DTC agreement between Netherlands and Turkey

8/2/2019 DTC agreement between Netherlands and Turkey

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6 (1986) N r . 1

TRACTATENBLADVAN HET

KONINKRIJK DER NEDERLANDEN

JAARGANG 1986 Nr. 67

A. TITELOvereenkomst tussen hetKoninkrijk derNederlanden en deRepubliekTurkije tot het vermijden vandubbele belasting en het voorkomen vanhet ontgaan van belasting metbetrekking totbelastingen naarhetinkomen, met Protocol;Ankara, 27maart 1986B. TEKSTAgreement between theKingdom oftheNetherlands and theRepublicof Turkey for theAvoidance ofDouble Taxation and thePreventionof Fiscal Evasion with respect toTaxes onIncome

The Government oftheKingdom ofthe Netherlandsandthe Government ofthe Republic ofTurkey,Desiring toconclude anagreement forthe avoidance of double

taxation and theprevention offiscal evasion with respect to taxes onincome,Have agreed asfollows:CHAPTER I

SCOPE OFT H E A G R E E M E N TArticle 1

Personal ScopeThis Agreement shall apply topersons who areresidents ofoneorboth oftheStates.


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i) the term "nationals" means:(i) in relation to Turkey , any individual possessing T urkishnationality in accordance with the Turkish Nationality Code and anylegal person, partnership or association deriving its status as suchfrom the law in force in Turkey;(ii) in relation to the Netherlands, any individual possessing thenationality of the Netherlands and any legal person, partnership orassociation deriving its status as such from the law in force in theNetherlands;j) the term "competent authority" means:(i) in Turkey, the Minister of Finance and Customs or his dulyauthorized representative;(ii) in the Netherlands, the Minister of Finance or his dulyauthorized representative.2. As regard s the applica tion of this Agreement by one of the S tatesany term not denned therein shall, unless the context otherwiserequires, have the meaning which it has under the law of that Stateconcerning the taxes to which the Agreement applies.

Article 4Resident

1. For the purposes of this Agreement, the term "resident of oneof the S tates " means any person who, und er the laws of that S tate, isliable to tax therein by reason of his domicile, residence, legal headoffice, place of manag em ent or any other criterion of a similar n atu re.2. W here by reason of the provisions of paragrap h 1 an individualis a resident of both States, then his status shall be determined asfollows:a) he shall be deem ed to be a residen t of the State in which he hasa permanent home available to him; if he has a permanent homeavailable to him in both States, he shall be deemed to be a residentof the State with which his personal and econom ic relations are closer(centre of vital interests);b) if the State in which he has his centre of vital interests cannotbe determined, or if he has not a permanent home available to himin either State, he shall be deemed to be a resident of the State inwhich he has an habitual abode;c) if he has an habitual abo de in both States or in neither of them ,he shall be deemed to be a resident of the State of which he is a

national;d) if he is a national of both States or of neither of them, thecom petent autho rities of the States shall settle the question by m utualagreement.


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3 . W here by reason of the provisions of paragrap h 1 a person otherthan an individual is a resident of both States, then it shall be deemedto be a resident of the State in which its place of effective m anagem entis situated. However, where such person has its place of effectivemanagement in one of the States and its legal head office in the otherState, then the com petent a uthorities of the States shall determine bymutual agreement the State of which the person shall be deemed tobe a resident for the purposes of this Agreement.

Article 5Permanent Establishment

1. For the purposes of this Agreem ent, the term "pe rm an en testablishment" 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 management;b) a branch;c) an office;d) a factory;e) a workshop;f) 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 purpose of storage, display or

delivery of goods or merchandise belonging to the enterprise;b) the maintenance of a stock of goods or mercha ndise belongingto the enterprise solely for the purp ose of storage, display or delivery;c) the maintenance of a stock of goods or merchandise belongingto the enterprise solely for the purpose of processing by anotherenterprise;d) the maintenance of a fixed place of business solely for thepurpose of purchasing goods or merchandise or of collectinginformation, 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;0 the maintenance of a fixed place of business solely for anycombination of activities mentioned in subparagraphs a) to e),provided that the overall activity of the fixed place of business


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5. Where profits include items of income which are dealt withseparately in othe r Articles of this Agreem ent, then the prov isions ofthose Articles shall not be affected by the provisions of this Article.Article 8

Shipping, Air and Land Tran sport1. Profits of an enterprise of one of the States from the operationof ships, aircraft or road vehicles in international traffic shall betaxable only in that State.2. The prov isions of parag rap h 1 shall also apply to profits fromthe participation in a poo l, a join t business or an internationa loperating agency.

