Turkey - Israel Tax Treaty

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Convention Between the Republic of Turkey and the State of Israel for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income THE G O V E R N M E N T OF THE REPUBLIC OF TURKEY AND T H E G O V E R N M E N T OF T H E STATE OF I S R A E L Desiring to conclude a Convention for the avoidance of double taxation and the pre­ vention of fiscal evasion with respect to taxes on income, HAVE A G R E E D AS FOLLOWS:

Chapter I S C O P E OF THE CONVENTION Article 1 PERSONAL S C O P E This Convention shall apply to p e r s o n s w h o are residents of one or both of the Contracting States.

Article 2 TAXES C O V E R E D

1. This Convention shall apply to taxes o n income Imposed o n behalf of a Contracting State or of Its political subdivisions or local authorities, irrespective of the m a n n e r In which they are levied.
2. There shall be regarded a s taxes on income all taxes i m p o s e d o n total income, or o n elements of Income, including taxes o n gains from the alienation of movable or immovable property, taxes on the total amounts of w a g e s or salaries paid by enterprises, a s well a s taxes o n capital appreciation.
3. T h e existing taxes to which t h e Convention shall apply are in particular: a) in Turkey: i) the income tax; ii) the corporation tax; a n d iii) the levy i m p o s e d on the income tax and the corporation tax; (hereinafter referred to a s "Turkish Tax"); b) in Israel: i) the i n c o m e tax; ii) the c o m p a n y tax; iii) the tax on capital gains, a n d iv) the tax i m p o s e d upon the alienation of immovable property under the L a n d Appreciation Tax Law, (hereinafter referred to a s "Israel Tax"). Yürütme ve İdare Bölümü Sayfa : 39

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4. T h e Convention shall apply also to any identical or substantially similar taxes which are i m p o s e d after the date of signature of the Convention in addition to, or in place of, the existing taxes. T h e competent authorities of the Contracting States shall notify e a c h other of significant c h a n g e s which have b e e n m a d e in their respective taxation laws

Chapter II DEFINITIONS Article 3 GENERAL DEFINITIONS

1. For the p u r p o s e s of this Convention, u n l e s s the context otherwise requires: a) the term T u r k e y " m e a n s the Turkish territory, territorial s e a as well a s the maritime areas over which it h a s jurisdiction or sovereign rights for the p u r p o s e of exploring, exploiting, conserving a n d m a n a g i n g natural resources, pursuant to international law, b) the term "Israel" m e a n s the State of Israel, a n d w h e n u s e d in a g e o g r a p h i c s e n s e includes the territorial s e a , continental shelf a n d e c o n o m i c z o n e thereof as well a s that area of the high s e a s in respect of which Israel is entitled, in a c c o r d a n c e with international law, to exercise sovereign rights over the s e a b e d a n d s u b s o i l a n d their natural resources; c) the term "person" includes an individual, a c o m p a n y and any other body of persons', d) the term "company" m e a n s any body corporate or any entity which is treated a s a body corporate for tax purposes; e) the terms "enterprise of a Contracting State" a n d "enterprise of the other Contracting State" m e a n 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, f) the term "international traffic" m e a n s any transport by a ship, aircraft or road-transport vehicle operated by a resident of a Contracting State, except w h e n the ship, aircraft or road-transport vehicle is operated solely between places in the other Contracting State; g) the term "competent authority" m e a n s : i) in Turkey, the Minister of F i n a n c e or his authorised representative; ii) in Israel: the Minister of F i n a n c e or his authorised representative; h) the term "national" means: i) any individual p o s s e s s i n g the nationality of a Contracting State; ii) any legal person, partnership or association deriving its status as s u c h from the laws in force in a Contracting State; i) the term "tax" m e a n s any tax covered by Article 2 of this Convention; Yiiriilme ve İdare Bölümü Sayfa : 40

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2. A s regards the application of the Convention at term not defined therein shall, unless the context otherwise at that time under the law of that State for the purposes applies, a n y meaning under the applicable tax laws of that to the term under other laws of that State.

