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Convention between the Government of Canada and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital [1976] CATSer 29 (29 July 1976)

E102261 - CTS 1976 No. 30

CONVENTION BETWEEN OF THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE FRENCH REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

The Government of Canada and the Government of the French Republic,

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital,

Have agreed as follows:

ARTICLE I

Personal Scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE II

Taxes Covered

1. This Convention shall apply to taxes on income and on capital imposed on behalf of each Contracting State, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3. The existing taxes to which the Convention shall apply are:

(a) in the case of Canada:

the income taxes imposed by the Government of Canada, (hereinafter referred to as “Canadian tax”);

(b) in the case of France:

the income tax, the corporation tax, including any withholding tax, prepayment or advance payment with respect to the aforesaid taxes, (hereinafter referred to as “French tax”).

4. The Convention shall apply also to any identical or substantially similar taxes and to taxes on capital which are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes. The Contracting States shall notify each other of any important changes which have been made in their respective taxation laws.

ARTICLE III

General Definitions

1. In this Convention:

(a) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Canada or France;

(b) the term “person” includes an individual, a company or any other body of persons, and in the case of Canada, a partner­ship, an estate and a trust;

(c) the term “company” means any body corporate or any other entity which is treated as a body corporate for tax purposes; in French, the term “société” also means a “corporation” within the meaning of Canadian law;

(d) 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;

(e) the term “competent authority” means:

(i) in the case of Canada, the Minister of National Revenue or his authorized representative;

(ii) in the case of France, the Minister of Economy and Finance (le Ministre de l’Economie et des Finances) or his authorized representative;

(f) the term “tax” means Canadian tax or French tax, as the context requires;

(g) the term “national” means:

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

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

2. As regards the application of the Convention by a Contracting State, any term not otherwise defined shall, unless the context other­wise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of the Convention.

ARTICLE IV

Fiscal Domicile

1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then this case shall be determined in accordance with the following rules:

(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (hereinafter referred to as his “centre of vital interests”);

(b) if the Contracting State in which he has his centre of vital interests cannot be determined or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

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

(d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall by mutual agree­ment endeavour to settle the question.

ARTICLE V

Permanent Establishment

1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

2. For the purposes of paragraph 1, the term “permanent estab­lishment” shall include especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, quarry or other place of extraction of natural resources;

(g) a building site or construction or assembly project or a place of prospecting for natural resources which exists for more than 12 months.

3. The term “permanent establishment” shall not be deemed to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(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.

4. A person (other than an agent of an independent status to whom paragraph 5 applies) acting in a Contracting State on behalf of an enterprise of the other Contracting State shall be deemed to be a permanent establishment in the first-mentioned State:

(a) if he has, and habitually exercises in that first-mentioned State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or

(b) if he maintains in that first-mentioned State a stock of goods or merchandise belonging to the enterprise for which he habitually fills orders on behalf of the enterprise.

5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status where such persons are acting in he ordinary course of their business

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 for either company a permanent establish­ment of the other.

ARTICLE VI

Income From Immovable Property

1. Income from immovable property including income from agriculture or forestry may be taxed in the Contracting State in which such property is situated.

2. For the purposes of this Convention the term “immovable property” shall be defined in accordance with the law of the Contract­ing State in which the property in question is situated. The term shall in any case include property accessory to immovable property, live-stock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and air­craft shall not be regarded as immovable property. In the case of France, the term “law of the Contracting State” shall mean French taxation laws.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property and to profits from the alienation of such property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services.

ARTICLE VII

Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In the determination of the profits of a permanent establish­ment, there shall be allowed those deductible expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses, whether incurred in the State in which the permanent establishment is situated or elsewhere.

4. 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.

5. 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.

6. Where profits include items of income which are dealt with separately in other Articles of this Convention, then, the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE VIII

Shipping and Air Transport

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

2. Notwithstanding the provisions of paragraph 1 of this Article and of Article VII, profits derived from the operation of ships or aircraft used principally to transport passengers or goods exclusively between places in a Contracting State may be taxed in that State.

