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E102237 - CTS 1976 No. 29

 

CONVENTION BETWEEN CANADA AND BELGIUM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE SETTLEMENT OF OTHER MATTERS WITH RESPECT TO TAXES ON INCOME

 

The Government of Canada and the Government of Belgium,

Desiring to conclude a Convention for the avoidance of double taxation and the settlement of other matters with respect to taxes on income,

Have agreed as follows:

 

I.  SCOPE OF THE CONVENTION

ARTICLE I

Personal Scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

 

ARTICLE II

Taxes Covered

1.       This Convention shall apply to taxes on income imposed on behalf of each Contracting State, irrespective of the manner in which they are levied.

2.       There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3.       The existing taxes to which the Convention shall apply are, in particular:

(a)      in the case of Belgium:

(i)       the individual income tax;

(ii)      the corporate income tax;

(iii)     the income tax on legal entities;

(iv)     the income tax on non-residents,

including the prepayments, the surcharges on these taxes and prepayments, and the communal supplement to the individual income tax, (hereinafter referred to as “Belgian tax”);

(b)      in the case of Canada:

the income taxes imposed by the Government of Canada, (herein­after referred to as “Canadian tax”).

4.       The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes.  The competent authorities of the Contracting States shall notify each other of any important changes which have been made to their respec­tive taxation laws.

 

II.  DEFINITIONS

ARTICLE III

General Definitions

1.   In this Convention, unless the context otherwise requires:

(a)      (i)       the term “Belgium” used in a geographical sense means the territory of the Kingdom of Belgium, including any area beyond the territorial waters of Belgium which is an area within which Belgium may exercise rights with respect to the sea-bed and sub-soil and their natural resources;

          (ii)      the term “Canada” used in a geographical sense means the territory of Canada, including any area beyond the territorial waters of Canada which is an area within which Canada may exercise rights with respect to the sea-bed and sub-soil and their natural resources;

(b)      The terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Canada or Belgium;

(c)      The term “person” includes an individual, a company, a part­nership and any other body of persons, including, in the case of Canada, an estate and a trust;

(d)      The term “company” means any body corporate or any other entity which is taxable as a body corporate on income in the State of which it is a resident; in French, the term “société” also means a “corporation” within the meaning of Canadian law;

(e)      The terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enter­prise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(f)       The term “tax” means Canadian tax or Belgian tax as the context requires;

(g)      The term “national” means:

(i)       any individual possessing the nationality of a Contracting State;

(ii)      any legal person, partnership and association deriving its status as such from the law in force in a Contracting State;

(h)      The term “competent authority” means:

(i)       in the case of Belgium: the Minister of Finance or his authorized representative, and,

(ii)      in the case of Canada: the Minister of National Revenue or his authorized representative.

2.       As regards the application of the Convention by a Contracting State any term not otherwise defined shall, unless the context other­wise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of the Convention.

 

ARTICLE IV

Fiscal Domicile

1.       For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature; it also means, in the case of Belgium, Belgian companies (other than compa­nies with share capital) which have elected to have their profits subjected to individual income tax.

2.      Where by reason of the provisions of paragraph 1 an individual is resident of both Contracting States, then this case shall be deter­mined in accordance with the following rules:

(a)      He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (centre of vital interests);

(b)      If the Contracting State in which he has his centre of vital interests cannot be determined or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

(c)      If he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;

(d)      If he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3.      Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of such agreement, such person shall be deemed not to be a resident of either Contracting State for the purposes of Articles VI to XXII inclusive and Article XXIV.

 

ARTICLE V

Permanent Establishment

1.       For the purposes of this Convention, the term “permanent establishment” means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

2.       The term “permanent establishment” shall include especially:

(a)    a place of management;

(b)    a branch;

(c)    an office;

(d)    a factory;

(e)    a workshop;

(f)     a mine, quarry or other place of extraction of natural resources;

(g)    a building site or construction or assembly project which exists for more than 12 months.

3.       The term “permanent establishment” shall not be deemed to include:

(a)    the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b)    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c)    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d)    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e)    the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a pre­paratory or auxiliary character, for the enterprise.