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a n y time by a Contracting State, a n y requires, have the m e a n i n g that it h a s of the taxes to which the C o n v e n t i o n State prevailing over a m e a n i n g given

Article 4 RESIDENT

1. For the p u r p o s e s of this Convention, the term "resident of a Contracting State" m e a n s any person who, under the laws of that State, Is liable to tax therein by reason of his domicile, residence, place of effective management, or any other criterion of a similar nature, a n d also includes that State a n d a n y political subdivision or local authority thereof. This term, however, does not include a n y person w h o is liable to tax in that State in respect only of i n c o m e from sources in that State.
2. W h e r e by reason of the provisions of paragraph 1\ a n individual is a resident of both Contracting States, then h i s status shall b e determined a s follows: a) h e shall, be d e e m e d to be a resident only of the State in which he h a s a permanent home available to him; if he h a s a permanent h o m e available to h i m in both S t a t e s , h e shall be d e e m e d to b e a resident of the State with which h i s personal a n d e c o n o m i c relations are closer (centre of vital interests); b) if the State in which h e h a s his centre of vital interests cannot b e determined, or if h e h a s not a permanent h o m e available to- him in either State, h e shall be d e e m e d to b e a resident only of the State in which h e h a s a n habitual abode; c) if h e h a s a n habitual a b o d e in both States or in neither of them, h e shall b e d e e m e d to be a resident only of the State of which h e is a national; d) if h e is a national of both States or of neither of them, the competent authorities of the Contracting S t a t e s shall settle the question by mutual agreement.
3. W h e r e by r e a s o n of the provisions of paragraph 1 of this Article, a person other than a n individual is a resident of both Contracting States, then it shall b e d e e m e d to b e a resident only of the Contracting State in which its place of effective m a n a g e m e n t is situated. However, if its place of effective m a n a g e m e n t cannot b e determined, then t h e competent authorities of the Contracting States shall determine by mutual agreement the State of which the p e r s o n shall be d e e m e d to be a resident for the purpose of this Agreement.

Article 5 PERMANENT ESTABLISHMENT

1. For the p u r p o s e s of this Convention, the term "permanent establishment* m e a n s a fixed place of b u s i n e s s through which the b u s i n e s s of an enterprise is wholly or partly carried o n .
2. The term "permanent establishment" includes especially: a) a place of management; b) a branch; c) a n office, YUrUlme ve İdare Bölümü Sayfa : 41

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Sayfa : 42 d) a factory; e) a workshop; a n d

f) a mine, a n oil or g a s well, a quarry or a n y other p l a c e of extraction of natural resources. 3. T h e term "permanent establishment" likewise e n c o m p a s s e s : a) a building site, a construction, a s s e m b l y , or installation project or supervisory activities in connection therewith, where s u c h site, project or activity lasts more than 1 2 months; b) the furnishing of services, including consultancy services, by a n enterprise through employees or other personnel e n g a g e d by the enterprise for s u c h purpose, but only where activities of that nature continue (for the s a m e or a c o n n e c t e d project) within the country for a period or periods aggregating more t h a n 1 8 3 d a y s within any 12 month period. 4. Notwithstanding the preceding provisions establishment" shall b e d e e m e d not to include.

of this

Article,

the term

"permanent

a) the u s e of facilities solely for the p u r p o s e of storage or display of g o o d s or m e r c h a n d i s e belonging to the enterprise; b) the maintenance of a stock of g o o d s or m e r c h a n d i s e belonging to the enterprise solely for the p u r p o s e of storage or display; c) the maintenance of a stock of g o o d s or m e r c h a n d i s e belonging to the enterprise solely for the p u r p o s e of processing by another enterprise; d) the maintenance of a fixed place of b u s i n e s s solely for the p u r p o s e of p u r c h a s i n g g o o d s or m e r c h a n d i s e or of collecting information, for the enterprise; e) the maintenance of a fixed place of b u s i n e s s solely for the purpose of carrying o n , for the enterprise, a n y other activity of a preparatory or auxiliary character; f) the maintenance of a fixed place of b u s i n e s s solely for a n y combination of activities mentioned in s u b - p a r a g r a p h s a) to e), provided that the overall activity of the fixed place of b u s i n e s s resulting from this combination is of a preparatory or auxiliary character. 5. Notwithstanding the provisions of paragraphs 1 a n d 2, where a person - other than a n agent of a n independent status to w h o m paragraph 6 applies - is acting m a Contracting State o n behai-' of a n enterprise of the oi.hei ContractirivJ -a'tate, that enterprise shall be d e e m e d to have a permanent establishment in i n e first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if s u c h a person. a) has a n d habitually exercises in that State an authority to c o n c l u d e contracts in the name of the enterprise, unless the activities of s u c h person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of b u s i n e s s would not make this fixed place of b u s i n e s s a permanent establishment under the provisions of that paragraph, or b) has no s u c h authority, but habitually maintains in the first-mentioned S t a l e a stock of goods or m e r c h a n d i s e from which he legularly delivers g o o d s or m e r c h a n d i s e o n behalf of the enterprise yiiriimie ve liare Bölümü Sayfa

