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9 JUIN 1999. - An Act to assent to the Convention between the Kingdom of Belgium and the Republic of Cyprus in order to avoid double taxation and to prevent tax evasion in respect of taxes on income and fortune, made in Brussels on 14 May 1996 (1) (2) (2)

ALBERT II, King of the Belgians,
To all, present and to come, Hi.
The Chambers adopted and We sanction the following:
Article 1^er. This Act regulates a matter referred to in Article 77 of the Constitution.
Art. 2. The Convention between the Kingdom of Belgium and the Republic of Cyprus with a view to avoiding double taxation and preventing tax evasion on income and fortune taxes, made in Brussels on 14 May 1996, will come out its full and complete effect.
Promulgate this law, order that it be clothed with the seal of the State and published by the Belgian Monitor.
Given in Brussels, 9 June 1999.
ALBERT
By the King:
Minister of Foreign Affairs,
E. DERYCKE
Deputy Prime Minister and Minister of Economy and Telecommunications, in charge of Foreign Trade,
E. DI RUPO
Minister of Finance,
J.-J. VISEUR
Seal of the state seal:
Minister of Justice,
T. VAN PARYS
____
Note
(1) 1998-1999 session:
Senate.
Documents. - Bill, tabled on 19 April 1999, No. 1-1376/1. - Report, no. 1-1376/2. - Text adopted by the Commission, No. 1-1376/3.
Annales parliamentarians. - Discussion. Session of 20 April 1999. - Vote. Session of 20 April 1999.
Room.
Documents. - Project transmitted by the Senate, No. 49-2186/1. - Text adopted in plenary and subject to Royal Assent, No. 49-2186/2.
Annales parliamentarians. - Discussion. Meeting of 29 April 1999. - Vote. Meeting of 29 April 1999.
(2) In accordance with its articles 30, the Convention will enter into force on 8 December 1999.

9 JUNE 1999. - Convention between the Kingdom of Belgium and the Republic of Cyprus for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital
The Government of the Kingdom of Belgium
and
The Government of the Republic of Cyprus
Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital,
Have agreed as follows:
CHAPTER I. - SCOPE OF THE CONVENTION
Article 1
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
Article 2
TAXES COVERED
1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, 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:
1. the individual income tax;
2. the corporate income tax;
3. the income tax on legal entities;
4. the income tax on non-residents;
5. the special levy assimilated to the individual income tax;
6. the supplementary crisis contribution,
including the prepayments, the surcharges on these taxes and prepayments, and the supplements to the individual income tax,
(hereinafter referred to as "Belgian tax");
(b) in the case of Cyprus:
1. the income tax;
2. the corporation tax;
3. the capital gains tax;
4. the immovable property tax;
5. the special contribution (defence of the Republic);
6.the taxes levied by local authorities,
(hereinafter referred to as « Cyprus tax »).
4. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which, have been made in their respective taxation laws.
CHAPTER II. - DEFINITIONS
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
(a) 1. the term « Belgium » means the Kingdom of Belgium and, when used in a geographical sense, includes the territorial waters of Belgium and any area outside Belgium which in accordance with international law and the laws of Belgium is an area within which the rights of Belgium with respect to the natural resources of the seabed and subsoil may be exercised;
2. the term « Cyprus » means the Republic of Cyprus and, when used in a geographical sense, includes the territorial waters of Cyprus and any area outside Cyprus which in accordance with international law and the laws of Cyprus is an area within which the rights of Cyprus with respect to the natural resources of the seabed and subsoil may be exercised;
b) the terms "a Contracting State" and " the other Contracting State" mean Belgium or Cyprus as the context requires;
(c) the term "person" includes an individual, a company and any other body of persons;
d) the term « company » means any body corporate or any entity which is treated as a body corporate for tax purposes in the Contracting State of which it is a resident;
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 "international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(g) the term "competent authority" means:
1. in the case of Belgium, the Director general of direct taxes, and
2. in the case of Cyprus, the Minister of Finance or his authorised representative.
2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies.
Article 4
RESIDENT
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);
b) if the 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 State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;
d) if he is a national of both 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, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop, and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3. A building site or construction or installation project constitutes a permanent establishment only if it lasts more than six months.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not 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 of collecting information, for the enterprise;
e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character;
g) the maintenance in Cyprus of a fixed place of business by a company which is a resident of Belgium and is registered in Cyprus under section 347 of the Companies Law (Cap. 113) solely for the purpose of carrying on offshore activities.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which undertake that person establishment that enterprise, unless the activities of such person are limited to those mentioned in paragraph 4
6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. 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 either company a permanent establishment of the other.
CHAPTER III. - TAXATION OF INCOME
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under 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 for the working of, or the consideration 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.
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 independent personal services.
Article 7
BUSINESS PRODUCTS
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 business as aforesaid, the profits of the 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 dealing wholly independently.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions 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. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an contributionionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an contributionionment as may be customary; the method of contributionionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
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 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 8
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. 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.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
4. Profits from the use or rental of containers (including trailers and related equipment for the transport of containers) used in international traffic shall be taxable only in the Contracting State in which the place of effective management of enterprise is situated.
Article 9
ASSOCIATED ENTERPRISES
Where
a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
b) the same persons participate directly or indirectly in the management, control or capital 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 increasedd to one of the enterprises, but, by reason of those conditions, have not so increasedd, may be included in the profits of that enterprise and taxed accordingly.
Article 10
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 also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State the tax so charged shall not exceed :
a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly or indirectly at least 25 per cent of the capital of the company paying the dividends;
(b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term « dividends » as used in this Article means income from shares, « enjoyment » shares or « enjoyment » rights, mining shares, founders' shares or other rights, not being debt-claims participating in profits, as well as income - even paid in the form of interest - which is treated as income from shares by the internal tax legislation of the State of which the paying company is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State that other State may not impose any tax on the dividends paid by the compar,y to a person who is a resident of the first-mentioned State, except insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment paid base situated in that other State, nor subject the company's undistributed profits to tax
Article 11
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 also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State in which it arises if it is:
a) interest paid to the other Contracting State, a political subdivision or a local authority of that State, the National Bank of that State or any institution the capital of which is wholly owned by that State or the political subdivisions or local authorities of that State;
b) interest on deposits - not represented by bearer instruments - with a banking.