4.      A person (other than an agent of an independent status to whom paragraph 5 applies) acting in a Contracting State on behalf of an enterprise of the other Contracting State shall be deemed to be a permanent establishment in the first-mentioned State if he has, and habitually exercices in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise.

5.      An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independ­ent status, where such persons are acting in the ordinary course of their business.

6.      The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute for either company a permanent establish­ment of the other.

 

III.  TAXATION OF INCOME

ARTICLE VI

Income From Immovable Property

1.       Income from immovable property including income from agriculture or forestry may be taxed in the Contracting State in which such property is situated.

2.       For the purpose of this Convention, the term “immovable property” shall be defined in accordance with the law of the Contract­ing State in which the property in question is situated. The term shall in any case include property accessory to immovable property, live­stock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usu­fruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and air­craft shall not be regarded as immovable property.

3.       The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property and to profits from the alienation of such property.

4.       The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services.

 

ARTICLE VII

Business Profits

1.       The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2.       Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and acting independently.

3.       In the determination of the profits of a permanent establish­ment, there shall be allowed those deductible expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

4.       In the absence of appropriate accounting or other data permit­ting the determination of the amount of the profits of an enterprise of a Contracting State which is attributable to its permanent establish­ment situated in the other State, the tax may, in particular, be charged in that other State in accordance with its domestic legislation, having regard to the normal profits of similar enterprises engaged in the same or similar activities under the same or similar conditions.

5.       No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6.       For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is a good and sufficient reason to the contrary.

7.       Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

 

ARTICLE VIII

Shipping and Air Transport

1.       Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2.       The term “international traffic” means any transport of passen­gers or goods by a ship or aircraft operated by an enterprise of a Contracting State, except to the extent that the ship or aircraft is used principally to transport passengers or goods exclusively between places in the other Contracting State.

3.       To the extent that they are not covered by paragraph 1, profits from the operation of ships used to transport passengers or goods exclusively between places in a Contracting State may be taxed in that State.

4.       If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contract­ing State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

5.       The provisions of paragraph 1 shall also apply to profits referred to in that paragraph which are derived by an enterprise from its participation in a pool, a joint business or in an international operating agency.

 

ARTICLE IX

Associated Enterprises

Where

(a)      an enterprise of a Contracting State participates directly or indirectly in the management, control or financing of an enter­prise of the other Contracting State, or

(b)      the same persons participate directly or indirectly in the man­agement, control or financing of an enterprise of a Contract­ing State and an enterprise of the other Contracting State,

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.

 

ARTICLE X

Dividends

1.       Dividends paid by a company which is a resident of a Contract­ing State to a resident of the other Contracting State may be taxed in that other State.

2.       However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and accord­ing to the law of that State; but if the recipient resident of the other Contracting State is the beneficial owner of the dividends, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. The provisions of this paragraph shall not affect the taxa­tion of the company on the profits out of which the dividends are paid.

3.       The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income assimilated to or treated in the same way as income from shares under the taxation law of the State of which the company making the distribution is a resident.

4.       The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, carries on in the other Contracting State of which the company paying the dividends is a resident, a trade or business through a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the holding by virtue of which the dividends are paid is effectively con­nected with such permanent establishment or fixed base. In such a case, the dividends may be taxed by that other State in accordance with its law.

5.       Where a company is a resident of a Contracting State, the other Contracting State may not impose any tax on the dividends paid by the company to a resident of the first-mentioned State, or subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. The provi­sions of this paragraph shall not prevent that other State from taxing dividends relating to a holding which is effectively connected with a permanent establishment or a fixed base operated in that other State by a resident of the first-mentioned State.

6.       Nothing in this Convention shall be construed as preventing Canada from imposing on the earnings attributable to a permanent establishment in Canada of a company which is a resident of Belgium, tax in addition to the tax which would be chargeable on the earnings of a company which is a resident of Canada, provided that any additional tax so imposed shall not exceed 15 per cent of the amount of such earnings which have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term “earnings” means the profits attributable to a permanent establish­ment in Canada in a year and previous years, after deducting there­from all taxes, other than the additional tax referred to herein, imposed on such profits in Canada; however, it does not include the profits attributable to a permanent establishment in Canada of a company which is a resident of Belgium, earned in a year during which the business of the company was not carried on principally in Canada.

