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The Government of Canada and the Government of the Italian
Republic, desiring to conclude a Convention for the
avoidance of double taxation with respect to taxes on
income and the prevention of fiscal evasion, have agreed as
follows:
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This Convention shall apply to persons who are residents of
one or both of the Contracting States.
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1. This Convention shall apply to taxes on income imposed on
behalf of each Contracting State, irrespective of the manner in
which they are levied.
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2. There shall be regarded as taxes on income all taxes
imposed on total income, or on elements of income, including
taxes on gains from the alienation of movable or immovable
property, taxes on the total amounts of wages or salaries paid by
enterprises, as well as taxes on capital appreciation.
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3. The existing taxes to which the Convention shall apply are,
in particular,
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(a) in the case of Canada: the taxes on income imposed by the
Government of Canada under the Income Tax Act, (hereinafter
referred to as ``Canadian tax'');
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(b) in the case of Italy:
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(i) the individual income tax (imposta sul reddito delle
persone fisiche);
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(ii) the corporate income tax (imposta sul reddito delle
persone giuridiche);
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(iii) the regional tax on productive activities (imposta
regionale sulle attività produttive);
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even when deducted at source; (hereinafter referred to as
``Italian tax'').
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4. The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of
signature of this 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.
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5. The Convention shall not apply to taxes (even when
deducted at source) payable on lottery winnings, on premiums
other than those on securities, and on winnings from games of
chance or skill, competitions and betting.
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1. For the purposes of this Convention, unless the context
otherwise requires,
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(a) the terms ``a Contracting State'' and ``the other
Contracting State'' mean, as the context requires, Canada or
Italy;
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(b) the term ``Canada'', used in a geographical sense, means
the territory of Canada, including
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(i) any area beyond the territorial sea of Canada which, in
accordance with international law and the laws of Canada,
is an area within which Canada may exercise rights with
respect to the seabed and subsoil and their natural
resources, and
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(ii) the sea and airspace above every area referred to in
clause (i) in respect of any activity carried on in connection
with the exploration for or the exploitation of the natural
resources referred to therein;
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(c) the term ``Italy'' means the Italian Republic and includes
any area beyond the territorial waters of Italy which is
designated as an area within which Italy, in compliance with
its legislation and in conformity with the International Law,
exercises sovereign rights in respect of the exploration and
exploitation of the natural resources of the seabed, the subsoil
and the superjacent waters;
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(d) the term ``person'' includes an individual, a company and
any other body of persons;
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(e) the term ``company'' means any body corporate or any
entity which is treated as a body corporate for tax purposes;
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(f) 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;
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(g) the term ``competent authority'' means
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(i) in the case of Canada, the Minister of National Revenue
or the Minister's authorized representative, and
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(ii) in the case of Italy, the Ministry of Finance;
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(h) the term ``national'' means
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(i) any individual possessing the nationality of a
Contracting State, and
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(ii) any legal person, partnership and association deriving
its status as such from the laws in force in a Contracting
State;
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(i) the term ``international traffic'' means any voyage of a ship
or aircraft operated by an enterprise that has its place of
effective management in a Contracting State to transport
passengers or property except where the principal purpose of
the voyage is to transport passengers or property between
places within the other Contracting State.
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2. As regards the application of the Convention at any time by
a Contracting State, 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 for the purposes of the taxes to
which the Convention applies.
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1. For the purposes of this Convention, the term ``resident of
a Contracting State'' means any person who, under the laws of
that State, is liable to taxation therein by reason of the person's
domicile, residence, place of management or any other criterion
of a similar nature but does not include any person who is liable
to tax in that State in respect only of income from sources in that
State.
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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:
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(a) the individual shall be deemed to be a resident only of the
State in which the individual has a permanent home available
and 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);
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(b) if the State in which the individual's centre of vital interests
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;
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(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;
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(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.
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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
endeavour to settle the question by mutual agreement having
regard in particular 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 not be entitled to claim any relief or exemption from tax
provided by the Convention.