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; however, the term "interest" shall not include for the purpose of this Article penalty charges for late payment nor interest regarded as dividends under paragraph 3 of Article 10.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent 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 case the provisions of Article 7 or Article 14, ~ case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the pay 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 such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the pay and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the pay and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable in the Contracting State in which the interest arises according to the laws of that State.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State if such resident is the beneficial owner of the royalties.
2. 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 of literary, artistic or scientific work including cinematograph films, and films or tapes for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula process, or for information concerning industrial, commercial or scientific experience.
3. The provisions of paragraph 1 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal 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 case the provisions of Article 7 or Article 14, as the case may be, shall apply.
4. Royalties shall be deemed to arise in a Contracting State when the pay is that State itself, a political subdivision, a local authority or a resident of that State. ~ here, 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 liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base. then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
5. Where, by reason of a special relationship between the pay and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the pay and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the royalties shall remain taxable in the Contracting State in which the royalties arise, according to the laws of that State.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
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 independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed
3. Gains from the alienation of ships or aircraft operated in international traffic or 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.
4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent 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 State but only so much of it as is attributable to that fixed base.
2. The term " professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18, 19 and 20, 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 any period of 12 months, and
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 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 derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place effective management of the enterprise is situated.
Article 16
COMPANY MANAGEMENT
1. Directors' fees and other 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 which is a resident of the other Contracting State may be taxed in that other State.
The provisions of this paragraph shall also apply to payments derived in respect of the discharge of functions which, under the laws of the Contracting State of which the company is a resident, are regarded as functions of a similar nature as those exercised by a person to whom this paragraph applies.
2. Remuneration derived by a resident referred to in paragraph 1 from the company in respect of the discharge of day-to-day functions of a managerial or technical nature and income received by a resident of a Contracting State in respect of his personal activity as a partner of a partnership which is a resident of the other Contracting State, may be taxed in the Contracting State where such resident exercises his activity.
Article 17
ARTISTES AND ATHLETES
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artist, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such increaseds not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by an entertainer or athlete from his personal activities as such shall be exempt from tax in the Contracting State in which these activities are exercised if the activities are substantially supported by public funds or sponsored by the other Contracting State, or by a political subdivision, local authority of statutory body thereof.
Article 18
PENSIONS
1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
2. Pensions and other allowances paid under a public scheme organised by a Contracting State in order to supplement the benefits of the social security legislation of that Contracting State may be taxed in that State.
Article 19
GOVERNMENT SERVICE
1. (a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority 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 individual is a resident of that State who:
1. is a national of that State; gold
2. did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or political subdivision or a local authority thereof.
Rule 20
PROFESSORS AND STUDENTS
1. Any remuneration paid to professors and other teachers who are residents of a Contracting State and who are temporarily present in the other Contracting State for the purpose of teaching or carrying on scientific research during a period not exceeding two years at a university or other officially recognized educational institution shall be taxable only in the first-mentioned State.
2. A student or business apprentice 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 State solely for the purpose of his education or training shall not be taxed in that State:
a) on payments which he receives from sources outside that State for the purpose of his maintenance, education or training;
b) on any amount representing remuneration for an employment in that State, provided the remuneration from such employment in a taxable year does not exceed 150,000 Belgian francs or the equivalent thereof in Cyprus currency.
Article 21
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
CHAPTER IV. -TAXATION OF CAPITAL
Article 22
CAPITAL
1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by 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 by 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 independent personal services, may be taxed in that other State.
3. Capital represented by ships and aircraft operated in international traffic and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. All other elements of capital of a resident of a contracting State shall be taxable only in that State.
CHAPTER V. - METHODS OF ELIMINATION OF DOUBLE TAXATION
Article 23
1. In the case of Belgium, double taxation shall be avoided as follows:
(a) Where a resident of Belgium derives income or owns capital which may be taxed in Cyprus in accordance with the provisions of this Convention, other than those of paragraph 2 of Article 10, of paragraphs 2 and 7 of Article 11 and of paragraph 5 of Article 12, Belgium shall exempt such income or capital from tax but may, in calculating the amount of tax on the remaining income or capital of that resident, apply the rate of tax which would have been exempt if such income or capital had
(b) Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are dividends taxable in accordance with paragraph 2 of Article 10, and not exempt from Belgian tax according to subparagraph c) hereinafter, interest taxable in accordance with paragraph 2 or 7 of Article 11, or royalties taxable in accordance with 5 paragraph of Article 12, the Cyprus tax levied income that
(c) Dividends derived by a company which is a resident of Belgium from a company which is a resident of Cyprus, and which may be taxed in Cyprus in accordance with paragraph 2 of Article 10, shall be exempt from the corporate income tax in Belgium under the conditions and within the limits provided for in Belgian law.
(d) Where in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in Cyprus have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in subparagraph a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in Cyprus by reason of compensation for the said losses.
2. In the case of Cyprus, double taxation shall be avoided as follows:
(a) Where a resident of Cyprus derives income or owns capital which may be taxed in Belgium in accordance with the provisions of this Convention, other than those of paragraph 2 of Article 10 and of paragraph 2 of Article 11, Cyprus shall exempt such income or capital from tax but may, in calculating the amount of tax on the remaining income or capital of that resident, apply the rate of tax which would have been applicable if such income or capital had not been exempted.
(b) Where a resident of Cyprus derives items of his aggregate income for Cyprus tax purposes which are dividends taxable in accordance with paragraph 2 of Article 10 or interest taxable in accordance with paragraph 2 of Article 11, the Belgian tax paid in respect of such income shall under the provisions of Cyprus law be allowed as a credit against Cyprus tax relating to that income.
(c) Where a company which is a resident of Cyprus derives dividends from a company which is a resident of Belgium, and the Cyprus company owns directly at least 25 per cent of the capital of the Belgian company, the credit mentioned in subparagraph b) shall however take into account, under the conditions provided for in Cyprus law and in addition to the Belgian tax on such dividends, the Belgian corporate income tax payable in respect of the profits out of which the dividends are paid.
(d) Where, in accordance with Cyprus law, losses incurred by an enterprise carried on by a resident of Cyprus in a permanent establishment situated in Belgium have been effectively deducted from the profits of that enterprise for its taxation in Cyprus, the exemption provided for in subparagraph a) shall not apply in Cyprus to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in Belgium by reason of compensation for the said losses.