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6. A n enterprise of a Contracting State shall not be d e e m e d to have a permanent establishment in a Contracting State merely b e c a u s e it carries on b u s i n e s s in that State through a broker, general c o m m i s s i o n agent or any other agent of a n independent status, provided that s u c h p e r s o n s are acting in the ordinary course of their b u s i n e s s .
7. T h e fact that a c o m p a n y which is a resident of a Contracting State controls or is controlled by a c o m p a n y which is a resident of the other Contracting State, or which carries on b u s i n e s s in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either c o m p a n y a permanent establishment of the other.

Chapter III TAXATION OF INCOME Article 6 INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from i m m o v a b l e property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the m e a n i n g which it h a s under the law of the Contracting State in which the property in question is situated. The term shall in any c a s e include property accessory to immovable property, livestock a n d equipment u s e d in agriculture a n d forestry, (including the breeding a n d cultivation of fish) rights to w h i c h the provisions of general law respecting landed property apply, usufruct of immovable property a n d rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, s o u r c e s and other natural resources; ships, boats a n d aircraft shall not be regarded as immovable property.
3. T h e provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4 T h e provisions of paragraphs 1 a n d 3 shall also apply to the i n c o m e from immovable property of an enterprise a n d to income from immovable property u s e d for the performance of independent personal services

Article 7 BUSINESS PROFITS 1, 'The profits of an enterprise of a Contracting State shall oe' taxable only in that State unless the enterprise carries on b u s i n e s s in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on b u s i n e s s a s aforesaid, the profits of the enterprise may be taxed in the. other State but only so m u c h of them as is attributable to that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on b u s i n e s s in the other Contracting State through a permanent establishment situated therein, there shall in e a c h Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct a n d separate enterprise e n g a g e d in the s a m e or similar activities under the s a m e or similar conditions a n d dealing wholly independently with the enterprise of which it is a permanent establishment. Yürütme ve îdare Bölümü Sayfa : 43

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3. In determining the profits of a permanent establishment, there shall b e allowed a s deductions e x p e n s e s which are incurred for the p u r p o s e s of the permanent establishment, including executive a n d general administrative e x p e n s e s s o incurred, whether in the State in which the permanent establishment is situated or elsewhere.
4. No profits shall b e attributed to a permanent establishment by reason of the mere purchase by that p e r m a n e n t establishment of g o o d s or m e r c h a n d i s e for the enterprise. 5 W h e r e profits include items of i n c o m e 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 SHIPPING, AIR AND ROAD TRANSPORT

1. Profits derived by a resident of a Contracting State from the operation of ships, aircraft or road-transport vehicles in international traffic shall be taxable only in that State.
2. T h e provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint b u s i n e s s or a n international operating agency.

Article 9 ASSOCIATED

ENTERPRISES

1. W h e r e a) a n enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b) the s a m e persons participate directly or indirectly in the m a n a g e m e n t , control or capital of a n enterprise of a Contracting State a n d a n enterprise of the other Contracting State, a n d in either c a s e conditions are m a d e or imposed between t h e two enterprises in their commercial or financial relations which differ from those which would be m a d e between independent enterprises, then any profits which would, but for those conditions, have a c c r u e d to one of the enterpnses, but, by reason of those conditions, have not s o a c c r u e d , m a y be included in the profits of that enterprise a n d taxed accordingly.
2. W h e r e a Contracting State includes in the profits of a n enterprise of that State - a n d taxes accordingly - profits o n which a n enterprise of the other Contracting State h a s been charged to tax in that other State a n d the profits so included are, by the first-mentioned State, claimed to be profits which would have accrued to the enterprise of the first-menlioned Slate if the conditions made between the two enterprises had been those w h i c h would have b e e n m a d e between independent enterprises, then that other State shall m a k e a n appropriate adjustment to the amount of the tax c h a r g e d therein o n those profits, where that other State c o n s i d e r s the adjustment justified. In determining s u c h adjustment, d u e regard shall b e h a d to the other provisions of this Convention a n d the competent authorities of the Contracting S t a t e s shail rf, necessary consult e a c h other.