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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.
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2. The term ``permanent establishment'' shall include
especially
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(a) a place of management;
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(f) a mine, an oil or gas well, a quarry or any other place of
exploration for or exploitation of natural resources;
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(g) a building site or construction or installation project only
if it lasts for more than 12 months.
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3. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' shall be deemed not to
include
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(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
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(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
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(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
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(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or for collecting
information, for the enterprise;
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(e) the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for
scientific research, or for similar activities which have a
preparatory or auxiliary character, for the enterprise.
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4. A person acting in a Contracting State on behalf of an
enterprise of the other Contracting State - other than an agent
of an independent status to whom paragraph 5 applies - shall be
deemed to be a permanent establishment in the first-mentioned
State if the person has, and habitually exercises in that State, an
authority to conclude contracts in the name of the enterprise,
unless the activities of such person are limited to the purchase of
goods or merchandise for the enterprise.
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5. 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.
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6. 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.
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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.
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2. The term ``immovable property'' shall have the meaning
which it has for the purposes of the relevant tax 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 as well as 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 shall also be
deemed to be ``immovable property''. Ships and aircraft shall not
be regarded as immovable property.
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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.
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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.
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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 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.
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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.
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3. In the determination of the profits of a permanent
establishment, there shall be allowed as deductions expenses
which are incurred for the purposes of the permanent
establishment including executive and general administrative
expenses, whether incurred in the State in which the permanent
establishment is situated or elsewhere.
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4. Insofar as it has been customary in a Contracting State to
determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits
of the enterprise to its various parts, nothing in paragraph 2 shall
preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles contained in
this Article.
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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.
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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.
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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.
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1. Profits from the operation of ships or aircraft in international
traffic shall be taxable only in the Contracting State in which the
place of effective management of the enterprise is situated.
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2. If the place of effective management of a shipping enterprise
is aboard a ship, then it shall be deemed to be situated in the
Contracting State in which the home harbour of the ship is
situated, or, if there is no such home harbour, in the Contracting
State of which the operator of the ship is a resident.
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3. The provisions of paragraph 1 shall also apply to profits
from the participation in a pool, a joint business or an
international operating agency.
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1. Where
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(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
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(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,
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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 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
profits of that enterprise and taxed accordingly.
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2. Where a Contracting State includes in the profits of an
enterprise of that State - and taxes accordingly - profits on
which an enterprise of the other Contracting State has been
charged to tax in that other State and the profits so included are
profits that would have accrued to the enterprise of the
first-mentioned State if the conditions made between the two
enterprises had been those that would have been made between
independent enterprises, then that other State shall make an
appropriate adjustment to the amount of tax charged therein on
those profits. Any such adjustment shall be made only in
accordance with the mutual agreement procedure in Article 24.
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3. A Contracting State shall not change the 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 profits
that would be subject to such change would, but for the
conditions referred to in paragraph 1, have accrued to that
enterprise.
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4. The provisions of paragraphs 2 and 3 shall not apply in the
case of fraud or wilful offence.
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1. Dividends paid by a company that is a resident of a
Contracting State to a resident of the other Contracting State may
be taxed in that other State.
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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:
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(a) except in the case of dividends paid by a
non-resident-owned investment corporation that is a resident
of Canada, 5 per cent of the gross amount of the dividends if
the beneficial owner is a company that controls directly or
indirectly at least 10 per cent of the voting power in the
company paying the dividends; and
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(b) 15 per cent of the gross amount of the dividends, in all
other cases.
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The competent authorities of the Contracting States shall by
mutual agreement settle the mode of application of these
limitations.
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The provisions of this paragraph shall not affect the taxation of
the company in respect of the profits out of which the dividends
are paid.
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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 from other rights which
is subjected to the same taxation treatment as income from shares
by the taxation laws of the State of which the company making
the distribution is a resident.
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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 dividends may be
taxed in that other Contracting State in accordance with its own
internal laws.