Article 9Associated E nterprises

1. Wherea) an enterprise of one of the States participates directly orindirectly in the management, control or capital of an enterprise ofthe other State, orb) the same p ersons participate directly or indirectly in themanagement, control or capital of an enterprise of one of the Statesand an enterprise of the other State,and in either case conditions are ma de or imposed between the twoenterprises in their commercial or financial relations which differfrom those which would be made between independent enterprises,then any profits which would, but for those conditions, have accruedto one of the enterprises , but, by reason of those co ndition s, have notso accrued, may be included in the profits of that enterprise and taxedaccordingly.

2. Where one of the States includes in the profits of an enterpriseof that State - and taxes accordingly - profits on which an enterpriseof the other State has been charged to tax in that other State and theprofits so included are profits which would have accrued to theenterprise of the first-mentioned State if the conditions m ade betweenthe two enterprises had been those which would have been madebetween inde pen den t enterprises, then that other State shall make anappropriate adjustment to the amount of the tax charged therein onthose profits, where that other State considers the adjustmentjustified. In determining such adjustment, due regard shall be had tothe other provisions of this Agreement and the competent authoritiesof the States shall if necessary consult each other.


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Article 10Dividends

1. Dividends paid by a company which is a resident of one of theStates to a resident of the other State may be taxed in that otherState.2. How ever, such divid ends may also be taxed in the State of whichthe com pany paying the dividends is a resident and acco rding to thelaws of that State, but the tax so charged shall not exceed:a) 15 per cent of the gross am oun t of the dividends if the recipien tis a company (other than a partnership) which holds directly at least25 per cent of the capital of the company paying the dividends;b) 20 per cent of the gross amount of the dividends in all othercases.The provisions of this paragraph shall not affect the taxation of thecompany in respect of the profits out of which the dividends arepaid.3. The competent authorities of the States shall by mutualagreement settle the mode of application of paragraph 2.4. The term "d ivi de nd s" as used in this article means incom e from

shares, "jouissance" shares or "jouissance" rights, founders' sharesor other rights, not being debt-claims, participating in profits, as wellas income from other co rpora te rights which is subjected to the sametaxation treatm ent as income from shares by the laws of the State ofwhich the company making the distribution is a resident.5. Profits from a com pan y of one of the States carrying on businessin the other State throug h a perm anen t establishment situated thereinmay, after having been taxed under Article 7, be taxed on theremaining amount in the State in which the permanent establishment

is situated and the taxes so charged shall not exceed 50 per cent ofthe percentage provided for in sub-paragraph a) of paragraph 2 ofthis Article.6. The prov isions of parag raph s 1 and 2 shall not apply if therecipient of the dividen ds, being a resident of one of the S tates, carrieson business in the other State of which the company paying thedividends is a resident, through a permanent establishment situatedtherein, or, in the case of a resident of Turkey, performs in theN ethe rland s ind epe nde nt p ersonal services from a fixed base situated

in the N ether land s, and the holding in respect of which the d ividendsare paid is effectively connected with such permanent establishmentor fixed base. In such case the provisions of Article 7 or Article 14,as the case may be, shall apply.


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any kind received as a consideration for the use of, or the right to use,or the sale of, any copyright of literary, artistic or scientific workincluding cinematograph films and recordings for radio andtelevision, any patent, trade mark, design or model, plan, secretformula or process, or for information concerning industrial,commercial or scientific experience, or for the use of, or the right touse, industrial, com me rcial, or scientific equipm ent.

5. The p rovisions of parag raph s 1 and 2 shall not apply if therecipient of the royalties, being a residen t of one of the States, carrieson business in the other State in which the royalties arise, through aperm anent establishm ent situated therein, or, in the case of a residentof Turkey, performs in the Netherlands independent personalservices from a fixed base situated in the Netherlands, and the rightor property in respect of which the royalties are paid is effectivelyconnected with such permanent establishment or fixed base. In suchcase the provisions of Article 7 or Article 14, as the case may be , shallapply.6. Royalties shall be deem ed to arise in one of the States when thepayer 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 one of the States or not, has inone of the States a permanent establishment or a fixed base, withwhich the right or property giving rise to the royalties is effectivelyconnected, and such royalties are borne by such permanentestablishment or a fixed bas e, then su ch royalties shall be deem ed toarise in the State in which the p erm anen t e stablishment or a fixedbase is situated.7. Where, by reason of a special relationship between the payerand the recipient or between both of them and some other person,the amount of the royalties paid, having regard to the use, right orinformation for which they are paid, exceeds the am oun t which w ould

have been agreed upon by the payer and the recipient in the absenceof such relation ship , the pro visions of this Article shall apply only tothe last-mentioned amount. In such case, the excess part of thepayments shall remain taxable according to the laws of each State,due regard being had to the other provisions of this Agreement.Article 13

Capital Gains1. Gains derived by a resident of one of the States from thealienation of immovable property referred to in Article 6 and situatedin the other State may be taxed in that other State.2. Gains from the alienation of movable property forming part of


