Replaced by new DTA, which applies in UK from 1st April 2003 for
CT, 6th April 2003 for IT and 1st January 2004 for PRT. For US
withholding taxes it applies from 1st May 2003 and for other US
taxes from 1st January 2004. See DT19939P.
(1) Individuals who are nationals of a Contracting State and
who are residents of the other Contracting State shall not be
subjected in that other 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.
(2) 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.
(3) Subject to the provisions of paragraph (4) of this
Article, interest, royalties and other disbursements paid by an
enterprise of a Contracting State to a resident of the other
Contracting State shall, if reasonable in amount, be deductible for
the purpose of determining the taxable profits of such enterprise
under the same conditions as if they had been paid to a resident of
the first-mentioned State. For the purposes of this paragraph, the
term `other disbursements` shall include charges for amounts
expended by such residents for the purposes of such enterprise,
including a reasonable allocation of executive and general
administrative expenses (except to the extent representing the
expenses of a type of activity which is not for the benefit of such
enterprise, but constitutes `stewardship` or `over-seeing`
functions undertaken for such resident's own benefit as an investor
in the enterprise), research and development in respect of which
such enterprise has the benefits under a cost and risk sharing
agreement and other expenses incurred by such resident for the
benefit of a group of related enterprises including such
enterprise.
(4) Paragraph (3) shall not apply to any interest,
royalties, or other disbursements to which the provisions of
Article 9 (Associated enterprises), paragraphs (5) and (7) or
Article 11 (Interest) or paragraph (5) of Article 12 (Royalties)
apply.
(5) 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 Contracting 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.
(6) Nothing contained in this Article shall be construed as
obliging either Contracting State to grant to individuals not
resident in that State any of the personal allowances and reliefs
which are granted to individuals so resident.