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5. Where a company that 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
undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
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6. Nothing in this Convention shall be construed as preventing
Canada from imposing on the earnings attributable to the
alienation of immovable property situated in Canada by a
company carrying on a trade in immovable property or on the
earnings of a company attributable to a permanent establishment
in Canada, a tax in addition to the tax that would be chargeable
on the earnings of a company that is a national of Canada, except
that any additional tax so imposed shall not exceed 5 per cent of
the amount of such earnings that have not been subjected to such
additional tax in previous taxation years. For the purpose of this
provision, the term ``earnings'' means the earnings attributable to
the alienation of such immovable property situated in Canada as
may be taxed by Canada under the provisions of Article 6 or of
paragraph 1 of Article 13, and the profits, including any gains,
attributable to a permanent establishment in Canada in a year and
previous years after deducting therefrom all taxes, other than the
additional tax referred to herein, imposed on such profits in
Canada.
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1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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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. The competent authorities of
the Contracting States shall by mutual agreement settle the mode
of application of this limitation.
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3. Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State shall be exempt from tax in that
State if:
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(a) the interest is paid to a beneficial owner who is a resident
of the other Contracting State and if the payer of the interest
is the first-mentioned Contracting State or a political or
administrative subdivision or local authority thereof; or
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(b) the interest is paid to the other Contracting State or a
political or administrative subdivision or local authority
thereof or to an institution or organization (including financial
institutions) wholly owned by that Contracting State or
subdivision or authority thereof; or
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(c) the interest is paid in respect of a loan made, guaranteed or
insured, or a credit extended, guaranteed or insured by any
institution specified and agreed in letters exchanged between
the competent authorities of the Contracting States.
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4. The term ``interest'' as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, 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 which is subjected to the same taxation treatment as
income from money lent by the laws of the State in which the
income arises. However, the term ``interest'' does not include
income dealt with in Article 10.
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5. The provisions of paragraphs 1 and 2 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
interest may be taxed in that other Contracting State in
accordance with its own internal laws.
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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 payer 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.
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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 that 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 according to the
laws of each Contracting State, due regard being had to the other
provisions of this Convention.
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1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
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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:
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(a) 5 per cent of the gross amount of the royalties in respect of
payments 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 royalties provided in connection with a rental or
franchise agreement);
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(b) 10 per cent of the gross amount of the royalties in all other
cases.
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The competent authorities of the Contracting States shall by
mutual agreement settle the mode of application of these
limitations.
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3. Notwithstanding the provisions of paragraph 2, 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 computer
software, 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)
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.
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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 computer software, motion picture films and royalties
in respect of works on film or videotape or other means of
reproduction for use in connection with television broadcasting,
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.
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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 royalties may be taxed in that other
Contracting State in accordance with its own internal laws.
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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 payer 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 that 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.
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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 that 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 according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
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1. Gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in paragraph 2 of
Article 6 and situated in the other Contracting State may be taxed
in that other State.
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2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment that 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 a
fixed base may be taxed in that other State.
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3. Gains from the alienation of ships or aircraft operated in
international traffic or from movable property pertaining to the
operation of such ships or aircraft shall be taxable only in the
Contracting State in which the place of effective management of
the enterprise is situated.
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4. Gains derived by a resident of a Contracting State from the
alienation of
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(a) shares (other than shares listed on an approved stock
exchange in a Contracting State) forming part of a substantial
interest in the capital stock of a company the value of which
shares is derived principally from immovable property
situated in the other State, or
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(b) a substantial interest in a partnership, trust or estate, the
value of which is derived principally from immovable
property situated in that other State,
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may be taxed in that other State. For the purposes of this
paragraph, the term ``immovable property'' does not include any
property, other than rental property, in which the business of the
company, partnership, trust or estate is carried on.
