Canada-Belgium Income Tax Convention Act, 1976 (S.C. 1974-75-76, c. 104, Part II)

The Government of Canada and the Government of the Kingdom of Belgium, 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:

I. Scope of the Convention

Article 1
Persons Covered

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 each Contracting State, 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, 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:

    • (i) the individual income tax;

    • (ii) the corporate income tax;

    • (iii) the income tax on legal entities;

    • (iv) the income tax on non-residents;

    • (v) 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 Canada: the taxes imposed by the Government of Canada under the Income Tax Act, (hereinafter referred to as “Canadian 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 significant changes, which have been made in their respective taxation laws.

II. Definitions

Article 3
General Definitions

• 1 For the purposes of this Convention, unless the context otherwise requires:

  • (a)

    • (i) the term Belgium used in a geographical sense means the national territory, including the territorial sea, and any other area in the sea or in the air within which Belgium, in accordance with international law, exercises sovereign rights or its jurisdiction;

    • (ii) the term Canada used in a geographical sense means the territory of Canada, including:

      • (A) any area beyond the territorial seas of Canada which, under the laws of Canada and in accordance with international law, is an area within which Canada may exercise rights with respect to the seabed and subsoil and their natural resources;

      • (B) the waters and airspace above every area referred to in clause (A) in respect of any activity carried on in connection with the exploration for or the exploitation of the natural resources referred to therein;

  • (b) the terms a Contracting State and the other Contracting State mean Canada or Belgium as the context requires;

  • (c) the term person includes an individual, a company, a partnership and any other body of persons, including, in the case of Canada, an estate and a trust;

  • (d) the term company means any body corporate or any other entity which is treated as a body corporate for tax purposes;

  • (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 competent authority means:

    • (i) in the case of Belgium: the Minister of Finance or the Minister’s authorized representative;

    • (ii) in the case of Canada: the Minister of National Revenue or the Minister’s authorized representative, and,

  • (g) the term national means:

    • (i) any individual possessing the nationality of a Contracting State;

    • (ii) any legal person, partnership and association deriving its status as such from the law in force in a Contracting State;

  • (h) the term international traffic means any voyage of a ship or aircraft operated by an enterprise of a Contracting State to transport passengers or goods except where the principal purpose of the voyage is to transport passengers or goods exclusively between places in the other Contracting State.

• 2 As regards the application of the Convention by a Contracting State at any time, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State concerning the taxes to which the Convention applies, any meaning under that law prevailing over a meaning given to the term under other laws of that State.

Article 4
Resident

• 1 For the purposes of this Convention, the term resident of a Contracting State means:

  • (a) any person who, under the laws of that State, is liable to tax therein by reason of the person’s domicile, residence, place of management or any other criterion of a similar nature;

  • (b) that State, a political subdivision or a local authority thereof or any legal entity owned by that State, subdivision or authority.

  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 the individual’s status shall be determined as follows:

  • (a) the individual shall be deemed to be a resident only of the State in which the individual has a permanent home available; if the individual has a permanent home available in both States, the individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);

  • (b) if the State in which the individual’s centre of vital interests is situated cannot be determined, or if there is not a permanent home available to the individual in either State, the individual shall be deemed to be a resident only of the State in which the individual has an habitual abode;

  • (c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident only of the State of which the individual is a national;

  • (d) if the individual 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, the competent authorities of the Contracting States shall by mutual agreement endeavour to settle the question having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of such agreement, such person shall be deemed not to be a resident of either Contracting State for the purposes of Articles 6 to 22 inclusive.

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 for more than twelve months.

• 4 The use of an installation or drilling rig or ship in a Contracting State to explore for or exploit natural resources constitutes a permanent establishment only if such use is for more than three months in any twelve month period.

• 5 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.

• 6 Notwithstanding the provisions of paragraphs 1 and 2, where a person — other than an agent of an independent status to whom paragraph 7 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 that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 5 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

• 7 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.

