China - Netherlands Tax Treaty

AGREEMENT BETWEEN

THE PEOPLE’S REPUBLIC OF CHINA AND

THE KINGDOM OF THE NETHERLANDS

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Government of the People’s Republic of China and the Government of the Kingdom of the Netherlands;

Desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income;

Have agreed as follows:

ARTICLE 1 PERSONAL SCOPE

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

ARTICLE 2 TAXES COVERED

This Agreement shall apply to taxes on income imposed on behalf
of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.
There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property as well as taxes on capital appreciation.
The existing taxes to which the Agreement shall apply are:

(a) in the Netherlands:

(i) de inkomstenbelasting (income tax) ;

(ii) de loonbelasting (wages tax) ;

(iii) de vennootschapsbelasting (company tax) including the Government share in the net profits of the exploitation of natural resources; and

(iv) de dividendbelasting (dividend tax) ; (hereinafter referred to as “Netherlands tax” ) ;

(b) in China:

(i) the individual income tax;

(ii) the income tax concerning joint ventures with Chinese and foreign investment;

(iii) the income tax concerning foreign enterprises; and

(iv) the local income tax;

(hereinafter referred to as “Chinese tax” ) .

The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes referred to in paragraph.
The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes.

ARTICLE 3 GENERAL DEFINITIONS

For the purposes of this Agreement, unless the context otherwise requires:

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

(b) the term “the Netherlands” means the part of the Kingdom of the Netherlands that is situated in Europe including the part of the sea bed and its sub-soil under the North Sea, to the extent that that area
in accordance with international law has been or may hereafter be designated under Netherlands laws as an area within which the Netherlands may exercise certain rights with respect to the exploration and exploitation of the natural resources of the sea bed or its sub-soil;

(c) the term “China” means the People’s Republic of China; when used in a geographical sense, means all the territory of the People’s Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, within which the People’s Republic of China has sovereign rights of exploration for and exploitation of resources of the seabed and its sub-soil and superjacent water resources in accordance with international law;

(d) the term “person” includes an individual, a company and any
other body of persons;

(e) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(f) 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;

(g) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise which has its head office or its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

(h) the term “nationals” means:

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

(ii) all legal persons, partnerships, associations and other entities deriving their status as such from the laws in force in a Contracting State;

(i) the term “competent authority” means:

(i) in the Netherlands the Minister of Finance or its duly authorized representative;

(ii) in China the Ministry of Finance or its authorized representative.

As regards the application of the Agreement by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies.

ARTICLE 4 RESIDENT

For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, head office, place of effective management
or any other criterion of a similar nature.
Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident of the State in which
he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;

(b) if the 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 State, he shall be deemed to be a resident of the State in which he has an habitual abode;

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

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

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 State in which the place of effective management of
its business is situated. However, where such a person has the place of effective management of its business in one of the Contracting States and the place of head office of its business in the other Contracting State, then the competent authorities of the Contracting States shall determine by mutual agreement the State of which the company shall be deemed to be a resident for the purposes of this Agreement.

ARTICLE 5 PERMANENT ESTABLISHMENT

For the purposes of this Agreement, the term “permanent
establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop, and

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation
project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months;

(b) the furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel

in the other Contracting State, provided that such activities continue for the same project or a connected project for a period or periods aggregating more than six months within any twelve-month period.

Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not 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 of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely
for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of
business resulting from this combination is of a preparatory or
auxiliary character.

Notwithstanding the provisions of paragraphs 1 and 2, where a person—other than an agent of an independent status to whom paragraph 6 applies—is acting
in a Contracting State on behalf of an enterprise of the other Contracting State,
and has, and habitually exercises, in the first-mentioned State an
authority to conclude contracts in the name of the enterprise, that enterprise shall be
deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for the enterprise, unless the activities of
such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided
that such persons are acting in the ordinary course of their business. However,
when the activities of such an agent are devoted wholly or almost wholly on
behalf of that enterprise, he will not be considered an agent of an independent
status within the meaning of this paragraph.
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.

ARTICLE 6

INCOME FROM IMMOVABLE PROPERTY

Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
The term “immovable property” shall have the meaning which it has under 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 and aircraft shall not be regarded as immovable property.
The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
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 independent personal services.

ARTICLE 7 BUSINESS PROFITS

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.
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.
In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes 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. However, no such deduction shall be allowed in respect of amounts,
if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for
management, or except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged
(otherwise than towards reimbursement of actual expenses), by the permanent
establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys
lent to the head office of the enterprise or any of its other offices.

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 contained in this Article.
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.
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.
Payments received by an enterprise of a Contracting State as a consideration for technical services in the other Contracting State shall be deemed to be profits of an enterprise to which the provisions of this Article shall apply.
Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8

SHIPPING AND AIR TRANSPORT

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.
if the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in
which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracing State of which the operator of the ship is a resident.
The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9 ASSOCIATED ENTERPRISES

Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprirse 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 enterprise, but, by reason of those conditions, have not so accrued, may be included in the prorfits of that enterprise and taxed accordingly.

Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if
the conditions made between the two enterprises had been those which would have
been made between independent enterprises, then that other State shall make an
appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of
this Agreement and the competent arthorities of the Contracting States shall if necessary consult each other.

ARTICLE 10 DIVIDENDS

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.
However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 10 percent of the gross amount of the dividends.

The provision of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

The term “dividends” as used in this Article means income from
shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation
treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with
such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
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, 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 the company’s 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

Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the
recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.
Notwithstanding the provisions of paragraph 2:

(a) interest arising in a Contracting State and paid directly or indirectly to the Government of the other Contracting State shall be exempt from tax in the first-mentioned State;

(b) interest arising in a Contracting State and paid in respect of
a loan guaranteed or insured by the Government of the other Contracting State shall be exempt from tax in the first-mentioned State.

For the purposes of paragraph 3 the term “Government” means;

(a) in the case of the Netherlands, the Government of the Kingdom of the Netherlands and shall include:

the local authorities;

(i) the Nederlandsche Bank (Central Bank) ;

(ii) the Nederlandse Financierings Maatschappij
voor Ontwikkelingslanden N. V. (Netherlands finance company for developing countries) and the Nederlandse Investerings bank voor Ontwikkelingslanden N. V. (Netherlands investment bank for developing countries) ;

all other institutions as may be agreed from time to time between the competent authorities of the Contracting States;

(b) in the case of China, the Government of China and shall include: the local authorities;

(i) the People’s Bank of China (Central Bank) ;

(ii) the Bank of China;

(iii) the International Investment and Trust Corporation of China;

all other institutions as may be agreed from time to time between the competent authorities of the Contracting States.

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. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent personal sevices 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 case the provisions of Article 7 or Article 14, as the case may be, shall apply.
Interest shall be deemed to arise in a Contracting State when the payer is that State itself, 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 a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, 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 beneficial
owner in the absence of such relationship, the provisions of this Article shall
apply only to the last-mentioned amount. In such 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 Agreement.

ARTICLE 12 ROYALTIES

Royalties arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10 per
cent of the gross amount of the royalties.
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, or films or
tapes used for radio or television broadcasting, any patent, know-how, trade mark, design or model, plan, secret formula or process, or for the use of, or the right
to use, industral, commercial, or scientific equipment, or for information
concerning industrial, commercial or scientific experience.

However, this term does not include the services meant in paragraph 7 of Article

The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State independent personal 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 case the provisions of Article 7 or Article 14, as the case may be, shall apply.
Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, 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 a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are
borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the

royalties, 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 beneficial owner in the absence of such relationship, the provisions
of this Article shall apply only to the last-mentioned amount. In such 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 Agreement.

ARTICLE 13 CAPITAL GAINS

Gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
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 independent personal services, including such gains
from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
Gains from alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective
management of the enterprise is situated.
Gains derived by a resident of a Contracting State from the alienation of any property, other than that referred to in paragraphs 1, 2 and 3, which is situated in the other Contracting State, may be taxed in that other State.

ARTICLE 14 INDEPENDENT PERSONAL SERVICES

Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable
only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:

(a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or

(b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the calendar year concerned; in that case, only so much of the income as is derived

from his activities performed in that other State may be taxed in that other State.

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

Subject to the provisions of Articles 16, 18, 19 and 20, 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.
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 calendar 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.

Notwithstanding the preceding provisions of this Article,
remuneration derived by a resident of a contracting State in respect of an
employment exercised aboard a ship or aircraft operated in international traffic, shall be taxable only in that State.

ARTICLE 16 DIRECTORS' FEES

Fees or other remuneration derived by a resident of a Contracting
State in his capacity as a member of the board of directors or a supervisory body of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17 ARTISTES AND ATHLETES

Notwithstanding the provisions of Articles 14 and 15, income
derived by a resident of a Contracting State as an entertainer, such as a
theatre, motion picture,

radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
Notwithstanding the provisions of paragraphs 1 and 2, income
derived by entertainers or athletes as mentioned in paragraph 1 who are
residents of a Contracting State from the activities exercised in the other
Contracting State within the framework of cultural exchange programs between the Governments of both Contracting States shall be taxable only in the first-mentioned State.

ARTICLE 18 PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions
and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
Any pension or other similar payment paid out under the provisions of a social security system of a Contracting State or a local authority thereof to a resident of the other Contracting State shall be taxable only in the first-mentioned State.

ARTICLE 19 GOVERNMENT SERVICE

(a) Remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or local authority thereof in the discharge of functions of a Governmental nature shall be taxable only in that State.

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

(i) is a national of that State; or

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

(a) Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or local authority thereof in the discharge of functions of a Governmental nature shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

The provisions of Articles 15, 16 and 18 shall apply to
remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.