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5. Where a resident of a Contracting State alienates property
in the course of a corporate or other organization, reorganization,
amalgamation, division or similar transaction and profit, gain or
income with respect to such alienation is not recognized for the
purpose of taxation in that State, if requested to do so by the
person who acquires the property, the competent authority of the
other Contracting State may agree, subject to terms and
conditions satisfactory to such competent authority, to defer the
recognition of the profit, gain or income with respect to such
property for the purpose of taxation in that other State until such
time and in such manner as may be stipulated in the agreement
between the competent authority and the person acquiring the
property. The competent authority of a Contracting State that has
entered into such an agreement shall inform the competent
authority of the other Contracting State of the terms of such
agreement.
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6. Gains from the alienation of any property, other than that
mentioned in paragraphs 1, 2, 3 and 4 shall be taxable only in the
Contracting State of which the alienator is a resident.
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7. Where an individual who is a resident of a Contracting State
and immediately thereafter becomes a resident of the other
Contracting State, is treated by the first-mentioned Contracting
State as having alienated property, and is taxed by that State in
respect of gains accrued from such property as of the date of
change of residence, the individual may elect in the other
Contracting State in the individual's return of income for the year
of alienation to be liable to tax as if the individual has sold and
repurchased the property for an amount equal to its fair market
value at the date of change of residence.
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1. Income derived by an individual who is a resident of a
Contracting State in respect of professional services or other
independent activities of a similar 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.
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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.
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1. Subject to the provisions of Articles 16, 17 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.
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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
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(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 calendar
year concerned, and
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(b) the remuneration is paid by, or on behalf of, a person who
is not a resident of the other State, and
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(c) the remuneration is not borne by a permanent
establishment or a fixed base which the person has in the other
State.
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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 shall be taxable only in the State
in which the place of effective management of the enterprise is
situated unless the remuneration is derived by a resident of the
other Contracting State.
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Directors' fees and other similar payments derived by a
resident of a Contracting State in that resident's capacity as a
member of the board of directors of a company which is a
resident of the other Contracting State may be taxed in that other
State.
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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, or a musician, or as a sportsperson, from that resident's
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
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2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson in that individual's capacity as
such accrues not to the entertainer or sportsperson 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 sportsperson are
exercised.
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3. The provisions of paragraph 2 shall not apply if it is
established that neither the entertainer or the sportsperson nor
persons related thereto, participate directly or indirectly in the
profits of the person referred to in that paragraph.
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1. Pensions arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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2. However, such pensions may also be taxed in the
Contracting State in which they arise and according to the laws
of that State but, in the case of periodic pension payments, the tax
so charged shall not exceed the lesser of
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(a) 15 per cent of the gross amount of such periodic pension
payments paid to the recipient in the calendar year concerned
that exceeds twelve thousand Canadian dollars or its
equivalent in Italian currency, and
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(b) the rate determined by reference to the amount of tax that
the recipient of the payment would otherwise be required to
pay for the year on the total amount of the periodic pension
payments received by the resident in the year, if the recipient
were resident in the Contracting State in which the payment
arises.
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3. Notwithstanding any provision of this Convention:
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(a) pensions paid by, or out of funds created by, the Italian
State or a political or administrative 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 Italy;
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(b) benefits under the social security legislation in a
Contracting State paid in a calendar year to an individual who
is a resident of the other Contracting State shall be taxable only
in the State in which they arise and according to the laws of
that State but the tax so charged shall not exceed the amount
that the recipient would otherwise be required to pay in that
year if the recipient were a resident of that first-mentioned
State;
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(c) non-periodic pension payments, severance or similar
lump-sum payments, and payments made as a consequence of
the termination of any office or employment arising in a
Contracting State and paid to a resident of the other
Contracting State may be taxed in the State in which they arise
and according to the laws of that State;
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(d) war veterans pensions and allowances arising in a
Contracting State and received by a resident of the other
Contracting State shall not be taxable in that other State as
long as they would not be taxable if received by a resident of
the Contracting State in which they arise.