 

ARTICLE XI

Interest

1.       Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2.       However, such interest may be taxed in the Contracting State in which it arises, and according to the law of that State; but if the recipient resident of the other Contracting State is the beneficial owner of the interest, the tax so charged shall not exceed 15 per cent of the amount of the interest.

3.       Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State to the extent that such interest:

(a)      is a penalty charge for late payments, or

(b)      is paid by a purchasing enterprise to a selling enterprise in connection with the sale on credit of any equipment or mer­chandise, except where the sale is made between associated enterprises within the meaning of Article IX (a) or (b).

4.       The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the State in which the income arises; however, the term “interest” does not include income dealt with in Article X.

5.       The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, carries on in the other Contracting State in which the interest arises a trade or business through a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article VII or Article XIV, as the case may be, shall apply.

6.       Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and that interest is borne directly by that permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

7.       Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the interest may be taxed in the Contracting State in which the interest arises, according to the law of that State.

 

ARTICLE XII

Royalties

1.       Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2.       However, such royalties may be taxed in the Contracting State in which they arise, and according to the law of that State; but if the recipient resident of the other Contracting State is the beneficial owner of the royalties the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3.       Notwithstanding the provisions of paragraph 2, copyright roy­alties and other like payments in respect of the production or repro­duction of any literary, dramatic, musical or artistic work (but not including royalties in respect of motion picture films and works on film or videotape for use in connection with television) arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State.

4.       The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright, patent, trade mark, design or model, plan, secret for­mula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience, and includes pay­ments of any kind in respect of motion picture films and works on film or videotape for use in connection with television.

5.       The provisions of paragraphs 1, 2 and 3 shall not apply if the recipient of the royalties, being a resident of a Contracting State, carries on in the other Contracting State in which the royalties arise a trade or business through a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent estab­lishment or fixed base. In such a case, the provisions of Article VII or Article XIV, as the case may be, shall apply.

6.       Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the agreement by virtue of which the royalties are paid was entered into, and those royalties are borne directly by that permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

7.       Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the royal­ties may be taxed in the Contracting State in which the royalties arise, according to the law of that State.

 

ARTICLE XIII

Gains from the Alienation of Property

1.       Gains from the alienation of immovable property may be taxed in the Contracting State in which such property is situated.

2.       Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enter­prise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing professional services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base may be taxed in the other State.

However, gains from the alienation of ships or aircraft operated in international traffic and movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

3.       Gains from the alienation of shares of the capital stock of a company which is a resident of a Contracting State and the property of which consists principally of immovable property situated in that Contracting State, may be taxed in that State.

Gains from the alienation of an interest in a partnership or a trust, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State.

For the purposes of this paragraph the term “immovable proper­ty” shall not include property, other than rental property, in which the business of the company, partnership or trust is carried on.

4.       Gains from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.

5.       The provision of paragraph 4 shall not affect the right of Canada to tax according to its law gains derived by an individual who is a resident of Belgium from the alienation of shares of the capital stock of a company which is a resident of Canada, or from the alienation of an interest in a trust which is a resident of Canada, if the alienator:

(a)      possesses Canadian nationality or was a resident of Canada for fifteen years or more prior to the alienation of the shares or the interest, and

(b)      was a resident of Canada at any time during the five years immediately preceding such alienation.

ARTICLE XIV

Professional Services

1.       Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other Contracting State but only so much of it as is attributable to activities exercised from that fixed base.

2.       The term “professional services” includes independent scientif­ic, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

 

ARTICLE XV

Dependent Personal Services

1.       Subject to the provisions of Articles XVI, XVIII and XIX, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remunera­tion as is derived therefrom may be taxed in that other State.

2.       Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employ­ment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a)      the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned;

(b)      the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(c)      the remuneration is not borne directly by a permanent estab­lishment or a fixed base which the employer has in the other State.

