THE EXCLUSIONS ARE SUMMARISED BELOW:
- CANADA: Article 29 provides that the convention does not apply to offshore entities.
- FEDERAL REPUBLIC OF GERMANY: the protocol to the treaty reduces the full tax exemption in Germany of certain items of income and capital in the case of offshore entities, to a simple tax credit. The items of income affected are profits and capital gains of a Cyprus offshore branch as well as dividends and capital gains on immovable property and shares in the case of a Cyprus offshore company.
- FRANCE: the articles on dividends, interest and royalties do not apply in the case of entities substantially controlled by non-residents if such entities pay tax at a rate substantially lower than normal.
- UNITED KINGDOM: under the protocol to the agreement the dividends, interest and royalty articles do not apply to offshore entities
- UNITED STATES: the treaty contains rules designed to prevent residents of third countries from establishing entities in a Contracting State for the purpose of deriving treaty benefited income from the other Contracting State. Such provisions also deny treaty benefits where the income is subject to tax in a Contracting State at a rate which is substantially lower than the rate generally applicable to income in that Contracting State.
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