3. The provisions of paragraphs 1 and 2 shall also apply to profits referred to in those paragraphs derived by an enterprise of a Con­tracting State from its participation in a pool, a joint business or in an international operating agency.

ARTICLE IX

Associated Enterprises

1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enter­prise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the man­agement, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any 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.

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

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 five years from the end of the year in which the profits which would be subject to such change would have accrued to an enterprise of that State. This paragraph shall not apply in the case of fraud or wilful default.

ARTICLE X

Dividends

1. Dividends paid by a company which is a resident of a Contract­ing State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and accord­ing to the law of that State; but if the recipient, resident of the other Contracting State, is the beneficial owner of the dividends, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. The provisions of this paragraph shall not affect the taxa­tion of the company on the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income assimilated to income from shares by the taxation law of the State of which the company making the distribu­tion is a resident.

4. The provisions of paragraph 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, carries on in the other Contracting State of which the company paying the divi­dends is a resident, a trade or business through a permanent estab­lishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the holding by virtue of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article VII or Article XIV, as the case may be, shall apply.

5. A resident of Canada who receives dividends paid by a com­pany which is a resident of France shall be entitled to the refund of the prepayment, if any, paid in respect of the dividends by the com­pany making the distribution, subject to the deduction of the with­holding tax on the refunded amounts in accordance with paragraph 2.

6. Where a company is a resident of only one Contracting State, the other Contracting 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.

7. Notwithstanding any provision of this Convention

(a) a company which is a resident of France and which has a permanent establishment in Canada shall, in accordance with the provisions of Canadian law, remain subject to the addi­tional tax on companies other than Canadian corporations, but the rate of such tax shall not exceed 15 per cent.

(b) a company which is a resident of Canada and which has a permanent establishment in France shall remain subject to the withholding tax in accordance with the provisions of French law, but the rate of such tax shall not exceed 15 per cent.

ARTICLE XI

Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may be taxed in the Contracting State in which it arises, and according to the law of that State; but the tax so charged shall, provided that the interest is taxable in the other Con­tracting State, not exceed 15 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State to the extent that such interest:

(a) is a penalty charge for late payment;

(b) is paid by the central bank of a Contracting State to the central bank of the other Contracting State; or

(c) is paid by the purchasing enterprise to the selling enterprise in connection with the sale on credit of any equipment or mer­chandise, except where the sale is made between associated enterprises within the meaning of Article IX, paragraph 1(a) or(b).

4. Notwithstanding the provisions of paragraph 2,

(a) interest arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner there­of in respect of a bond, debenture or similar obligation of a Contracting State or of a political subdivision or local author­ity thereof, shall be taxable only in that other State;

(b) interest arising in France and paid to a resident of Canada shall be taxable only in Canada if it is paid in respect of a loan made or guaranteed, or of a credit granted or guaranteed, by the Export Development Corporation.

(c) interest arising in Canada and paid to a resident of France shall be taxable only in France if it is paid in respect of a loan made or guaranteed, or of a credit granted or guaranteed, by the French Bank for External Trade (la Banque Française pour le Commerce Extérieur).

5. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the State in which the income arises. However, the term “interest” does not include income dealt with in Article X.

6. The provisions of paragraphs 2, 3 and 4 shall not apply if the recipient of the interest, being a resident of a Contracting State, carries on in the other Contracting State in which the interest arises a trade or business through a permanent establishment situated therein, or performs in that other State professional 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 a case, the provisions of Article VII or Article XIV as the case may be, shall apply.

7. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in con­nection with which the indebtedness on which the interest is paid was incurred, and that interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

8. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

ARTICLE XII

Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may be taxed in the Contracting State in which they arise, and according to the law of that State; but if the royalties are taxable in the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3. Notwithstanding the provisions of paragraph 2

(a) copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or artistic work (but not including royalties in respect of motion picture films and works on film or videotape for use in connection with television) arising in a Contracting State and paid to a resident of the other Contracting State who is sub­ject to tax thereon shall be taxable only in that other State;

(b) royalties arising in a Contracting State and paid to the govern­ment of the other Contracting State or to a body of that other State approved by the competent authorities of the two Con­tracting States, shall be taxable only in that other State.

4. Notwithstanding the provisions of paragraph 2, royalties in respect of cultural motion picture films arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein in respect thereof shall be taxable only in that other State.

This provision shall apply to royalties

(a) paid to a resident of France in respect of French films which meet the requirements of Article 13 of Decree 59-1512 dated December 30, 1959 and which are included in the list of films referred to in Article 2 of Decree 71-46 dated January 6, 1971 which is used by the Art and Experimental Motion Picture Theatre Classification Board (Commission de classement des théâtres cinématographiques d’art et d’essai) provided for in Article 4 of Decree 71-46.

(b) paid to a resident of Canada in respect of films wholly or principally directed and produced in Canada and which are included in the list of films prepared by the Committee of the Bureau of Film Festivals established under Order-in-Council P.C. 1968-400 dated February 29, 1968.

5. 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 motion picture films, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

6. The provisions of paragraphs 2, 3 and 4 shall not apply if the recipient of the royalties, being a resident of a Contracting State, carries on in the other Contracting State in which the royalties arise a trade or business through a permanent establishment situated therein, or performs in that other State professional 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 a case, the provisions of Article VII or Article XIV, as the case may be, shall apply.

7. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in con­nection with which the obligation to pay the royalties was incurred, and those royalties are borne by that permanent establishment or fixed base, then such royalties shall be deemed to arise in the Con­tracting State in which the permanent establishment or fixed base is situated.

8. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that 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.

ARTICLE XIII

1. Gains from the Alienation of Property:

(a) Gains from the alienation of immovable property may be taxed in the Contracting State in which such property is situated.

(b) Gains from the alienation of shares of the capital stock of a company the assets of which consist principally of immovable property situated in a Contracting State may be taxed in that State.

(c) Gains from the alienation of an interest in a partnership or a trust the assets of which consist principally of immovable property situated in a Contracting State may be taxed in that State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing professional services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base may be taxed in the other State. However, gains from the alienation of ships and aircraft oper­ated in international traffic and movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Con­tracting State in which such property is taxable according to para­graph 3 of Article XXII.

3. Gains from the alienation of:

(a) shares forming part of a substantial interest in the capital stock of a company which is a resident of a Contracting State,

(b) an interest in a trust or estate which is a resident of a Con­tracting State, or

(c) an interest in a partnership which is a resident of a Contract­ing State,

may be taxed by that State; but the tax so charged shall not exceed 25 per cent of the amount of the gain. For the purposes of this para­graph, a substantial interest exists when the alienator, alone or to­gether with associated persons, owns directly or indirectly 25 per cent or more of the shares of any class of the capital stock of a company.

4. Notwithstanding the provisions of paragraph 3, gains from the alienation of shares of the capital stock of a company which is a resident of a Contracting State - other than a company referred to in paragraph 1(b) - by an enterprise of the other Contracting State in the course of an amalgamation or other reorganization shall be taxable only in that other State, For the purposes of this paragraph, the term “reorganization” means any transaction between associated enter­prises within the meaning of Article IX, paragraph 1(a) or (b), by virtue of which shares are alienated, other than any such transaction undertaken primarily for the purpose of securing the benefit of this provision and not for bona fide commercial reasons.

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

6. The provisions of paragraph 5 shall not affect the right of a Contracting State to tax according to its law gains derived by an individual resident in the other Contracting State from the alienation of any property, if the alienator:

(a) is a national of the first-mentioned Contracting State or was a resident of that State for ten years or more prior to the alienation of the property, and

(b) was a resident of that first-mentioned Contracting State at any time during the five years immediately preceding such alienation.