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the business property of a permanent establishment which anenterprise of one of the States has in the other State or of movableproperty pertaining to a fixed base available to a resident of one ofthe States in the other State for the purpose of performingindependent personal services, including such gains from thealienation of such a permanent establishment (alone or with thewhole enterprise) or of such fixed base, may be taxed in that otherState.3. Gains derived by an enterprise of one of the States from thealienation of ships, aircraft o r road vehicles operated in internation altraffic, or movable prope rty p ertaining to the op eration of such sh ips,aircraft or road vehicles, shall be taxable only in that State.4. Gains from the alienation of any property other than thatreferred to in paragraphs 1,2 and 3, shall be taxable only in the Stateof which the alienator is a resident.5. The provisions of paragraph 4 shall not affect the right of oneof the States to levy according to its own law a tax on gains derivedby a resident of the other State from the alienation of shares or bo nd sissued by a company which is a resident of the first-mentioned State(other than shares and bonds quoted on a stock exchange of thatState) if the alienation takes place to a residen t of the first-men tioned

State and if the period between acquisition and alienation does notexceed one year.6. The provisions of paragraph 4 shall not affect the right of eachof the States to levy acco rding to its own law a tax on gains from thealienation of shares or "jouissance" rights in a company, the capitalof which is wholly or partly divided into shares and which under thelaws of that State is a resident of that State, derived by an individualwho is a resident of the other State and has been a resident of thefirst-men tioned State in the course of the last five years precedin g the

alienation of the shares or "jouissance" rights.Article 14

Independent personal Services1. Income derived by a resident of one of the States in respect ofprofessional services or other activities of an independent charactershall be taxable only in that State. However, such income may alsobe taxed in the othe r State if such services or activities are perform ed

in that other State and if:a) he has a fixed base regu larly available to him in that othe r Statefor the purpose of performing those services or activities; orb) he is present in that other State for the purpose of performingthose services or activities for a period or periods amounting in the


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aggregate to 183 days or more in any con tinuous period of 12 m on ths.In such circumstances, only so much of the income as is attributab leto that fixed base or is derived from the services or activitiesperformed during his presence in that other State, as the case may be,may be taxed in that other S tate.

2. Income derived by an enterprise of one of the States in respectof professional services or other activities of a similar character shallbe taxable only in that S tate. However, such income m ay also be taxedin the other State if such services or activities are performed in thatother State and if:a) the enterprise has a perm anent establishm ent in that other Statethrough which the services or activities are performed; orb) the period or periods during which the services are performedexceed in the aggregate 183 days in any continuous period of 12months.In such circumstances only so much of the income as is attribu tableto that permanent establishment or to the services or activitiesperformed in that other State, as the case may be, may be taxed inthat other State. In either case the Republic of Turkey may levy awithholding tax on such income. However the recipient of suchincome, having been subjected to such a tax, may elect to be taxedon a net basis in respect of such income in accordance with theprovisions of Article 7 of this Agreement as if the income wereattributable to a permanent establishment of the enterprise situatedin T urkey.3. The term "professional services" includes especiallyindependent scientific, literary, artistic, educational or teachingactivities as well as the independent activities of physicians, lawyers,engineers, architects, dentists and accountants, and other activitiesrequiring specific professional skill.

Article 15Depend ent personal Services

1. Subject to the provisions of Articles 16, 18, 19 and 20, salaries,wages and o ther similar rem uneration derived by a resident of one ofthe States in respect of an employment shall be taxable only in thatState unless the employment is exercised in the other State. If theemployment is so exercised, such remuneration as is derived there-from may be taxed in that other State.2. Notwithstanding the provisions of paragraph 1, remunerationderived by a resident of one of the States in respect of an em ploym entexercised in the other State shall be taxab le only in the first-men tionedState if:


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a) the recipient is present in the other State for a period or periodsnot exceeding in the aggregate 183 days in the calendar yearconcerned, andb) the remuneration is paid by, or on behalf of, an employer whois not a resident of the other State, andc) the remuneration is not borne by a permanent establishment ora fixed base which the employer has in the other State.3. Notwithstanding the preceding provisions of this Article,remuneration derived by a resident of one of the States in respect ofan employment exercised aboard a ship, aircraft or road vehicleoperated in international traffic, by an enterprise of the other State,may be taxed in that other State.

Article 16Directors' Fees

Directors' fees or other remuneration derived by a resident of oneof the States in his capacity as a mem ber of the board of directors, a"bestuurder" or a "commissaris" of a company which is a residentof the other State may be taxed in that other State.Article 17

Artistes and Athletes1. Notw ithstand ing the prov isions of Article 14 and 15, incom ederived by a resident of one of the States as an entertainer, such as atheatre, motion picture, radio or television artiste, or a musician, oras an athlete, from his personal activities as such exercised in theother 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 theentertainer or athlete himself but to anothe r perso n, that income may,no twithsta nd ing the provisions of Articles 7, 14 and 15, be taxed inthe State in which the activities of the entertainer or athlete areexercised.3. No twith standin g the provisions of parag raph s 1 and 2, incomederived from activities performed in one of the States by entertainersor athletes when their visit to that State is substantially supportedfrom the public funds of the other State, including those of anypolitical subd ivision, a local authority or statutary body thereof, andincome derived by a non-profit making organization in respect ofsuch activities, provided no part of its income is payable to, or isotherwise available for the personal benefit of its proprietors,members or shareholders, shall not be taxed in the first-mentionedState.


