S.I. No. 22/1970 - Double Taxation Relief (Taxes on Income and Capital) (Kingdom of the Netherlands) Order, 1970.

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

2. The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect

(

a

) in the Netherlands

for taxable years and periods beginning on or after the 1st January, 1965;

(

b

) in Ireland

(i) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April, 1965;

(ii) as respects corporation profits tax, for any accounting period beginning on or after the 1st April, 1965, and for the unexpired portion of any accounting period current at that date.

ARTICLE 31.

TERMINATION.

This Convention shall remain in force indefinitely, but either of the States may denounce the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the year 1973. In such event the Convention shall cease to be effective

(

a

) in the Netherlands

for any taxable year or period beginning after the end of the calendar year in which such notice is given;

(

b

) in Ireland

(i) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April in the calendar year next following that in which such notice is given;

(ii) as respects corporation profits tax, for any accounting period beginning on or after the 1st April in the calendar year next following that in which such notice is given and for the unexpired portion of any accounting period current at that date.

IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Convention and have affixed thereto their seals.

DONE in duplicate at The Hague, this 11th day of February, 1969 in the English and Netherlands languages, both texts being equally authentic.

For the Government of Ireland

EÓIN MAC WHITE.

For the Government of the Kingdom of the Netherlands

J. M. A. H. LUNS.

PROTOCOL.

At the moment of signing the Convention between the Government of Ireland and the Government of the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect of taxes on income and capital, the undersigned representatives have agreed the following provisions

I.

Ad Articles 8, 9 and 10.

Applications for the restitution of tax levied contrary to the provisions of Articles 8, 9 and 10 have to be lodged with the competent authority of the State having levied the tax within a period of six years after the expiration of the year in which the tax has been levied.

II.

Ad Articles 9 and 10

It is understood that interest and royalties paid by a resident of Ireland to a resident of the Netherlands shall be allowed as a deduction in the computation of the corporation profits tax charged on the payer.

III.

Ad Article 14, paragraph 3

An individual living aboard a ship without a permanent home available to him in either of the States shall be deemed to be a resident of the State in which the ship has its home harbour.

IV.

Ad Article 18

The income mentioned in paragraph 1 of Article 18 which is paid by the Netherlands or a political subdivision or a local authority thereof shall be exempt from Irish tax unless the recipient is a citizen of Ireland without being also a national of the Netherlands.

V.

Ad Article 22

It is understood that, in so far as the Netherlands income tax or company tax is concerned, the basis mentioned in paragraph 1 of Article 22 is the "onzuivere inkomen" or "winst" in terms of the Netherlands income tax law or company tax law, respectively.

VI.

Ad Article 24

The provisions of Article 24 shall not be construed as obliging Ireland to grant to any company other than a company incorporated in Ireland and resident therein for the purpose of income tax, any relief or exemption allowed in accordance with the provisions of

(i) the

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

(No. 8 of 1956), as in force at the date of signature of the Convention, or

(ii) Part II of the

Finance (Miscellaneous Provisions) Act, 1956

(No. 47 of 1956), as in force at the date of signature of the Convention, or

(iii) Chapter II or Chapter III of Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967), as in force at the date of signature of the Convention.

VII.

Ad Article 26

The obligation to exchange information does not include any obligation to exchange information obtained from banks or from institutions assimilated thereto. The term "institutions assimilated thereto" means inter alia insurance companies.

VIII.

It is agreed that, when the Irish income tax appropriate to dividends paid by a company which is a resident of Ireland, has been wholly relieved or reduced for a limited period of time, by reason of the provisions of Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967), as in force at the date of signature of the Convention, so as to promote economic development, the requirement of being subject to a similar tax, as laid down in the Netherlands company tax provisions, has been satisfied with respect to these dividends.

IX.

This Protocol shall be ratified and instruments of ratification thereof shall be exchanged at Dublin. It shall enter into force simultaneously with the Convention signed today and shall have the same duration as the Convention in accordance with Articles 30 and 31 thereof.

IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Protocol and have affixed thereto their seals.

DONE in duplicate at The Hague, this 11th day of February, 1969 in the English and Netherlands languages, both texts being equally authentic.

For the Government of Ireland

EÓIN MAC WHITE.

For the Government of the Kingdom of the Netherlands

J. M. A. H. LUNS.

GIVEN under the Official Seal of the Government, this 3rd

day of February, 1970.

SEÁN Ó LOINSIGH,

Taoiseach.

EXPLANATORY NOTE.

This Order gives the force of law to the Convention with the Netherlands and the associated Protocol which are set out in the Schedule.