ARTICLE XIV

Professional Services

1. Income derived by 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 he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other Contracting State but only so much of it as is attributable to that fixed base.

2. The term “professional services” includes independent scientif­ic, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects dentists and accountants.

ARTICLE XV

Dependent Personal Services

1. Subject to the provisions of Articles XVI, XVIII and XIX, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remunera­tion as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employ­ment exercised in the other Contracting State shall be taxable only in the first-mentioned State if the recipient is present in the other Con­tracting State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned, and either

(a) the remuneration does not exceed in the said year the greater of the following amounts:

(i) two thousand five hundred Canadian dollars, and

(ii) ten thousand French francs; or

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and such remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

The competent authorities of the Contracting States may, if neces­sary, agree to modify the above-mentioned amounts as a result of monetary or economic developments.

3. Notwithstanding the preceding provisions of this Article, remu­neration 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 that State.

ARTICLE XVI

Directors’ Fees

Directors’ fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of direc­tors or a similar organ of a company which is a resident of the other Contracting State, may be taxed in that other State.

ARTICLE XVII

Artistes and Athletes

1. Notwithstanding the provisions of Articles VII, XIV and XV, income derived by entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their per­sonal activities as such may be taxed in the Contracting State in which these activities are exercised.

2. Where income in respect of personal activities as such of an entertainer or athlete accrues not to that entertainer or athlete himself but to another person, that income may, notwithstanding the provi­sions of Articles VII, XIV and XV, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.

3. The provisions of paragraph 2 shall not apply if the entertainer or the athlete establishes that neither he, nor any person associated with him or related to him, participates directly or indirectly in the profits of the person referred to in that paragraph.

ARTICLE XVIII

Pensions and Annuities

1. Periodic or non-periodic pensions and other similar allowances arising in a Contracting State and paid in respect of past employment to a resident of the other Contracting State shall be taxable only in the Contracting State in which they arise.

2. (a) Pensions and allowances received from Canada under the Pension Act, the Civilian War Pensions and Allowances Act or the War Veterans Allowances Act and compensation received under regulations made under section 7 of the Aeronautics Act shall, notwithstanding the provisions of paragraph 2(c) of Article XXIII, be excluded from the bases used for the compu­tation of French tax, so long as they are exempt from Canadi­an tax.

(b) Pensions referred to in paragraphs 4, 5 and 6 of Article 81 of the French General Tax Code (Code général des impôts fran­çais) shall be exempt from Canadian tax so long as they are exempt from French tax.

3. Annuities 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. The term “annuities” means stated sums payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

4. Alimony and other similar payments arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein in respect thereof, shall be taxable only in that other State.

ARTICLE XIX

Government Service

1. (a) Remuneration paid by a Contracting State or a political sub­division or a local authority thereof to any individual in respect of services rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

(b) However, such remuneration shall be taxable only in the Contracting State of which the recipient is a resident if the services are rendered in that State and if the recipient

(i) is a national of that State, or

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

2. The provisions of paragraph 1 shall not apply to remuneration in respect of services rendered in connection with any trade or busi­ness carried on by one of the Contracting States or a political subdivi­sion or a local authority thereof.

ARTICLE XX

Students, Apprentices and Business Trainees

Payments which a student, apprentice or business trainee who is, or was immediately before visiting one of the Contracting States, a resident of the other Contracting State and who is present in the first-mentioned Contracting State solely for the purpose of his educa­tion or training receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned State, provided that such payments are made to him from sources outside that State.

ARTICLE XXI

Income not Expressly Mentioned

1. Subject to the provisions of paragraph 2 of this Article, items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention shall be tax­able only in that State.