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Article 18Pens ions, Annuities a nd Social Security Pens ions

1. Subject to the prov isions of pa rag rap h 1 of Article 19, pen sion sand other similar remuneration paid in consideration of pastem ploym ent and annu ities paid to a resident of one of the States shallbe taxable only in that State.2. However, where such remuneration is not of a periodical natureand it is paid to a resident of one of the States who is not a nationalof that S tate, in con sideration of past em ploym ent in the other S tate,it may be taxed in that other State.3 . Notw ithstanding the provisions of paragrap h 1, any pensionwhether or not paid in consideration of past employment and paidout under the prov isons of a social security system of one of the Statesto a resident of the other State may be taxed in the first-mentionedState. However such pension shall be taxable only in the other Stateif the pension is paid to an individual who is a resident of, and anational of that other State.4. The term "a nn uity " means a stated sum payable periodically atstated times during life or during a specified or ascertainable period

of time under an obligation to make the payments in return foradequate and full consideration in money or money's worth.Article 19

Governm ent Service1. Remuneration, including pensions, paid by, or out of fundscreated by, one of the States or a political subdivision or a localauthority thereof to any individual in respect of services rendered to

that State or subdivision or authority thereof in the discharge offunctions of a governmental nature may be taxed in that State.2. The prov isions of Articles 15, 16 and 18 shall app ly toremuneration and pensions in respect of services rendered inconnection with a business carried on by one of the States or apolitical subdivision or a local authority thereof.

Article 20Professors and Teachers

I. Paym ents which a professor or teache r who is a resident of oneof the States and who is present in the other State for the purpose ofteaching or scientific research for a maximum period of two years in


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a university, college or other establishment for teaching or scientificresearch in that other State, receives for such teaching or research,shall be taxable only in the first-mentioned State, provided that suchpayments arise from sources outside that other State.2. This Article shall not apply to income from research if suchresearch is undertaken not in the public interest but primarily for theprivate benefit of a specific person or persons.

Article 21Students

1. Paym ents which a student or business appren tice w ho is or wasimmediately before visiting one of the States a resident of the otherState and who is present in the first-mentioned State solely for thepurpose of his education or training receives for the purpose of hismaintenance, education or training shall not be taxed in that State,provided that such payments arise from sources outside that State.2. Remuneration which a student or business apprentice who is orwas immediately before visiting one of the States a resident of theother State derives from an employment which he exercises in the

first-mentioned State for a period or periods not exceeding 183 daysin a calendar year, in order to obtain practical experience related tohis education or formation shall not be taxed in the first-mentionedState.Article 22

Other Income1. Items of income of a resident of one of the States, wherever

arising, not dealt with in the foregoing Articles of this Agreement shallbe taxable only in that State.2. The provisions of para grap h 1 shall not apply to incom e, otherthan income from imm ovable property as defined in parag raph 2 ofArticle 6, if the recipint of such income, being a resident of one ofthe States, carries on business in the other State through a p erm anen testablishment situated therein, or performs in that other Stateinde pen den t p ersonel services from a fixed base situated there in, andthe right or property in respect of which the income is paid is

effectively connec ted with such perm anen t establishm ent o r fixedbase . In such case the provisio ns of Article 7 or Article 14, as the casemay be, shall apply.


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CHAPTE R IVELIMINATION OF DOUBLE TAXATION

Article 23Elimination of double Taxation

1. Double taxation for residents of Turkey shall be eliminated asfollows:a) Where a resident of Turkey derives items of incom e, not beingincome covered by parag raph b) hereafter, w hich in accord ance withthe provisions of this Agreement, may be taxed in the Netherlands,Turkey shall exempt such income from tax but may, in calculatingtax on the remaining income of that person, apply the rate of taxwhich would have been applicable if the exempted income had notbeen so exempted. For dividends the foregoing provision of thissub-paragraph shall apply to a resident of Turkey which directlyhold s at least 10 per cent of the cap ital of a com pany w hich is reside ntof the Netherlands.b) The tax paid in the Netherlands according to the provisions ofthis Agreement, shall be deducted from the tax paid in Turkey for thetaxes imp osed on income which is shown below, und er the p rovisionsof Turkish tax laws concerning the deduction of foreign taxes:(i) dividends which are not covered by sub-paragraph a);(ii) interest;(iii) royalties;(iv) gains from the alienation of property mentioned in paragraph5 of Article 13 which may be taxed in the Netherlands.Such deduc tions shall not, however, exceed that part of the incometax computed in Turkey before the deduction is given, which isappropriate to the income which may be taxed in the Netherlands.c) For the purposes of this paragraph in determining the taxes onincome paid to the Netherlands, the investment premiums andbonuses and desinvestment payments as meant in the NetherlandsInvestment Account Law (Wet Investeringsrekening) shall not betaken into account. For the purposes of this paragraph, the taxesreferred to in sub-paragraph b) of paragraph 3 and paragraph 4 ofArticle 2 shall be considered taxes on income.

