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CONVENTION BETWEEN THE REPUBLIC OF AUSTRIA AND THE STATE OF ISRAEL FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND CAPITAL

Chapter I

Scope of the Convention

Article 1

Personal scope

[ ]

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

Article 2

Taxes covered

[ ]

1. This Convention shall apply to taxes on income and on capital imposed on behalf of each Contracting State or of its political sub-divisions or local authorities, 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 for the alienation of movable or immovable property, as well as taxes on capital appreciation.

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

(a) In the case of Israel

(i) the income tax (including capital gains tax);

(ii) the company tax;

(iii) the security charge;

(iv) the national property taxes; and

(v) the tax on gains from the sale of land under the Land Appreciation

Tax Law;

(hereinafter referred to as "Israeli tax");

(b) In the case of Austria

(i) the income tax;

(ii) the corporation tax;

(iii) the contribution from income for the promotion of residential building

and for the equalisation of family burdens;

(iv) the contribution from income to the emergency fund;

(v) the tax on commercial and industrial enterprises, including the tax

levied on the sum of wages;

(vi) the capital tax;

(vii) the contribution from capital to the emergency fund;

(viii) the land tax;

(ix) the tax on agricultural and forestry enterprises;

(x) the directors' tax;

(xi) the tax on the value of vacant plots;

(xii) the tax on property eluding death duties;

(xiii) the contributions from agricultural and forestry enterprises to the fund

for the equalization of family burdens;

(xiv) the special tax on income;

(xv) the special tax on capital;

(hereinafter referred to as "Austrian tax").

4. The Convention shall also apply to any identical or substantially similar taxes which

are subsequently imposed in addition to, or in place of, the existing taxes. The competent

authorities of the Contracting States shall notify to each other any major changes which have

been made in their respective taxation laws.

Chapter II

Definitions

Article 3

General definitions

[ ]

1. In this Convention, unless the context otherwise requires:

(a) the term "Israel" means the State of Israel;

(b) the term "Austria" means the Republic of Austria;

(c) the term "person" comprises individuals, companies and all other entities which

are treated as taxable units under the taxation laws in force in either Contracting

State;

(d) the term "company" means any body corporate or any entity which is treated as a

body corporate for tax purposes;

(e) 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 an enterprise carried on by a resident of the other Contracting

State;

(f) the term "competent authority" means in the case of Israel, the Minister of Finance

or his authorized representative; and in the case of Austria, the Federal Minister of

Finance.

2.Where according to this Convention income from sources within one of the Contracting

States shall not be taxable or shall be taxable only at a reduced rate in that State and, under

the law in force in the other Contracting State the said income is subject to tax by reference to

the amount thereof which is remitted to or received in that other Contracting State and not by

reference to the full amount thereof, then the exemption or reduction in the first-mentioned

Contracting State resulting from this Convention shall apply only to such income as is

remitted to the other Contracting State. This shall not apply in the case of Article 15,

paragraph 2, Article 20 and Article 21.

3.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 4

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 (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.

3. Where by reason of the provisions of paragraph 1 a person other than an individual

is a resident of both Contracting States, then it shall be deemed to be a resident of the

Contracting State in which its place of effective management is situated.

Article 5

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.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 which exists for more than

twelve 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 acting in a Contracting State on behalf of an enterprise of the other Contracting

State -- other than an agent of an independent status to whom paragraph 5 applies -- shall be

deemed to be a permanent establishment in the first-mentioned State if he has, and

habitually exercises in that 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.

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 the 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 either company a permanent establishment of the other.

Chapter III

Taxation of income

Article 6

Income from immovable property

[ ]

1. Income form immovable property may be taxed in the Contracting State in which such

property is situated.

2.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, livestock 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.

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.

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 7

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 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.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 as

deductions expenses which are incurred for the purpose of the permanent establishment

including executive and general administrative expenses so incurred, whether in the State in

which the permanent establishment is situated or elsewhere.

4. Insofar as it has been customary in a Contracting State to determine the profits to be

attributed to a permanent establishment on the basis of an apportionment of the total profits

of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting

State from determining the profits to be taxed by such an apportionment as may be

customary; the method of apportionment adopted shall, however, be such that the result shall

be in accordance with the principles laid down in this Article.

5.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.

6.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.

7.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.

8.The provisions of paragraphs 1 to 7 shall also apply to income derived by the sleeping

partner of a sleeping partnership (Stille Gesellschaft) of the Austrian law.

