exceed 50 per cent. of the amount of the tax with respect to which such interest and penalties have been computed. 2. The United States income tax unpaid on the date of signature of the present Convention for any taxable year beginning after the thirty-first day of December, 1935, and prior to the first day of January, 1945, in the case of an individual (other than a citizen of the United States) resident of the United Kingdom, or in the case of any United Kingdom corporation shall be determined as if the provisions of Articles XV and XVI of the present Convention had been in effect for such taxable year. 3. The provisions of paragraph (1) of this Article shall not apply- (a) unless the taxpayer files with the Commissioner of Internal Revenue on or before the thirty-first day of December, 1947, a request that such tax liability be so adjusted and furnishes such information as the Commissioner may require; or (b) in any case in which the Commissioner is satisfied that any deficiency in tax is due to fraud with intent to evade the tax. 4-RTICLE XVIIL A professor or teacher from the territory of one of the Contracting Parties who visits the territory of the other Contracting Party for the purpose of teaching, for a period not exceeding two years, at a university, college, school or other educational institution in the territory of such other Contracting Party shall be exempted by such other Contracting Party from tax on his remuneration for such teaching for such period. A student or business apprentice from the territory of one of the Contracting Parties who is receiving full-time education or training in the territory of the other Contracting Party shall be exempted by such other Contracting Party from tax on payments made to him by persons within the territory of the former Contracting Party for the purposes of his maintenance, education or training. 1. The taxation authorities of the Contracting Parties shall exchange such information (being information available under the respective taxation laws of the Contracting Parties) as is necessary for carrying out the provisions of the present Convention or for the prevention of fraud or the administration Double Taxat1:on Relief (United States of America) [Cap. 273 of statutory provisions against legal avoidance in relation to the taxes which are the subject of the present Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any person other than those concerned with the assessment and collection of the taxes which are the subject of the present Convention. No information shall be exchanged which would disclose any trade secret or trade process. 2. As used in this Article, the term " taxation authorities " means, in the case of the United States, the Commissioner of Internal Revenue or his authorised representative; in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorised representative; and, in the case of any territory to which the present Convention is extended under Article XXII, the competent authority for the administration in such territory of the taxes to which the present Convention applies. 1. The nationals of one of. the Contracting Parties shall not, while resident in the territory of the other Contracting Party, be subjected therein to other or more burdensome taxes than are the nationals of such other Contracting Party resident in its territory. 2. The term " nationals " as used in this Article means- (a) In relation to the United Kingdom, all British subjects and British protected persons, from the United Kingdom or any territory with respect to which the present Convention is applicable by reason of extension made by the United Kingdom under Article XXII; and (b) In relation to the United States, United States citizens, and all persons under the protection of the United States, from the United States or any territory to which the present Convention is applicable by reason of extension made by the United States under Article XXII; and includes all legal persons, partnerships and associations deriving their status as such from, or created or organised under, the laws in force in any territory of the Contracting Parties to which the present Convention applies. 3. In this Article the word " taxes " means taxes of every kind or description, whether national, federal, state, provin<'ial or municipal. 1. Either of the Contracting Parties may, at the time of exchange of instruments of ratification or thereafter while the present Convention continues in force, by a written notification of extension given to the other Contracting Party through diplomatic channels, declare its desire that the operation of the present Convention shall extend to all or any of its colonies, overseas territories, protectorates, or territories in respect of which it exercises a mandate, which impose taxes substantially similar in character to those which are the subject of the present Convention. The present Convention shall apply to the territory or territories named in such notification on the date or dates specified in the notification (not being less than sixty days from the date of the notification) or, if no date is specified in respect of any such territory, on the sixtieth day after the date of such notification, unless, prior to the date on which the Convention would otherwise become applicable to a particular territory, the Contracting Party to whom notification is given shall have informed the other Contracting Party in writing through diplomatic channels that it does not accept such notification as to that territory. In the absence of such extension, the present Convention shall not apply to any such territory. 2226 Cap. 273] Income Tax 2. At any time after the expiration of one year from the entry into force of an extension under paragraph (1) of this Article, either of the Contracting Parties may, by written notice of termination given to the other Contracting Party through diplomatic channels, terminate the application of the present Convention to any territory to which it has been extended under paragraph (1), and in such event the present Convention shall cease to apply, six months after the date of such notice, to the territory or territories named therein, but without affecting its continued application to the United States, the United Kingdom or to any other territory to which it has been extended under paragraph (1) hereof. 3. In the application of the present Convention in relation to any territory to which it is extended by notification by the United Kingdom or the United States references to the " United Kingdom " or, as the case may be, the "United States" shall be construed as references to that territory. 