2. Double taxation for residents of the Netherlands shall beeliminated as follows:a) The Netherlands, when imposing tax on its residents, mayinclude in the basis upon which such taxes are imposed the items ofincome which, according to the provisions of this Agreement may betaxed in Turkey.b) How ever, where a resident of the N ethe rland s derives items of


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income which according to Article 6, Article 7, paragraph 6 of Arti-cle 10, para graph 6 of Article 11,p arag raph 5 of Article 12, pa rag rap hs1 and 2 of A rticle 13, Article 14, pa rag rap h 1 of Article 15, Article 16,para graph 3 of Article 18, Article 19 and paragraph 2 of Article 22 ofthis Agreement may be taxed in Turkey and are included in the basisreferred to in sub-paragraph a) the Netherlands shall exempt suchitems of income by allowing a reduction of its tax. This reductionshall be computed in conformity with the provisions of Netherlandslaw for the avoidance of double taxation. For that purpose the saiditems of income shall be deemed to be included in the total amountof the items of income which are exemp t from N etherlan ds tax u nde rthose provisions.c) Further, the Netherlands shall allow a deduction from theNetherlands tax so computed for the items of income whichaccording to paragraph 2 of Article 10, paragraph 2 of Article 11,parag raph 2 of Article 12, parag raph 5 of Article 13, parag raph 3 ofArticle 15, Article 17 and p ara gra ph 2 of Article 18 of this Agreem entmay be taxed in Turkey to the extent that these items are included inthe basis referred to in sub-p aragra ph a). The am ount of thisdeduction shall be equal to the tax paid in Turkey on these items ofincome, but shall not exceed the amount of the reduction whichwould be allowed if the items of income so included were the soleitems of income which are exempt from Netherlands tax under theprovisions of N etherlan ds law for the avoidance of doub le tax ation.d) Where, by reason of the relief given under the provisions ofTurkish laws for the purpose of encouraging investment in Turkeythe Turkish tax actually levied on dividends paid by a companywhich is a resident of Turkey, on interest arising in Turkey or onroyalties arising in Turkey is lower than the tax Turkey may levyaccording to sub-paragraphs a) and b) of paragraph 2 of Article 10,sub-paragraphs a) and b) of paragraph 2 of Article 11 and para-graph 2 of Article 12, respectively, then the amount of the tax paidin Turkey on such dividends, interest and royalties shall be deemedto have been paid at the rates of tax mentioned in the said p rovisio ns.However, if the general tax rates under Turkish laws applicable tothe afore-mentioned dividends, interest and royalties are reducedbelow those men tioned in this sub-para grap h, these lower rates shallapply for the purposes of this sub-paragraph. The provisions of thissub-paragraph shall only apply for a period often years after the dateon which the Agreement became effective. This period may beextended by mutual agreement between the competent authorities.

3. Where a resident of one of the States derives gains which maybe taxed in the other State in accordance with paragraph 6 of Arti-cle 13, that o ther S tate shall allow a dedu ction from its tax on suchgains to an am oun t equal to the tax levied in the first-mentioned Stateon the said gains.


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CHAPTER VSPECIAL PROVISIONS

Article 24Non-discrimination

1. Nationals of one of the States shall not be subjected in the otherState to any taxation or any requirement connected therewith, whichis other or more burdensome than the taxation and connectedrequirements to which nationals of that other State in the samecircumstances are or may be subjected. This provision shall,notw ithstanding the provisions of Article 1, also apply to person s w hoare not residents of one or both of the States.2. Subject to the provisions of paragraph 5 of Article 10, thetaxation on a permanent establishment which an enterprise of one ofthe States has in the other State shall not be less favourably levied inthat other State than the taxation levied on enterprises of that otherState carrying on the same activities.3. Except where the provisions of para graph 1 of Article 9,

parag raph 8 of Article 11, or paragraph 7 of Article 12, apply , interest,royalties and other disbursements paid by an enterprise of one of theStates to a resident of the other State shall, for the purpose ofdetermining the taxable profits of such enterprise, be deductibleunder the same conditions as if they had been paid to a resident ofthe first-mentioned State.4. Enterprises of one of the States, the capital of which is whollyor partly owned or controlled, directly or indirectly, by one or moreresidents of the other State, shall not be subjected in thefirst-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. The provisions of this Article shall not be construed as obligingone of the S tates to grant to residents of the othe r State any persona lallowances, reliefs and reductions for taxation purposes on accountof civil status or family responsibilities which it grants to its ownresidents.