3.       Notwithstanding the preceding provisions of this Article, remu­neration in respect of an employment exercised aboard a ship or aircraft in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

ARTICLE XVI

Directors’ Fees

1.       Director’s fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of direc­tors or a similar organ of a company with share capital which is a resident of the other Contracting State, may be taxed in that other State.

2.       However, income received by the persons concerned in any other capacity may be taxed, as the case may be, under the conditions provided for in Article XIV or in paragraph 1 of Article XV of this Convention.

 

ARTICLE XVII

Artistes and Athletes

1.       Notwithstanding the provisions of Articles VII, XIV and XV income derived by entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their per­sonal activities as such may be taxed in the Contracting State in which these activities are exercised.

2.       Where income in respect of personal activities as such of an entertainer or athlete accrues not to that entertainer or athlete himself but to another person that income may, notwithstanding the provi­sions of Articles VII, XIV and XV, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.

3.       The provisions of paragraph 2 shall not apply if the entertainer or the athlete establishes that neither he nor any person associated with him participates directly or indirectly in the profits of the person referred to in that paragraph.

 

ARTICLE XVIII

Pensions and Annuities

1.       Subject to the provisions of paragraph 2, periodic or non-peri­odic pensions and other similar allowances arising in a Contracting State and paid in consideration of past employment to a resident of the other Contracting State may be taxed in the Contracting State in which they arise.

2.       Periodic or non-periodic social security pensions and other similar allowances and war veterans pensions paid by a Contracting State or a political subdivision, a local authority or a governmental instrumentality thereof (personne morale ressortissant à son droit public), shall be taxable only in that State.

3.       Annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the State in which they arise.

4.       Any alimony or other maintenance payment arising in a Con­tracting State and paid to a resident of the other Contracting State who is subject to tax there in respect thereof, shall be taxable only in that other State.

 

ARTICLE XIX

Government Service

1.       (a)      Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to any individual in respect of services rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

          (b)      However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that State who:

(i)       is a national of that State; or

(ii)     did not become a resident of that State solely for the purpose of performing the services.

2.       The provisions of paragraph 1 shall not apply to remuneration in respect of services rendered in connection with any trade or busi­ness carried on by one of the Contracting States or a political subdivi­sion or a local authority thereof.

 

ARTICLE XX

Students and Apprentices

Payments which a student, apprentice or business trainee who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned Contracting State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned State, provided that such payments are made to him from sources outside that State.

ARTICLE XXI

Estates or Trusts

1.       Income received from an estate or a trust resident in Canada by a resident of Belgium may be taxed in Canada according to its law, but the tax so charged shall not exceed 15 per cent of the gross amount of the income.

2.       The provisions of paragraph 1 shall not apply if the recipient of the income, being a resident of Belgium, carries on in Canada a trade or business through a permanent establishment situated therein, or performs in Canada professional services from a fixed base situated therein, and the right or interest in the estate or trust in respect of which the income is paid is effectively connected with such perma­nent establishment or fixed base. In such a case, the provisions of Article VII or Article XIV, as the case may be, shall apply.

 

ARTICLE XXII

Income not Expressly Mentioned

Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that Contracting State except that, if such income is derived from sources within the other Contracting State, it may also be taxed in that other Contracting State.

 

IV.  METHODS FOR PREVENTION OF DOUBLE TAXATION

ARTICLE XXIII

1.       In the case of Belgium, double taxation shall be avoided as follows:

(a)      When a resident of Belgium derives income which may be taxed in Canada in accordance with the Convention and which is not subject to the provisions of clauses (b), (c) and (d) below, Belgium shall exempt such income from tax but may, in calculating the amount of tax on the remaining income of that resident, apply the rate of tax which would have been applicable if such income had not been exempted.