CHAPTER VI. - SPECIAL PROVISIONS
Article 24
NON-DISCRIMINATION
1. Nationals 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. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The term "nationals" means:
a) all individuals possessing the nationality of a Contracting State;
b) all legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State.
3. Stateless persons who are residents of a Contracting State shall not be subjected in either 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 the State concerned in the same circumstances are or may be subjected.
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. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
5. Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph 5 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly. any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall ~ for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
6. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
7. Nothing contained in this Article shall be construed as preventing Belgium :
a) from taxing the total amount of the profits attributable to a permanent establishment in Belgium of a company which is a resident of Cyprus at the rate of tax provided by the Belgian law provided that this rate does not exceed the maximum rate applicable to the whole or a portion of the profits of companies which are residents of Belgium;
b) from imposing the movable property prepayment on dividends derived from a holding which is effectively connected with a permanent establishment maintained in Belgium by a company which is a resident of Cyprus.
3. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
Rule 25
MUTUAL PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory 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 which is 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 interpretation or application of the Convention.
4. The competent authorities of the Contracting States shall agree on administrative measures necessary to carry out the provisions of the Convention and particularly on the proofs to be furnished by residents of either Contracting State in order to benefit in the other State from the exemptions or reductions in tax provided for in the Convention.
5. The competent authorities of the Contracting State shall communicate directly with each other for the application of the Convention.
Rule 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
b) to supply information which is 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).
Rule 27
ASSISTANCE IN COLLECTION
1. Each of the Contracting States shall endeavour to collect on behalf of the other Contracting State such taxes imposed by that other Contracting State as will ensure that any exemption or reduced rate of tax granted under this Convention by that other Contracting State shall not be enjoyed by persons not entitled to such benefits.
2. In no case shall this Article be construed so as to impose upon a Contracting State the obligation to carry out measures at variance with the laws, administrative practices, or public policy of either Contracting State with respect to the collection of its own taxes.
Rule 28
DIPLOMATIC AGENTS AND CONSULAR OFFICERS
1. Nothing in this Convention shall affect the fiscal privileges of members of a diplomatic mission or consular post under the general rules of international law or under the provisions of special agreements.
2. For the purposes of the Convention, persons who are members of a diplomatic mission or consular post of a Contracting State in the other Contracting State or in a third State and who are nationals of the sending State, shall be deemed to be residents of the sending State if they are subjected therein to the same obligations in respect of taxes on income and capital as are residents of that State.
3. The Convention shall not apply to international organisations, to organs or officials thereof and to persons who are members of a diplomatic mission or consular post of a third State. being present in a Contracting State and not treated in either Contracting State as residents in respect of taxes on e or on capital.
Rule 29
LIMITATION OF THE EFFECTS OF THE CONVENTION
1. Where under any provision of the Convention income is relieved from tax in one of the Contracting States and, under the law in force in the other Contracting State, a person, in respect of the said income, is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the relief to be allowed under the Convention in the first-mentioned Contracting State shall apply only to so much of the income as
2. Notwithstanding the provisions of Article 8, profits from the operation of a ship in international traffic derived by a company or partnership which is a resident of Cyprus having more than 25 percent of its capital owned, directly or indirectly, by persons who are not residents of Cyprus, may be taxed in Belgium if the company or partnership has in Belgium a permanent establishment.
3. The provisions of paragraph 2 of Article 10, paragraphs 2 and 3 of Article 11 and paragraph 1 of Article 12 shall not apply to persons entitled to any special tax benefit under any of the Sections listed below of the Cyprus Income Tax Law :
(a) Section 5 (2) (c) (i) insofar as no tax is charged or the tax charged is at a rate less than the rate prescribed for individuals in Section 1 of the Second Schedule to the Cyprus Income Tax Law or which may hereafter otherwise be prescribed for individuals generally;
(b) Section 8 (w) and (y);
(c) Section 28 (A).
4. The provisions of paragraph 3 shall also apply to any provision of Cyprus law which is of an identical or substantially similar character to the provisions mentioned in that paragraph.
CHAPTER VII. - FINAL PROVISIONS
Rule 30
ENTRY INTO FORCE
1. This Convention shall be ratified and the instruments of ratification shall be exchanged
at as soon as possible.
2. The Convention shall enter into force on the fifteenth day after the date of the exchange of the instruments of ratification and its provisions shall have effect:
(a) in Belgium:
1. with respect to taxes due at source on income credited or payable on or after January 1, and
2. with respect to other taxes charged on income of taxable periods ending on or after December 31, in the calendar year next following that in which the instruments of ratification have been exchanged;
(b) in Cyprus:
with respect to taxes on income or on capital relating to the calendar year next following that in which the instruments of ratification have been exchanged.
Rule 31
TERMINATION
This Convention is concluded for an indefinite period. Either Contracting State may terminate the Convention, through diplomatic channels, by giving to the other Contracting State, written notice of termination not later than the 30thJune of any calendar year from the fifth year following that in which the instruments of ratification have been exchanged. In the event of termination before July 1 of such year, the Convention shall cease to have effect :
(a) in Belgium:
1. with respect to taxes due at source on income credited or payable on or after January 1, and
2. with respect to other taxes charged on income of taxable periods ending on or after December 31, in the calendar year next following that in which the notice of termination was given;
(b) in Cyprus:
with respect to taxes on income or on capital relating to the calendar year next following that in which the notice r- termination has been given.
In witness whereof the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention and have affixed thereto their seals.
Done in duplicate at Brussels, this 14th of May 1996, in the English language.
For the Kingdom of Belgium :
E. DERYCKE
For the Republic of Cyprus :
A.P. MICHAE LIDES

TRADUCTION
Convention between the Kingdom of Belgium and the Republic of Cyprus to avoid double taxation and to prevent tax evasion in respect of taxes on income and on fortune
The Government of the Kingdom of Belgium
and
The Government of the Republic of Cyprus,
Desirous of concluding a Convention to avoid double taxation and to prevent tax evasion in respect of income and wealth taxes,
The following provisions were agreed:
CHAPTER I. - APPROVAL CHAMP OF THE CONVENTION
Article 1
PERSONS
This Convention applies to persons who are residents of a Contracting State or both Contracting States.