Article 25Mutual Agreemen t Procedure

1. Where a person of one of the States considers that the actions


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of one or both of the States result or will result for him in taxationnot in accordance with this Agreement, he may, irrespective of theremedies provided by the national law of those States, present hiscase to the competent authority of the State of which he is a residentor, if his case comes u nd er para grap h 1 of Article 24, to that of theState of which he is a national.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 solution, to resolve the case by mutual agreement withthe competent authority of the other State, with a view to theavoidance of taxation not in accordance with the Agreement. Anyagreement reached shall be implemented notwithstanding any timelimits in the domestic law of the States.3. The competent authorities of the States shall endeavour toresolve by mutual agreement any difficulties or doubts arising as tothe interpretation or application of the Agreement. They may alsoconsult together for the elimination of double taxation in cases notprovided for in the Agreement.4. The com petent au thorities of the States may com mu nicate witheach other directly for the purpose of reaching an agreement in thesense of the preceding paragraphs.

Article 26Exchange of Information

1. The competent authorities of the States shall exchange suchinformation as is necessary for carrying out the provisions of thisAgreement or of the domestic laws of the States concerning taxescovered by the Agreement insofar as the taxation thereunder is notcontrary to the Agreement. The exchange of information is not re-stricted by Article 1. Any inform ation received by one of the Statesshall be treated as secret in the same m anner as information obta inedunder the domestic laws of that State and shall be disclosed only topersons or authorities including courts and administrative bodiesinvolved in the assessment or collection of, the enforcement or pro-secution in respect of, or the determination of appeals in relation to,the taxes covered by the Agreem ent. Such persons or authorities shalluse the information only for such purposes.

2. In no case shall the provisions of parag raph 1 be construed soas to impose on one of the States the obligation:a) to carry out administrative measures at variance with the lawsand the administrative practice of that or of the other State;b) to supply information which is not obtainable under the lawsor in the normal course of the administration of that or of the otherState;

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c) to supply information which would disclose any trad e, 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 Officers

1. Nothing in this Agreement shall affect the fiscal privileges ofdiplomatic agents or consular officers under the general rules ofinternational law or under the provisions of special agreements.However the Agreement shall not apply to international organisati-ons, organs and officials thereof and members of a diplomatic orconsular mission of a third State, being present in one of the States,if they are not subjected therein to the same obligations in respect oftaxes on income as are residents of that State.

2. For the purposes of the Agreement an individual, who is amember of a diplomatic or consular mission of one of the States inthe other State or in a third State and w ho is a national of the sendingState, shall be deemed to be a resident of the sending State if he issubjected therein to the same obligations in respect of taxes onincome as are residents of that State.

Article 28Territorial Extension

1. This Agreement may be extended, either in its entirety or withany necessary modifications, to the part of the Kingdom of theNetherland s which is not situated in Euro pe and which imposes taxessubstantially similar in character to those to which the Agreementapplies. Any such extension shall take effect from such date andsubject to such m odifications and con ditions, including co nditions asto termin ation, as may be specified and agreed in notes to be exch an-ged through diplomatic channels.2. Unless otherwise agreed the termina tion of the Agreement shallalso terminate any extension of the Agreement to the part of theKingdom of the Netherlands to which it has been extended underthis Article.


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CHAPTER VIFINAL PROVISIONS

Article 29Entry into Force

This Agreement shall enter into force on the thirtieth day after thelatter of the dates on w hich the respective G overnm ents have notifiedeach other in writing that the formalities constitutionally required intheir respective States have been complied with, and its provisionsshall have effect for taxable years and periods beginning on or afterthe first day of January in the calendar year following that in whichthe latter of the notifications has been received.

Article 30Termination

This Agreement shall remain in force until terminated by one ofthe Contracting Parties. Either Party may terminate the Agreement,through diplomatic channels, by giving notice of termination at leastsix months before the end of any calendar year after the expirationof a period of five years from the date of its entry into force. In suchevent the Agreement shall cease to have effect for taxable years andperiods beginning after the end of the calendar year in which thenotice of termination has been given.