• 8 Notwithstanding the provisions of paragraphs 6 and 7, an insurance enterprise of a Contracting State shall, except with regard to reinsurance, be deemed to have a permanent establishment in the other State if it collects premiums in that other State, or insure risks situated therein, through a representative referred to in paragraph 6 or through an agent of an independent status who has, and habitually exercises, an authority to conclude contracts in the name of the enterprise.

• 9 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.

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 consideration for the working of, or the 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 and to income from the alienation of such 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 Profits

• 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 or has carried on business as aforesaid, the profits of the enterprise 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 with the enterprise of which it is a permanent establishment and with all other associated persons.

• 3 In determining the profits of a permanent establishment, there shall be allowed those deductible 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 In the absence of appropriate accounting or other data permitting the determination of the amount of the profits of an enterprise of a Contracting State which is attributable to its permanent establishment situated in the other State, the tax may, in particular, be charged in that other State in accordance with its domestic legislation, having regard to the normal profits of similar enterprises engaged in the same or similar activities under the same or similar conditions.

• 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 derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

• 2 Notwithstanding the provisions of Article 7, profits which are not covered by paragraph 1 and which are derived from the operation of ships used to transport passengers or goods exclusively between places in a Contracting State may be taxed in that State.

• 3 The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

• 4 In this Article,

  • (a) the term profits includes interest on funds directly connected with the operation of ships or aircraft in international traffic, provided that such interest is incidental to the operation;

  • (b) the term operation of ships or aircraft in international traffic includes:

    • (i) the charter or rental of ships or aircraft, or

    • (ii) the rental of containers and related equipment,

    by an enterprise of a Contracting State, provided that such charter or rental is incidental to the operation by that enterprise of ships or aircraft in international traffic.

Article 9
Associated Enterprises

• 1 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 income or profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the income or profits of that enterprise and taxed accordingly.

• 2 Where a Contracting State includes in the income or profits of an enterprise of that State — and taxes accordingly — income or profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the income or profits so included are income or profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make such an adjustment as it considers appropriate to the amount of tax charged therein on that income or those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention.

• 3 A Contracting State shall not change the income or profits of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its national laws and, in any case, after six years from the end of the year in which the income or profits which would be subject to such change would have accrued to an enterprise of that State.

• 4 The provisions of paragraphs 2 and 3 shall not apply in the case of fraud or wilful default.

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) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which owns directly at least 10 per cent of the voting stock 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, “jouissance” shares or “jouissance” 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 subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the payment 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 company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

• 6 Nothing in this Convention shall be construed as preventing Canada from imposing a tax on the earnings attributable to permanent establishments in Canada of a company which is a resident of Belgium, in addition to the tax which would be chargeable on the earnings of a company which is a resident of Canada, provided that the rate of any additional tax so imposed shall not exceed 5 per cent of the amount of such earnings which have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term earnings means profits attributable to such permanent establishments in Canada (including gains from the alienation of property forming part of the business property, referred to in paragraph 2 of Article 13, of such permanent establishments) in accordance with Article 7 in a year and previous years after deducting therefrom:

  • (a) business losses attributable to such permanent establishments (including losses from the alienation of property forming part of the business property of such permanent establishments) in such year and previous years;

  • (b) all taxes chargeable in Canada on such profits, other than the additional tax referred to herein;

  • (c) the profits reinvested in Canada, provided that the amount of such deduction shall be determined in accordance with the existing provisions, of the law of Canada regarding the computation of the allowance in respect of investment in property in Canada, and any subsequent modification of those provisions which shall not affect the general principle hereof; and

  • (d) five hundred thousand Canadian dollars ($500,000), less any amount deducted:

    • (i) by the company, or

    • (ii) by a person related thereto from the same or a similar business as that carried on by the company,

    under this subparagraph (d); for the purposes of this subparagraph (d), a company is related to another company if one company directly or indirectly controls the other, or both companies are directly or indirectly controlled by the same person or persons, or if the two companies deal with each other not at arm’s length.

