S.I. No. 773/2004 - Double Taxation Relief (Taxes on Income and Capital Gains) (Government of Canada) Order 2004

1. Each of the Contracting States shall notify the other through diplomatic channels of the completion of the procedures required by law for the bringing into force of this Convention. The Convention shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect

(a) in Canada

(i) in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of January in the calendar year next following that in which the Convention enters into force; and

(ii) in respect of other Canadian tax for taxation years beginning on or after the first day of January in the calendar year next following that in which the Convention enters into force;

(b) in Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the first day of January in the calendar year next following that in which the Convention enters into force; and

(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following that in which the Convention enters into force.

2. The Agreement between the Government of Canada and the Government of Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at Ottawa on November 23, 1966 (hereinafter referred to as “the 1966 Agreement”), shall cease to have effect from the dates on which this Convention becomes effective in accordance with paragraph 1.

3. The 1966 Agreement shall terminate on the last date on which it has effect in accordance with paragraph 2.

Article 30

Termination

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention at any time after five years from the date on which the Convention enters into force provided that at least six months prior notice of termination has been given through diplomatic channels. In such event, this Convention shall cease to have effect

(a) in Canada

(i) in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of January in the calendar year next following the date on which the period specified in the said notice of termination expires; and

(ii) in respect of other Canadian tax for taxation years beginning on or after the first day of January in the calendar year next following the date on which the period specified in the said notice of termination expires;

(b) in Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the first day of January in the calendar year next following the date on which the period specified in the said notice of termination expires; and

(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following the date on which the period specified in the said notice of termination expires.

IN WITNESS WHEREOF

the undersigned, duly authorised to that effect, have signed this Convention.

DONE

in duplicate at Ottawa, this 8

th

day of October, 2003, in the English and French languages, each version being equally authentic.

FOR THE GOVERNMENT OF IRELAND

FOR THE GOVERNMENT OF CANADA

MARY HARNEY

BILL GRAHAM

Given under the Official Seal of the Government,

this 7

th

day of December, 2004.

BERTIE AHERN,

Taoiseach.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

This Order gives force of law in Ireland to the Convention with Canada which is set out in the Schedule. This Convention replaces a previous Double Taxation Convention between Ireland and Canada, signed on 23 November 1966 and which had been in effect since 1968. The principal provisions of the new Convention are summarised below.

This Convention with Canada, which was signed in Ottawa on 8 October 2003, is comprehensive in scope and is based on the OECD Model Convention.

It provides for the allocation of taxing rights between Ireland and Canada and for the granting of relief from double taxation with regard to items of income and capital gains which, under the laws of Ireland and the laws of Canada, may be taxed in both countries.

In many cases, the Convention awards the taxation right over items of income and gains to the country of residence of the recipient only, for example, for items such as business profits and gains on movable property, provided such income or gains do not arise through a permanent establishment or fixed base in the country of source and profits from the operation of ships or aircraft engaged in international traffic. In other cases, such as certain government salaries, the Convention awards the sole taxation right to the country of source.

Where both countries continue to have taxing rights, for example in the case of dividend income, certain interest and royalty income, pensions, business profits arising through a permanent establishment which an enterprise resident in one country has in the other country, or in the case of capital gains arising from the disposal of immovable property or shares linked with immovable property, the Convention provides that the country of residence of the recipient of the income or gain will give credit against its tax on the income or gains for the tax paid in the other country on the same income or gains.

In the case of dividends the Convention reduces withholding tax rates to 5% and 15%. The lower rate of 5% of the gross dividend applies where the recipient is a company that owns 10% of the company paying the dividends: otherwise, the 15% rate applies.

Source country taxation of interest and royalties is limited to 10% of the gross payment. In the case of interest there is exemption from tax in the source State where the interest is in respect of the indebtedness of the Government of that State or a political subdivision or a local authority thereof, or where interest is paid in respect of a sale on credit of certain goods and services except between related parties, or where the loan was made by or guaranteed by the relevant Government agency of the recipient State, or where the recipient is a pension fund.

With regard to royalties, there is exemption from tax in the source state for copyright royalties or royalties for the use of, or the right to use, computer software or any patent or for information concerning industrial, commercial or scientific experience.