Article 8

Shipping and air transport

[ ]

1. Profits from the operation of ships or aircraft in international traffic shall be taxable

only in the Contracting State in which the place of effective management of the enterprise is

situated.

2.The provisions of paragraph 1 shall likewise apply in respect of participations in pools of

any kind by Israeli or Austrian enterprises engaged in air transport.

Article 9

Associated enterprises

[ ]

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 of 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.

Article 10

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 the tax so

charged shall not exceed 25 per cent of the gross amount of the dividends.

This paragraph shall not affect the taxation of the company in respect of the profits out of

which the dividends are paid.

3.The term "dividends" as used in this Article means income from shares, founders' shares or

other rights, not being debt-claims, participating in profits, as well as income from other

corporate rights assimilated to income from shares by the taxation law of the State of which

the company making the distribution is a resident.

4.Dividends paid by a company resident in one of the Contracting States to a company

resident in the other Contracting State shall be excluded from the tax base in that other State,

but only in so far as such dividends would be excluded from the tax base by virtue of the

national tax laws in case both companies would have had their residence in that other State,

provided, further, that the company receiving the dividends owns at least 25 per cent of the

voting power of the company paying the dividends.

5.The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being

a resident of a Contracting State, has in the other Contracting State, of which the company

paying the dividends is a resident, a permanent establishment with which the holding by

virtue of which the dividends are paid is effectively connected. In such a case, the provisions

of Article 7 shall apply.

6.Where a company which is a resident of a Contracting State derives profits or income from

the other Contracting State, that other State may not impose any tax on the dividends paid by

the company to persons who are not residents of that other State, or 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.

Article 11

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 not exceed 15 per cent of the

amount of the interest.

3.The term "interest" as used in this Article means income from Government securities,

bonds or debentures, whether or not secured by mortgage and whether or not carrying a right

to participate in profits, and debt-claims of every kind as well as all other income assimilated

to income from money lent by the taxation law of the State in which the income arises.

4.The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a

resident of a Contracting State, has in the other Contracting State in which the interest arises

a permanent establishment with which the debt-claim from which the interest arises is

effectively connected. In such a case, the provisions of Article 7 shall apply.

5. 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 in connection with which the indebtedness on

which the interest is paid was incurred, and such interest is borne by such permanent

establishment, such interest shall be deemed to arise in the Contracting State in which the

permanent establishment is situated.

6.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 debtclaim

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 12

Royalties

[ ]

1.Copyright royalties and other payments, arising in a Contracting State and paid to a

resident of the other Contracting State as consideration for the use of, or the right to use, any

literary, dramatic, musical or artistic work (excluding royalties and like payments, whether

recurring or not, in respect of motion picture films or films for use in connection with

television) shall be taxable only in the Contracting State of which the recipient is a resident.

2.Subject to the provisions of paragraph 1, royalties arising in a Contracting State and paid to

a resident of the other Contracting State may be taxed in that other State; however, the

Contracting State in which the royalties arise may tax such royalties according to its own

laws, but the rate of tax shall not exceed 10 per cent of such royalties.

3.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 cinematograph films and films or video tapes for use in connection with

television, any patent, trade mark, 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.

4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties,

being a resident of a Contracting State, has in the other Contracting State in which the

royalties arise a permanent establishment with which the right or property giving rise to the

royalties is effectively connected. In such case, the provisions of Article 7 shall apply.

5.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 royalty, whether he is a resident of a Contracting State or not, has in a

Contracting State a permanent establishment in connection with which the right on which the

royalty is paid was incurred, and such royalty is borne by such permanent establishment,

such royalty shall be deemed to arise in the Contracting State in which the permanent

establishment is situated.

6.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 law of each Contracting

State, due regard being had to the other provisions of this Convention.

Article 13

Capital gains

[ ]

1.Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6,

may be taxed in the Contracting State in which such property is situated.

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 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), may be taxed in the other State. However, gains from the alienation of movable

property of the kind referred to in paragraph 3 of Article 23 shall be taxable only in the

Contracting State in which such movable property is taxable according to the said Article.

3.Gains from the alienation of any property other than those mentioned in paragraphs 1 and

2, shall be taxable only in the Contracting State of which the alienator is a resident. However,

in the case of the alienation of shares of a company which are not negotiable through the

Stock Exchange of the country of which such company is a resident or other rights therein,

the country where property of such a company is situated may tax the capital gains relating to

such property, but the rate of tax shall not exceed 15 per cent.

Article 14

Independent personal 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, especially, independent scientific, literary,

artistic, educational or teaching activities as well as the independent activities of physicians,

lawyers, engineers, architects, dentists and accountants.