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 arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State if it is:

  • (a) interest paid with respect to indebtedness in connection with the sale on credit by a resident of that other State of any equipment, merchandise or services, except where the sale or indebtedness was between related persons;

  • (b) interest paid to the other Contracting State or a political subdivision or a local authority thereof;

  • (c) interest on a loan made, guaranteed or insured or a credit extended, guaranteed or insured by Export Development Canada in the case of Canada or by any similar institution specified and agreed in letters exchanged between the competent authorities of the Contracting States in the case of Belgium.

• 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, as well as income assimilated to income from money lent by the taxation law of the State in which the income arises; however, the term interest does not include for the purpose of this Article penalty charges for late payment, interest referred to in paragraph 4 of Article 8 nor interest dealt with in 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 personal 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, as the case may be, shall apply.

• 6 Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether the person 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 payer 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 payer 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 may be taxed in that other State.

• 2 However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

• 3 Notwithstanding the provisions of paragraph 2,

  • (a) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or other artistic work (but not including royalties in respect of motion picture films nor royalties in respect of works on film or videotape or other means of reproduction for use in connection with television broadcasting); and

  • (b) royalties for the use of, or the right to use, computer software or any patent or for information concerning industrial, commercial or scientific experience (but not including any such information provided in connection with a rental or franchise agreement),

  arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State.

• 4 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 payments of any kind in respect of motion picture films and works on film, videotape or other means of reproduction for use in connection with television, any patent, trade mark, design or model, plan, secret formula or process or other intangible property, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

• 5 The provisions of paragraphs 1, 2 and 3 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.

• 6 Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether the person 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 obligation 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.

• 7 Where, by reason of a special relationship between the payer 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 payer 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 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 fixed base, may be taxed in that other State.

• 3 Gains derived by an enterprise of a Contracting State 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 that State.

• 4 Gains derived by a resident of a Contracting State from the alienation of:

  • (a) shares (other than shares listed on an approved stock exchange in the other Contracting State) forming part of a substantial interest in the capital stock of a company which is a resident of either Contracting State, the value of which shares is derived principally from immovable property situated in the other State; or

  • (b) a substantial interest in a partnership, trust or estate, established under the law in either Contracting State, the value of which is derived principally from immovable property situated in the other State,

  may be taxed in that other State. For the purposes of this paragraph, the term immovable property includes the shares of a company referred to in subparagraph (a) or an interest in a partnership, trust or estate referred to in subparagraph (b) but does not include any property, other than rental property, in which the business of the company, partnership, trust or estate is carried on.

• 5 Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.

• 6 Where an individual who ceases to be a resident of a Contracting State, and immediately thereafter becomes a resident of the other Contracting State, is treated for the purposes of taxation in the first-mentioned State as having alienated a property and is taxed in that State by reason thereof, the individual may elect to be treated for purposes of taxation in the other State as if the individual had, immediately before becoming a resident of that State, sold and repurchased the property for an amount equal to its fair market value at that time. However, this provision shall not apply to property, which would give rise, if it were alienated immediately before the individual became a resident of that other State, to a gain, which may be taxed in that other State nor to immovable property situated in a third State.

Article 14
Independent Personal Services

• 1 Income derived by an individual who is 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 the individual has a fixed base regularly available in the other Contracting State for the purpose of performing the activities. If the individual has or had 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 and 19, salaries, wages and other 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 twelve month period commencing or ending in the fiscal year concerned; 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 by an enterprise of a Contracting State may be taxed in that State.

Article 16
Company Managers

• 1 Director’s fees and similar payments derived by a resident of a Contracting State in that resident’s 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.

  This provision 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 member of a board of directors or a similar organ of a company.

• 2 Remuneration derived by a person referred to in paragraph 1 from a company which is a resident of a Contracting State in respect of the discharge of day-to-day functions of a managerial or technical nature may be taxed in accordance with the provisions of Article 15 as if such remuneration were remuneration derived by an employee in respect of an employment and as if references to the “employer” were references to the company.