Article 2
IMPOTS VISES
1. This Convention applies to taxes on income and on property collected on behalf of a Contracting State, its political subdivisions or local authorities, irrespective of the system of perception.
2. The taxes on total income, total property, or income or property, including taxes on earnings from the alienation of movable or real estate property, taxes on the total amount of wages paid by companies, as well as taxes on surplus-values, are considered income and property taxes.
3. Current taxes to which the Convention applies include:
(a) with regard to Belgium:
1. the tax of natural persons;
2. corporate tax;
3. the tax of legal persons;
4. non-resident tax;
5. the special contribution assimilated to the tax of natural persons;
6. the complementary contribution of crisis,
including pre-payments, additional cents to such taxes and pre-payments, and additional taxes to the tax of natural persons,
(hereinafter referred to as "Belgian tax");
(b) Cyprus:
1. income tax;
2. corporate tax;
3. capital gains tax;
4. real property tax;
5. the special contribution (defendant of the Republic);
6. taxes collected by local authorities,
(hereinafter referred to as "cypriote tax").
4. The Convention also applies to taxes of an identical or similar nature that would be established after the date of signature of the Convention and that would be in addition to or replace existing taxes. The competent authorities of the Contracting States shall communicate the significant changes to their respective tax laws.
CHAPTER II. - DEFINITIONS
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context requires a different interpretation:
(a) 1. the term "Belgium" means the Kingdom of Belgium and, when used in a geographical sense, it includes Belgian territorial waters and any area outside Belgium that, in accordance with international law and Belgian legislation, constitutes an area in which Belgium's rights to natural resources of the seabed and the basement may be exercised;
2. the term "Cycle" means the Republic of Cyprus and, when used in a geographical sense, includes the territorial waters of Cyprus and any area outside Cyprus that, in accordance with international law and cypriote legislation, constitutes an area in which the rights of Cyprus in respect of the natural resources of the seabed and the subsoil may be exercised;
(b) the terms "a Contracting State" and "the other Contracting State" mean, in the context, Belgium or Cyprus;
(c) the term "person" includes individuals, societies and other groups of persons;
(d) the term "society" means any corporation or entity that is considered to be a legal entity for taxation purposes in the Contracting State of which it is a resident;
(e) the terms "company of a Contracting State" and "company of the other Contracting State" shall, respectively, designate a business operated by a resident of a Contracting State and a business operated by a resident of the other Contracting State;
(f) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise whose effective steering seat is located in a Contracting State, except where the vessel or aircraft is operated only between points in the other Contracting State;
(g) the term "competent authority" means:
1. with regard to Belgium, the Director-General of Direct Contributions, and
2. with regard to Cyprus, the Minister of Finance or his authorized representative.
2. For the purposes of the Convention by a Contracting State, any expression not defined therein shall have the meaning assigned to it by the law of that State concerning the taxes to which the Convention applies, unless the context requires a different interpretation.
Article 4
RESIDENT
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 subject to tax in that State, because of his domicile, residence, management seat or any other similar criterion. However, this term does not include persons who are subject to tax in that State only for income from sources located in that State or for the property located therein.
2. Where, according to the provisions of paragraph 1, a natural person is a resident of the two Contracting States, his or her situation shall be settled as follows:
(a) that person is considered to be a resident of the State where the person has a permanent home; if it has a permanent home in both states, it is considered to be a resident of the State with which its personal and economic ties are the narrowest (centre of vital interests);
(b) if the State in which that person has the centre of his or her vital interests cannot be determined, or if it does not have a permanent home in any of the States, it is considered to be a resident of the State in which it normally resides;
(c) if the person normally stays in both States or if he or she does not normally stay in any of them, he or she is considered to be a resident of the State of which he or she is a national;
(d) if the person possesses the nationality of the two States or has no nationality of any of them, the competent authorities of the Contracting States shall decide the question by mutual agreement.
3. Where, according to the provisions of paragraph 1, a person other than a natural person is a resident of the two Contracting States, it is considered to be a resident of the State where its effective management seat is located.
Article 5
STABLE FULLING
1. For the purposes of this Convention, the term "stable establishment" means a fixed business facility through which a company operates all or part of its business.
2. The term "stable establishment" includes:
(a) a steering seat,
(b) a branch,
(c) an office,
(d) a factory,
(e) a workshop, and
(f) a mine, oil or gas well, a career or any other place of extraction of natural resources.
3. A construction or construction site is a permanent establishment only if its duration exceeds six months.
4. Notwithstanding the preceding provisions of this Article, it is considered that there is no "stable establishment" if:
(a) the use of facilities for the sole purpose of storage, exposure or delivery of goods owned by the company;
(b) goods belonging to the undertaking are stored for storage, exposure or delivery purposes only;
(c) goods belonging to the enterprise are stored for the sole purpose of processing by another company;
(d) a fixed business facility is used for the sole purpose of purchasing goods or collecting information for the company;
(e) a fixed business facility is used for the sole purpose of carrying out any other preparatory or auxiliary activity for the enterprise;
(f) a fixed business facility shall be used for the purposes of the cumulative year of activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed business facility resulting from the cumulative operation shall be preparatory or auxiliary;
(g) a fixed business facility is used in Cyprus by a company that is a resident of Belgium and is registered in Cyprus in accordance with section 347 of the Corporations Act (Cap. 113), for the sole purpose of carrying out offshore activities.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent enjoying an independent status to which paragraph 6 applies - shall act on behalf of a business and shall have in a Contracting State powers that it normally exercise to enter into contracts on behalf of the enterprise, that undertaking shall be deemed to have a permanent establishment in that State for all activities that that that person exercises for the enterprise, unless
6. A business is not considered to have a permanent establishment in a Contracting State solely because it operates in it through a broker, a general commissioner or any other agent with an independent status, provided that such persons act within the ordinary framework of their business.
7. The fact that a corporation that is a resident of a Contracting State controls or is controlled by a corporation that is a resident of the other Contracting State or that operates therein (either through a permanent establishment or not) is not sufficient in itself to make any of these companies a permanent establishment of the other.
CHAPTER III. - IMPOSITION OF REVENUS
Article 6
REVENUS IMMOBILIERS
1. The income that a resident of a Contracting State derives from real property (including income from farms or forestry) located in the other Contracting State, is taxable in that other State.