Article 10 DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. Yürütme ve İdare Bölümü Sayfa : 44

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2. However, s u c h dividends may also b e taxed in the Contracting State of which the company paying the dividends is a resident a n d according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Conracting State, the tax s o c h a r g e d ' shall not exceed 1 0 % of the gross amount of the dividends
3. T h e term "dividends" as used in this Article m e a n s income from shares, "jouissance" shares or "jouissance" rights, founders' shares or other rights, not being debt-claims, participating in profits,, a s well as income from,other corporate rights which is subjected to the s a m e taxation treatment a s income : , o n ! shares by the laws of the State of which the c o m p a n y making the distribution is a resident in the case of Turkey, this term also includes income derived from a n investment fund a n d investment trust. *•
4. The provisions of paragraphs 1 a n d 2 shai! not apply if the beneficial owner of the dividends, being a resident of a Contracting State, c a n i e s o n b u s i n e s s in the otner Contracting State of which the c o m p a n y paying, the dividends is a resident, through a permanent establishment situated therein, a n d in the c a s e of a resident of Turkey, performs in israei independent personal services from a fixed b a s e situated in Israel, a n d the holding in respect of which the dividends are paid is effectively c o n n e c t e d with s u c h permanent establishment or fixed base. In s u c h case the provisions of Article 7 or Article 14, as trie c a s e m a y be, shall apply. 5 Subject to the provision of paragraph 6 of this Article, where a c o m p a n y which is a resident of a Contracting State derives profits or income from the otner Contracting State, that other State may not impose any tax o n the dividends paid by the company, except insofar as such dividends a i e p3id to a resident of that other State or insofar a s the holding in respect of which the dividends are paid is effectively c o n n e c t e d with a manent establishment or a fixed base situated in that other State, nor subject t h s ci>mpj»ry's undistributed profits to a tax on the company's undistributed profits, even if the dividends ::a<6 or the undistributed profits consist wholly or partly of profits or income arising ir, s u c h other State. 6 Profits of a c o m p a n y of a Contracting State carrying on b u s i n e s s in the other Contracting State through a permanent establishment situated therein may, after having b e e n subjected to tax under Article 7, b e taxed o n the remaining amount in the Contracting State in which the permanent establishment is situated and in a c c o r d a n c e with paragraph 2.

Article 11 INTEREST

1. Interest arising in a Contracting State and paid to a resident o f the other Contracting State m a y b e taxed in that other Stale
2. However, s u c h interest m a y also b e taxed in the Contracting State in which it arises a n d 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 s o c h a r g e d shall not e x c e e d 1Ü p e r cent of the g r o s s amount of the interest
3. Notwithstanding the provisions o f paragraph 2, interest arising in: a) Turkey and paid to the G o v e r n m e n t of Israel or to'the Central Bank of Israel (Bank of Israel) snail b e e x e m p t from tax in Turkey, b) Israel and paid to the G o v e r n m e n t o f Turkey or to the Central Bank of Turkey (Türkiye Cumhuriyet M e r k e z Bankası) shall be e x e m p t from tax in Israel