Article 17
Artistes and Sports Persons

• 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 artiste, a musician, or as a sports person, from that resident’s 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 a sports person in that individual’s capacity as such accrues not to that entertainer or sports person personally 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 sports person are exercised.

• 3 The provisions of paragraph 2 shall not apply if the entertainer or the sports person establishes that neither the individual nor any person associated with the individual participates directly or indirectly in the profits of the person referred to in that paragraph.

Article 18
Pensions

• 1 Periodic or non-periodic pensions and other similar allowances arising in a Contracting State and paid in consideration of past employment to a resident of the other Contracting State may be taxed in the Contracting State in which they arise. This provision shall also apply to pensions and allowances paid under a public scheme organised by a Contracting State in order to supplement the benefits of its social security legislation.

• 2 Notwithstanding the provisions of paragraph 1, payments under the social security legislation in a Contracting State and war veterans pensions paid by a Contracting State to a resident of the other Contracting State shall be taxable only in the first-mentioned State.

• 3 Any alimony or other maintenance payment arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein in respect thereof, shall be taxable only in that other State.

Article 19
Government Service

• 1

  • (a) Salaries, wages and other similar 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 salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that State who:

    • (i) is a national of that State; or

    • (ii) did not become a resident of that State solely for the purpose of performing the services.

• 2 The provisions of paragraph 1 shall not apply to salaries, wages and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20
Students

Payments which 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 that individual’s education or training receives for the purpose of that individual’s maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

Article 21
Other Income

• 1 Subject to the provisions of paragraph 2, 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 However, if such income is derived by a resident of a Contracting State from sources in the other Contracting State, such income may also be taxed in the State in which it arises, and according to the law of that State. Where such income is income from an estate or a trust, other than a trust to which contributions were deductible, the tax so charged shall, provided that the income is taxable in the Contracting State in which the beneficial owner is a resident, not exceed 15 per cent of the gross amount of the income.

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 by an enterprise of a Contracting State in international traffic, or represented by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that State.

• 4 All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

V. Methods for Prevention of Double Taxation

Article 23
Elimination of Double Taxation

• 1 In the case of Belgium, double taxation shall be avoided as follows:

  • (a) When a resident of Belgium derives income or owns elements of capital which are taxed in Canada 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, of paragraphs 2 and 7 of Article 12 and of the second sentence of paragraph 2 of Article 21, Belgium shall exempt such income or such elements of 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 elements of capital had not been exempted.

  • (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, royalties taxable in accordance with paragraph 2 or 7 of Article 12, the Canadian tax levied on that income shall be allowed as a credit against Belgian tax relating to such income.

  • (c) Dividends derived by a company which is a resident of Belgium from a company which is a resident of Canada and which may be taxed in Canada 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) When, in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in Canada, 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 Canada by reason of compensation for the said losses.

  • (e) When a resident of Belgium derives income to which the provisions of the second sentence of paragraph 2 of Article 21 apply and which has been taxed in Canada, the amount of Belgian tax proportionately attributable to such income shall not exceed the amount which would be charged according to Belgian law if such income were taxed as earned income derived from sources outside Belgium and subject to foreign tax.

• 2 In the case of Canada, double taxation shall be avoided as follows:

  • (a) Subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the general principle hereof) and unless a greater deduction or relief is provided for under the laws of Canada, tax payable in Belgium on profits, income or gains arising in Belgium shall be deducted from any Canadian tax payable in respect of such profits, income or gains.

  • (b) Subject to the existing provisions of the law of Canada regarding the taxation of income from a foreign affiliate and to any subsequent modification of those provisions for the purposes of computing Canadian tax, a company which is a resident of Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate which is a resident of Belgium.

  • (c) Where in accordance with any provision of the Convention income derived or capital owned by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on other income or capital, take into account the exempted income or capital.

