dtc agreement between bangladesh and netherlands

8/2/2019 DTC agreement between Bangladesh and Netherlands

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32 (1993) N r . 1

TRACTATENBLADV A N HET

KONI NKRI JK DER NE DE RL AN DE NJAARGANG 1993 Nr. 145

A. TITELVerdrag lussen het Koninkrijk derNederlanden en de VolksrepubliekBangladesh tot het vermijden van dubbele belasting en hetvoorkomenvan het ontgaan van belasting met betrekking tot be lastingen naar hetinkomen, metProtocol enbrieven;Dhaka, 13 juli 1993

B . T E K S TConvention between the Kingdom ofthe Netherlands and the People'sRepublic of Bangladesh for theavoidance of double taxation and theprevention of fiscal evasion with respect to taxes on incomeThe Government of the Kingdom of the Netherlandsandthe Government of the People's Republic of BangladeshDesiring to conclude a convention for the avoidance of doubletaxation and theprevention of fiscal evasion with respect to taxes onincome,Have agreed as follows:

C H A P T E R IS C O P E OF THE C O N V E N T I O N

Article 1Personal Scope

This Convention shall apply to persons who areresidents of one orboth of the Contracting States.


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Article 2Taxes covered

1. This Convention shall apply to taxes on income imposed onbehalf of a Contracting State or of its political subdivisions or localauthorities, irrespective of the manner in which they are levied.2. There shall be regarded as taxes on income all taxes imposed ontotal incom e, or on elements of incom e, including taxes on gains fromthe alienation of movable or imm ovable pro perty, as well as taxes oncapital appreciation.3 . The existing taxes to which the Convention shall apply are inparticular:a) in the N etherlan ds:- de inkom stenbelasting (income tax),- de loonbelasting (wages tax),- de vennoo tschapsbelasting (company tax) including the Govern-ment share in the net profits, of the exp loitation of na tural resourceslevied pursuant to the Mijnwet 1810 (the Mining Act of 1810) withrespect to concessions issued from 1967, or pu rsuan t to the MijnwetContinentaa l Plat 1965 (the Nethe rland s Co ntinental Shelf M ining

Act of 1965),- de dividendbelasting (dividend tax),(hereinafter referred to as "Netherlands tax");b) in B angladesh:- the income tax,(hereinafter referred to as "Bangladesh tax").4. The Conven tion shall apply also to any identical or substantiallysimilar taxes which are imposed after the date of signature of theConvention in addition to, or in place of, the existing taxes. The

competent authorities of the Contracting States shall notify to eachother any substantial changes which have been made in their respec-tive taxation laws.

CHAPTER IIDEFINITIONS

Article 3General definitions1. For the purposes of this Convention, unless the context other-wise requires:


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a) the term "Co ntractin g St ate " means the N etherlan ds or B angla-desh, as the context requires; the term "C ontra cting Sta tes" means theNetherlands and Bangladesh;b) the term "the N ethe rland s" means the part of the Kingdom ofthe Netherlands that is situated in Europe including the part of theseabed and its sub-soil un der the No rth Sea, to the extent that that areain accordance with international law has been or may hereafter bedesignated under Netherlands law as an area within which theNeth erlands m ay exercise sovereign rights with respect to the exp lora-tion and exploitation of the natural resources of the sea bed or itssub-soil;c) the term " B an gla des h" m eans all the territory of the People'sRepublic of Bangladesh including the part of the seabed and itssub-soil thereof, to the extent that that area in accordance withinternational law has been or may hereafter be designated underBangladesh law as an area within which Bangladesh may exercisesovereign rights with respect to the explora tion and ex ploitation of thenatural resources of the seabed or its sub-soil;d) the term " pe rso n" includes an individual, a comp any and anyother body of persons;e) the term "co m pa ny " means any body corporate or any otherentity which is treated as a body corporate for tax purposes;f) the terms "en terpris e of a Co ntracting Stat e" and "ente rprise ofthe other Contracting State" mean respectively an enterprise carriedon by a resident of a Contracting State and an enterprise c arried on bya resident of the other Contracting State;g) the term "intern ation al traffic" m eans any transp ort by a ship oraircraft operated by an enterprise which has its place of" effectivema nagem ent in a Contracting State, except when the ship or aircraft isoperated solely between places in the other Contracting State;h) the term "na tiona ls" me ans:(1) all individuals possessing the nationality of one of theContracting States;(2) all legal persons, partnerships and associations derivingtheir status as such from the laws in force in a ContractingState;i) the term "com petent autho rity" m eans:(1) in the Netherlands the Minister of Finance or his dulyauthorised representative;(2) in Bangladesh the Natio nal B oard of Rev enue or itsauthorised representative.2. As regards the application of the Convention by a ContractingState any term not defined therein shall, unless the context otherwiserequires, have the meaning which it has under the law of that Stateconcerning the taxes to which the Convention applies.


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Article 4Resident

1. For the purposes of this Convention, the term "resident of aContracting State" means any person who, under the laws of thatState, is liable to tax therein by reason of his dom icile, residence, placeof m anagem ent or any other criterion of a similar natu re. B ut this termdoes not include any person who is liable to tax in tha t S tate in respectonly of income from sources in that State.2. W here by reason of the provisions of para grap h 1 an ind ividualis a resident of both Contracting States, then his status shall be

determined as follows:a) he shall be deem ed to be a resident of the State in which he has apermanent home available to him; if he has a permanent homeavailable to him in both States, he shall be deem ed to be a resident ofthe 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 c ann ot bedetermined, or if he has not a permanent home available to him ineither State, he shall be deemed to be a resident of the S tate in wh ich h ehas an habitual abode;c) if he has an habitual ab od e in both States or in neither of them ,he shall be deemed to be a resident of the State of which he is anational;d) if he is a national of both States or of neither of them, thecompetent authorities of the Contracting States shall settle thequestion by mutual agreement.