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4. T h e term "interest" as u s e d in this Article m e a n s i n c o m e from debt-claims of every kind, whether or not s e c u r e d by m o r t g a g e a n d whether or not carrying a right to participate in the debtor's profits, and in particular, i n c o m e from government s e c u n t i e s and i n c o m e from b o n d s or debentures, including p r e m i u m s attaching to s u c h securities, b o n d s or d e b e n t u r e s . W h e r e a resident of a Contracting State sells industrial, c o m m e r c i a l or scientific g o o d s , e q u i p m e n t or m e r c h a n d i s e to a resident of the other Contracting State, and the p a y m e n t s for s u c h s a l e s are m a d e in a s p e c i f i e d period after the delivery of s u c h g o o d s , e q u i p m e n t or m e r c h a n d i s e , then not any part of s u c h p a y m e n t s shall b e r e g a r d e d as interest for the p u r p o s e of this p a r a g r a p h s . In s u c h c a s e , the provisions of Articles 5 and 7 shall apply.
5. T h e provisions of paragraphs 1 a n d 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on b u s i n e s s in the other Contracting State in which the interest arises, through a p e r m a n e n t e s t a b l i s h m e n t situated therein, and in the c a s e of a resident of Turkey, p e r f o r m s in Israel independent p e r s o n a l s e r v i c e s from a fixed b a s e situated in Israel, and the debt-claim in r e s p e c t of which the interest is paid is effectively c o n n e c t e d with s u c h permanent e s t a b l i s h m e n t or fixed b a s e . In s u c h c a s e the provisions of Article 7 or Article 14, a s the c a s e m a y b e . shall apply.
6. Interest shall be d e e m e d to arise in a Contracting State w h e n the payer is that State itself, a political subdivision, a local authority or a resident of that State. W h e r e , however, the p e r s o n paying the interest, whether he is a resident of a Contracting State or not, h a s in a Contracting State a permanent e s t a b l i s h m e n t or a fixed b a s e in c o n n e c t i o n with which the i n d e b t e d n e s s on which the interest is paid w a s incurred, and s u c h interest is borne by s u c h permanent establishment cr fixed b a s e , then s u c h interest shall b e d e e m e d to arise in the State in which the permanent establishment or fixed b a s e is situated.
7. W h e r e , by r e a s o n of a s p e c i a l relationship b e t w e e n the payer and the beneficial owner or b e t w e e n both of them and s o m e other p e r s o n , the amount o ' the interest, having regard to the debt-claim for which it is paid, e x c e e d s the amount which would have b e e n a g r e e d upon by the payer and the beneficial owner in the a b s e n c e of s u c h relationship, the provisions of this Article shall apply only to the last m e n t i o n e d amount. In s u c h c a s e , the e x c e s s part of the p a y m e n t s shall remain taxable a c c o r d i n g to the laws ot e a c h Contracting State, d u e regard being had to the other provisions of this C o n v e n t i o n

Article 12 ROYALTIES

1. Royalties arising in a Contracting State a n d paid to a resiaent of the other Contracting State may be taxed in that other State. 2 However, s u c n royalties m a y also be taxed in the Contracting State in whicn they a n s e a n d according to the laws ol that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax s o c h a r g e d shall not e x c e e d 10 percent of the g r o s s amount of the royalties 3 T h e term "royalties" a s u s e d in this Article m e a n s payments of any kind received a s a consideration for the u s e of, the right to use, or the sale of a n y copyright of literary, artistic or scientific work including cinematograph films a n d recordings for radio a n d television, a n y 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, c o m m e r c i a l or scientific experience. 4-The provisions of paragraphs 1 a n d 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on b u s i n e s s in the other Contracting Yürütme ve İdare Bölümü Sayfa . 46

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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, a n d the right or property in respect of which the royalties are paid is effectively c o n n e c t e d with s u c h permanent establishment or fixed base. In s u c h c a s e the provisions of Article 7 or Article 14, a s the c a s e may be, shall apply. 5. Royalties shall be d e e m e d to arise in a Contracting State when the payer is theit State itself, a political subdivision, a local authority or a resident of that State. W h e r e , however, the person paying the royalties, whether h e is a resident of a Contracting State or not, h a s in a Contracting State a permanent establishment or a fixed b a s e in connection with which the liability to pay the royalties w a s incurred, a n d s u c h royalties are borne by s u c h permanent establishment or fixed base, then s u c h royalties shall be d e e m e d to arise in the State in which the permanent establishment or fixed b a s e is situated. 6. W h e r e , by reason of a special relationship between the payer a n d the beneficial owner or between both of them a n d s o m e other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, e x c e e d s the amount which would have been agreed upon by the payer a n d the beneficial owner in the a b s e n c e of s u c h relationship, the provisions of this Article shall apply only to the last-mentioned amount. In s u c h c a s e , the e x c e s s part of the payments shall remain taxable a c c o r d i n g to the laws of e a c h Contracting State, d u e regard being had to the other provisions of this Convention.