  • (d) For the purposes of this paragraph, profits, income or gains of a resident of Canada, which may be taxed in Belgium in accordance with the Convention shall be deemed to arise in Belgium.

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, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to individuals who are not residents of one or both of the Contracting States.

• 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. 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.

• 3 Except where the provisions of paragraph 1 of Article 9 or of paragraph 7 of Article 12, apply, royalties 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.

• 4 In this Article, the term taxation means the taxes which are the subject of this Convention.

Article 25
Mutual Agreement Procedure

• 1 Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, present the case in writing to the competent authority of the Contracting State of which that person is a resident, or if the case comes under paragraph 1 of Article 24, to that of the Contracting State of which that person is a national. To be admissible, the said case must be presented within two years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.

• 2 The competent authority referred to in paragraph 1 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 States may communicate directly with each other for the application of the Convention.

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

Article 26
Exchange of Information

• 1 The competent authorities of the Contracting States shall exchange such information as is relevant for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning all taxes imposed on behalf of the Contracting States insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2. 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 in respect of, or the determination of appeals in relation to taxes. 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).

Article 27
Miscellaneous Provisions

• 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 The provisions of the Convention shall not be construed to restrict in any manner any exemption, allowance, credit or other deduction now or hereafter accorded by the laws of a Contracting State in the determination of the tax imposed by that State.

• 3 Nothing in the Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada with respect to a trust in which that resident has an interest or with respect to a controlled foreign affiliate, in accordance with section 91 of the Income Tax Act of Canada as it may be amended without changing the general principle hereof.

• 4 The Convention shall not apply to non-resident-owned investment corporations as defined under section 133 of the Income Tax Act of Canada, or under any similar provision enacted by Canada after the signature of the Convention, or to any income derived from such companies by any shareholders thereof.

• 5 The exemption provided under subparagraph (b) of paragraph 3 of Article 12 shall not apply where the enterprise benefiting from the royalties has, in a State which is not a Contracting State, a permanent establishment to which the royalties are attributable and where the royalties are subject, in the State of residence of the enterprise and in the State where the permanent establishment is situated, to a tax the total of which is less than 60 per cent of the tax that would be imposed in the State of residence of the enterprise if the royalties were attributable to the enterprise and not to the permanent establishment. The provisions of this paragraph shall not apply:

  • (a) if the royalties are derived in connection with or incidental to the active conduct of a trade or business carried on in the State which is not a Contracting State; or

  • (b) when Belgium is the State of residence of the enterprise, to royalties taxed by Canada according to section 91 of the Income Tax Act, as it may be amended without changing the general principle hereof.

• 6 Notwithstanding the provisions of paragraphs 2 and 3 of Article 11 and of paragraphs 2 and 3 of Article 12, interest and royalties (other than royalties to which paragraph 5 applies) arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned State at a rate not exceeding 15 per cent of the gross amount of the interest and 10 per cent of the gross amount of the royalties, where:

  • (a) such interest or royalties are received by a company and one or more persons not resident in that other Contracting State hold directly or indirectly, through one or more companies or otherwise, at least 50 per cent of the capital of such company and, directly or indirectly, exercise the management of, or control such company; and

  • (b) such interest or royalties are not subject to tax in the other State under the ordinary rules of its tax law.

VII. Final Provisions

Article 28
Entry Into Force

• 1 This Convention shall be ratified and the instruments of ratification shall be exchanged at Brussels 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:

    • (i) with respect to taxes due at source on income credited or payable on or after January 1 of the year in which the instruments of ratification have been exchanged;

    • (ii) with respect to other taxes for taxable periods ending on or after December 31 of the year in which the instruments of ratification have been exchanged;

  • (b) in Canada:

    • (i) with respect to taxes withheld at the source on amounts paid or credited to non-residents on or after January 1 of the year in which the instruments of ratification have been exchanged;

    • (ii) with respect to other taxes for taxation years beginning on or after January 1 of the year in which the instruments of ratification have been exchanged.