2. The term "real property" has the meaning assigned to it by the law of the Contracting State in which the property is located. The term includes, in any case, accessories, dead or alive livestock of farms and forests, the rights to which the provisions of private law apply in respect of land ownership, the usufruct of real property and the rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources; ships, ships and aircraft are not considered real property.
3. The provisions of paragraph 1 shall apply to income derived from direct exploitation or enjoyment, lease or charter, as well as any other form of exploitation of real property.
4. The provisions of paragraphs 1 and 3 also apply to income from real property of a business as well as to income from real property used in the exercise of an independent profession.
Article 7
BENEFICES DES ENTREPRISES
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 located therein. If the company operates in such a way, the profits of the company are taxable in the other State but only to the extent that they are attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where a business of a Contracting State carries on business in the other Contracting State through a permanent establishment located therein, it shall be charged, in each Contracting State, to that permanent establishment the profits that it could have realized if it had constituted a separate undertaking carrying out identical or similar activities under identical or similar conditions and acting independently.
3. In order to determine the benefits of a permanent establishment, deductions are made of the expenses incurred for the purposes of this permanent establishment, including the executive expenses and general administrative expenses so exposed, either in the State where the permanent establishment is located or elsewhere.
4. If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of a distribution of the total profits of the enterprise between its various parties, no provision in paragraph 2 shall prevent that Contracting State from determining the taxable profits according to the distribution in use; However, the method of distribution adopted must be such that the result obtained is consistent with the principles contained in this article.
5. No profit is charged to a permanent establishment because it simply purchased goods for the company.
6. For the purposes of the preceding paragraphs, the benefits to be charged to the permanent establishment are determined annually on the same basis, unless there are valid and sufficient grounds to proceed otherwise.
7. Where profits include income elements treated separately in other articles of this Convention, the provisions of these articles are not affected by the provisions of this article.
Article 8
MARITIME AND AERIENNE NAVIGATION
1. The profits derived from the operation, in international traffic, of ships or aircraft shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
2. If the effective management seat of a marine navigation company is on board a vessel, that seat shall be considered to be located in the Contracting State where the vessel's port of attachment is located, or if the vessel is not carrying the vessel, in the Contracting State of which the vessel operator is a resident.
3. The provisions of paragraph 1 also apply to benefits derived from participation in a pool, a joint operation or an international operating organization.
4. The benefits derived from the use or lease of containers (including trailers and related equipment used for the transport of containers) operated in international traffic shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
Article 9
ENTREPRISES ASSOCIEES
When
(a) a business of a Contracting State directly or indirectly participates in the direction, control or capital of a business of the other Contracting State, or
(b) the same persons directly or indirectly participate in the direction, control or capital of a business of a Contracting State and a business of the other Contracting State,
and that, in both cases, both companies are, in their commercial or financial relations, bound by agreed or imposed conditions, that differ from those that would be agreed between independent companies, the profits that, without these conditions, would have been realized by one of the companies but could not be in fact because of these conditions, may be included in the profits of that undertaking and imposed accordingly.
Article 10
DIVIDENDS
1. Dividends paid by a corporation that is a resident of a Contracting State to a resident of the other Contracting State shall be taxable in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the corporation paying the dividends is a resident, and according to the law of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of dividends if the beneficial owner is a corporation that holds directly or indirectly at least 25 per cent of the capital of the corporation that pays the dividends;
(b) 15 per cent of the gross amount of dividends in all other cases.
This subsection does not affect the corporation's taxation of profits that are used to pay dividends.
3. The term "dividends" used in this article refers to income from shares, shares or benefits, share of mine, share of founder or other share of beneficiaries except for receivables, as well as incomes - themselves attributed in the form of interest - subject to the same tax regime as income from shares by the law of the State whose debiting society is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the dividends, a resident of a Contracting State, exercises in the other Contracting State whose dividend paying company is a resident, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the dividend-generating interest is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
5. Where a corporation that is a resident of a Contracting State derives from the profits or income of the other Contracting State, that other State shall not collect any tax on the dividends paid by the corporation to a person who is a resident of the first Contracting State, except to the extent that the income-generating interest of the dividends is effectively connected to a permanent establishment or a fixed base located in that other State, or to take no tax, under the taxation
Article 11
INTERTS
1. Interest arising from a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.
2. However, these interests are also taxable in the Contracting State in which they arise and according to the law of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State from which it arises when it is:
(a) interest paid to the other Contracting State, a political subdivision or a local authority of that State, the National Bank of that State or any institution whose capital is wholly owned by that State, the political subdivisions or the local authorities of that State;
(b) interest in deposits of money, not represented by holder securities, made in banking enterprises;
4. The term "interest" used in this section refers to income from receivables of any kind, whether or not accompanied by mortgage guarantees or an interest clause in the debtor's profits, including income from public funds and borrowing obligations, including premiums and lots attached to such securities; However, the term "interest" does not, within the meaning of this section, include penalties for late payment or interest treated as dividends under section 10, paragraph 3.
5. The provisions of paragraphs 1, 2 and 3 shall not apply where the beneficial owner of the interest, a resident of a Contracting State, carries on in the other Contracting State in which the interest arises, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the interest-generating debt is effectively linked to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
6. Interest shall be deemed to arise from a Contracting State where the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the debtor of interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, for which the debt giving rise to the payment of interest has been contracted and which bears the burden of such interests, these shall be deemed to arise from the State where the permanent establishment or fixed base is located.
7. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of interest, taking into account the debt for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this Article shall apply only to the latter amount. In this case, the surplus portion of the payments shall remain taxable, in accordance with its legislation, in the Contracting State from which the interest arises.
Article 12
REDEVANCES
1. Royalties from a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State, if that resident is the beneficial owner of the property.
2. The term " royalties" used in this article means the remuneration of any kind paid for the use or concession of the use of a copyright on a literary, artistic or scientific work, including film films and films or tapes registered for radio or television, a patent, a trademark or trade mark, a drawing or a model, a plan, a secret line or a
3. The provisions of paragraph 1 shall not apply where the beneficial owner of the royalties, a resident of a Contracting State, exercises in the other Contracting State in which the royalties arise, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the right or property that generates royalties is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
4. The royalties shall be deemed to come from a Contracting State when the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the debtor of royalties, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, for which the contract giving rise to the payment of royalties has been concluded and which bears the charge of such royalties, these shall be deemed to be from the State where the permanent establishment or fixed base is located.
5. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of royalties, taking into account the benefit for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this section apply only to the latter amount. In this case, the surplus portion of the payments shall remain taxable, in accordance with its legislation, in the Contracting State from which royalties arise.
Article 13
GAINS EN CAPITAL
1. The gains derived by a resident of a Contracting State from the alienation of real property referred to in Article 6 and situated in the other Contracting State shall be taxable in that other State.
2. The gains from the alienation of movable property that are part of the assets of a permanent establishment that a business of a Contracting State has in the other Contracting State, or of movable property that belong to a fixed base of which a resident of a Contracting State disposes in the other Contracting State for the exercise of an independent profession, including such gains from the alienation of that permanent establishment (ully or with
3. Gains derived from the alienation of ships or aircraft operated in international traffic or movable property assigned to the operation of such vessels or aircraft shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
4. Gains derived from the alienation of any property other than those referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the assignor is a resident.
Article 14
INDEPENDENT PROFESSIONS
1. The income derived by a resident of a Contracting State from a liberal profession or other activities of an independent character shall be taxable only in that State, unless that resident has in the other Contracting State a fixed basis for the exercise of his or her activities in an ordinary manner. If it has such a fixed base, income may be taxed in the other State but only to the extent that it is attributable to that fixed base.
2. The term "liberal profession" includes independent scientific, literary, artistic, educational or educational activities, as well as independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
Article 15
PROFESSIONS
1. Subject to the provisions of Articles 16, 18, 19 and 20, wages, salaries and other similar remuneration that a resident of a Contracting State receives under an employee employment shall be taxable only in that State, unless employment is exercised in the other Contracting State. If the employment is exercised, the remuneration received as such is taxable in that other State.
2. Notwithstanding the provisions of paragraph 1, the remuneration of a resident of a Contracting State in respect of an employee employed in the other Contracting State shall be taxable only in the first State if:
a) the beneficiary stays in the other State for a period or periods not exceeding a total of 183 days in any period of twelve months, and
(b) compensation shall be paid by an employer or on behalf of an employer who is not a resident of the other State, and
(c) the pay charge is not borne by a permanent establishment or a fixed base that the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration received for an employee employed on board a ship or aircraft operated in international traffic shall be taxed in the Contracting State where the effective management seat of the enterprise is located.
Article 16
SOCIETY DIRIGEANTS
1. The fortieth, attendance and other similar remuneration that a resident of a Contracting State receives as a member of the board of directors or of a similar body of a corporation that is a resident of the other Contracting State may be taxed in that other State.
The provisions of this paragraph shall also apply to remuneration received as a result of the exercise of functions which, under the laws of the Contracting State whose society is a resident, are treated as functions of a nature similar to those exercised by a person referred to in that paragraph.
2. The remuneration that a resident referred to in paragraph 1 receives from the corporation as a result of the exercise of a daily activity of direction or technical character and the income that a resident of a Contracting State derives from his or her personal activity as a member in a partnership, which is a resident of the other Contracting State, shall be taxable in the Contracting State in which that resident exercises his or her activity.
Article 17
ARTISTS AND SPORTIFS
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State from his or her personal activities in the other Contracting State as an artist of the spectacle, such as a theatre, cinema, radio or television artist, or a musician, or as a sportsman, may be taxed in that other State.
2. Where the income of activities that an entertainer or a sportsperson exercises personally and in this capacity is attributed not to the artist or to the athlete himself but to another person, such income shall be taxable, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State where the activities of the artist or athlete are carried out.
3. Notwithstanding the provisions of paragraphs 1 and 2, the income derived by an artist or athlete from his or her activities carried out personally and in that capacity is exempted from tax in the Contracting State in which such activities are carried out if they are financed largely by public funds, or supported by the other Contracting State, by one of its political subdivisions or local authorities or by a public law body of that State.
Article 18
PENSIONS
1. Subject to the provisions of Article 19, paragraph 2, pensions and other similar remuneration paid to a resident of a Contracting State for an earlier job shall be taxable only in that State.
2. Pensions and other allowances paid under a general regime organized by a Contracting State to supplement the benefits provided by the social legislation of that Contracting State are taxable in that State.
Article 19
PUBLIC FUNCTIONS
1. (a) Compensation, other than pensions, paid by a Contracting State or any of its political subdivisions or local authorities to a natural person, for services rendered to that State or subdivision or community, 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 if the natural person is a resident of that State who:
1. has the nationality of that State; or
2. has not become a resident of that State for the sole purpose of rendering the services.
2. (a) Pensions paid by a Contracting State or any of its political subdivisions or local authorities, either directly or by debiting from funds that they have constituted, to a natural person, for services rendered to that State or to that subdivision or community, shall be taxable only in that State.
(b) However, such pensions shall be taxable only in the other Contracting State if the natural person is a resident of that State and has its nationality.
3. The provisions of Articles 15, 16 and 18 apply to remuneration and pensions paid for services rendered in an industrial or commercial activity carried out by a Contracting State or one of its political subdivisions or local authorities.
Rule 20
PROFESSeurs ETUDIANTS
1. Any remuneration of teachers and other members of the teaching staff, who are residents of a Contracting State and who are temporarily residing in the other Contracting State to teach or undertake scientific research there for a period not exceeding two years, at a university or other officially recognized educational institution, shall be taxable only in the first State.
2. A student or trainee who is, or who was immediately before going to a Contracting State, a resident of the other Contracting State and who stays in the first State for the sole purpose of continuing his or her studies or training, is not taxable in that State:
(a) the sums it receives from sources outside the State to cover its costs of maintenance, study or training;
(b) on the amounts that represent the remuneration of an employee employment in that State, provided that such remuneration does not exceed in the taxation year 150,000 Belgian francs or the equivalent of that sum in cypriote currency.