4. The termination in respect of the United States or the United Kingdom of the present Convention under Article XXIV or of Article VI shall, unless otherwise expressly agreed by both Contracting Parties, terminate the application of the present Convention or, as the case may be, that Article to any territory to which the Convention has been extended by the United States or the United Kingdom. 5. The provisions of the preceding paragraphs of this Article shall apply to the Channel Islands and the Isle of Man as if they were colonies of the United Kingdom. ARTICLE XXIII. 1. The present Convention shall be ratified and the instruments of ratification shall be exchanged at Washington as soon as possible. 2. Upon exchange of ratifications, the present Convention shall have (a) as respects United States tax, for the taxable years beginning on or after the first day of January, 1945; (b) (i) as respects United Kingdom income tax, for the year of assessment beginning on the 6th day of April, 1945, and subsequent years; (ii) as respects United Kingdom surtax, for the year of assessment beginning on the 6th day of April, 1944, and subsequent years; and (iii) as respects United Kingdom excess profits tax and national defence contribution, for any chargeable accounting period beginning on or after the first day of April, 1945, and for the unexpired portion of any chargeable accounting period current at that date. ARTICLE XXIV. 1. The present Convention shall continue in effect indefinitely but either of the Contracting Parties may, on or before the 30th day of June in any year after the year 1946, give to the other Contracting Party, through diplomatic channels, notice of termination, and in such event, the present Convention shall cease to be effective- · (a) as respects United States tax for the taxable years beginning on or after the first day of January in the year next following that in which such notice is given; (b) (i) as respects United Kingdom income tax, for any year of assessment beginning on or after the 6th day of April in the year next following that in which such notice is given; (ii) as respects United Kingdom surtax for any year of assessment beginning on or after the 6th day of April in the year in which such notice is given; and (iii) as respects United Kingdom excess profits tax and national defence contribution, for any chargeable accounting period beginning on or after the first day of April in the year next following that in which such notice is given and for the unexpired portion of any chargeable accounting period current at that date. 2. The termination of the present Convention or of any Article thereof shall not have the effect of reviving any treaty or arrangement abrogated by the present Convention or by treaties previously concluded between the Contracting Parties. Done at Washington in duplicate, on the sixteenth day of April, one thousand nine hundred and forty-five. For the Government of the United Kingdom of Great Britain and Northern Ireland : (L.S.) HALIFAX. For the Government of the United States of America: (L.S.) E. R. STETTINIUS, JR. PART H.-PROTOCOL. Ireland and the Government of the United States of America. Desiring to conclude a supplementary Protocol modifying in certain respects the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which was signed at Washington on April 16th, 1945, Have agreed as follows: ARTICLE I. •Paragraph (3) of Article XI of the Convention of April 16th, 1945, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income shall be deemed to be deleted and of no effect. This Protocol, which shall be regarded as an integral part of the said Convention, shall be ratified and the instruments of ratification thereof shall be exchanged at Washington. IN WITNESS WHEREOF the undersigned Plenipotentiaries, being authorised thereto by their respective Governments, have signed this Protocol and have affixed thereto their seals. DONE at Washington, in duplicate, this sixth day of June, 1946. FOR THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: JOHN BALFOUR, His Majesty's Envoy Extraordinary and M i'l'lli8tef" Plenipotentiary in Washington. 2228 Cap. 273] Income Tax FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA: JAMES F. BYRNES, Secretary of State of the United States of America. SUPPLEMENTARY PROTOCOL AMENDING THE CoNVENTION FOR THE AVOID- ANCE OF DoUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME, SIGNED AT WASHINGTON ON THE 16TH APRIL, 1945, AS MoDIFIED BY THE SuPPLEMENTARY PROTOCOL, SIGNED AT WASHINGTON ON THE 6TH JUNE, 1946. Ireland and the Government of the United States of America. Desiring to conclude a further supplementary Protocol amending the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect of Taxes on Income, signed at Washington on the 16th April, 1945, as modified by the Supplementary Protocol, signed at Washington on the 6th June, 1946. Have agreed as follows: ARTICLE l. Paragraph (1) of Article XXII of the Convention of the 16th April, 1945, for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income is hereby amended to read as follows: " (1) Either of the Contracting Parties may, at any time while the present Convention continues in force, by a written notification given to · the other Contracting Party through the diplomatic channel, declare its desire that the operation of the present Convention, either in whole or in part or with such modifications as may be found necessary for special application in a particular case, shall extend to all or any of its territories for whose international relations it is responsible, which impose taxes substantially similar in character to those which are the subject of the present Convention. When the other Contracting Party has, by a written communication through the diplomatic channel, signified to the first Contracting Party that such notification is accepted in respect of such territory or territories, the present Convention, in whole or in part or with such modifications all may be found necessary for special application in a particular case, as specified in the notification, shall apply to the territory or territories named in the notification on and after the date or dates specified therein. None of the provisions of the present Convention shall apply to any such territory in the absence of such acceptance in respect of that territory." This supplementary Protocol, which shall be regarded as an integral part of the said Convention, shall be ratified and the instruments of ratification hereof shall be exchanged in London. IN WITNESS WHEREOF the undersigned, being authorised thereto by their respective