Article 15

Dependent personal services

[ ]

1.Subject to the provisions of Articles 16, 18 and 19, 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:

(a) the recipient is present in the other State for a period or periods not exceeding in

the aggregate 183 days in the fiscal year concerned, and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of

the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which

the employer has in the other State.

3.Notwithstanding the preceding provisions of this Article, remuneration in respect of an

employment exercised aboard a ship or aircraft in international traffic or aboard a boat

engaged in inland waterways transport, may be taxed in the Contracting State in which the

place of effective management of the enterprise is situated.

Article 16

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 of a company which is a resident of the other

Contracting State, may be taxed in that other State.

Article 17

Artists and athletes

[ ]

Notwithstanding the provisions of Articles 14 and 15, income derived by public entertainers,

such as theatre, motion picture, radio or television artists, and musicians, and by athletes,

from their personal activities as such may be taxed in the Contracting State in which these

activities are exercised.

Article 18

Pensions and annuities

[ ]

1. Subject to the provisions of paragraph 1 of Article 19, pensions and other similar

remuneration paid to a resident of a Contracting State shall be taxable only in that State. The

same rule shall apply to annuities derived from sources within a Contracting State and paid to

a resident of the other Contracting State.

2.As used in this Article:

(a) the term "pension" means periodic payments made in consideration of past

services;

(b) the term "annuity" means a stated sum 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.

Article 19

Governmental functions

[ ]

1. Remuneration, including pensions, paid by, or out of funds created by, a Contracting

State or a political subdivision or a local authority thereof to any individual, who is not a

national of the other Contracting State, in respect of services rendered to the first-mentioned

State or subdivision or local authority thereof in the discharge of functions of a governmental

nature may be taxed in that State.

2.The provisions of Articles 15, 16 and 18 shall apply to remuneration or pensions 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 local authority thereof.

Article 20

Students

[ ]

A person who is or was formerly a resident of a Contracting State, who is temporarily present

in the other Contracting State solely as a student at a university, college or school, or as a

commercial or technical apprentice, or as a recipient of a grant, allowance or award for the

primary purpose of study or research from a religious, charitable, scientific or educational

organisation, shall not be taxed in that other State --

(a) in respect of remittances from abroad for the purpose of his maintenance,

education or training or in respect of a scholarship grant;

(b) in respect of any amount representing remuneration for services rendered in that

other State, provided that such services are in connection with his studies or

training or are necessary for the purpose of his maintenance. However, this

provision shall not apply to such cases where the studies or training have a

secondary character as compared with the services for which the remuneration is

paid, or for a period exceeding five years from the commencement of the studies.

Article 21

Professors, teachers and researchers

[ ]

Subject to the provisions of Article 15, a person who is or was formerly a resident of a

Contracting State who, at the invitation of a university, college or other institute of higher

education or scientific research in the other Contracting State, visits that other State solely for

the purpose of teaching or scientific research at such an institution shall not be taxed in that

other State on his remuneration for such teaching or research for a period not exceeding two

years.

Article 22

Income not expressly mentioned

[ ]

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.

Chapter IV

Taxation of capital

Article 23

Capital

[ ]

1.Capital represented by immovable property, as defined in paragraph 2 of Article 6, 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 in international traffic, and movable property pertaining to the

operation of such ships and aircraft, shall be taxable only in the Contracting State in which

the place of effective management of the enterprise is situated.

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

State.

Chapter V

Elimination of double taxation

Article 24

Exemption method

[ ]

1.Where a resident of a Contracting State derives income or owns capital which, in

accordance with the provisions of this Convention, may be taxed in the other Contracting

State, the first-mentioned State shall, subject to the provisions of paragraph 2, exempt such

income or capital from tax but may, in calculating tax on the remaining income or capital of

that person, apply the rate of tax which would have been applicable if the exempted income

or capital had not been so exempted.

2. Where a resident of a Contracting State derives income which in accordance with the

provisions of Articles 10, 11, 12 and 13, paragraph 3, may be taxed in the other Contracting

State, the first-mentioned State shall allow as a deduction from the tax on the income of that

person an amount equal to the tax paid in that other Contracting State. Such deduction shall

not, however, exceed that part of the tax, as computed before the deduction is given, which is

appropriate to the income derived from that other Contracting State.

The provisions of this paragraph shall also apply when the Israeli income tax appropriate to

dividends, interest, royalties or capital gains has been wholly relieved or reduced for a limited

period of time as if no such relief had been given or no such reduction had been allowed.

