THE CONVENTION BETWEEN THE AZERBAIJAN REPUBLIC AND THE KINGDOM OF THE NETHERLANDS

of September 22, 2008

About elimination of double taxation concerning taxes on the income and property and prevention of evasion from the taxation

The government of the Azerbaijan Republic and the Government of the Kingdom of the Netherlands, wishing to sign the Convention on elimination of double taxation and prevention of tax avoidance on the income and property between two States, agreed about the following:

Chapter I. Scope of the Convention

Article 1. Persons to whom the Convention is applied

This Convention is applied to persons who are residents of one or both Contracting States.

Article 2. Taxes to which the Convention extends

1. This Convention is applied to the taxes on the income and property levied on behalf of the Contracting State or its political or administrative division, or regional authority irrespective of method of their collection.

2. All taxes levied from the total amount of the income, total cost of property or on elements of the income or property, including taxes on the income from alienation of personal or real estate, taxes on the total amount of the salary paid by the companies and also the property increment value duties are considered as taxes on the income and property.

3. The operating taxes to which this Convention is applied, in particular, are:

(a) in Azerbaijan:

income tax of legal entities; the income tax from physical persons; property tax; (further the referred to as "taxes of Azerbaijan");

(b) In the Netherlands:

de inkomstenbelasting (income tax); de loonbelasting (wage tax); de vennootschapsbelasting (tax on the companies), including share of the Government in net profit from operation of natural resources, levied according to the Law on mining (Mijnbouwwet); de dividendbelasting (dividend tax),

(further the referred to as "Netherlands taxes").

4. This Convention is applied also to any to similar or in essence to similar taxes which will be levied after signature date of the Convention in amendment or instead of the existing taxes. Competent authorities of Contracting states notify each other on the essential changes made to their corresponding tax legislations.

Chapter II. Determinations

Article 3. General determinations

1. For the purposes of this Convention if other does not follow from context:

(a) the term "Contracting state" means the Azerbaijan Republic (Azerbaijan) or the Kingdom of the Netherlands (Netherlands) depending on context; the term "Agreeing the States" means the Azerbaijan Republic (Azerbaijan) or the Kingdom of the Netherlands (Netherlands);

(b) the term "Azerbaijan" means - the territory of the Azerbaijan Republic, including internal waters of the Azerbaijan Republic, the sector of the Caspian Sea (lake) belonging to the Azerbaijan Republic, airspace over the Azerbaijan Republic and also any other territory determined or which will be determined in the future according to international law and the legislation of the Azerbaijan Republic within which the Azerbaijan Republic performs the sovereign rights and jurisdiction on the relation of subsoil, seabed, the continental shelf and natural resources;

(c) the term "Netherlands" means part of the Kingdom of the Netherlands which is located in Europe, including its territorial sea and any square around the territorial sea on which the Netherlands, according to international law, performs jurisdiction or the sovereign rights concerning seabed, its subsoil and the waters lying over it and their natural resources;

(d) the term "person" includes physical person, the company or Ljubo other consolidation of persons;

(c) the term "company" means any corporate education or any organization which are considered as corporate education for the purposes of the taxation;

(f) the terms "company of the Contracting State" and "company of other Contracting State" mean respectively the business activity performed by resident of the Contracting State and the business activity performed by resident of other Contracting State;

(g) the term "international delivery" means any transportation sea or the aircraft operated by the company of the Contracting State (except cases, when sea or the aircraft is operated only between Items in other Contracting State);

(h) national person means "term":

(i) Any physical person having nationality of the Contracting State;

(ii) any legal entity, partnership or any other association who received the status based on the current legislation of the Contracting State;

(i) the competent authority means "term":

(i) in Azerbaijan - the Ministry of Finance or the Ministry of taxes;

(ii) in the Netherlands - the Minister of Finance or his authorized representative.

2. In case of application of the Convention by Contracting states any term, not determined in it if other does not follow from context, makes sense which is given them by the legislation of this State concerning taxes to which the Convention is applied. The sense given to the term by the existing tax legislation of this State prevails in comparison with sense which is given to this term by other laws of this State.

Article 4. Resident

1. For the purposes of this Convention the term "resident of the Contracting State" means any person who by the legislation of this State is subject to the taxation in it based on its residence, the permanent residence, the place of management, the place of incorporation, place of registration or any other criterion of similar nature, and also includes the Contracting State, any its political or administrative division or regional authorities. But this term does not include any person who is subject to the taxation in this State only concerning the income from sources in this State or concerning the property which is in it.

2. In case according to Item provisions 1, the physical person is resident of both Contracting States, its status is determined as follows:

(a) it is considered resident of that Contracting State in which it has the permanent dwelling; If it has the permanent dwelling in both Contracting States, it is considered resident of that Contracting State in which it has more close personal and commercial relations (the center of vital interests);

(b) if the Contracting State in which it has the center of vital interests cannot be determined or if it has no the permanent dwelling in one of Contracting States, it is considered resident of that Contracting State in which it usually lives;

(c) if it usually lives in both Contracting States or if it usually does not live in one of them, it is considered resident of that Contracting State which national face it is;

(d) if it is national face of both Contracting States or if it is not national face of any of them, competent authorities of Contracting States resolve issue by mutual consent.

3. If according to Item provisions 1 person which is not physical person is resident of both Contracting states, it is considered resident of that Contracting state in which its actual place of management is located.

Article 5. Permanent mission

1. For the purposes of this Convention expression "permanent mission" means the permanent place of activities through which the company fully or partially performs business activity.

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