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4. For the purposes of paragraphs 1 and 2, where an individual
who is a resident of a Contracting State in a particular taxable
period first receives a payment under a pension fund in the other
Contracting State that can reasonably be attributed to a pension
to which the individual was entitled for any period preceding that
particular period, the individual may in each Contracting State
elect to treat for the purposes of taxation in each such State such
portion as the individual may elect of the payment relating to all
preceding periods as having been paid to and received by the
individual on the last day of the taxable period immediately
preceding the particular period and not to have been so paid to
and received by the individual in that particular period.
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1. (a) Salaries, wages and other similar remuneration, other
than a pension, paid by a Contracting State or a political or
administrative 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.
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(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
individual is a resident of that State who
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(i) is a national of that State; or
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(ii) did not become a resident of that State solely for the
purpose of rendering the services.
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2. Notwithstanding the provisions of subparagraph (b) of
paragraph 1, salaries, wages and other similar remuneration
referred to therein paid by a Contracting State or a political or
administrative subdivision or a local authority thereof to an
individual who is a national of the other Contracting State being
also a national of the first-mentioned State, or is a national of the
first-mentioned State, shall be taxable only in that
first-mentioned State if such salaries, wages and other similar
remuneration are taxed under the ordinary rules of taxation of
such income in that first-mentioned State.
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3. The provisions of Articles 15, 16, 17 and 18 shall 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 or administrative subdivision or
a local authority thereof.
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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 professional training receives for the purpose of that
individual's maintenance, education or professional training
shall not be taxed in that State, if such payments arise from
sources outside that State.
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1. 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.
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2. The provisions of paragraph 1 shall not apply to income
other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income, being a
resident of a Contracting State, carries on business in the other
Contracting State 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 income is paid is effectively
connected with such permanent establishment or fixed base. In
such case, the income may be taxed in that other Contracting
State in accordance with its own internal laws.
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3. Notwithstanding the provisions of paragraph 1, 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, if 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.
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1. In the case of Canada, double taxation shall be avoided as
follows:
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(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 under the laws of Canada, tax payable in
Italy on profits, income or gains arising in Italy shall be
deducted from any Canadian tax payable in respect of such
profits, income or gains;
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(b) where, in accordance with any provision of the
Convention, income derived by a resident of Canada is
exempt from tax in Canada, Canada may nevertheless, in
calculating the amount of tax on other income, take into
account the exempted income.
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2. In the case of Italy, double taxation shall be avoided as
follows:
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Where a resident of Italy derives items of income which may be
taxed in Canada, Italy may, in computing its own income taxes
referred to in Article 2 of this Convention, include such items of
income in the tax base unless otherwise expressly provided by
this Convention.
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In such case, Italy shall allow as a deduction from the tax so
computed the income taxes paid in Canada but the deduction
shall not exceed the proportion Italian tax attributable to such
items of income that such items bear to the entire income.
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No deduction will, however, be allowed in cases where, at the
request of the recipient and in accordance with Italian laws, the
item of income is subjected to tax in Italy by way of a final
withholding.
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3. For the purposes of this Article, profits, income or gains of
a resident of a Contracting State which may be taxed in the other
Contracting Sate in accordance with this Convention shall be
deemed to arise from sources in that other State.
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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 are or may be subjected.
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In particular, the nationals of a Contracting State who are subject
to tax in the other Contracting State shall be granted the same
exemptions, basic abatements, deductions and reductions for
taxation purposes on account of family responsibilities which are
granted to nationals of the other Contracting State in the same
circumstances.
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2. The taxation on a permanent establishment that 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.
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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.
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3. Enterprises of a Contracting State, the capital of which is
wholly or partly owned or controlled, directly or indirectly, by
one or more residents of the other Contracting State, shall not be
subjected in the first-mentioned State to any taxation or any
requirement connected therewith which is other or more
burdensome that the taxation and connected requirements to
which other similar enterprises of the first-mentioned State, the
capital of which is wholly or partly owned or controlled, directly
or indirectly, by one or more residents of a third State, are or may
be subjected.
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4. In this Article, the term ``taxation'' means taxes which are
the subject of this Convention.