2. However, if such income is derived by a resident of a Contract­ing State from sources in the other Contracting State, it may also be taxed in the State in which it arises, and according to the law of that State. However, in the case of income from an estate or trust, the tax so charged shall, provided that the income is taxable in the Contract­ing State in which the recipient resides, not exceed 15 per cent of the gross amount of the income.

ARTICLE XXII

Capital

1. Capital represented by immovable property may be taxed in the Contracting State in which such property is situated.

2. Capital represented by movable property forming part of the business property of a permanent establishment of an enterprise, or by movable property pertaining to a fixed base used for the perform­ance of professional services, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.

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

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

ARTICLE XXIII

Elimination of Double Taxation

1. In the case of Canada, double taxation shall be avoided as follows:

(a) Subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions (which shall not affect the principle hereof), and unless a greater deduction or relief is provided under the law of Canada, French tax payable under the law of France and in accordance with this Convention on profits, income or gains arising in France shall be deducted from any Canadian tax payable in respect of such profits, income or gains;

(b) Subject to the existing provisions of the law of Canada regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions (which shall not affect the principle hereof) for the purpose of computing Canadian tax, a company resident in Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate resident in France.

For the purpose of computing the exempt surplus of a foreign affiliate resident in France, profits derived from a permanent establishment of that company situated in an Overseas Territory of the French Repub­lic shall be deemed to be derived from France.

2. In the case of France, double taxation shall be avoided as follows:

(a) income other than that mentioned in subparagraph (b) below shall be exempt from the French taxes mentioned in para­graph 3 of Article II while the income is, under the Conven­tion, taxable in Canada;

(b) as regards income mentioned in Articles X, XI, XII, XVI, XVII and in paragraph 3 of Article XVIII which has borne Canadi­an tax in accordance with the provisions of these Articles, France shall allow to a resident of France receiving such income from Canada a tax credit corresponding to the amount of tax levied in Canada. Such tax credit, not exceed­ing the amount of French tax levied on such income, shall be allowed against taxes mentioned in paragraph 3 of Article II, in the bases of which such income is included;

(c) notwithstanding the provisions of subparagraphs (a) and (b) French tax may be computed on income chargeable in France by virtue of this Convention at the rate appropriate to the total of the income chargeable in accordance with French laws.

3. For the purposes of this Article, profits, income or gains of a resident of a Contracting State which are taxed in the other Contract­ing State in accordance with the provisions of this Convention shall be deemed to arise from sources in that other State.

ARTICLE XXIV

Non-Discrimination

1. The 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. This provi­sion shall apply to individuals whether or not they are residents of one of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

3. Nothing in this Article shall 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.

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

ARTICLE XXV

Mutual Agreement Procedure

1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. The case must be submitted within two years from the first notification of the action which gives rise to taxation not in accordance with the Convention.

2. The 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.

3. A Contracting State shall not, after the expiry of the time limits provided in its national laws and, in any case, after five years from the end of the taxation year in which the income concerned has accrued, increase the tax base of a resident of either of the Contracting States by including therein items of income which have also been charged to tax in the other Contracting State; this provision does not apply in case of fraud or wilful default.

4. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties arising as to the application of the Convention. In particular, the competent authorities of the Contracting States may consult together to endeavour to agree:

(a) to the same attribution of profits to a resident of a Contracting State and its permanent establishment situated in the other Contracting State;

(b) to the same allocation of income between a resident of a Contracting State and any associated person provided for in Article IX.

5. 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.

ARTICLE XXVI

Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention or for the prevention of fraud or fiscal evasion in relation to the taxes which are the subject of this Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons or authorities other than those concerned with the assess­ment or collection of the taxes which are the subject of this Convention.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on one of the Contracting States the obligation:

(a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contract­ing State;

(b) to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, busi­ness, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

ARTICLE XXVII

Diplomatic and Consular Officials

1. Nothing in this Convention shall affect the fiscal privileges of members of diplomatic or consular missions under the general rules of international law or under the provisions of special agreements.