3. W here by reason of the provisions of par agraph 1 a person otherthan an individual is a resident of both Co ntracting States, then it shallbe deem ed to be a resident of the S tate in wh ich its place of effectivemanagement is situated.Article 5

Permanent establishment1. For the purposes of this Convention, the term "permanentestablishment" means a fixed place of business through which thebusiness of an enterprise is wholly or partly carried on.2. The term "permanent establishment" includes especially:a) a place of m anagem ent;b) a branch ;c) an office;d) a factory;


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e) a wo rkshop ;f) a w areh ouse in relation to a perso n providin g storage facilitiesfor others; andg) a mine, an oil or gas well, a quarry or any other place ofextraction of natural resources.3. A building site, a construction, assembly or installation projectconstitutes a permanent establishment only if it lasts more than sixmonths.4. Notwithstanding the preceding provisions of this Article, theterm "permanent establishment" shall be deemed not to include:a) the use of facilities solely for the pu rpo se of storage or display of

goods or merchandise belonging to the enterprise;b) the m ainten ance of a stock of goo ds or m erchan dise belon gingto the enterprise solely for the purpose of storage or display;c) the m ainten ance of a stock of goods or m erchan dise b elongingto the enterprise solely for the purpose of processing by anotherenterprise;d) the maintenance of a fixed place of business solely for thepurp ose of purchasing go ods or m erchan dise or of collecting informa-tion, for the enterprise;e) the maintenance of a fixed place of business solely for thepurpose of carrying on, for the enterprise, any other activity of apreparatory or auxiliary character;f) the m ain tenanc e of a fixed place of business solely for anycombination of activities mentioned in sub-paragraph a) to e),provided that the overall activity of the fixed place of businessresulting from this combination is of a preparatory or auxiliarycharacter.

5. No twithstanding the provisions of paragraph s 1 and 2, where aperson - other than an agent of an independent status to whomparagraph 6 applies - is acting in a Contrac ting State on behalf of anenterprise of the other Contracting State, that enterprise shall bedeemed to have a permanent establishment in the first-mentionedState if the person:a) has and habitually excercises in that State an authority toconclud e c ontracts on be half of the enterprise , unless his activities arelimited to the purcha se of goo ds or merch andise for that ente rprise ; orb) has no such authority, but habitually m aintains in that State astock of good s or merch andise from which he regularly delivers goo dsor merchandise on behalf of the enterprise.

6. An enterprise shall not be deemed to have a permanent esta-blishme nt in a Contracting State merely becau se it carries on businessin that S tate thro ugh a broke r, general comm ission agent or any oth eragent of an independent status, provided that such persons are actingin the ordinary course of their business.


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7. The fact that a company which is a resident of a ContractingState controls or is controlled by a com pany which is a resident of theother Contracting State, or which carries on business in that otherState (whether throug h a permanen t establishm ent or otherwise), shallnot of itself constitute either company a permanent establishment ofthe other.

CHAPTER I I IT AXAT ION OF INC OME

Article 6Income from immovable property

1. Income derived by a resident of a Contracting State fromimmovable property (including income from agriculture or forestry)situated in the other Contracting State may be taxed in that otherState.2. The term "imm ovable p rop erty" shall have the meaning which ithas under the law of the Contracting State in which the property in

question is situated. The term shall in any case include propertyaccessory to immovable property, livestock and equipment used inagriculture and forestry, rights to which the provisions of general lawrespecting landed property apply, usufruct of immovable propertyand rights to variable or fixed payments as consideration for theworking of, or the right to work, mineral deposits, sources and othernatural resources; ships, boats and aircraft shall not be regarded asimmovable property.3. The provisions of paragraph 1 shall apply to income derived

from the direct use, letting, or use in any other form of immovableproperty.4. The provisions of paragra phs 1 and 3 shall also apply to theincom e from imm ovable prope rty of an enterprise and to incom e fromimmovable property used for the performance of independentpersonal services.

Article 7Business profits

1. The profits of an enterprise of a Contracting State shall betaxable only in that State unless the enterprise carries on business inthe other Contracting State through a permanent establishmentsituated the rein. If the enterprise carries on business as aforesaid, the


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profits of the enterprise may be taxed in the other State but only somuch of them as is attributable to that permanent establishment.2. Subject to the provisions of par agraph 3 , where an enterprise of a

Contracting State carries on business in the other Contracting Statethrough a permanent establishment situated therein, there shall ineach Contracting S tate be attributed to that perm anen t establishmentthe profits w hich it might be expected to make if it were a distinct andseparate enterprise engaged in the same or similar activities und er thesame or similar conditions an d d ealing wholly indep enden tly w ith theenterprise of which it is a permanent establishment.3 . In determining the profits of a permanent establishment, thereshall be allowed as deductions expenses which are incurred for the

purposes of the permanent establishment, including executive andgeneral administrative expenses so incurred, whether in the State inwhich the permanent establishment is situated or elsewhere.4. Insofar as it has been customary in a Contracting State todetermine the profits to be attributed to a perm anen t establishm ent onthe basis of an ap por tionm ent of the total profits of the enterprise to itsvarious parts, nothing in paragraph 2 shall preclude that ContractingState from determining the profits to be taxed by such an apportion-ment as may be customary; the method of apportionment adopted

shall, however, be such that the result shall be in acco rdan ce w ith theprinciples contained in this Article.5. No profits shall be attributed to a permanent establishment byreason of the mere purchase by that permanent establishment ofgoods or merchandise for the enterprise.6. For the purposes of the preceding paragraphs, the profits to beattributed to the permanent establishment shall be determined by thesame m ethod y ear by year unless there is good and sufficient reason tothe contrary.7. Where profits include items of income which are dealt withseparately in other Articles of this Co nvention, then the p rovisions ofthose Articles shall not be affected by the provisions of this Article.