Under the Convention certain classes of income derived from one country by a resident of the other country are (subject to certain conditions) to be exempt from tax in the former country. These classes are trading profits not arising through a "permanent establishment" [Article 5], shipping and air transport profits [Article 7], interest [Article 9], patent and copyright royalties [Article 10], profits from professional or other independent activities not attributable to a fixed base [Article 13], pensions (other than Government pensions] [Article 17], annuities [Article 19], and certain earnings of temporary residents [Articles 27 and 28]. Government and local authority salaries and pensions are normally to be taxed by the paying Government only [Article 18].

In general dividends paid by Irish companies to residents of the Netherlands are to be exempt from Irish sur-tax; the rate of withholding tax on dividends paid by Netherlands companies to Irish residents is not to exceed 15 per cent and where the resident of Ireland is a company, which holds at least 25 per cent of the capital of the Netherlands company, the dividents are to be exempt from Netherlands tax [Article 8].

Subject to certain exceptions (e.g., immovable property) property of an Irish resident situated in the Netherlands is to be exempt from the annual taxes on capital imposed in that country [Article 21].

In the matter of personal allowances and reliefs for tax purposes, each country is to treat residents of the other in the same way as its own non-resident nationals [Article 23].

Where, under the Convention, income derived from one country by a resident of the other may be taken into account for tax purposes in both countries, a measure of double taxation relief is to be granted by the latter country. In the Netherlands, income (other than dividends) and capital which may be taxed in Ireland are to be included in the base upon which tax is computed and from the tax so computed a deduction is to be allowed of the proportion thereof which is appropriate to the Irish income or capital as the case may be. As the deduction applies without regard to the Irish tax borne by the relevant income, the benefit of Irish tax incentive reliefs is preserved for Netherlands enterprises with branches in Ireland which qualify for those reliefs. The requirements of being subject to a tax similar to Netherlands company tax is (by paragraph VIII of the Protocol to the Convention) to be regarded as satisfied in the case of an Irish company the profits of which have been wholly or partly relieved from Irish tax by virtue of Irish tax incentive reliefs. Irish dividends paid out of such profits (as well as Irish dividends paid out of fully taxed profits) to Netherlands corporations will therefore qualify for the exemption allowed in the Netherlands to Nethelands corporations owning a substantial participation in the distributing company's share-capital.

In Ireland, relief is to be given by allowing, against the Irish tax payable on Netherlands income, a credit in respect of the Netherlands tax which the income has borne, including, in the case of dividends received by an Irish company which controls 50 per cent or more of the voting power in the Netherlands company paying the dividends, an appropriate proportion of the Netherlands tax on the profits out of which the dividends are paid [Article 22].

The Convention contains provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country [Article 24], for consultation [Article 25] and for the exchange of information [Article 26] between the taxation authorities of the two countries.

The Convention takes effect in Ireland for the fiscal year 1965-66 and subsequent years [Article 30].

3. The term "business apprentice" in this Article has the meaning attributed to it by legislation concerning apprentices to a trade or profession, or by common practice, in either State.

ARTICLE 29.

TERRITORIAL EXTENSION.

4. The competent authorities of the States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 26.

EXCHANGE OF INFORMATION.

5. In this Article the term "taxation" means taxes of every kind and description.

ARTICLE 25.

MUTUAL AGREEMENT PROCEDURE.

6. Notwithstanding the provisions of paragraph 2, dividends paid by a company which is a resident of Ireland to a resident of the Netherlands shall be exempt from Irish sur-tax.

7. 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 from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident.

8. The provisions of paragraphs 1, 2, 3 and 6 shall not apply if the recipient of the dividends, being a resident of one of the States, has in the other State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case, the provisions of Article 5 shall apply.

9. Where a company which is a resident of one of the States derives profits or income from the other State, that other State may not impose any tax on the dividends paid by the company to persons who are not residents of that other 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.

ARTICLE 9.

INTEREST.

S.I. No. 22 of 1970.

DOUBLE TAXATION RELIEF (TAXES ON INCOME AND CAPITAL) (KINGDOM OF THE NETHERLANDS) ORDER, 1970.

WHEREAS it is enacted by

section 361

(1) of the

Income Tax Act, 1967

(No. 6 of 1967), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, sur-tax or corporation profits tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment, have the force of law

AND WHEREAS it is further enacted by section 361 (6) of that Act that where such an order is proposed to be made, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of this Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

section 361

of the

Income Tax Act, 1967

(No. 6 of 1967), hereby order as follows