IN WITNESS whereof the undersigned, duly authorized thereto,have signed this Agreement.DONE at Ankara this twentyseventh day of March 1986 in dupli-

cate in the English language.For the Governm ent of the Kingdom of the Netherlands(sd.) G. M. V. VAN A A R D EN N E(sd.) P. C. N IEM A NFor the Governm ent of the Republic of Turkey(sd.) I. KAYA ERDEM


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ProtocolAt the moment of signing the Agreement for the avoidance of

double taxation and the prevention of fiscal evasion with respect totaxes on incom e, this day concluded between the Rep ublic of Turkeyand the Kingdom of the Netherlands, the undersigned have agreedthat the following provisions shall form an integral part of theAgreement.I. Ad Articles 3, 4, 5 and 7

The profits of the special joint venture which is deemed to be acorporate body under the Turkish Corporation Tax Act shall betaxable only in Turkey. However if the activities of such a jointventure do not fulfill the requirements of the provisions of para-graph 3 of Article 5, then for the purposes of this Agreement thecorporate body status of that joint venture shall not be taken intoaccount and the Netherlands enterprise who is a partner in such ajoint venture shall not be taxable in Turkey for its share in the profitsof the joint venture and also for the deemed dividend paid by suchjoint venture to the Ne therlands enterprise.

II. Ad Article 4An individual living aboard a ship without any real domicile ineither of the States shall be deemed to be a resident of the State inwhich the ship has its home harbour.

III . Ad Article 5In respect of paragraph 6 of Article 5, it is understood that anotherwise independent agent does not lose his independent status by

the mere fact that he holds a stock of goods or merchandise fromwhich he delivers goods or merchandise on behalf of an enterpriseunder conditions customary between independent enterprises.IV. Ad Article 6

1. In respect of paragraph 2 of Article 6, it is understood that theterm "fishing places of every ki nd" does not include sea fishing placesoutside the territorial waters of the States.2. It is und erstoo d tha t incom e from imm ovable property shall notinclude the items of income dealt with in Article 12.

V. Ad Article 71. In respect of pa rag rap h 1 of Article 7, profits derived from the


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sale of goods or merchandise of the same or similar kind as thosesold, or from other business activities of the same or similar kind asthose effected, through a permanent establishment, may beconsidered attributable to that permanent establishment if it isproved that this transaction has been resorted to in order to avoidtaxation in the State where the permanent establishment is situated.2. In respect of para grap hs 1 and 2 of Article 7, where an enterpriseof one of the S tates sells goo ds or m erchand ise or carries on businessin the other State through a perm anen t establishment situated th erein ,the profits of that permanent establishment shall not be determinedon the basis of the total amount received by the enterprise, but shallbe determined only on the basis of the remuneration which isattributable to the actual activity of the permanent establishment forsuch sales or business. Especially, in the case of contracts for thesurvey, supply, installation or construction of industrial, commercialor scientific equipment or premises, or of public works, when theenterprise has a permanent establishment, the profits of suchpermanent establishment shall not be determined on the basis of thetotal am oun t of the contract, bu t shall be determined only on the basisof that part of the contract which is effectively carried out by thepermanent establishment in the State where the permanentestablishment is situated. The profits related to that part of thecontract which is carried out by the head office of the enterprise shallbe taxable only in the State of which the enterrpise is a resident.3 . In respect of par agraph 3 of Article 7, in determining the profitsof a permanen t establishmen t there shall not be allowed as d educ tionspayments for interest, royalties, commissions or other similarpayments made to the head office of the enterprise itself or to otherpermanent establishments for sharing all or part of the losses orexpenses of the head office of the enterprise itself or of otherpermanent establishments located abroad. However the permanentestablishment may, in accordance with paragraph 3 of Article 7 ofthe Agreement, deduct interest, royalties, commissions or othersimilar payments (including expenses for research or development)incurred for the purposes of the permanent establishment.

VI. Ad Article 9In respect of pa ragraph 1 of Article 9, it is under stoo d, however,that the fact that associated enterprises have concludedarrangements, such as costsharing arrangements or general services

agreements, for or based on the allocation of executive, generaladministrative, technical and commercial expenses, research anddevelopment expenses and other similar expenses, is not in itself acondition as meant in that paragraph.


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VII. Ad Article 10In respect of paragraph 4 of Article 10, it is understood that thedividends in the case of Turkey shall also include the income frominvestment funds and investment trusts.

VIII. Ad Article 10, 11 and 12Where tax has been levied at source in excess of the amount of taxchargeable under the provision s of Articles 10,11 and 12, app licatio nsfor the refund of the excess amo un t of tax have to be lodged with thecompetent authority of the State having levied the tax, within the timelimit provided for in the national legislation of that State.

IX . Ad Articles 10 and 23Notwithstanding the provisions of sub-paragraph a) of para-graph 2 of Article 10, as long as, under the provisions of theNetherlands Company Tax Act and to the future amendmentsthereto, a company which is a resident of the Netherlands is notcharged to Netherlands company tax with respect to dividends thecompany receives from a company which is a resident of Turkey, thepercentage provided for in that sub-paragraph shall be lowered to:a) 10 per cent with respect to dividends p aid by a com pany whichis a resident of Turkey; andb) 5 per cent with respect to dividends paid by a company whichis a resident of the Netherlands. In such case the provisions ofsubparagraph d) of paragraph 2 of Article 23 shall be appliedaccordingly.

