Georgia - Serbia Tax Treaty

A G R E E M E N T

BETWEEN GEORGIA AND

THE REPUBLIC OF SERBIA

FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

GEORGIA AND

THE REPUBLIC OF SERBIA

desiring to conclude an Agreement for the avoidance of double taxation with respect to taxes on income and on capital,

have agreed as follows:

Article 1 PERSONS COVERED

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  and  on

capital imposed on behalf of a Contracting State or of its political subdivisions or
local authorities, irrespective of the manner in which they are levied.

   There shall be regarded as taxes on income and on capital all taxes

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

   The existing taxes to which this Agreement shall apply are in

particular: in Serbia:

the corporate income tax;
the personal income tax;
the tax on capital.

(hereinafter referred to as ''Serbian tax'');

in Georgia:

the profit tax;
the income tax;
the property tax.

(hereinafter referred to as ''Georgian tax'').

   This Agreement shall apply also to any identical or substantially

similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.

Article 3 GENERAL DEFINITIONS

    For the purposes of this Agreement, unless the context otherwise

requires:

   the  terms  ''a  Contracting  State''  and  ''the  other  Contracting

State''

mean Serbia or Georgia, as the context requires;

   the  term  ''Serbia''  means  the  Republic  of  Serbia,  and  when

used in a geographical sense it means the territory of the Republic of Serbia;

   the term "Georgia" means the territory defined by Georgian

legislation, including land territory, its subsoil and the air space above it,
internal waters and territorial sea, the sea bed, its sub-soil and the air space above them, in respect of which Georgia exercises sovereignty, as well as the contiguous zone, the exclusive economic zone and continental shelf adjacent to its territorial sea, in respect of which Georgia may exercise its sovereign rights and/or jurisdiction in accordance with the international law;

   the term ''national'' in relation to a Contracting State means:

any individual possessing the citizenship or nationality of a Contracting State;
any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State.

   the term ''person'' includes an individual, a company and any other

body of persons;

   the  term  ''company''  means  any  body  corporate  or  any  entity

that is treated as a body corporate for tax purposes;

   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;

   the term ''international traffic'' means any transport by a ship or

aircraft operated by an enterprise that has 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;

   the term ''competent authority'' means:

     in Serbia, the Ministry  of Finance or its authorized

representative;

     in    Georgia,    the    Ministry    of    Finance    or    its

authorized representative.

    As regards the application of this Agreement by a Contracting State,

any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

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, place of management or any other
criterion of a similar nature, and also includes that State and any political
subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that
State or capital situated therein.

    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:

   he shall be deemed to be a resident only 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 only
of the State with which his personal and economic relations are closer (centre of vital interests);

   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 only of the State in which he

has an habitual abode;

   if he has an habitual abode in both States or in neither of them, he

shall be deemed to be a resident only of the State of which he is a national;

   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 only of the State in which its place of effective management is situated.

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:

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   a place of management;
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   a branch;
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   an office;
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   a factory;
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   a workshop, and
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   a mine, an oil or gas well, a quarry or any other place of

extraction of natural resources.

   A  building  site  or  construction  or  installation  project

constitutes a permanent establishment only if it lasts more than nine months.

   Notwithstanding the preceding provisions of this Article, the term

''permanent establishment'' shall be deemed not to include:

   the use of facilities solely for the purpose of storage, display or

delivery of goods or merchandise belonging to the enterprise;

   the  maintenance  of  a  stock  of  goods  or  merchandise  belonging

to the enterprise solely for the purpose of storage, display or delivery;

   the  maintenance  of  a  stock  of  goods  or  merchandise  belonging

to the enterprise solely for the purpose of processing by another enterprise;

   the  maintenance  of  a  fixed  place  of  business  solely  for  the

purpose of purchasing goods or merchandise or of collecting information, for the

enterprise;

   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, for the enterprise;

   the maintenance of a fixed place of business solely for any

combination of activities mentioned in subparagraphs 1) to 5), 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 on behalf of an enterprise and has, and habitually exercises, in a
Contracting State an authority to conclude contracts in the name of the enterprise, that
enterprise shall be deemed to have a permanent establishment in that 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.

   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.

   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.

   Where profits include items of income which are dealt with separately

in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8 INTERNATIONAL TRAFFIC

    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 Contracting 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

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    Where
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   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

   the  same  persons  participate  directly  or  indirectly  in  the

management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would
be made between independent enterprises, then any profits which would,
but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.