ARTICLE 20 TEACHERS AND RESEARCHERS

Payments which a teacher or researcher who is or was immediately
before visiting a Contracting State a resident of the other Contracting
State and who is present in the first-mentioned State for the primary purpose of teaching or scientific research at a university, college, school or other educational or
scientific research institution accredited by the Governments, receives for such teaching
or research, shall be exempt from tax in the first-mentioned State for a period not exceeding three years in the aggregate from the date of his frist arrival in the first-mentioned State.
This Article shall not apply to income from research if such
research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons.

ARTICLE 2l STUDENTS AND TRAINEES

Payments which a student, business apprentice or trainee who is or was immediately before visiting a Contracting State a resident of the
other Contracting State and who is present in the first-mentioned 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 State.

ARTICLE 22 OTHER INCOME

Items of income of a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall apply.
Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing
Articles of this Agreement and arising in the other Contracting State may be taxed in that other State.

ARTICLE 23

METHODS FOR THE ELIMINATION OF DOUBLE TAXATION

In the Netherlands, double taxation shall be eliminated as follows:

(a) The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income which, according to the provisions of this Agreement, may be taxed in China.

(b) However, where a resident of the Netherlands derives items of income which may be taxed in China and are included in the basis referred to in sub-paragraph (a), the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the total amount of the items of income which are exempt from Netherlands tax under those provisions.

(c) Notwithstanding the provisions of sub-paragraph (b), the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to paragraph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article 12, paragraphs 1 and 2 of Article 17 and paragraph 3 of Article 22 of this Agreement may be taxed in China to the extent that these items are included in the basis referred to in sub-paragraph (a) . The amount of this deduction shall be equal to the tax paid in China on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.

(d) For the purposes of sub-paragraph (c), the tax paid in China on interest to which paragraph 2 of Article 11 applies and on royalties to which paragraph 2 of Article 12 applies shall be deemed to be 10 per cent of the gross amount of such interest and 15 per cent of the gross amount of such royalties.

In China, double taxation shall be eliminated as follows:

(a) Where a resident of China derives income from the Netherlands
the amount of tax on that income payable in the Netherlands in accordance with the provisions of this Agreement, may be credited against the Chinese tax imposed on that resident. The amount of credit, however,

shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.

(b) Where the income derived from the Netherlands is a dividend paid by a company which is a resident of the Netherlands to a company which is a resident of China and which owns not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to the Netherlands by the company paying the dividend in respect of its income.

ARTICLE 24

NON-DISCRIMINATION

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, notwithstanding the provisions of Article 1, also apply to persons
who are not residents of one or both of the Contracting States.
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. 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.
Except where the provisions of paragraph 1 of Article 9,
paragraph 8 of Article 11, or paragraph 6 of Article 12, apply, interest,
royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable
profits of such enterprise, be deductible under the same conditions as if they had
been paid to a resident of the first-mentioned State.
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 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 the first-mentioned State are or may be subjected.
The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

ARTICLE 25

MUTUAL AGREEMENT PROCEDURE

Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the
Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Agreement.
The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory 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 which is not in accordance with the provisions of this Agreement. Any agreement reached shall be
implemented notwithstanding any time limits in the domestic law of the Contracting States.
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 Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
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 for reaching agreement, representatives of the competent authorities of the Contracting States
may meet together for an oral exchange of opinions.

ARTICLE 26 EXCHANGE OF INFORMATION

The competent authorities of the Contracting States shall exchange
such information as is necessary for carrying out the provisions of this Agreement and in particular for the prevention of fiscal evasion. Any information
received by a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes.
In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

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

(b) to supply information which is 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 27

DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Nothing in this Agreement shall affect the fiscal privileges of
diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.
Notwithstanding the provisions of paragraph 1 of Article 4, an individual who is a member of the diplomatic or permanent mission or consular post of a Contracting State or any third State which is situated in the other Contracting State and who is subject to tax in that other State only if he derives income from sources therein, shall not be deemed to be a resident of that other State.

ARTICLE 28 ENTRY INTO FORCE

This Agreement shall enter into force on the thirtieth day after the latter of the dates on which the respective Governments have notified each other in writing through diplomatic channels that the internal legal procedures required in their respective States have been complied with, and its provisions shall
have effect in respect of income derived during taxable years and periods beginning on or after the first day of January in the calendar year following that in which this Agreement has entered into force.

ARTICLE 29 TERMINATION

This Agreement shall continue in effect indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its
entry into force, give written notice of termination to the other Contracting State through
diplomatic channel. In such event this Agreement shall cease to have effect as respects income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which the notice of termination is given.

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

DONE at Beijing this 13th day of May, 1987 in duplicate in the Chinese, Netherlands and English languages, the three texts being equally authentic. In
case there is any divergence of interpretation between the Chinese and Netherlands texts, the English text shall prevail.

On behalf of

the Government of the People’s Republic of China

On behalf of

the Government of the Kingdom of the Netherlands

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