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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 laws of those States, present that
person's case to the competent authority of the Contracting State
of which that person is a resident or, if that person's case comes
under paragraph 1 of Article 23, to that of the Contracting State
of which that person is a national. The case must be presented
within two years from the first notification of the action resulting
in taxation not in accordance with the Convention.
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2. That competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to arrive at an
appropriate 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 not in accordance with the
Convention.
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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. They may also consult together for the elimination
of double taxation in cases not provided for in the Convention.
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4. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching
an agreement in the sense of the preceding paragraphs. When it
seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a
Commission consisting of representatives of the competent
authorities of the Contracting States.
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5. If any difficulty or doubt arising as to the interpretation or
application of the Convention cannot be resolved by the
competent authorities pursuant to the preceding paragraphs of
this Article, the case may be submitted for arbitration if both
competent authorities and the taxpayer agree and the taxpayer
agrees in writing to be bound by the decision of the arbitration
board. The decision of the arbitration board in a particular case
shall be binding on both States with respect to that case. The
procedure shall be established in an exchange of notes between
the Contracting States.
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1. The competent authorities of the Contracting States shall
exchange such information as is necessary for carrying out the
provisions of this Convention or of the domestic laws of the
Contracting States concerning taxes covered by this Convention
insofar as the taxation thereunder is not contrary to this
Convention and for the prevention of fiscal evasion. The
exchange of information is not restricted by Article 1. 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, the taxes
covered by the Convention. Such persons or authorities shall use
the information only for such purposes. These persons or
authorities may disclose the information in public court
proceedings or in judicial decisions.
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2. In no case shall the provisions of paragraph 1 be construed
so as to impose on a Contracting State the obligation
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(a) to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other
Contracting State;
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(b) to supply information that is not obtainable under the laws
or in the normal course of the administration of that or of the
other Contracting State; or
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(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).
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Nothing in this Convention shall affect the fiscal privileges of
diplomatic or consular officials under the general rules of
international law or under the provisions of special agreements.
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1. Taxes withheld at source in Italy shall, at the request of the
taxpayer, be refunded to the extent that the right to levy the taxes
is limited by the provisions of this Convention. Such request
shall be submitted within the time limits provided for by the
Italian laws and must contain an official certificate issued by the
competent authority of Canada stating that the conditions for
claiming the exemptions or reductions provided for in this
Convention have been fulfilled.
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2. The competent authorities of the Contracting States may, by
mutual agreement and in accordance with the provisions of
Article 24, agree on other procedures for the application of the
limitations provided for by this Convention.
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1. This Convention shall be ratified and the instruments of
ratification shall be exchanged as soon as possible.
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2. The Convention shall enter into force upon the exchange of
instruments of ratification and its provisions shall have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents, on or after the first day of
January in the calendar year in which the exchange of
instruments of ratification takes place; and
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(ii) in respect of other Canadian tax, for taxation years
beginning on or after the first day of January in the calendar
year in which the exchange of instruments of ratification
takes place;
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(b) in Italy in respect of income derived during the taxable
periods beginning on or after the first day of January in the
calendar year in which the exchange of instruments of
ratification takes place.
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3. Notwithstanding the provisions of paragraph 2, the
provisions of paragraph 2 of Article 19 shall have effect on or
after the first day of January of the year that is three years before
the year of the exchange of the instruments of ratification.
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4. The provisions of the Convention between Canada and
Italy for the avoidance of double taxation with respect to taxes on
income and for the prevention of fiscal evasion signed at Toronto
on November 17, 1977, and as amended by the Protocol signed
at Ottawa on March 20, 1989, shall cease to have effect with
respect to taxes to which this Convention applies in accordance
with the provisions of paragraph 2.