   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 authorities 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 beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

   5 per cent of the gross amount of the dividends if the beneficial

owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;

   10 per cent of the gross amount of the dividends in all other cases.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

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 beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

   Notwithstanding the provisions of paragraph 2, interest arising in a

Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State if the recipient is the beneficial owner of such interest and such interest is derived by:

   the Government of the other Contracting State or political

subdivisions or local authorities thereof;

   the Central or National Bank of the other Contracting State;

   a financial institution wholly or almost wholly owned by the

Government of the other Contracting State or political subdivisions or local authorities thereof.

    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 and 2 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 services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base.
In such 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 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 beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

   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, 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.

   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 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 the 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 shares or comparable interests deriving more than 50 per cent of their
value directly or indirectly from immovable property situated in the other Contracting
State may be taxed in that other State.

   Gains  from  the  alienation  of  any  property  other  than  that

referred to in

paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting
State of which the alienator is a resident.

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, unless:

   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

   his  stay  in  the  other   Contracting  State  is  for  a  period

or periods amounting to or exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other Contracting 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 21, 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:

   the  recipient  is  present  in  the  other  State  for  a  period

or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and

   the remuneration is paid by, or on behalf  of, an employer who is not

a resident of the other State, and

   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 in respect of an employment exercised aboard a ship or
aircraft operated in international traffic by an enterprise of a Contracting State, 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 other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or other
similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17 ARTISTES AND SPORTSMEN

   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 a sportsman, 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 a sportsman in his capacity as such accrues not to the entertainer or sportsman 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 sportsman are exercised.

   Notwithstanding  the  provisions  of  paragraphs  1  and  2,  income

derived by a resident of a Contracting State from his personal activities as an
entertainer or as a sportsman shall be taxable only in that State if the activities are exercised in the other Contracting State within the framework of a cultural or sports
exchange programme approved by both Contracting States.

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.

Article 19 GOVERNMENT SERVICE

   1)        Salaries,  wages  and  other  similar  remuneration,  paid

by a Contracting State or a political subdivision or a local authority thereof to an

individual

in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.

   However, such   salaries, wages and other similar  remuneration shall

be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

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     is a national of that State; or
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     did not become a resident of  that State solely for the  purpose of

rendering the services.

   1)        Notwithstanding the provisions of paragraph 1, pension and

other similar remunaration paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

   However,  such  pension  and  other  similar  remuneration  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, 17 and 18 shall apply to salaries, wages, pensions, and other similar remuneration in respect of services rendered in
connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20 STUDENTS

Payments which a student or business apprentice 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, provided that such payments arise from sources outside that State.

Article 21 PROFESSORS AND RESEARCHERS

   An  individual  who  visits  a  Contracting  State  for  the  purpose

of teaching or carrying out research at a university, college, school or other
recognized educational institution in that State and who is or was immediately before that visit a resident of the other Contracting State, shall be exempt from taxation in the first-mentioned Contracting State on remuneration for such teaching or research for a period not exceeding two years from the date of his first visit for that purpose, provided that such remuneration arises from sources outside that State.

   The  provisions  of  paragraph  1  of  this  Article  shall  not

apply to remuneration 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 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.

Article 23 CAPITAL

   Capital represented by immovable property referred to in Article 6,

owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

   Capital represented by 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 by 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, may be taxed in that other State.

   Capital represented by ships and aircraft operated in international

traffic, and by

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.

   All other elements of capital of a resident of a Contracting State

shall be taxable only in that State.

Article 24

ELIMINATION OF DOUBLE TAXATION

   In Serbia, double taxation shall be eliminated as follows:

   Where  a  resident  of  Serbia  derives  income  or  owns  capital

which, in accordance with the provisions of this Agreement, may be taxed in Georgia, Serbia shall allow:

     as  a  deduction  from  the  tax  on  the  income  of  that

resident, an amount equal to the income tax paid in Georgia;

     as  a  deduction  from  the  tax  on  the  capital  of  that

resident, an amount equal to the capital tax paid in Georgia.

Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in Georgia.