Governments, have signed this supplementary Protocol and have affixed thereto their seals. DONE in duplicate at Washington this twenty-fifth day of May, 1954. FOR THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND: ROG~R MAKINS, Her May'esty's Ambassador Extraordinary and Plenipotentiary at Washington. FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA: JOHN FOSTER DULLES, Secretary of State of the United States of America. SUPPLEMENTARY PROTOCOL BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NoRTHERN IRELAND AND THE UNITED STATES oF AMERICA AMENDING THE CONVENTION FOR THE AVOIDANCE OF DoUBLE TAXATION AND THE PREVENTION OF FISCAL EvASION WITH RESPECT TO TAXES ON INCOME, SIGNED AT WASHINGTON ON THE 16TH APRIL, 1945, AS MODIFIED BY THE SUPPLE- MENTARY PROTOCOL SIGNED AT WASHINGTON ON THE 6TH JUNE, 1946 AND BY THE SUPPLEMENTARY PROTOCOL SIGNED AT WASHINGTON ON THE 25TH MAY, 1954. Ireland and the Government of the United States of America, Desiring to conclude a further supplementary Protocol amending the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at Washington on the 16th April, 1945, as modified by the supplementary Protocol signed at Washington on the 6th June, 1946 and by the supplementary Protocol signed at Washington on the 25th May, 1954, Have agreed as follows: Paragraphs (1) and (2) of Article VIII of the Convention of the 16th April, 1945, for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income are hereby amended to read as follows: " (1) Royalties and other amount~ paid as consideration for the use of, or for the privilege of using copyrights, patents, designs, secret processes and formulae, trade marks and other like property, and derived from sources within the United States by a resident of the United Kingdom who is subject to United Kingdom tax on such royalties or other amounts shall be exempt from United States tax {a) if such resident is not engaged in trade or business in the United States through a permanent establishment situated therein or (b) if such resident is so engaged, the royalties or other amounts are not directly associated with the business carried on through that permanent establishment. 2230 Cap. 273] Income Tax (2) Royalties and other amounts paid as consideration for the use of, or for the privilege of using, copyrights, patents, designs, secret processes and formulae, trade marks and other like property, and derived from sources within the United Kingdom by a resident of the United States who is subject to United States tax on such royalties or other amounts shall be exempt from United Kingdom tax (a) if such resident is not engaged in trade or business in the United Kingdom through a permanent establishment situated therein or (b) if such resident is so engaged, the royalties or other amounts are not directly associated with the business carried on through that permanent establishment." Paragraph (1) of Article XIII of the said Convention is hereby amended to read as follows: "(1) Subject to Sections 901 to 905 of the United States Internal Revenue Code as in effect on the 1st day of January, 1956, United Kingdom tax shall be allowed as a credit against United States tax. For this purpose- (a) the recipient of a dividend paid by a corporation which is a resident of the United Kingdom shall be deemed to have paid the United Kingdom tax appropriate to such dividend, and (b) the recipient of any royalty or other amount coming within the scope of Article VIII of the present Convention shall be deemed to have paid any United Kingdom tax legally deducted from the royalty or other amount by the person by or through whom any payment thereof is made, if the recipient of the dividend or royalty or other amount, as the case may be, elects to include in his gross income for the purposes of United States tax the amount of such United Kingdom income tax." 1. This supplementary Protocol shall be ratified and the instruments of ratification shall be exchanged at London as soon as possible. 2. This supplementary Protocol shall enter into force upon the exchange of instruments of ratification and shall thereupon have effect--- (i) as respects income tax and surtax for any year of assessment beginning on or after the 6th April, 1956; (ii) as respects profits tax for any chargeable accounting period beginning on or after the lst April, 1956, and for the unexpired portion of any chargeable accounting period current at that date. (b) In the United States: As respect taxable years beginning on or after the 1st January, 1956. IN WITNESS WHEREOF the undersigned, being authorised thereto by the respective Governments, have signed this supplementary Protocol and have affixed thereto their seals. DONE in duplicate at Washington this nineteenth day of August, 1957. For the Government of the United Kingdom of Britain and Northern (L.S.) HAROLD C.ACCIA. For the Government of the United States of America: (L.s.) JQHN FOSTER DULLES. l. (a) The provisions of the Convention and Protocols incorporated in the First Schedule to this Order shall apply as modified below- (i) as if the contracting parties were Sierra Leone and the Government of the United States; and as if the tax concerned in the case of Sierra Leone were the Income Tax and the duty on profits charged under the Concessions Ordinance, and the Diamond Industry Profits Tax and the Iron Ore Concessions Tax; (ii) as if references to the date of signature were references to the 3rd day of December, 1958. (iii) as if references to the 6th day of April were references to the 1st day of April. year of assessment next following that in which the last of those measures shall have been taken in the United States and Sierra Leone necessary to give the extension the force of Law in the United States and Sierra Leone and for subsequent years of assessment and will have effect in the United States as respects United States tax for the taxable year beginning on or after the 1st day of January in that next following calendar year. Modifications- 2. (a) In Article VI (2) the words "exempt from United Kingdom Surtax " shall be understood for the purposes of this extension as though they read " shall not be liable to any tax in the territory other than tax imposed with respect to the profits or earnings of the corporation out of which such dividends are paid ". (b) In Article IX (2) the words" shall be exempt from United Kingdom Surtax " shall be understood for the purposes of this extension as though they read " shall not be liable to tax in the territory at a rate in excess of the rate applicable to a company ". (c) Article VII, XIV and XVI shall be deemed to be deleted.