However, the deduction of tax shall not exceed the amount of tax which may be imposed in

Israel according to the provisions provided for in Article 10, paragraph 2, Article 11,

paragraph 2, Article 12, paragraph 2 and Article 13, paragraph 3.

Chapter VI

Special provisions

Article 25

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.

2.The term "nationals" means

(a) all individuals possessing the nationality of a Contracting State;

(b) all legal persons, partnerships and associations deriving their status as such

from the law in force in a Contracting State.

3.The taxation of 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.

This provision shall not 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.Enterprises of a Contracting State, the capital of which is wholly or partly owned or

controlled, directly or indirectly, by one or more residents of the other Contracting State, shall

not be subjected in the first-mentioned Contracting State to any taxation or any requirement

connected therewith which is other or more burdensome than the taxation and connected

requirements to which other similar enterprises of that first-mentioned State are or may be

subjected.

5. In this Article the term "taxation" means taxes of every kind and description.

Article 26

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.

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.The competent authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or application of the

Convention. They may also consult together for the elimination of double taxation in cases

not provided for in the Convention.

4. 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

paragraph. 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 27

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 and of the domestic laws of the Contracting

States concerning taxes covered by this Convention insofar as the taxation thereunder is in

accordance with 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 the 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 28

Diplomatic and consular officials

[ ]

1. Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular

officials under the general rules of international law or under the provisions of special

agreements.

2. Insofar as, due to fiscal privileges granted to diplomatic or consular officials under the

general rules of international law or under the provisions of special international treaties,

income or capital are not subject to tax in the receiving State, the right to tax shall be

reserved to the sending State irrespective of the provisions of this Convention.

Chapter VII

Final provisions

Article 29

Entry into force

[ ]

1.This Convention shall be ratified and the instruments of ratification shall be exchanged at

Jerusalem as soon as possible.

2.This Convention shall enter into force upon the exchange of instruments of ratification and

its provisions shall have effect:

(a) In the case of Israel: in respect of Israeli taxes for the tax years beginning on or

after the first day of April 1968 or for any special tax year ending after the said

date;

(b) In the case of Austria: in respect of Austrian taxes for the tax years beginning on

or after the first day of January 1968.

Article 30

Termination

[ ]

The Convention shall remain in force until denounced by one of the Contracting States. Either

Contracting State may denounce the Convention, through diplomatic channels, by giving

notice of termination at least six months before the end of any calendar year after the year

1973. In such event, the Convention shall cease to have effect --

(a) In the case of Israel: for any tax year beginning on or after the first day of April in

the calendar year next following that in which the notice is given.

(b) In the case of Austria; for any tax year beginning on or after the first day of

January of the calendar year next following that in which the notice is given.

In witness whereof the Plenipotentiaries of the two States have signed the Convention and

have affixed thereto their seals.

Done at Vienna this 29th day of January 1970, in duplicate in the English language.

EXCHANGE OF LETTERS

I

Vienna, the 29th January, 1970

Dear Sir,

The Convention between the Republic of Austria and the State of Israel for the avoidance of

double taxation with respect to taxes on income and capital being signed today, I have the

honour, on behalf of the Government of Israel to inform you that annuities, pensions and

other payments to be made either periodically or in a lump sum, which are paid by the

Republic of Austria, a political subdivision thereof or a corporation of public law of the

Republic of Austria or out of funds created by the Republic of Austria, a political subdivision

thereof or a corporation of public law of the Republic of Austria to an individual as indemnity

for damages caused by warfare or political and religious persecution or for reasons of

descent, are not taxable in Israel. The Government of Israel declares that no changes will be

made on this subject in future.

I have the honour to propose, that this letter and your letter of confirmation shall constitute an

agreement to be part of the aforementioned Convention.

Accept, dear Sir, the assurance of my high consideration.

Zeev Shek

Mr. Dr. Josef Hammerschmidt

Director General in the

Federal Ministry of Finance

Vienna

II

Vienna, the 29th January, 1970

Dear Sir,

With reference to the Convention, signed today, between the Republic of Austria and the

State of Israel for the avoidance of double taxation with respect to taxes on income and

capital, you have informed me of the following:

[see I]

I have the honour to inform you, that the proposal contained in the last paragraph of your

letter meets my approval. Your letter and this letter of confirmation shall therefore constitute

an agreement to be part of the aforementioned Convention.

Accept, dear Sir, the assurance of my high consideration.

Hammerschmidt

His Excellency

Mr. Zeev Shek

Ambassador of the State of Israel

Vienna

 

 

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