• 3 The provisions of the Convention between Canada and Belgium for the avoidance of double taxation and the settlement of other matters with respect to taxes on income signed at Ottawa, on May 29, 1975, shall cease to be effective in relation to any Canadian or Belgian tax for which this Convention has effect in accordance with paragraph 2.

Article 29
Termination

This Convention shall remain in force until terminated by a Contracting State but either Contracting State may terminate the Convention, through diplomatic channels, by giving to the other Contracting State, written notice of termination not later than June 30 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:

  • (i) with respect to taxes due at source on income credited or payable after December 31 of the year in which the notice of termination is given;

  • (ii) with respect to other taxes for taxable periods ending on or after December 31 of the year next following the year in which the notice of termination is given;

• (b) in Canada:

  • (i) with respect to taxes withheld at the source on amounts paid or credited to non-residents after December 31 of the year in which the notice of termination is given;

  • (ii) with respect to other taxes for taxation years beginning on or after January 1 of the year next following the year in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorized thereto by their respective Governments, have signed this Convention.

DONE in duplicate at Ottawa, this 23^rd day of May, 2002, in the English, French and Dutch languages, the three texts being equally authentic.

Protocol

At the moment of signing the Convention between Canada and Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, the undersigned have agreed that the following provisions shall form an integral part of the Convention.

• 1 With reference to paragraph 1 of Article 4.

  It is understood that:

  • (a) for purposes of the application of the Convention to:

    • (i) income taxes, the term “liable to tax” refers to liability to taxes on income and not to taxes on capital;

    • (ii) capital taxes, the term “liable to tax” refers to liability to taxes on capital and not to taxes on income;

  • (b) the term resident of a Contracting State also includes:

    • (i) a company or other organization constituted and operated exclusively to administer or provide benefits under one or more funds or plans established to provide pension, retirement or other employee benefits that is generally exempt from tax in a Contracting State and that is a resident of that State according to the laws of that State;

    • (ii) a company or other organization that is operated exclusively for religious, charitable, scientific, educational, or public purposes and that is generally exempt from tax in a Contracting State and that is a resident of that State according to the laws of that State.

• 2 With reference to paragraph 6 of Article 10.

  The provisions of this paragraph shall also apply with respect to earnings derived from the alienation of immovable property in Canada by a company carrying on a trade in immovable property, whether or not it has a permanent establishment in Canada, but only insofar as these earnings may be taxed in Canada under the provisions of Article 6 or paragraph 1 of Article 13.

• 3 With reference to subparagraph (a) of paragraph 3 of Article 11.

  It is understood that the exemption provided for under that subparagraph shall not apply to interest paid with respect to indebtedness that was created or acquired essentially with a view to take advantage of that provision and not for bona fide commercial purposes.

• 4 With reference to paragraph 4 of Article 12.

  It is understood that payments constituting consideration for technical assistance or technical services shall not be considered to be payments for information concerning industrial, commercial or scientific experience, but shall be taxable in accordance with the provisions of Article 7 or Article 14, as the case may be.

• 5 With reference to paragraph 2 of Article 16.

  The provisions of this paragraph shall also apply, in the case of Belgium, to remuneration received by a resident of Canada in respect of that resident’s personal activity as a partner of a company, other than a company with share capital, which is a resident of Belgium.

• 6 With reference to paragraph 6 of Article 27.

  The provisions of paragraph 6 of Article 27 shall not apply if,

  • (a) the participation in the capital of the company receiving the interest or the royalties was made for bona fide commercial or financial reasons, and

  • (b) at the end of the taxation year or the taxable period concerned, the paid-up capital and the taxed retained earnings of the company receiving the interest or the royalties do not exceed 33 per cent of its debt.

IN WITNESS WHEREOF the undersigned, being duly authorized thereto by their respective Governments, have signed this Protocol.

DONE in duplicate at Ottawa, this 23^rd day of May, 2002, in the English, French and Dutch languages, the three texts being equally authentic.