#### Article 11. Branch Tax
- 1 A corporation which is a resident of one of the States and which has a permanent establishment
in the other State or which is subject to tax on a net basis in that other State under
[Article 6](#Verdrag_2_Verdragtekst_1_HoofdstukIII_Artikel6) (Income from Real Property) or under [paragraph 1 of Article 14](#Verdrag_2_Verdragtekst_1_HoofdstukIII_Artikel14) (Capital Gains), may be subject in that other State to a tax in addition to the tax
allowable under the other provisions of this Convention. Such tax, however, may be
imposed only on that portion of the business profits of the corporation attributable
to the permanent establishment under this Convention or the income subject to tax
on a net basis under Article 6 (Income from Real Property) or under paragraph 1 of
Article 14 (Capital Gains) and reduced for all taxes chargeable in that State on such
profits and income, other than the additional tax referred to herein, and further
reduced (but not below zero) for any increase in the net equity attributable to such
permanent establishment at the end of the taxation year, as measured from the end
of the preceding taxation year, and increased (but not in excess of the accumulated
profits) for any decrease in the net equity attributable to such permanent establishment
at the end of the taxation year, as measured from the end of the preceding taxation
year.
- 2 Notwithstanding paragraph 4, for purposes of this Article, the term “accumulated profits”
means the excess of the aggregate profits referred to in paragraph 1 of this Article
for all the preceding taxation years during which this Convention was in effect, over
the aggregate profits taxed under this Article during such preceding taxation years.
- 3 The tax referred to in paragraph 1 shall not be imposed at a rate exceeding the rate
specified in [paragraph 2(a) of Article 10](#Verdrag_2_Verdragtekst_1_HoofdstukIII_Artikel10) (Dividends). Paragraph 1 shall not apply in the case of a company that:
- a) prior to October 1st, 1998 was engaged in activities giving rise to profits attributable
to that permanent establishment or to income or gains to which the provisions of [Article 6](#Verdrag_2_Verdragtekst_1_HoofdstukIII_Artikel6) or, as the case may be, [paragraph 1 of Article 14](#Verdrag_2_Verdragtekst_1_HoofdstukIII_Artikel14) apply;
- b) is a qualified person by reason of [subparagraph c) of paragraph 2 of Article 26](#Verdrag_2_Verdragtekst_1_HoofdstukV_Artikel26) (Limitation on Benefits) of this Convention; or
- c) is entitled to benefits with respect to the dividends under [paragraph 3 of Article 26](#Verdrag_2_Verdragtekst_1_HoofdstukV_Artikel26); or
- d) has received a determination pursuant to [paragraph 7 of Article 26](#Verdrag_2_Verdragtekst_1_HoofdstukV_Artikel26) with respect to this paragraph.
- 4 In the case of the United States, the additional tax described in paragraph 1 may
be imposed upon the “dividend equivalent amount” (as that term is defined in the law
of the United States as on the date of signature of this Convention and as that law
may be amended from time to time, but only to the extent that this definition, as
amended, is in conformity with the principles of this Article).
- 5 Notwithstanding paragraph 4, no additional tax may be imposed under paragraph 1 with
respect to income subject to tax under [paragraph 1 of Article 14](#Verdrag_2_Verdragtekst_1_HoofdstukIII_Artikel14) (Capital Gains) which is derived from the disposition of shares or other comparable
corporate rights in a company.