(b)      In the case of dividends taxable in accordance with paragraph 2 of Article X and not exempt from Belgian tax according to clause (d) of this paragraph, interest taxable in accordance with paragraph 2 or 7 of Article XI, royalties taxable in accordance with paragraph 2 or 7 of Article XII and income from an estate or a trust taxable in accordance with para­graph 1 of Article XXI, the fixed proportion in respect of the foreign tax for which provision is made under Belgian law shall, under the conditions and at the rate provided for by such law, be allowed as a credit against Belgian tax relating to such income.

(c)      When a resident of Belgium derives income to which the provisions of paragraph 3 or 5 of Article XIII or the provisions of Article XXII apply and which has been taxed in Canada, the amount of Belgian tax proportionately attributable to such income shall not exceed the amount which would be charged according to Belgian law if such income were taxed as earned income derived from sources outside Belgium and subject to foreign tax.

(d)      When a company which is a resident of Belgium owns shares or other rights in a company with share capital which is a resident of Canada and which is subject to Canadian tax on its profits, the dividends which are paid to it by the latter company and which may be taxed in Canada in accordance with paragraph 2 of Article X shall be exempt from the corporate income tax in Belgium to the extent that exemption would have been accorded if the two companies had been residents of Belgium.

(e)      When, in accordance with Belgian law, losses of an enterprise carried on by a resident of Belgium which are attributable to a permanent establishment situated in Canada have been effec­tively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided in clause (a) shall not apply in Belgium to the profits of other taxable periods attributable to that permanent establishment to the extent that those profits have also been exempted from tax in Canada by reason of compensation for the said losses.

2.       In the case of Canada, double taxation shall be avoided as follows:

(a)      Subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which, however, shall not affect the principle hereof) and unless a greater deduction or relief is provided for under the law of Canada, Belgian tax payable under the law of Belgium and in accordance with this Convention on profits, income or gains arising in Belgium shall be deducted from any Canadian tax payable in respect of such profits, income or gains.

(b)      Subject to the existing provisions of the law of Canada regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions (which, however, shall not affect the principle hereof) for the purposes of computing Canadian tax, a com­pany which is a resident of Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate which is a resident of Belgium.

3.       For the purposes of this Article, profits, income or gains of a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise in that other State.

 

V.  SPECIAL PROVISIONS

ARTICLE XXIV

Non-Discrimination

1.       The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirements connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected.

2.       Stateless persons resident of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected.

3.       When an individual who is a resident of a Contracting State is taxable in the other Contracting State in respect of income mentioned in any of Articles VI, VII, XIII, XIV, XV, XVIII and XIX, the tax of that other State on such income shall, if the individual so elects, be computed at the rate which would be applicable if he were a resident of that other State, taking into account his civil status and family responsibilities and the aggregate of such income.  To be admissible, such election must be made in writing within two years from the end of the year in which the income concerned has accrued.

4.       The taxation on a permanent establishment which an enter­prise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

5.       Nothing in this Article shall be construed as preventing Belgium:

(a)      from taxing at the rate determined by Belgian law the total profits or income attributable to a permanent establishment or a fixed base maintained in Belgium by a company, or an entity taxable as a body corporate in Belgium, which is a resident of Canada;

(b)     from imposing the movable property prepayment on divi­dends derived from a holding which is effectively connected with a permanent establishment or a fixed base maintained in Belgium by a company, or an entity taxable as a body corpo­rate in Belgium, which is a resident of Canada.

6.       In this Article, the term “taxation” means the taxes which are the subject of this Convention.

 

ARTICLE XXV

Mutual Agreement Procedure

1.      Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, without prejudice to the remedies provided by the national laws of those States, address to the competent authority of the Contracting State of which he is a resident an application in writing stating the grounds for claiming the revision of such taxation. To be admissible, the said application must be submitted within two years from the first notification of the action which reveals the existence of taxation not in accordance with the Convention.

2.       The competent authority referred to in paragraph 1 shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contract­ing State, with a view to the avoidance of taxation not in accordance with the Convention.

3.       The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the application of the Convention.

 

ARTICLE XXVI

Exchange of Information

1.       The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic laws of the Contracting States con­cerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention.