2. Notwithstanding Article IV of this Convention, an individual who is a member of a diplomatic, consular or permanent mission of a Contracting State which is situated in the other Contracting State or in a third State shall be deemed for the purposes of this Convention to be a resident of the sending State if he is liable in the sending State to the same obligations in relation to tax on his total world income as are residents of that sending State.

3. This Convention shall not apply to International Organizations, to organs or officials thereof and to persons who are members of a diplomatic, consular or permanent mission of a third State, being present in a Contracting State and who are not liable in either State to the same obligations in relation to tax on their total world income as are residents thereof.

ARTICLE XXVIII

Territorial Scope

1. This Convention shall apply, with respect to France, to the European and Overseas Departments (Guadeloupe, Guyane, Mar­tinique and Reunion) of the French Republic.

2. This Convention may be extended, either in its entirety or with any necessary modifications, to the Overseas Territories of the French Republic which impose taxes substantially similar in charac­ter to those to which the Convention applies. Any such extension shall take effect from such date and subject to such modifications and conditions, including conditions as to termination, as may be specified and agreed between the Contracting States in notes to be exchanged through diplomatic channels or in any other manner in accordance with their constitutional procedures.

3. Unless otherwise agreed by both Contracting States, the termi­nation of the Convention by one of the Contracting States under Article XXXI shall terminate, in the manner provided for in that Article, the application of the Convention to any territory to which it has been extended under this Article.

ARTICLE XXIX

Miscellaneous Rules

1. Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada according to section 91 of the Canadian Income Tax Act.

2. A resident of a Contracting State who maintains one or several abodes in the territory of the other Contracting State shall not be subject in that other State to an income tax according to an imputed income based on the rental value of that or those abodes.

3. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this Convention.

ARTICLE XXX

Entry into Force

1. Each of the Contracting States shall notify to the other the completion of the procedure required by its laws for the bringing into force of this Convention. This Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect:

(a) in Canada:

(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 Convention enters into force, and

(ii) in respect of other taxes, in the case of companies, for any financial year beginning on or after the first day of Janu­ary in the calendar year in which the Convention enters into force, and in other cases, for any taxation year begin­ning on or after the first day of January of the said year;

(b) in France:

(i) for the withholding tax and the prepayment (précompte) relating to any amounts payable on or after the first day of January in the calendar year in which the Convention enters into force;

(ii) in respect of the corporation tax, for any financial year beginning on or after the first day of January in the calendar year in which the Convention enters into force; and

(iii) in respect of the income tax, for any taxation year begin­ning on or after the first day of January in the calendar year in which the Convention enters into force.

2. The agreement between Canada and France for the avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed at Paris on March 16, 1951 is terminated. Its provisions shall cease to have effect from the date on which the corresponding provisions of this Convention take effect in accordance with the provisions of paragraph 1.

ARTICLE XXXI

Termination

This Convention shall continue in effect indefinitely but either Contracting State may, on or before June 30 in any calendar year after the year 1977, give notice of termination to the other Contracting State and, in such event, the Convention shall cease to have effect:

(a) in Canada:

(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 next following that in which the notice is given, and

(ii) in respect of other taxes, in the case of companies, for any financial year beginning on or after the first day of Janu­ary in the calendar year next following that in which the notice is given, and in other cases, for any taxation year beginning on or after the first day of January in the said year;

(b) in France:

(i) for the withholding tax and the prepayment (précompte) relating to any amounts payable on or after the first day of January in the calendar year next following that in which the notice is given,

(ii) in respect of the corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following that in which the notice is given, and

(iii) in respect of the income tax, for any taxation year begin­ning on or after the first day of January in the calendar year next following that in which the notice is given.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Convention.

DONE in duplicate at Paris, this second day of May 1975 in the English and French languages, each version being equally authentic.

John N. Turner

FOR THE GOVERNMENT OF CANADA

Jean-Pierre Fourcade

FOR THE GOVERNMENT OF THE FRENCH REPUBLIC

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