Article 8Shipping and Air Transport

1. Profits from the operation of aircraft in international traffic shallbe taxab le only in the Co ntrac ting State in which the place of effectivemanagement of the enterprise is situated.2. Profits arising in a Contracting State and derived from theoperation of ships in international traffic by an enterprise having its


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place of effective m anagem ent in the other C ontracting State may betaxed in the first-mentioned State but the rate of tax chargeable in thatState shall be reduced to fifty per cent thereof and shall in no caseexceed 4 per cent.3. If the place of effective management of a shipping enterprise isabo ard a ship , then it shall be deemed to be situated in the C ontractingState in w hich the hom e h arbo ur of the ship is situated, or, if there is nosuch home harbo ur, in the Co ntracting S tate of which the operator ofthe ship is a resident.

4. The provisions of paragra phs 1 and 2 shall also apply to profitsfrom the particip ation in a poo l, a join t business or an inte rnation aloperating agency.

Article 9Associated E nterprises

1 . W h e r e -a) an enterprise of a Contracting State participates directly orindirectly in the m anage m ent, control or capital of an enterprise of theother Contracting State, or,b) the same persons p articipate directly or indirectly in the man-agem ent, control or capital of an enterprise of a Contrac ting State an dan enterprise of the other Contracting State,and in either case cond itions are m ade or impo sed betw een the twoente rprises in their com mercial or financial relations which differ fromthose which would be made between independent enterprises, thenany profits w hich would, but for those cond itions, have accrued to oneof the enterprises, but, by reason of those conditions, have not soaccrued, may be included in the profits of that enterprise and taxedaccordingly.

2. W here a Contracting State includes in the profits of an enterpriseof that State - and tax es according ly - profits on which an enterprise ofthe other C ontracting State has been charged to tax in that other Stateand the profits so included are profits which would have accrued to theenterprise of the first-mentioned S tate if the con ditions m ade betweenthe two enterprises had been those which would have been madebetween independent enterprises, then that other State shall make anappropriate adjustment to the amount of the tax charged therein onthose profits. In determ ining such adjustm ent, due regard shall be hadto the other provisions of this Convention and the competentauthorities of the Contracting States shall if necessary consult eachother.


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Article 10Dividends

1. Dividends paid by a company which is a resident of a Contract-ing State to a resident of the other C ontracting State may be taxed inthat other State.2. However, such dividends may also be taxed in the ContractingState of which the company paying the dividends is a resident andacco rding to the laws of tha t State , bu t if the recipient is the beneficialowner of the dividends the tax so charged shall not exceed:a) 10 per cent of the gross am ount of the dividends if the beneficial

owner is a company (other than a partnership) which holds directly atleast 10 per cent of the capital of the company paying the dividends;b) 15 per cent of the gross am oun t of the div idends in all othercases.3. The p rovisions of paragrap h 2 shall not affect the taxation of thecom pany in respect of the profits ou t of which the dividends are p aid .4. The term " divide nd s" as used in this Article means incom e fromshares, "jouissance" shares or "jouissance" rights, mining shares,

founders' shares or other rights participating in profits, as well asincome from profits sharing bonds and income from other corporaterights which is subjected to the same taxation treatment as incomefrom shares by the laws of the State of which the com pany making thedistribution is a resident.5. The prov isions of parag raphs 1 and 2 shall not apply if thebeneficial owner of the dividends, being a resident of a ContractingState, carries on business in the other Contracting State of which thecompany paying the dividends is a resident, through a permanent

establishment situated therein, or performs in that other State inde-pendent personal services from a fixed base situated therein, and theholding in respect of which the dividends are paid is effectivelyconnected with such permanent establishment or fixed base. In suchcase the p rovisions of Article 7 or Article 14, as the case may be, shallapply.6. Where a company which is a resident of a Contracting Statederives profits or incom e from the other C ontrac ting State, that otherState may not imp ose any tax on the dividends paid by the co m pany,except insofar as such dividends are paid to a resident of that otherState or insofar as the holding in respect of which the dividends arepaid is effectively connected with a permanent establishment or afixed base situated in tha t other S tate, nor subject the com pany'sundistributed profits to a tax on the company's undistributed profits,


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even if the dividends paid or the undistributed profits consist whollyor partly of profits or income arising in such other State.Article 11

Interest1. Interest arising in a Contracting State and paid to a resident ofthe other Contracting State may be taxed in that other State.2. However, such interest may also be taxed in the ContractingState in which it arises and acco rding to the laws of that S tate, bu t if therecipient is the beneficial owner of the interest the tax so charged shall

not exceed 10 per cent of the gross amount of the interest.3. Notwithstanding the provisions of paragraph 2:a) the B angladesh B ank shall be exempt from Ne therlan ds tax withrespect to interest arising in the Netherlands;b) the Central Bank of the Netherlands shall be exempt fromBangladesh tax with respect to interest arising in Bangladesh;c) the Governm ent of a Contracting S tate shall be exempt from taxin the other Contracting State with respect to interest arising in thatother State;d) interest arising in a Contracting State and paid in respect of aloan made by or guaranteed or insured by the Governm ent of the otherContracting State, the C entral B ank of the other State or any agency orinstrum entality (including a financial institution) owned or controlledby the G overnm ent of the othe r State shall be exemp t from tax in thefirst-mentioned State;e) interest arising in a Contrac ting State and paid to a resident ofthe other Contracting State by virtue of a contract of financing or ofdelay in payment relating to the sale of industrial, commercial orscientific equipment or to the construction of industrial, commercialor scientific installations as well as of public works shall be exemptfrom tax in the first-mentioned State.4. The term "interest" as used in this Article means income fromdebt-claims of every kind, whether or not secured by mortgage andwhether or not carrying a right to participate in the debtor's profits,and in particular, income from government securities and incomefrom bonds or debentures, including premiums and prizes attachingto such securities, bonds or debentures.How ever, this term does no t include incom e dealt with in Article 10.