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5. Notwithstanding the provisions of paragraph 4, where any
greater relief from tax would have been afforded by the
provisions of the 1977 Convention, as amended by the 1989
Protocol, any such provision as aforesaid shall continue to have
effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents, on or before the last day of the
calendar year next following that in which the Convention
enters into force; and
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(ii) in respect of other Canadian tax, for taxation years
ending on or before the last day of the calendar year next
following that in which the Convention enters into force;
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(b) in Italy in respect of income derived during the taxable
periods ending on or before the last day of the calendar year
next following that in which the Convention enters into force.
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This Convention shall continue in effect indefinitely but either
Contracting State may, on or before June 30 in any calendar year
after the expiration of the fifth year from that of its ratification,
give to the other Contracting State a notice of termination in
writing and through diplomatic channels. In such event, the
Convention shall cease to have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents on or after the first day of
January in the calendar year following that in which the
notice is given; and
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(ii) in respect of other Canadian tax for taxation years
beginning on or after the first day of January in the calendar
year following that in which the notice is given
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(b) in Italy in respect of income derived during the taxable
periods beginning on or after the first day of January in the
calendar year following that in which the notice is given.
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IN WITNESS THEREOF the undersigned, being duly
authorized by their respective Governments, have signed this
Convention.
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DONE at Ottawa on the third day of June 2002, in two
originals, each in the English, French and Italian languages, all
texts being equally authentic.
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FOR THE GOVERNMENT F
OR THE GOVERNMENT OF CANADA: OF THE ITALIAN REPUBLIC:
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Leonard J. Edwards M
arco Colombo
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Protocol of understanding to the Convention between the
Government of Canada and the Government of the Italian
Republic for the avoidance of double taxation with respect
to taxes on income and the prevention of fiscal evasion.
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At the moment of signing the Convention this day concluded
between the Government of Canada and the Government of the
Italian Republic for the avoidance of double taxation with respect
to taxes on income and the prevention of fiscal evasion, the
undersigned plenipotentiaries have agreed upon the following
additional provisions which shall be an integral part of the
Convention.
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It is understood that
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(a) With reference to subparagraph (d) of paragraph 1 of
Article 3, the term ``person'' includes, in the case of Canada,
a partnership, an estate and a trust.
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(b) With reference to Article 4, the term ``resident of a
Contracting State'' also includes the Government of that State
or a political or administrative subdivi-sion or local authority
thereof or any agency or instrumentality of any such
government, subdivision or authority.
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(c) With reference to paragraph 3 of Article 4, the compromise
solution adopted reflects the common desire of both
Contracting States to prevent fiscal evasion.
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(d) With reference to Articles 5 and 8, ferry-boats, deep-sea
ferry boats or other vessels devoted principally to the
transportation of passengers or goods exclusively between
places in a Contracting State shall, when so operated, not be
considered to be operated in international traffic; it is further
agreed that the landing site or sites situated in the Contracting
State and used regularly in such operation by such boats or
vessels shall constitute a permanent establishment in that State
of the enterprise operating such boats or vessels.
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(e) With reference to paragraph 1 of Article 7, where an
enterprise of a Contracting State which has carried on business
in the other Contracting State through a permanent
establishment situated therein, receives, after it has ceased to
carry on business as aforesaid, profits attributable to that
permanent establishment, such profits may be taxed in that
other State in accordance with the principles laid down in
Article 7.
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(f) With reference to paragraph 3 of Article 7, the term
``expenses which are incurred for the purposes of the
permanent establishment'' means those deductible expenses
directly relating to the business of the permanent
establishment.
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(g) For the purposes of Article 8,
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(a) the term ``profits'' includes
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(i) gross receipts and revenues derived directly from the
operation of ships or aircraft in international traffic, and
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(ii) interest on sums generated directly from the
operation of ships or aircraft in international traffic if that
interest is incidental to the operation; and
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(b) the term ``operation of ships or aircraft in international
traffic'' by an enterprise, includes
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(i) the charter or rental of ships or aircraft,
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(ii) the rental of containers and related equipment, and
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(iii) the alienation of ships, aircraft, containers and
related equipment
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by that enterprise if that charter, rental or alienation is
incidental to the operation by that enterprise of ships or
aircraft in international traffic.