Article 13 CAPITAL GAINS

1. G a i n s derived by a resident of a Contracting State from the alienation of i m m o v a b l e property referred to in Article 6 a n d situated in the other Contracting State m a y b e taxed in t h a t other State.
2. G a i n s from the alienation of movable property forming part of the b u s i n e s s property of a permanent establishment which a n enterprise of a Contracting State h a s in the other C o n t r a c t i n g State or of movable property pertaining to a fixed b a s e available to a resident of a C o n t r a c t i n g State in the other Contracting State for the purpose of performing independent personal s e r v i c e s ! including s u c h gains from the alienation of s u c h a permanent establishment (alone or with t h e whole enterprise) or of s u c h fixed base, may be taxed in that other State
3. G a i n s derived by a resident of a Contracting State from the alienation of s h i p s , aircraft o r road-transport vehicles operated in international traffic a n d any property, other than i m m o v a b l e property, pertaining to the operation of s u c h ships, aircraft or road-transport vehicles shall b e taxable only in that Contracting State
4. G a i n s from the alienation of shares of the capital stock of a c o m p a n y the property of which consists directly or indirectly principally of immovable property situated in a C o n t r a c t i n g State, m a y be taxed in that State.
5. G a i n s 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

1. Income derived by a resident of a Contracting State in respect of professional services or other activities of a n independent character, shall be taxable only in that State u n l e s s s u c h activities are exercised in the other Contracting State. If the activities are exercised in the other State, income derived therefrom m a y be taxed in that other State. Yürütme ve İdare Bölümü Sayfa : 47

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2. Notwithstanding the provision of paragraph 1, income derived by a resident of a Contracting State in respect of professional services o r , other activities of a n independent character exercised in the other Contracting State shall b e taxable only in the first-mentioned State if: a) the recipient is present in the other State for a penod or penods not e x c e e d i n g in the aggregate 1 8 3 d a y s in any twelve months period c o m m e n c i n g or ending in the fiscal year concerned, a n d b) the remuneration is paid by, or on behalf of, a person who is not a resident of the other State, a n d c) the remuneration is not borne by a permanent establishment or a fixed b a s e which the . said person h a s in the other State.
3. T h e term "professional services" i n c l u d e s especially independent scientific, literary, artistic, educational or teaching activities a s well a s the independent activities of physicians, lawyers, engineers, architects, dentists a n d accountants, a n d other independent activities requiring specific professional skill

Article 15 DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18, 1 9 a n d 2 0 , salaries, w a g e s a n d other similar remuneration derived by a resident of a Contracting State in respect of a n employment shall b e taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is s o exercised, s u c h remuneration as is derived therefrom m a y be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of a n employment exercised in the other Contracting State shall b e 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 1 8 3 days in any twelve month period c o m m e n c i n g or e n d i n g in the fiscal year c o n c e r n e d , a n d b) the remuneration is paid by, or on behalf of, an employer w h o is not a resident of the other State, a n d c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the provisions of paragraphs 1 a n d 2, remuneration in respect of a n employment exercised aboard a ship, aircraft or road-transport vehicle operated in international traffic by a resident of a Contracting State may be taxed in that C o n t r a c t i n g State.

Article 16 DIRECTORS' FEES Directors' fees a n d other similar payments derived by a resident of a Contracting State in his capacity a s a m e m b e r of the board of directors of a c o m p a n y which is a resident of the other Contracting State may be taxed in that other State. Yürütme ve İdare Bölümü Sayfa : 48

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Article 17 ARTISTES AND SPORTSMEN

1. Notwithstanding the provisions of Articles 14 a n d 1 5 , i n c o m e derived by a resident of a Contracting State a s a n entertainer, s u c h a s a theatre, motion picture, radio or television artiste, or a musician, or a s a sportsman, from his personal activities a s s u c h exercised in the other Contracting State, m a y be taxed in that other State.
2. W h e r e income in respect of personal activities exercised by a n entertainer or a sportsman in his capacity a s s u c h a c c r u e s not to the entertainer or s p o r t s m a n himself but to another person, that i n c o m e may, notwithstanding the provisions of Articles 7, 1 4 a n d 15, be taxed in the Contracting State In which the activities of the entertainer or s p o r t s m a n are exercised.
3. Notwithstanding the provisions of paragraphs 1 a n d 2, the i n c o m e derived from the activities referred to in paragraph 1 within the framework of cultural or sports e x c h a n g e programme agreed to by the G o v e r n m e n t s of the Contracting States a n d carried out other than for the purpose of profit, shall be exempted from tax in the Contracting State in which these activities are exercised, provided that s u c h person w h o derived the i n c o m e from the aforementioned activities is substantially supported by public funds of the other Contracting State.

Artiole18 PENSIONS

1. Subject to the provisions of paragraph 2 of Article 19, p e n s i o n s a n d other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only In that State. This provision shall also apply to life annuities paid to a resident of a Contracting State.
2. Notwithstanding the provisions of paragraph 1, p e n s i o n s a n d other p a y m e n t s m a d e under the social security legislation of a Contracting State shall be taxable only in that State.
3. T h e term "annuity" m e a n s a stated s u m payable periodically at stated times during life or during a specific ascertainable period of time under a n obligation to m a k e payments in return for adequate a n d full consideration in money or money's worth.