Article 21
OTHER REVENUS
1. The income elements of a resident of a Contracting State, wherever they arise, which are not dealt with in the preceding articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income other than income derived from real property as defined in Article 6, paragraph 2, where the beneficiary of such income, a resident of a Contracting State, carries on in the other Contracting State, either an industrial or commercial activity through a permanent establishment located therein, or an independent occupation by means of a fixed base located therein, and that the right or property therein shall, In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
CHAPTER IV. - IMPOSITION OF THE FORTUNE
Article 22
FORTUNE
1. The property constituted by real property referred to in Article 6, which is owned by a resident of a Contracting State and situated in the other Contracting State, is taxable in that other State.
2. The property constituted by movable property that is part of the asset of a permanent establishment that a business of a Contracting State has in the other Contracting State, or by movable property that is owned by a fixed base of which a resident of a Contracting State has in the other Contracting State for the exercise of an independent profession, is taxable in that other State.
3. Assets made by ships and aircraft operated in international traffic and by movable property assigned to the operation of such ships or aircraft shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
4. All other assets of a resident of a Contracting State shall be taxable only in that State.
CHAPTER V. - METHODS FOR ELIMINING IMPOSITION DOUBLES
Article 23
1. With regard to Belgium, double taxation is avoided as follows:
(a) When a Belgian resident receives income or owns assets that are taxable in Cyprus in accordance with the provisions of this Convention, with the exception of those of articles 10, paragraph 2, 11, paragraphs 2 and 7, and 12, paragraph 5, Belgium exempts from tax these incomes or assets, but it may, to calculate the amount of its taxes on the rest of the income or fortune of that resident, apply the same rate as if the incomes were exempted or
(b) Subject to the provisions of Belgian law relating to the imputation on Belgian tax of taxes paid abroad, where a Belgian resident receives income elements that are included in his or her total income subject to Belgian tax and that consist of taxable dividends in accordance with Article 10, paragraph 2, and not exempted from Belgian tax under (c) below, in taxable interest in accordance with Article 11, paragraphs 2 or 7,
(c) The dividends that a corporation that is a resident of Belgium receives from a corporation that is a resident of Cyprus, and that are taxable in Cyprus in accordance with Article 10, paragraph 2, are exempted from corporate tax in Belgium, under the conditions and limits provided for in Belgian law.
(d) Where, in accordance with Belgian law, losses incurred by a company operated by a resident of Belgium in a permanent establishment located in Cyprus were effectively deducted from the profits of that undertaking for its taxation in Belgium, the exemption provided for in (a) does not apply in Belgium to the profits of other taxable periods attributable to that establishment, to the extent that such profits were also exempted from tax in Cyprus due to their compensation with
2. With regard to Cyprus, double taxation is avoided as follows:
(a) Where a resident of Cyprus receives income or has assets that are taxable in Belgium in accordance with the provisions of this Convention, except those of sections 10, paragraph 2, and 11, paragraph 2, Cyprus exempts from tax such income or assets, but may, in order to calculate the amount of its taxes on the rest of the income or fortune of that resident, apply the same rate as if the income or assets in question had not been exempted.
(b) Where a resident of Cyprus receives income elements that are included in his or her aggregate income subject to cypriote tax and that consist of taxable dividends in accordance with Article 10, paragraph 2, or in taxable interest in accordance with Article 11, paragraph 2, the Belgian tax paid on such income shall be charged, in accordance with the provisions of cypriote legislation, on the cypriote tax relating to such income.
(c) Where a corporation that is a resident of Cyprus receives dividends from a corporation that is a resident of Belgium, and that the cypriote corporation holds directly at least 25 per cent of the capital of the Belgian company, the imputation referred to in subparagraph (b) nevertheless takes into account, in accordance with the conditions provided by the cypriote legislation and in addition to the Belgian tax on these dividends, the Belgian tax of the companies due on the profits.
(d) Where, in accordance with cypriote legislation, losses incurred by a company operated by a resident of Cyprus in a permanent establishment located in Belgium have been effectively deducted from the profits of that undertaking for its taxation in Cyprus, the exemption provided for in subparagraph (a) does not apply to Cyprus to the profits of other taxable periods that are attributable to that establishment, to the extent that these profits have also been exempted from tax in Belgium
CHAPTER VI. - SPECIAL PROVISIONS
Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subject in the other Contracting State to any taxation or obligation relating thereto, which is other or heavier than those to which nationals of that other State are or may be subject to the same situation. This provision also applies, notwithstanding the provisions of Article 1, to persons who are not residents of a Contracting State or both Contracting States.
2. The term "nationals" means
(a) all natural persons who have the nationality of a Contracting State;
(b) all legal persons, corporations and associations constituted in accordance with the legislation in force in a Contracting State.
3. Stateless persons who are residents of a Contracting State shall not be subject in either Contracting State to any taxation or relative obligation that is other or heavier than those to which nationals of the State concerned are or may be subject in the same situation.
4. The imposition of a permanent establishment that a business of a Contracting State has in the other Contracting State is not established in that other State in a less favourable manner than the taxation of the enterprises of that other State that exercise the same activity. This provision shall not be construed as requiring a Contracting State to grant personal deductions, deductions and tax reductions to the residents of the other Contracting State on the basis of the situation or family expenses that it grants to its own residents.
5. Unless the provisions of Article 9, Article 11, paragraph 7 or Article 12, paragraph 5, are applicable, the interests, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable profits of that undertaking, under the same conditions as if they had been paid to a resident of the first Contracting State. Similarly, the debts of an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable fortune of that undertaking, on the same basis as if they had been contracted to a resident of the first Contracting State.
6. The undertakings of a Contracting State, whose capital is wholly or partly, directly or indirectly, held or controlled by one or more residents of the other Contracting State, shall not be subject in the first State to any taxation or obligation relating thereto, which is other or heavier than those to which the other similar enterprises of the first State are or may be subject.
7. Nothing in this article shall be construed as preventing Belgium:
(a) to impose at the rate prescribed by Belgian law the total amount of the profits of a Belgian permanent establishment of a company that is a resident of Cyprus, provided that the above-mentioned rate does not exceed the maximum rate applicable to the whole or to a fraction of the profits of companies that are residents of Belgium;
(b) to collect the movable pre-payment on the dividends associated with an effective interest in a stable establishment in Belgium that is a resident of Cyprus.
8. The provisions of this section shall apply notwithstanding the provisions of section 2, to taxes of any kind or denomination.