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(h) The provisions of paragraphs 1 and 2 of Article 13 shall
also apply to profits from the alienation of property referred to
therein.
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(i) With reference to Article 13, the inclusion of the provisions
contained in paragraph 4 of the said Article arises from
extensive possibilities of abuses in connection with
investment in immovable property in a Contracting State by
non-residents and takes into account the fact that one of the
Contracting States has ascertain the existence of actual cases
of fiscal evasion in this area.
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(j) For the purposes of subparagraph (b) of paragraph 3 of
Article 18, the term ``social security'' means:
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(a) in the case of Canada, any pension or benefit paid under
the Old Age Security Act of Canada;
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(b) in the case of Italy, payments received out of funds for
which no direct contributions were made by the recipient
and, in particular, to such portion of any pension or benefit
paid under the social security laws of Italy as is certified by
the competent authority of Italy as the amount necessary to
increase such pension or benefit to the minimum amount
for the category of pension payable to that individual under
those laws.
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(k) The Convention shall not apply to international
organizations, to organs or officials thereof and to persons
who are members of a diplomatic mission, consular post or
permanent mission of a third State or group of States, being
present in a Contracting State and who are not liable in either
Contracting State to the same obligations in relation to tax on
their total income as are residents thereof.
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(l) Nothing in the Convention shall be construed to restrict in
any manner any tax allowance now or hereafter accorded by
the domestic law of a Contracting State or by any other
agreement entered into by a Contracting State.
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(m) Nothing in the Convention shall be construed as
preventing a Contracting State from imposing a tax on
amounts included in the income of a resident of that State with
respect to a partnership, trust or controlled foreign affiliate, in
which that resident has an interest.
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(n) The Convention shall not apply to any company, trust or
partnership that is a resident of a Contracting State and is
beneficially owned or controlled, directly or indirectly, by one
or more persons who are not residents of that State, if the
amount of the tax imposed on the income of the company,
trust or partnership by that State is substantially lower than the
amount that would be imposed by that State if all of the shares
of the capital stock of the company or all of the interests in the
trust or partnership, as the case may be, were beneficially
owned by one or more individuals who were residents of that
State.
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(o) For the 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 Article 24 of the
Convention or, failing agreement under that procedure,
pursuant to any other procedure agreed to by both Contracting
States.
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(p) For the purposes of the Convention, where an individual
who is a participant in a pension fund that is established and
recognized under the legislation of a Contracting State
performs personal services in the other Contracting State:
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(a) contributions paid by or on behalf of the individual to
the fund during the period that the individual performs such
services in the other State shall, during a period not
exceeding in the aggregate 60 months, be deductible in
computing the individual's taxable income in that State.
Any benefits accrued under the fund or payments made to
the fund by or on behalf of the individual's employer
during that period shall not be treated as part of the
employee's taxable income and shall be allowed as a
deduction in computing the profits of the individual's
employer in that other State.
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(b) The provisions of this paragraph shall apply only if:
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(i) contributions by or on behalf of the individual to the
fund (or to another similar fund for which this fund was
substituted) were made before the individual arrived in
the other State; and
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(ii) the competent authority of the other State has agreed
that the pension fund generally corresponds to a pension
fund recognized for tax purposes by that State.
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The benefits granted under this paragraph shall not exceed the
benefits that would be allowed by the other State to its
residents for contributions to, or benefits otherwise accrued
under a pension fund recognized for tax purposes by that
State.
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IN WITNESS THEREOF the undersigned, being duly
authorized by their respective Governments, have signed this
Protocol of Understanding.
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DONE at Ottawa on the third day of June 2002, in two
originals, each in the English, French and Italian languages, all
texts being equally authentic.
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FOR THE GOVERNMENT F
OR THE GOVERNMENT OF CANADA: OF THE ITALIAN REPUBLIC:
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Leonard J. Edwards M
arco Colombo
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