X. Ad Article 12It is understood that remuneration for the exercise of independentservices (including the furnishing of services) is not a royalty withinthe meaning of paragraph 4 of Article 12.

X I. Ad Articles 12 and 13In respect of Articles 12 and 13 of the Agreemen t it is un derstoodthat in the case of any payment received as a consideration for thesale of the property as meant in paragraph 4 of Article 12, theprovisions of Article 12 shall app ly, unless it is proved that thepaym ent in question is a paym ent for a genuine alienation of the saidproper ty. In such case the provisions of Article 13 shall ap ply.


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XII . Ad Article 14In respect of sub -parag raph b) of parag raph 2 of Article 14 it isund erstood that for the app lication of the time limits provided for inthat sub-paragraph only connected activities shall be taken intoaccou nt. However, activities which are in character not related to eachother shall not be considered to be connected activities.

XII I . Ad Article 16It is understood that "bestuurder" or "commissaris" of aNe therlands com pany m eans persons, who are nominated as such bythe general meeting of shareholders or by any other competent body

of such company and are charged with the general management ofthe company and the supervision thereof, respectively.XIV. Ad Article 23

It is understood that the provisions of sub-paragraph a) ofparagraph 1 of Article 23 shall only apply w ith respect to dividend smentioned in that sub-paragraph as long as, under the provisions ofthe Netherlands Company Tax Act and to future amendmentsthereto, a company which is a resident of the Netherlands is notcharged to Netherlands company tax with respect to dividends thecompany receives from a company which is a resident of Turkey.

XV. Ad Article 24It is understood that the expression "in the same circumstances"as mentioned in parag raph 1 of Article 24 refers to taxpaye rs(individuals, legal persons, partnerships and associations) placed,from the po int of view of the app lication of the ordinary taxation lawsand regulations, in substantially similar circumstances both in lawand in fact.Am ongst other things this means that a national of one of the States,resident of a third S tate an d doing business in the other State will besubjected to the same taxation or requirements connected therewithin that other State to which a national of that other State, resident ina third State and doing business in that other State, is or may besubjected.

XVI. Ad Article 25It is understood that with respect to paragraph 2 of Article 25 thetaxpayer must in the case of Turkey claim the refund resulting fromsuch mutual agreement within a period of one year after the taxadministration has notified the taxpayer of the result of the mutualaereement.


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XVII. Ad Article 26In respect of para graph 1 of Article 26 it is understoo d that as longas the Republic of Turkey has not signed the additional protocol ofMarch 17 1978 to the European Convention on Mutual Assistance inCrim inal M atters of April 20, 1959, the provisions of par agraph 1 ofArticle 26 shall not be operative to information required forprosecution.IN WITNESS whereof the undersigned, duly authorized thereto,have signed this Protocol.DONE at Ankara, this twentyseventh day of March 1986 induplicate in the English language.

For the Governm ent of the Kingdom of the Netherlands,(sd.) G. M. V. VAN A AR D EN NE(sd.) P. C. NIEMANFor the Governm ent of the R epublic of Turkey,(sd.) I. KAYA ERDEM

D. PARLEMENTDe Overeenkomst, met Pro tocol, behoeft ingevolge artikel 91, eer-ste lid, van de Grondwet de goedkeuring van de Staten-Generaal,alvorens het Koninkrijk aan de akten kan worden gebonden.

G. INWERKINGTREDING

De bepalingen van Overeenkomst en Protocol zullen ingevolgeartikel 29 van de Overeenkomst, juncto het gestelde in de preambuletot het Protocol, in werking treden op de dertigste dag na de laatstevan de data waarop de onderscheiden Regeringen elkaar schriftelijkhebben medegedeeld dat de in hun onderscheiden Staten grondwet-telijk vereiste formaliteiten zijn vervuld. De bepalingen ervan vindentoepassing voor belastingjaren en - tijdvakken die aanvangen op ofna 1 jan uar i in het kalenderjaar volgend op het jaar w aarin de laatstevan de kennisgevingen is ontvangen.Wat het Koninkrijk der Nederlanden betreft, zal de Overeenkomstingevolge artikel 3, eerste lid, letter b (ii), alleen voor Nederlandgelden . Zij kan ech ter blijkens artikel 28 , eerste lid, tot de N ede rlan dseAntillen en/of Aruba worden uitgebreid.


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J. GEGEVENSVan het op 17 maart 1978 te Straatsburg tot stand gekomen Aan-

vullend Protocol bij het E uropees Verdrag van 20 april 1959 aang aan -de de wederzijdse rechtshulp in strafzaken, waarnaar in punt XVIIvan het Protocol wordt verwezen, zijn de tekst en de Nederlandsevertaling geplaatst in Trb. 1979, 121. Zie ook Trb. 1982, 11.Uitgegeven de twaalfde juni 1986.

De Minister van Buitenlandse Zaken,H. VAN DEN BROEK

DTC agreement between Netherlands and Turkey

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