Rule 25
AMIABLE PROCEDURE
1. Where a person considers that the measures taken by a Contracting State or by the two Contracting States shall result in or result in taxation not in accordance with the provisions of this Convention, the person may, independently of the remedies provided by the domestic law of those States, submit his case to the competent authority of the Contracting State of which he is a resident or, if his case falls under Article 24, paragraph 1, to that of the Contracting State of which he or she is a national. The case shall be submitted within three years after the first notification of the measure that results in taxation not in conformity with the provisions of the Convention.
2. The competent authority shall endeavour, if the request appears to it to be founded and if it is not itself able to make a satisfactory solution to it, to resolve the case by amicable agreement with the competent authority of the other Contracting State, with a view to avoiding taxation not in conformity with the Convention.
3. The competent authorities of the Contracting States shall endeavour, by mutual agreement, to resolve the difficulties or to dispel the doubts to which the interpretation or application of the Convention may take place.
4. The competent authorities of the Contracting States shall agree on the administrative measures necessary for the implementation of the provisions of the Convention and in particular on the justifications to be provided by the residents of each Contracting State for the benefit in the other State of the exemptions or tax reductions provided for in this Convention.
5. The competent authorities of the Contracting States shall communicate directly with each other for the purposes of the Convention.
Rule 26
ECHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention or those of the domestic legislation of the Contracting States relating to the taxes covered by the Convention to the extent that the taxation it provides is not contrary to the Convention. The exchange of information is not restricted by section 1. The information received by a Contracting State shall be kept secret in the same manner as the information obtained under the domestic legislation of that State and shall only be communicated to the persons or authorities (including the courts and administrative bodies) concerned by the establishment or collection of the taxes referred to in the Convention, by the procedures or prosecutions relating to such taxes, or by the decisions on remedies relating to such taxes. These individuals or authorities only use this information for these purposes. They may report this information at public court hearings or in judgments.
2. In no case shall the provisions of paragraph 1 be construed as imposing on a Contracting State the obligation:
(a) take administrative measures derogating from its legislation, administrative practice or those of the other Contracting State;
(b) provide information that could not be obtained on the basis of its legislation or in the course of its normal administrative practice or those of the other Contracting State;
(c) provide information that would reveal a commercial, industrial, professional or commercial secret or information that would be contrary to public order.
Rule 27
ASSISTANCE TO RECOVER
1. Each Contracting State shall endeavour to recover, on behalf of the other Contracting State, any tax established by that other Contracting State and whose collection is necessary for the benefit of the exemption or reduction of the tax rate granted by that other Contracting State under this Convention to be obtained by persons who are not entitled to it.
2. In no case shall this article be construed as imposing on a Contracting State the obligation to take measures derogating from the law, administrative practice or public order of either of the Contracting States concerning the collection of its own taxes.
Rule 28
CONSULAR DIPLOMATIC AND FUNCTIONAL AGENTS
1. The provisions of this Convention shall not affect the tax privileges enjoyed by members of diplomatic missions or consular posts under either the general rules of the law of people or the provisions of special agreements.
2. For the purposes of the Convention, members of a diplomatic mission or consular post of a Contracting State accredited in the other Contracting State or in a third State, who have the nationality of the accrediting State, shall be deemed to be residents of that State if they are subject to the same obligations, in respect of income and property taxes, as residents of that State.
3. The Convention does not apply to international organizations, their organs or officials, or to persons who are members of a diplomatic mission or consular post of a third State, where they are located in the territory of a Contracting State and are not treated as residents in one or the other Contracting State in respect of taxes on income or on property.
Rule 29
LIMITATION OF EFFECTS OF THE CONVENTION
1. Where, under any provision of the Convention, an income shall be tax relief in one of the Contracting States and that, under the legislation in force in the other Contracting State, a person shall be subject to the tax on that income up to the amount of that income that has been transferred or collected in that other Contracting State and not to the total amount thereof, the tax relief that shall be granted
2. Notwithstanding the provisions of Article 8, profits derived from the exploitation, in international traffic, of a ship, by a company or association that is a resident of Cyprus and of which more than 25 per cent of the capital are held, directly or indirectly, by persons who are not residents of Cyprus, may be taxed in Belgium if the corporation or association has a permanent establishment in Belgium.
3. The provisions of Article 10, paragraph 2, Article 11, paragraphs 2 and 3 and Article 12, paragraph 1, do not apply to persons with special benefits in accordance with the sections of the Income Tax (Cyprus Income Tax Law) Act listed below:
(a) Section 5 (2) (c) (i), provided that no tax is due or that the tax is due to a rate below the rate that is provided for by section 1 of the second cédule of the Income Tax Act or that could be subsequently provided for natural persons in general;
(b) Section 8, (w) and (y);
(c) Section 28 (A).
4. The provisions of paragraph 3 also apply to the provisions of identical or similar cypriote legislation in substance to the provisions mentioned in that paragraph.
CHAPTER VII. - FINAL PROVISIONS
Rule 30
BACKGROUND
1. This Convention shall be ratified and the instruments of ratification shall be exchanged in Brussels as soon as possible.
2. The Convention shall enter into force on the fifteenth day following that of the exchange of instruments of ratification and its provisions shall apply:
(a) Belgium:
1. in respect of taxes due to the source on the income awarded or paid from 1^er January, and
2. with respect to other taxes established on taxable period income ending on 31 December,
the calendar year immediately following that in which the instruments of ratification have been exchanged;
(b) Cyprus:
with respect to taxes on income or capital for the calendar year immediately following that in which the instruments of ratification have been exchanged.
Rule 31
DENONCIATION
This Convention shall be concluded for an unlimited period. Each Contracting State may, until 30 June inclusive of any calendar year from the fifth year following the exchange of instruments of ratification, denounce it, in writing and through diplomatic channels, to the other Contracting State. In case of denunciation before 1^er July of such a year, the Convention will cease to apply:
(a) Belgium:
1. in respect of taxes due to the source on the income awarded or paid from 1^er January, and
2. with respect to other taxes established on taxable period income ending on 31 December,
the calendar year immediately following that in which the denunciation has been notified;
(b) Cyprus:
in respect of taxes on income or on capital for the calendar year immediately following that in which the denunciation has been notified.
In faith, the undersigned, duly authorized by their respective Governments, have signed this Convention and affixed their seals there.
Done in Brussels on 14 May 1996, in duplicate, in the English language.