Penalty charges for late paym ent shall not be regarded as interest forthe purpose of this Article.5. The p rovisions of parag raph s 1 and 2 shall not apply if thebeneficial owner of the interest, being a resident of a ContractingState, carries on business in the other Contracting State in which the


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interest arises, throug h a perma nen t establishmen t situated therein , orperforms in that other State independent personal services from afixed base situated therein a nd the debt-claim in respect of which theinterest is paid is effectively connected with such permanent estab-lishment or fixed base. In such case the provisions of Article 7 orArticle 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when thepayer is that State itself, a political subd ivision, a local autho rity or aresident of that State. Where, however, the person paying the interest,whether he is a resident of a Contracting State or not, has in aContracting State a permanent establishment or a fixed base inconne ction w ith which the indebtedn ess on which the interest is paidwas incurred, and such interest is borne by such permanent estab-lishment or fixed base, then such interest shall be deem ed to arise inthe State in which the permanent establishment or fixed base issituated.

7. W here, by reason of a special relationship between the paye r andthe beneficial owner or between b oth of them and som e other person ,the am oun t of the interest, having regard to the debt-claim for which itis paid exceeds the amo unt which would have been agreed u po n by thepayer an d the beneficial owner in the absence of such relationsh ip, theprovisions of this Article shall apply only to the last-mentionedamount. In such case, the excess part of the payments shall remaintaxable according to the laws of each Contracting State, due regardbeing had to the other provisions of this Convention.

Article 12Royalties

1. Royalties arising in a Contractin g S tate and paid to a resident ofthe other Contracting State may be taxed in that other State.2. However, such royalties may also be taxed in the ContractingState in which they arise and acco rding to the laws of that S tate, bu t ifthe recipien t is the beneficial ow ner of the royalties the tax so chargedshall not exceed 10 per cent of the gross amou nt of the roy alties.3. The term "royalties" as used in this Article means payments ofany kind received as a con side ration for the use of, o r the right to use acopyright of a literary, artistic or scientific work, including cinemato-graph films, or films or tapes for ra dio or television broa dca sting, anypatent, tradem ark, design or mode l, plan , secret formula or process , orfor information concerning in dustrial, com mercial or scientific expe-rience.4. The provisions of para grap hs 1 and 2 shall not ap ply if the


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beneficial owner of the royalties, being a resident of a ContractingState, carries on business in the othe r C ontracting State in which theroyalties arise through a perma nent establishment situated therein, orperforms in that other State independent personal services from afixed base situated therein, and the right or property in respect ofwhich the royalties are paid is effectively connected with suchperm anent establishment or fixed base. In such case the provisions ofArticle 7 or Article 14, as the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State whenthe payer is that State itself, a political subdivision a local authority ora resident of that State. Where, however, the person paying theroyalties, whether he is a resident of a Co ntrac ting State or not, has in aContracting State a permanent establishment or a fixed base inconnection with which the liability to pay the royalties was incurredand such royalties are born e by such perm anen t establishmen t or fixedbase, then such royalties shall be deem ed to arise in the State in whichthe permanent establishment or fixed base is situated.

6. W here, by reason of a special relationship between the payer an dthe beneficial owner or between both of them and som e other pe rson,the amount of the royalties, having regard to the use, right orinformation for which they are paid exceeds the amo unt which w ouldhave been agreed upon by the payer and the beneficial owner in theabsence of such relationship, the provisions of this Article shall applyonly to the last-men tioned am oun t. In such case, the excess part of thepaym ents shall remain taxable acco rding to the laws of each C ontra c-ting State, due regard being had to the other provisions of thisConvention.

Article 13Capital Gains

1. Capital gains derived by a resident of a Contracting State fromthe alienation of immovable property referred to in Article 6 andsituated in the other Contracting State may be taxed in that otherState.2. Capital gains from the alienation of movable property formingpart of the business property of a permanent establishment which anenterprise of a Co ntracting State has in the other Con tracting State or

of movable pro perty pertaining to a fixed base available to a re sidentof a Con tracting State in the other C ontracting State for the purp ose ofperforming ind epe nd ent p ersonal services, including such gains fromthe alienation of such a permanent establishment (alone or with thewhole enterprise) or of such fixed base, may be taxed in that otherState.


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3. Ca pital gains from the alienation of ships or aircraft opera ted ininternational traffic or movable property pertaining to the operationof such ships or aircraft shall be taxable only in the Co ntrac ting Statein which the place of effective management of the enterprise issituated.