   Where  in  accordance  with  any  provision  of  the  Agreement

income derived or capital owned by a resident of Serbia is exempt from tax in Serbia, Serbia may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

   In Georgia, double taxation shall be eliminated as follows:

   Where  a  resident  of  Georgia  derives  income  or  owns  capital

which, in accordance with the provisions of this Agreement, may be taxed in the Republic of Serbia, Georgia shall allow:

     as  a  deduction  from  the  tax  on  the  income  of  that

resident, an amount equal to the income tax paid in the Republic of Serbia;

     as  a  deduction  from  the  tax  on  the  capital  of  that

resident, an amount equal to the capital tax paid in the Republic of Serbia.

Such deduction in either case shall not, however, exceed the sums of the tax which would have been accrued according to the rules and rates on this
income and capital

effective in Georgia.

   Where  in  accordance  with  any  provision  of  the  Agreement

income derived or capital owned by a resident of a Georgia is exempt from tax in Georgia, Georgia may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account
the exempted income or capital.

Article 25

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, in particular with respect to
residence, 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.

   Stateless persons who are residents of a Contracting State shall not

be subjected in either 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 the State concerned in the same circumstances, in
particular with respect to residence, are or may be subjected.

   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 7

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. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted 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 apply to the taxes referred to

in Article 2.

Article 26

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 25, 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 this 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 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 this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

   The competent authorities of the Contracting States may communicate

with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 27 EXCHANGE OF INFORMATION

   The   competent   authorities   of   the   Contracting   States

shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement, in particular for the prevention of fraud or evasion of such taxes. The

exchange of information is not restricted by Articles 1 and 2.

   Any  information  received  under  paragraph  1  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) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in
relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

   In  no  case  shall  the  provisions  of  paragraphs  1  and  2  be

construed so as to impose on a Contracting State the obligation:

   to  carry  out  administrative  measures  at  variance  with  the

laws and administrative practice of that or of the other Contracting State;

   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;

   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).

   If  information  is  requested  by  a  Contracting  State  in

accordance with this Article, the other Contracting State shall use its information
gathering measures to obtain the requested information, even though that other State may
not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply
information solely because it has no domestic interest in such information.

   In  no  case  shall  the  provisions  of  paragraph  3  be  construed

to permit a Contracting State to decline to supply information solely because the
information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Article 28

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

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

Article 29 ENTRY INTO FORCE

   Each  of  the  Contracting  States  shall  notify  in  written  form

the other, through diplomatic channels, of the completion of the internal procedures
necessary for the entry into force of this Agreement.

   This  Agreement  shall  enter  into  force  on  the  date  of  the

receipt of the later notification indicating the completion of the legal procedures necessary for the entry into force of this Agreement. This Agreement shall have effect:

   in Serbia:                             -      in   respect   of   the

taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following

the year in which the Agreement enters into force;

   in Georgia:                          -      in  respect  of  taxes

withheld at source, on income derived on or after 1 January of the calendar year next following the year in which the Agreement enters into force;

 in respect of other taxes on income and

on capital chargeable for any taxable year beginning on or after 1 January of the calendar year next following the year in which the Agreement enters into force.

Article 30 TERMINATION

This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate this Agreement, through diplomatic
channels, by giving written notice of termination at least six months before the end of any calendar year after the fifth year from the date of entry into force of this
Agreement. In such event, this Agreement shall cease to have effect:

   in Serbia:                             -      in   respect   of   the

taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice of termination has been given;

    in Georgia:                         -      in respect of taxes

withheld at source, on income derived on or after 1 January of the calendar year next following the year in which the notice is given;

 in respect of other taxes on income and

on capital chargeable for any taxable year beginning on or after 1 January of the calendar year next following the year in which the notice is given.

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

DONE in ........................., on .................., in two originals, in Georgian, Serbian and English languages, both originals being equally authentic. In case of divergent interpretation of the provisions of this Agreement, the English text shall prevail.

FOR GEORGIA

FOR

THE REPUBLIC OF SERBIA

PROTOCOL

At the moment of signing the Agreement between Georgia and the Republic of Serbia for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital, the undersigned have agreed that the following provision shall form an integral part of the Agreement:

In the case of Georgia, the terms ''political subdivisions''
or ''local authorities'' means ''administrative-territorial units'' or ''local self
governing authorities'';

IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Protocol.

DONE in ........................., on .................., in two originals, in Georgian, Serbian and English languages, both originals being equally authentic. In case
of divergent interpretation of the provisions of this Agreement, the English text shall prevail.

FOR GEORGIA

FOR

THE REPUBLIC OF SERBIA

Georgia - Serbia Tax Treaty

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