There are special provisions in the Convention dealing with the allocation of taxation rights for activities connected with the offshore exploration and exploitation of natural resources in each country.

The Convention also provides for safeguarding nationals and enterprises of one country against discriminatory taxation in the other country, for consultation between the competent authorities of the two countries for the purpose of resolving any doubts or difficulties arising as to the interpretation or application of the Convention and for the exchange of information that is relevant for carrying out the provisions of the Convention or of the domestic laws of each country in relation to the taxes covered by the Convention.

The Convention will enter into force when each country notifies the other of the completion of its procedures for bringing the Convention into force. It will thereupon have effect in both countries for tax periods beginning in the following year. The provisions of the Convention signed in 1966 will cease to have effect when the provisions of this Convention take effect.

4. The Convention shall not apply to any company, trust or partnership that is a resident of a Contracting State and is beneficially owned or controlled directly or indirectly by one or more persons who are not residents of that State, if the amount of the tax imposed on the income or capital of the company, trust or partnership by that State is substantially lower than the amount that would be imposed by that State if all of the shares of the capital stock of the company or all of the interests in the trust or partnership, as the case may be, were beneficially owned by one or more individuals who were residents of that State.

5. For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 4 of Article 25 or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.

6. Contributions in a year in relation to services rendered in that year paid by, or on behalf of, an employee who is a resident of a Contracting State or who is temporarily present in that State, to a pension plan that is recognised for tax purposes in the other Contracting State shall, during a period not exceeding in the aggregate 60 months, be treated in the same way for tax purposes in the first-mentioned State as a contribution paid to a pension plan that is recognised for tax purposes in that first-mentioned State, if

(a) such employee was contributing on a regular basis to the pension plan for a period ending immediately before that individual became a resident of or temporarily present in the first-mentioned State; and

(b) the competent authority of the first-mentioned State agrees that the pension plan generally corresponds to a pension plan recognised for tax purposes by that State.

For the purposes of this paragraph, “pension plan” includes a pension plan created under the social security system in a Contracting State.

7. Where, under paragraph 6, contributions to a foreign pension plan are deductible in computing an individual's taxable income in a Contracting State and, under the laws in force in that State, the individual is, in respect of income or gains, subject to tax by reference only to the amount thereof which is remitted to or received in that State, and not by reference to the full amount of such income or gains, then the deduction which would otherwise be allowed to the individual under paragraph 6 in respect of such contributions shall be reduced to an amount that bears the same proportion to such deduction as the amount remitted bears to the full amount of the income or gains of the individual that would be taxable in that State if the income or gains had not been taxable on the amount remitted only.

8. Notwithstanding the provisions of Article 10, dividends arising in a Contracting State and paid to an organisation that was constituted and is operated in the other Contracting State exclusively to administer funds or provide benefits under one or more pension, retirement or employee benefits plans shall be exempt from tax in the first-mentioned State if

(a) the organisation is the beneficial owner of the shares on which the dividends are paid, holds those shares as an investment and is generally exempt from tax in the other State;

(b) the organisation does not own directly or indirectly more than 5 per cent of the capital or 5 per cent of the voting stock of the company paying the dividends; and

(c) the class of shares of the company on which the dividends are paid is regularly traded on an approved stock exchange.

VI. FINAL PROVISIONS

Article 29

Entry into Force

STATUTORY INSTRUMENTS

S.I. No. 773 of 2004

DOUBLE TAXATION RELIEF (TAXES ON INCOME AND CAPITAL GAINS) (GOVERNMENT OF CANADA) ORDER 2004

WHEREAS it is enacted by sections 826(1) and 828 of

the Taxes Consolidation Act 1997

(No.

39 of 1997) 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, corporation tax in respect of income and chargeable gains 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, then subject to section 826 of that Act, the arrangements shall, notwithstanding any enactment, have the force of law

AND WHEREAS it is further enacted by section 826(6) of

the Taxes Consolidation Act 1997

that where such an order is proposed to be made, a draft of the order 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 the following 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 sections 826(1) and 828 of

the Taxes Consolidation Act 1997

(No. 39 of 1997) hereby order as follows