4. Ca pital gains from the alienation of any prope rty other than th atreferred to in paragraphs 1, 2 and 3, shall be taxable only in theContracting State of which the alienator is a resident.5. Th e provisions of par agrap h 4 shall not affect the right of each ofthe C ontracting States to levy accord ing to its own law a tax on gainsfrom the alienation of shares or "jou issa nc e" rights in a com pan y, the

capital of which is wholly or partly divided into shares an d w hich is aresident of that State acco rding to the laws of that State, derived by anindividual who is a resident of the other Contracting State and hasbeen a resident of the first-mentioned State in the c ourse of the last fiveyears preceding the alienation of the shares or "jouissance" rights.Article 14

Independent Personal Services1. Incom e derived by a resident of a Con tracting State in respect ofprofessional services or other activities of an independent charactershall be taxable only in that State. However, in the followingcircumstances such income may be taxed in the other ContractingState:a) if he has a fixed base regularly available to him in the otherCo ntracting State for the purpo se of performing his activities; in thatcase, only so much of the income as is attributable to that fixed basemay be taxed in that other Contracting State; orb) if he is present in the other Contracting State for a period orperiods amounting to or exceeding in the aggregate 183 days in thetaxable period or the fiscal year, as the case m ay be, of that St ate; inthat case, only so much of the incom e as is derived from his activitiesperformed in that other State may be taxed in that other State.2. The term "professional services" includes especially indepen-dent scientific, literary, artistic, educational or teaching activities aswell as the independent activities of physicians, lawyers, engineers,architects, dentists and accountants.

Article 15Dependent Personal Services

1. Subject to the provisions of Articles 16,18,19,2 0 and 21 , salaries,


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wages and other similar remuneration derived by a resident of aCo ntrac ting State in respect of an employm ent shall be taxab le only inthat State unless the employment is exercised in the other Co ntractingState. If the employment is so exercised, such remuneration as isderived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remunerationderived by a resident of a Contracting State in respect of anemploym ent exercised in the other Con tracting S tate shall be tax ableonly in the first-mentioned State if:a) the recipient is presen t in the other State for a period or periodsnot exceeding in the aggregate 183 days in the taxable period or thefiscal year, as the case may be, of that State, andb) the rem uneration is paid by, or on behalf of, an employer who isnot a resident of the other State, andc) the rem uneration is not born e by a perm anent establishment or afixed base which the employer has in the other State.3 . No twithsta nding the preceding provisions of this Article, remu-neration derived in respect of an em ploym ent exercised abo ard a shipor aircraft operated in international traffic, may be taxed in theContracting State in which the place of effective management of theenterprise is situated.

Article 16Directors' Fees

Directors' fees or other remuneration derived by a resident of aContractin g S tate in his capacity as a member of the board of directorsa " bes tuu rder " or a "com m issaris" of a company w hich is a resident ofthe other Contracting State may be taxed in that other State.Article 17

Artists and Athletes1. Notw ithsta ndin g the provisions of Articles 14 and 15, incom ederived by a resident of a Con tracting State as an entertainer, such as atheatre, motion picture, radio or television artist, or a musician, or asan athlete, from his personal activities as such exercised in the otherContracting State, may be taxed in that other State.2. Where income in respect of personal activities exercised by anentertainer or an athlete in his capacity as such accrues not to theentertaine r or athlete himself but to anothe r person , that income m ay,notw ithstan ding the provisions of Articles 7,14 and 15, be taxed in theContracting State in which the activities of the entertainer or athleteare exercised.


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3. No twithstanding the provisions of paragrap hs 1 and 2 of thisArticle, income derived from such activities as defined in paragraph 1shall be exempt from tax in the Contracting State in which theseactivities are exercised if the visit of the entertainers, the musicians orthe athletes to a C ontracting S tate is supp orted wholly or substantiallyfrom public funds of the other C ontrac ting State, a political subdivisi-on or a local authority thereof, or if these activities are performedunder a cultural or sport agreement or arrangement between theContracting States.

Article 18Pensions and Annuities

1. Subject to the provisions of paragraph 2 of Article 19, anypension and other similar remuneration in consideration of pastem ploym ent and any annu ity paid to a resident of a Co ntracting Stateshall be taxable only in that State.2. How ever, where such pension, rem uneration or annuity is not ofa periodical nature, it may be taxed in that other State.3. Pensions and other payments paid to an individual under thesocial security scheme of a Contracting State, may be taxed in thatState.4. The term "a nn uit y" means a stated sum payable periodically atstated times during life or during a specified or ascertainable period oftime un der an obligation to make the paym ents in return for ade qua teand full consideration in money or money's worth.

Article 19Governm ent Service

1. a) Remuneration, other than a pension, paid by a ContractingState or a political subdivision or a local authority thereof to anindividual in respect of services rendered to that S tate or su bdivisionor authority may be taxed in that State.b) How ever, such remu neratio n shall be taxable only in the otherContracting State if the services are rendered in that State and theindividual is a resident of that State who:(1) is a nation al of that S tate; or(2) did not becom e a resident of that State solely for the purpos eof rendering the services.2. a) Any pension paid by, or out of funds created by, a Contrac-ting State or a political subdivision or a local authority thereof to an


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of a grant, allow ance or award from a scientific, ed uca tiona l, religiousor charitable organisation or und er a technical assistance program meentered in to by the Gov ernm ent of a Co ntractin g State shall, from thedate of his first arrival in that other State in connection with that visit,be exempt from tax in that other State:a) on the am oun t of such grant, allowance or aw ard; andb) on all remittances from abro ad for the purposes of his mainte-nance, education or training.Article 22

Other Income1. Items of income of a resident of a Contracting State, whereverarising, not dealt with in the foregoing Articles of this Conventionshall be taxable only in that State.2. The provisions of parag raph 1 shall not apply to income, otherthan income from immovable property as denned in paragraph 2 ofArticle 6, if the recipient of such income, being a resident of aContracting State, carries on business in the other contracting Statethrough a permanent establishment situated therein, or performs in

that other State independent personal services from a fixed basesituated therein, and the right or property in respect of which theincome is paid is effectively connected with such permanent esta-blishment or fixed base. In such case the provisions of Article 7 orArticle 14, as the case may be, shall ap ply.C HAPT E R IV