Article 19 GOVERNMENT SERVICE 1 a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to a n individual In respect of services rendered to that State or subdivision or authority shall b e taxable only in that State. b) However, s u c h remuneration shall b e taxable only in the other Contracting State if the services are rendered in that State a n d the individual is a resident of that State who: i) is a national of that State; or ii) did not b e c o m e a resident of that State solely for the purpose of rendering the services. 2. a) A n y pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to a n individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. Yürütme ve İdare Bölümü Sayfa : 49

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b) However, s u c h pension shall be taxable only in the other Contracting State if the individual is a resident of, a n d a national of, that State. 3. The provisions of Articles 15, 16,17 a n d 18 shall apply to remuneration a n d pensions in respect of services rendered in connection with a b u s i n e s s carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20 STUDENTS AND TEACHERS 1 P a y m e n t s which a student or b u s i n e s s apprentice who Is or w a s immediately before visiting a Contracting State a resident of the other Contracting State a n d w h o 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 s u c h payments arise from s o u r c e s outside that State. 2. Likewise, a teacher or instructor who is a national of a Contracting State a n d who is present in the other Contracting State for the primary purpose of teaching or engaging rn scientific research for a period or periods not exceeding two years shall be exempt from tax in that other State for remunerations from personal services for teaching or research, provided that s u c h payments arise from s o u r c e s outside that other State.

Article 21 OTHER INCOME 1 Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State 2. The provisions of paragraph 1 shall not apply to income, other than i n c o m e from immovable property a s defined in paragraph 2 of Article 6, if the recipient of s u c h income, being a resident of a Contracting State, carries on b u s i n e s s in t h e ' o t h e r Contracting State through a permanent establishment situated therein, or performs in that other State independent personal sen/ices from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with s u c h permanent establishment or fixed base. In s u c h case tne provisions of Article 7 or Article 14, as the case may be, shall apply. 3 Notwithstanding the provisions of paragraphs 1 a n d 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention and arising in the other Contracting State may also be taxed in that other State.

Chapter IV METHODS FOR ELIMINATION OF DOUBLE TAXATION Article 22 ELIMINATION OF DOUBLE TAXATION

1. Double taxation for the residents of Turkey shall be eliminated a s follows. Subject to the laws of Turkey from time to time in force regarding the allowance a s a deduction against Turkish Tax, not affecting the general principles of this Convention, of tax paid Yürütme ve İdare Bölümü Sayfa : 50

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in any country other than Turkey, Israel Tax paid in respect of i n c o m e derived from Israel shall b e allowed a s a deduction against Turkish Tax payable in respect of that income. S u c h deductions shall not, however, exceed that part of the income tax c o m p u t e d before the deduction is given, which is appropriate to the income which m a y b e taxed in Israel. W h e r e in accordance with any provision of the Convention income derived by a resident of Turkey is exempt from Turkish Tax, Turkey m a y nevertheless, in calculating the amount of tax on the remaining income of s u c h resident, take into account the e x e m p t e d income. 2. Double taxation for the residents of Israel shall b e eliminated a s follows: Subject to the laws of Israel.from time to time in force regarding the allowance a s a credit against Israel Tax, not affecting the general principles of this Convention, of tax paid in a n y country other than Israel, Turkish Tax paid in respect of income derived from Turkey shall be allowed a s a credit against Israel Tax payable in respect of that income. The credit shall not, however, exceed that portion of Israel Tax which the income from sources within Turkey bears to the entire income subject to Israel Tax. W h e r e in a c c o r d a n c e with any provision of the Convention i n c o m e derived by a resident of Israel is exempt from Israel Tax, Israel m a y nevertheless, in calculating the amount of tax on the remaining income of s u c h resident, take into account the exempted income.