Any information so obtained shall be treated as secret and shall not be disclosed to any persons other than the taxpayer or his mandatory, or other than persons or authorities concerned with the assess­ment or collection of or the determination of claims or appeals in relation to the taxes which are the subject of this Convention.

2.       In no case shall the provisions of paragraph 1 be construed so as to impose on one of the Contracting States the obligation:

(a)      to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contract­ing State;

(b)      to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c)       to supply information which would disclose any trade, busi­ness, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

 

ARTICLE XXVII

Diplomatic and Consular Officials

1.       Nothing in this Convention shall affect the fiscal privileges of members of diplomatic or consular missions under the general rules of international law or under the provisions of special agreements.

2.       Notwithstanding Article IV, an individual who is a member of a diplomatic, consular or permanent mission of a Contracting State which is situated in the other Contracting State or in a third State, shall be deemed for the purposes of this Convention to be a resident of the sending State if he is liable in the sending State to the same obligations in relation to tax on his total world income as are residents of that sending State.

3.       This Convention shall not apply to International Organizations, to organs or officials thereof and to persons who are members of a diplomatic or consular mission of a third State, being present in a Contracting State and who are not liable in either Contracting State to the same obligations in relation to tax on their total world income as are residents of that State.

 

ARTICLE XXVIII

Miscellaneous Rules

1.       The provisions of this Convention shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded:

(a)      by the laws of a Contracting State in the determination of the tax imposed by that Contracting State, or

(b)      by any other agreement between the Contracting States.

2.       Nothing in this Convention shall have the effect of limiting the taxation of a company which is a resident of Belgium on the redemp­tion of its own shares or rights or on the partition of its share capital.

3.       Nothing in this Convention shall have the effect of preventing Canada from imposing its tax on amounts included in the income of a resident of Canada according to section 91 of the Canadian Income Tax Act.

4.       This Convention shall not apply to non-resident-owned invest­ment corporations as defined under section 133 of the Income Tax Act of Canada, or under any similar provision enacted by Canada after the signature of this Convention, or to any income derived from such companies by any shareholders thereof.

5.       The competent authorities of the two Contracting States may communicate with each other directly for the purpose of applying this Convention and shall by mutual agreement settle the mode of applica­tion of this Convention.

 

VI.  FINAL PROVISIONS

ARTICLE XXIX

Entry into Force

1.       This Convention shall be ratified and the instruments of ratifi­cation shall be exchanged at Brussels as soon as possible.

2.       The Convention shall enter into force 15 days after the date of exchange of the instruments of ratification and it shall apply:

(a)     in Belgium:

(i)       to taxes due at source on income credited or payable on or after January 1 of the year in which the instruments of ratification have been exchanged;

(ii)      to other taxes charged on income for taxable periods ending on or after December 31 of the year of such exchange;

(b)     in Canada:

(i)       to taxes withheld at the source on amounts paid or credit­ed to non-residents on or after January 1 of the year in which the instruments of ratification have been exchanged;

(ii)      to other income taxes for taxation years commencing on or after January 1 of the year of such exchange.

 

ARTICLE XXX

Termination

This Convention shall continue in effect indefinitely but either Contracting State may, on or before June 30 in any calendar year after three years from the year of the exchange of the instruments of ratification, give to the other Contracting State a notice of termination in writing and through diplomatic channels. In the event of termina­tion before July 1 of such year, the Convention shall cease to have effect:

(a)     in Belgium:

(i)       in respect of taxes due at source on income credited or payable after December 31 of the year of termination;

(ii)      in respect of other taxes charged on income for taxable periods ending on or after December 31 of the year immediately following the year of termination;

(b)      in Canada:

(i)       in respect of taxes withheld at the source on amounts paid or credited to non-residents after December 31 of the year of termination;

(ii)      in respect of other income taxes for taxation years com­mencing on or after January 1 of the year immediately following the year of termination.

IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed the present Convention.

DONE in duplicate at Ottawa, May 29, 1975, in the English, the French and the Netherlands languages, the three texts being equally authentic.

 

Gérard Pelletier

FOR THE GOVERNMENT OF CANADA

 

Marcel Rymenans

FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM