Australian Tax Treaties
As amended by the Netherlands Protocol (No 2)
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) has modified the application of this tax treaty. A synthesised text of the MLI and this tax treaty is available to facilitate the understanding of how the MLI modifies this tax treaty.
Subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle hereof), Netherlands tax paid, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in the Netherlands (not including, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against Australian tax payable in respect of that income.
(2)
The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income which according to the provisions of this Agreement may be taxed in Australia.
(3)
Without prejudice to the application of the provisions concerning the compensation of losses in the unilateral regulations for the avoidance of double taxation the Netherlands shall allow a deduction from the amount of tax computed in conformity with paragraph (2) of this Article equal to such part of that tax which bears the same proportion to the aforesaid tax, as the part of the income which is included in the basis mentioned in paragraph (2) of this Article and may be taxed in Australia according to Articles 6 and 7 , paragraphs (2) and (3) of Article 8 , paragraph (4) of Article 10 , paragraph (4) of Article 11 , paragraph (4) of Article 12 , paragraph (1) of Article 13 , Article 14 , paragraph (1) of Article 15 , paragraph (1) of Article 16 and Article 19 of this Agreement bears to the total income which forms the basis mentioned in paragraph (2) of this Article.
Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for such items of income, as may be taxed in Australia according to paragraph (2) of Article 10 , paragraph (2) of Article 11 , paragraph (2) of Article 12 and Article 17 , and are included in the basis mentioned in paragraph (2) of this Article. The amount of this deduction shall be the lesser of the following amounts:
(a) the amount equal to the Australian tax;
(b) the amount of the Netherlands tax which bears the same proportion to the amount of tax computed in conformity with paragraph (2) of this Article, as the amount of the said items of income bears to the amount of income which forms the basis mentioned in paragraph (2) of this Article.
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