E L IMINAT ION OF DOUBL E T AXAT IONArticle 23

Elimination of D ouble Taxation1. The Netherlands, when imposing tax on its residents, mayinclude in the basis upon which such taxes are imposed the items ofincome w hich, according to the provisions of this Co nvention , may betaxed in Bangladesh.2. However where a resident of the Netherlands derives items ofincome which according to Article 6, Article 7, pa rag rap h 5 of Article10, para grap h 5 of Article 11, paragraph 4 of Article 12, paragraph s 1and 2 of Article 13, Article 14, paragra ph 1 and 3 of Article 15, Article16, Article 19 and paragraph 2 of Article 22 of this Con vention may betaxed in Bangladesh and are included in the basis referred to inparag raph 1 the Ne therlan ds shall exempt such items of income by


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allowing a reduction of its tax. This reduction shall be computed inconformity with the provisions of Netherlands law for the avoidanceof double taxa tion. Fo r that purpo se the said items of incom e shall bedeemed to be included in the total amount of the items of incomewhich are exempt from Netherlands tax under those provisions.

3. Further, the Netherlands shall allow a deduction from theN ethe rland s tax so comp uted for the items of income which a ccordingto para grap h 2 of Article 8, par agra ph 2 of Article 10 para grap h 2 ofArticle 11, para gra ph 2 of A rticle 12, para grap h 5 of Article 13, Article17 and par agra ph 2 of Article 18 of this Co nvention may be taxed inBangladesh to the extent that these items are included in the basisreferred to in para gra ph 1. The a m oun t of this deduc tion shall be equalto the tax paid in B angladesh on these items of income, but shall notexceed the amount of the reduction which would be allowed if theitems of income so included were the sole items of incom e which areexempt from Netherlands tax under the provisions of Netherlandslaw for the avoidance of double taxation.

4. Where, by reason of special relief given under the provisions ofB angladesh law for the purp ose of encouraging investment in B angla-desh the Bangladesh tax actually levied on interest and royaltiesarising in Bangladesh is lower than the tax Bangladesh may levyaccording to pa ragraph 2 of Article 11 and para grap h 2 of Article 12,then the amount of the tax paid in Bangladesh on such interest androyalties shall be deemed to have been paid at the rates of taxmentioned in the said provisions. However, if the general tax ratesun der B angladesh law applica ble to the afore-mentioned interest androyalties are reduced below those m entioned in the foregoing senten-ce these lower rates shall apply for the purposes of that se ntence .

The prov isions of the two foregoing sentences shall only apply for aperiod of ten years after the date on which the Convention becameeffective. This period m ay be exten ded by m utual agreem ent betweenthe competent authorities.

5. Subject to the provisions of the law of B angladesh regarding theallowance as a credit against Bangladesh tax of tax payable in aterritory outside Bangladesh (which shall not affect the generalprinciple hereof), tax payable under the laws of the Netherlands andin acco rdan ce w ith this Conv ention on incom e, profits or gains fromsources within the N etherla nds shall be allowed as a credit against anyBangladesh tax computed in respect of the same income, profits orgains by reference to which the Netherlands tax is computed.For the purposes of this paragraph in determining the taxes onincome paid to the Netherlands, the investment premiums andbonuses and disinvestment payments as meant in the NetherlandsInvestment Account Law ("Wet investeringsrekening") shall not be


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taken into account. For the purposes of this paragraph, the taxesreferred to in paragraph 3 (a) and 4 of Article 2 shall be consideredtaxes on income.CHAPTER V

SPECIAL PROVISIONSArticle 24

Non-Discrimination1. Nationals of a Contracting State shall not be subjected in theother Co ntracting S tate to any taxation or any requirem ent conn ectedtherewith, which is other or more burdenso m e than the taxation andconnected requirements to which nationals of that other State in thesame circumstances are or may be subjected. This provision shall,notw ithstandin g the provisions of Article 1, also apply to persons w hoare not residents of one or both of the Contracting States.2. The taxation on a permanen t establishment w hich an enterprise

of a Contracting State has in the other Contracting State shall not beless favourably levied in that other State than the taxation levied onenterprises of that other State carrying on the same activities. Thisprovision shall not be construed as obliging in a Con tracting State togrant to residents of the other Contracting State any personalallowan ces, reliefs and reduction s for taxation purpo ses on acco unt ofcivil status or family responsibilities which it grants to its ownresidents.3. Excep t where the provisions of para gra ph 1 of Article 9 par a-

graph 7 of Article 11, or para gra ph 6 of Article 12, apply , interest,royalties and o ther disbursem ents p aid by an enterprise of a Co ntrac-ting State to a resident of the other Contracting State shall, for thepurpose of determining the taxable profits of such enterprise bedeductible under the same conditions as if they had been paid to aresident of the first-mentioned State.4. Enterprises of a Co ntracting State, the capital of which is whollyor partly owned or controlled, directly or indirectly, by one or moreresidents of the other Contracting State, shall not be subjected in the

first-mentioned State to any taxation or any requirement connectedtherewith which is other or more burdensome than the taxation andconnected requirements to which other similar enterprises of thefirst-mentioned State are or may be subjected.5. Th e provisions of this Article shall, notw ithstandin g the provisi-ons of Article 2, apply to taxes of every kind and description.


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Article 25Mutual Agreement Procedure1. Where a person considers that the actions of one or both of theContracting States result or will result for him in taxation not inaccord ance w ith the provisions of this Conv ention, he m ay, irrespecti-ve of the remedies provided by the domestic law of those States,present his case to the comp etent au thority of the Con tracting S tate ofwhich he is a resident or, if his case comes un der para grap h 1 of A rticle24 , to that of the C ontracting State of which h e is a natio nal. The casemust be prese nted within th ree years from the first no tification of the

action resulting in taxation not in accordance with the provisions ofthe Convention.2. The competent authority shall endeavour, if the objectionappears to it to be justified and if it is not itself able to arrive at asatisfactory solu tion, to resolve the case by mutual agreem ent with thecom petent a uthority of the other Contracting State, with a view to theavoidance of taxation which is not in accordance with the Conven-tion. Any agreement reached shall be implemented notwithstandingany time limits in the domestic law of the Contracting States.3 . The co m petent authorities of the Contrac ting States shall endea-vour to resolve by mutu al ag reem ent any difficulties or doub ts arisingas to the interpretation or application of the Convention. They mayalso consult together for the elimination of double taxation in casesnot provided for in the Convention.4. The competent authorities of the Contracting States may com-municate with each other directly for the purpose of reaching anagreement in the sense of the preceding paragraphs. When it seemsadvisable in order to reach agreement to have an oral exchange of

opinions, such exchange may take place through a Commissionconsisting of representatives of the competent authorities of theStates.

Article 26Exchange of Information

1. The competent authorities of the Contracting States shall ex-change such information as is necessary for carrying out the provisi-ons of this Convention or of the domestic laws of the ContractingStates concerning taxes covered by the Convention insofar as thetaxation thereunder is not contrary to the Convention. The exchangeof information is not restricted by Article 1. Any information received


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by a Con tracting State shall be treated as secret in the sam e ma nn er asinformation obtained under the domestic laws of that State and shallbe disclosed only to persons or authorities (including courts andadm inistrative bodies) involved in the assessm ent or collection of, theenforcemen t in respect of, or the determin ation of app eals in relationto, the taxes covered by the Convention. Such persons or authoritiesshall use the information only for such purp oses . They may disclosethe information in public court proceedings or in judicial decisions.

2. In no case shall the provisions of par ag rap h 1 be constru ed so asto impose on a Contracting State the obligation:a) to carry out adm inistrative measures at variance with the lawsand administrative practice of that or of the other Contracting State;b) to supply information which is not obtaina ble und er the laws orin the normal course of the administration of that or of the otherContracting State;c) to supply information w hich wou ld disclose any trade , business,industrial, commercial, or professional secret or trade process, orinformation, the disclosure of which would be contrary to publicpolicy (ordre public).

Article 27Diplomatic Agents and Consular O fficers

1. Nothing in this Convention shall affect the fiscal privileges ofmembers of a diplomatic mission or consular post under the generalrules of international law or under the provisions of special agree-ments.

2. For the purposes of the Convention, an individual who is amem ber of a diplomatic m ission, consular post or perm anent missionof a Contrac ting S tate which is situated in the other Con tracting Stateor in a third S tate shall be deemed to be a resident of the sending Stateif he is liable in the sendin g S tate to the sam e obligations in relation totax on his total world income as are residents of that sending State.3. The Convention shall not apply to international organisations,to organs or officials thereof and to persons who are members of adiplomatic, consular or permanent mission of a third State beingpresent in a Contracting State and who are not liable in eitherContracting State to the same obligations in relation to tax on theirtotal world income as are residents thereof.


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Article 28Regulations

The competen t authorities of the Contracting States shall by mu tualagreem ent settle the mo de of application of parag raph 2 of Article 10,of parag raphs 2 and 3 of Article 11 and paragraph 2 of Article 12.Article 29

Territorial Extension1. This Convention may be extended, either in its entirety or withany necessary modifications, to any part or territory of the K ingdom ofthe Netherlands to which the Convention does not apply and whichimposes taxes substantially similar in character to those to which theConvention applies. Any such extension shall take effect from suchdate and subject to such modifications and conditions, includingcond itions as to term ination , as may be specified and agreed in notesto be exchanged through diplom atic channels or in any other m anner,in accordance with their constitutional procedures.2. Unless otherwise agreed the term ination of the Convention shallnot also terminate any extension of the Convention to any part orterritory to which it has been extended under this Article.

C HAPT E R VIFINAL PR OVISIONS

Article 3 0Entry into Force

1. This Convention shall be ratified and the instruments of ratifica-tion shall be exchanged at Dhaka as soon as possible.2. The Convention shall enter into force on the thirtieth day afterthe date of the exchange of the instruments of ratification and itsprovisions shall have effect:a) in the Neth erl an ds : for taxable years and periods beginning onor after January 1in the calen dar year next following that in which theinstruments of ratification have been exchanged;b) in B angladesh: for any year of assessment beginning on or afterJuly 1 in the calendar year next following that in which the instrumentsof ratification have been exchanged.


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Article 31TerminationThis Convention shall remain in force until terminated by aContracting State. Either Contracting State may terminate the Con-vention, through diplom atic chan nels, by giving to the other Co ntrac-ting State, written notice of term ination not later than 3 0th Jun e of anycalendar year from the fifth year following that in which the instru-ments of ratification have been exchang ed. In such event, the Conven-tion shall cease to have effect:a) in the N ethe rland s: for taxable years and periods beginning on

or after Jan ua ry 1in the ca lendar year next following that in which thenotice of termination is given;b) in B ang ladesh : for any year of assessment beg inning on or afterJuly 1 in the c alend ar year next following that in which the notice oftermination is given.IN W ITNE SS whereof the undersigned , duly authorised thereto bytheir respective Governments, have signed this Convention.D O N E at D haka this thirteenth day of July 1993, in duplicate , in theEnglish language.

