(1) Except as otherwise provided in this Article, a resident of
a Contracting State that derives income from the other Contracting
State shall be entitled to all the benefits under this Agreement for
a taxable year only if such resident is a qualified person as de-
fined in paragraph 2 and satisfies any other specified conditions
in the relevant provisions of the Agreement for the obtaining of
such benefits.
(2) A resident of a Contracting State is a qualified person for
a taxable year only if such resident is either:
a) an individual;
b) a qualified governmental entity;
c) a company, if its principal class of shares is listed or regis-
tered and is regularly traded on one or more recognised stock
exchanges;
d) a pension fund or pension scheme, provided that, as of the
end of the prior taxable year, more than 50 per cent of the
beneficiaries, members or participants of that pension fund
or pension scheme are individuals who are residents of either
Contracting State;
e) a person established under the laws of that Contracting State
and operated exclusively for a religious, charitable, educa-
tional, scientific, artistic, cultural or public purpose, only if all
or part of its income may be exempt from tax under the laws
of that Contracting State; or
f) a person other than an individual, if at least 65 per cent of the
voting shares or other beneficial interests of the person are
owned, directly or indirectly, by residents of that Contracting
State that are qualified persons by reason of subparagraph a),
b), c), d) or e).
(3) Notwithstanding that a resident of a Contracting State may
not be a qualified person, that resident shall be entitled to a benefit
under this Agreement in respect of an item of income derived
from the other Contracting State if that resident satisfies any other
specified conditions in the relevant provisions of the Agreement
for the obtaining of such benefit and if:
a) at least 65 per cent of the voting shares or other beneficial
interests of the person are owned, directly or indirectly, by
persons who, if they had derived the item of income directly,
would, under the Agreement, be entitled to equivalent or
more favourable benefits; or
b) at least 90 per cent of the voting shares or other beneficial
interests of the person are owned, directly or indirectly, by
persons who, if they had derived the item of income directly,
would, under the Agreement or an agreement that the Con-
tracting State from which the item of income arise has con-
cluded with another State, be entitled to equivalent or more
favourable benefits.
(4) Where the provisions of subparagraph f) of paragraph 2 or
paragraph 3 apply:
a) in respect of taxation by withholding at source, a resident of
a Contracting State shall be considered to satisfy the condi-
tions described in that subparagraph or that paragraph for
the taxable year in which payment of an item of income is
made if such resident satisfies those conditions during the
twelve month period preceding the date of the payment (or,
in the case of dividends, the date on which entitlement to the
dividends is determined);
b) in all other cases, a resident of a Contracting State shall be
considered to satisfy the conditions described in that sub-
paragraph or that paragraph for a taxable year if such resi-
dent satisfies those conditions on at least half the days of the
taxable year.
(5)
a) Notwithstanding that a resident of a Contracting State may
not be a qualified person, that resident shall be entitled to a
benefit under this Agreement in respect of an item of income
derived from the other Contracting State if:
i)
that resident is engaged in the active conduct of a busi-
ness (other than the business of making or managing in-
vestments for that resident’s own account, unless the
business is banking, insurance or securities business car-
ried on by a bank, insurance company or securities deal-
er) in the first-mentioned Contracting State;
ii) the income derived from that other Contracting State is
derived in connection with, or is incidental to, that busi-
ness; and
iii) that resident satisfies any other specified conditions in the
relevant provisions of the Agreement for the obtaining of
such benefit.
b) If a resident of a Contracting State derives an item of income
from a business carried on by that resident in the other Con-
tracting State or derives an item of income arising in the other
Contracting State from a person that has with that resident a
relationship described in subparagraph a) or b) of para-
graph 1 of Article 9, the conditions described in subpara-
graph a) of this paragraph shall be considered to be satisfied
with respect to such item of income only if the business car-
ried on in the first-mentioned Contracting State is substantial
in relation to the business carried on in that other Contracting
State. Whether such business is substantial for the purpose
of this paragraph shall be determined on the basis of all the
facts and circumstances.
c) In determining whether a person is engaged in the active
conduct of a business in a Contracting State under subpara-
graph a), the business conducted by a partnership in which
that person is a partner, and the business conducted by a
person connected to such person only to the extent that both
persons are engaged in the same or complementary lines of
business, shall be deemed to be conducted by such person.
A person shall be connected to another if one owns, directly
or indirectly, at least 50 per cent of the beneficial interests in
the other (or, in the case of a company, at least 50 per cent
of the voting shares of the company) or another person owns,
directly or indirectly, at least 50 per cent of the beneficial
interests (or, in the case of a company, at least 50 per cent
of the voting shares of the company) in each person. In any
case, a person shall be considered to be connected to
another if, on the basis of all the facts and circumstances,
one has control of the other or both are under the control of
the same person or persons.
(6) A resident of a Contracting State that is neither a qualified
person nor entitled under paragraph 3 or 5 to the benefits
referred to in those paragraphs shall, nevertheless, be granted
all the benefits under this Agreement or a benefit under the
Agreement in respect of an item of income derived from the other
Contracting State if, upon request from that resident, the com-
petent authority of that other Contracting State determines, in
accordance with its domestic law or administrative practice, that
the establishment, acquisition or maintenance of such resident
and the conduct of its operations are considered as not having
the obtaining of such benefits as one of the principal purposes.
The competent authority of the Contracting State to which a re-
quest has been made under this paragraph by a resident of the
other Contracting State will consult with the competent authority
of that other Contracting State before rejecting the request.
(7) For the purposes of this Article:
a) the term “qualified governmental entity” means the Govern-
ment of a Contracting State, of a federal state (Land) thereof,
or of any political subdivision or local authority thereof, the
Federal Bank of Germany (Deutsche Bundesbank), the Bank
of Japan or a person that is wholly owned, directly or indi-
rectly, by the Government of a Contracting State, of a federal
state (Land) thereof, or of a political subdivision or local au-
thority thereof;
b) the term “principal class of shares” means the class or classes
of shares of a company which represent a majority of the voting
shares of the company;
c) the term “recognised stock exchange” means:
i)
any stock exchange established under the terms of the
Financial Instruments and Exchange Law (Law No. 25 of
1948) of Japan;
ii) any regulated market pursuant to the Markets in Financial
Instruments Directive 2004/39/EC (as amended) or any
successor Directive;
iii) Hong Kong Exchanges and Clearing, the NASDAQ Sys-
tem, the New York Stock Exchange, Singapore Exchange,
SIX Swiss Exchange and the Taiwan Stock Exchange;
and
iv) any other stock exchange which the competent authori-
ties of the Contracting States agree to recognise for the
purposes of this Article;
d) the term “pension fund or pension scheme” means any per-
son that:
i)
was constituted and is operated exclusively or almost
exclusively to administer or provide pensions or other
similar benefits; or
ii) was constituted and is operated to invest funds for the
benefit of persons referred to in clause i), provided that
substantially all the income of that person is derived from
investments made for the benefit of these persons.
(8) Notwithstanding the other provisions of this Agreement, a
benefit under the Agreement shall not be granted in respect of
an item of income if it is reasonable to conclude, having regard
to all relevant facts and circumstances, that obtaining that benefit
was one of the principal purposes of any arrangement or trans-
action that resulted directly or indirectly in that benefit, unless it
is established that granting that benefit in these circumstances
would be in accordance with the object and purpose of the
relevant provisions of the Agreement.
(9) Nothing in this Agreement shall be construed as restricting,
in any manner, the application of any provisions of the law of a
Contracting State which are designed to prevent the avoidance
or evasion of taxes as long as those provisions are in accordance
with the object and purpose of the Agreement.