For the Governm ent of the Kingdom of the Netherlands.(sd.) H. GAJENTAANFor the Governm ent of the P eople's Republic of B angladesh.(sd.) AKBAR ALI KHAN

ProtocolAt the moment of signing the Convention for the avoidance ofdouble taxation and the prevention of fiscal evasion with respect totaxes on income, this day concluded between the Kingdom of theNe therlands and the People's R epublic of Bangladesh, the undersig-ned have agreed that the following provisions shall form an integral

part of the Convention.I. Ad Article 2

It is understood that if, after the signature of this Convention, theJamuna Multipurpose Bridge Levy, the Relief and Rehabilitation


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Levy or a similar levy of Bangladesh comes under the scope of anagreement or a Convention for the avoidance of double taxationbetween Bangladesh and a third State, this Convention shall alsoapply to these levies.

II. Ad Article 11N otw ithstand ing the provisions of paragraph 2 of Article 11, as longas the Netherlands does not levy a tax at source on interest then therate of tax to be applied on interest received by a bank or any otherfinancial institution (including an insurance company) shall notexceed 7.5 per cent of the gross amount of the interest.

III. Ad articles 10, 11 and 12Where tax has been levied at source in excess of the amount of taxchargeab le und er the provisions of Articles 10,11 or 12, app licationsfor the refund of the excess amount of tax have to be lodged with thecompetent authority of the Contracting State having levied the taxwithin a period of four years after the expiration of the calendar yearor assessment year, as the case may be, in which the tax has beenlevied.

IV. Ad Article 12Payments received as a consideration for technical services, inclu-ding studies or surveys of a scientific, geological or techn ical na ture, orfor engineering contracts including blue prints related thereto, or forconsultancy or supervisory services are payments to which the

provisions of Article 7 or Article 14 apply.V. Ad Article 16

It is understood that "bestuurder" or "commissaris" of a Nether-lands company means persons, who are nominated as such by thegeneral meeting of shareholders or by any other competent body ofsuch company and are charged with the general management of thecompany and the supervision thereof, respectively.IN WITNESS whereof the undersigned, duly authorised thereto,have signed this Protocol.D O N E at D hak a this thirteenth day of July 1993, in duplicate, in theEnglish language.


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For the G overnment of the Kingdom of the Netherlands.(sd.) H. GAJENTAANFor the Governm ent of the P eople's Republic of Bangladesh.(sd.) AKBAR ALI KHAN

Nr. IDhaka July 13, 1993

Excellency,W ith reference to Article 3 of the Con vention signed tod ay betweenthe Kingdom of the Netherlands and the People's Republic ofBangladesh for the Avoidance of Double Taxation with respect toTaxes on Incom e, I have the hon ou r to explain tha t the conclusion ofthis Convention does not affect the position of the Kingdom of theNetherlands concerning the Maritime boundaries of the People'sRepublic of Bangladesh.Regarding the taxation of income from ships, B angladesh agreed toreopen negotiations with the Netherlands with a view to accordingtreatment that is similar to any more favourable treatment of incomefrom ships gran ted by B angladesh in a treaty or other agreem ent withanother country after the signing in Dhaka of the Memorandum ofUnderstanding by the Heads of Delegations on January 16th, 1992.Reg arding the taxation at source on interest B angladesh also agreedto reopen neg otiations with the Neth erlan ds w ith a view to accordingtreatm ent that is similar to any more favourable treatme nt of interestreceived by a bank or any other financial institution (including aninsurance company) granted by Bangladesh in a treaty or other

agreement with another country.I would be grateful if you would confirm tha t you a re in ag reem entwith the abov e. If so, this Nota and Yo ur Excellency's N ote of Replyshall be regarded as an integral part of this Convention and will enterinto force on the date of entry into force of the Convention.


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Permit me, Excellency, to renew to you the assurances of my highestconsideration.(sd.) H. GAJENTAANH. Gajentaan

Ambassador of the Kingdom ofThe Netherlands to B angladesh.His ExcellencyDr. Akbar Ali KhanSecretaryInternal Resources DivisionMinistry of Finance,Government of the People'sRepublic of Bangladesh.

Nr. IIDhaka, 13th July 1993Excellency,

I have the ho no ur to acknowledge the receipt of your note of today'sdate which reads as follows:(zoals in Nr. I)

I have the hon our to inform Your Excellency that I am in agreem entwith the above and to confirm that Your Excellency's Note and thisNote in Reply will be regarded as an integral part of this Conventionand will enter into force on the date of entry into force of theConvention.Please accept, Excellency, the assurances of my highest considera-

tion. (sd.) AKBAR ALI KHANDr. Akbar Ali KhanSecretary,Internal Resources DivisionMinistry of Finance,Governm ent of the Peo ple'sRepublic of Bangladesh.

His ExcellencyMr. Henricus GajentaanAmbassador of the Kingdom ofTlie Netherlands to Bangladesh


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D . P A R L E M E N THet Verdrag, met Protocol en brieven, behoeft ingevolge artikel 91

van de Grondwet de goedkeuring van de Staten-Generaal, alvorenshet Koninkrijk aan Verdrag, Protocol en brieven kan worden gebon-den.E . B E K R A C H T I G I N G

Bekrachtiging van Verdrag, Protocol en brieven is voorzien inartikel 30, eerste lid, jun cto de pream bule tot het Protocol en de laa tstealinea van de brieven.G . I N W E R K I N G T R E D I N G

De bepalingen van Verdrag, Protocol en brieven zullen ingevolgeartikel 30, tweede lid, van het Verdrag, juncto de preambule tot hetProtocol en de laatste alinea van de brieven, in werking treden op dedertigste dag na de dag van uitwisseling van de akten van bekrachti-ging-

Uitgegeven de veertiende oktober 1993.De Minister van Buitenlandse Zaken,

P. H. KOOIJMANS

dtc agreement between bangladesh and netherlands

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