Chapter V SPECIAL PROVISIONS Article 23 NON-DISCRIMINATION

1. 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 b u r d e n s o m e than the taxation a n d c o n n e c t e d requirements to which nationals of that other State in the s a m e circumstances are or m a y be subjected.
2. Subject to the provisions of paragraph 6 of Article 10, the taxation o n a permanen* establishment which a n enterprise of a Contracting State h a s in the other Contracting State shaii not be less favourably levied in that other State than the taxation levied o n enterprises of that other State carrying on the s a m e activities. This provision shall not b e construed a s obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs a n d reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties a n d other d i s b u r s e m e n t s paid by a n enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of s u c h enterprise, be deductible under the s a m e conditions a s if they had been paid to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more b u r d e n s o m e than the taxation a n d c o n n e c t e d requirements to which other similar enterprises of the first-mentioned State are or may be subjected. Yürütme ve İdare Bölümü Sayfa : 51

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Article 24 MUTUAL AGREEMENT PROCEDURE

1. W h e r e a person considers '.hat the actions of one oi both of the Contracting States result or will result for hirn in taxation rfbt in a c c o r d a n c e with the p'ovisions of this Convention, he may. irrespective of the remedies provided by the domestic law of those States, oresent his c a s e to the competent authority of the Contracting State of which he is a resident or, if his case c o m e s under paragraph 1 of Article 23, to that of the Contracting State of which he is a nat.onal. 2 The competent authority shall endeavour, if the objection appears to ;i to be justified and if it is not itself able to arnve at a satisfactory solution, lo resolve the cas-j by mutual agreement •.-.ith the competent authonty of the other Contracting State with a view to the avoiaance of "axation which is not in a c c o r d a n c e with the Convention. A n y agreement reached shaii be implemented notwithstanding any time limits in the domestic ;.?.», of the Contracting States However the taxpayer must claim the refund resulting front s u c h rnutuai agreement within a period of one year after the tax administration has notified thé taxpayer of the result of the mutual agreement 3 The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as tc the interpretation or application of the Convention They may aiso consult together for the elimination of double taxation in c a s e s not orovided for in the Convention

4 Tne competent authorities of the Contracting States may c o m m u n i c a t e with e a c h other nVectly -nciudmg through a joint c o m m i s s i o n consisting of themselves or tneir representatives, for tne purpose of reaching a r agreement in the s e n s e of the p i e c e d m g paragraphs 5 For tne p u i p o s e s of paragraph 3 of A r t c i e XXII (Consultation) of tne General Agreement oi. Trade in Services, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the s c o p e of this Agreement may be brought before the C o u n c i l For Trade in Services., as providec by that paragraph, only with the consent of both Contracting States A n y doubt 3S to the interpretation of this paragraph shall be r s o l v e d under paragraph 3 of Article 24 or, failing agreement under that procedure, pursuant to a iy other procedure agreed to by ooth Contracting States

Article 25 EXCHANGE OF INFORMATION 1 The competent authorities of the Contracting States shall e x c h a n g e s u c h information as .a necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the C o n v e n t i o n insofar as the taxation 'hereunder is not contrary to the Convention The e x c h a n g e of information is not restricted by Article 1. A n y information received by a Contracting State snail be treated as secret in the s a m e manner as information obtained under the domestic laws of that State and shall be disclosed only v. persons or authorities (including courts and administrative bodies) involved in the a s s e s s m e n t collection of, the enforcement or prosecution in respect of, or the determination of appeals in rotation to, the taxes covered by the Convention S u c h persons or authorities shall use the Kifortnation only for s u c h p u r p o s e s They may disclose the information in public court proceedings or injudicial decisions

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2. In no c a s e shall the provisions of paragraph 1 be c o n s t r u e d s o a s to i m p o s e o n a Contracting State the obligation: a) to carry out administrative m e a s u r e s at variance with the laws a n d 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, b u s i n e s s , industrial, c o m m e r c i a l or professional secret or trade process, or information, the d i s c l o s u r e of which would be contrary to public policy (ordre public).

Article 26 DIPLOMATIC AGENTS AND CONSULAR OFFICERS Nothing in this C o n v e n t i o n shall affect the fiscal privileges of diplomatic a g e n t s or consular officers under the general rules of international law or under the provisions of s p e c i a l agreements.

Article 27 LIMITATION OF BENEFITS T h e competent authorities of the Contracting States, u p o n their mutual agreement, may d e n y the benefits of this C o n v e n t i o n to any person, or with respect to any transaction, if in their opinion the receipt of those benefits, under the circumstances, would constitute an a b u s e of the Convention according to its purposes.

Chapter VI FINAL PROVISIONS Article 28 ENTRY INTO FORCE

1. E a c h Contracting State shall notify to the other Contracting State the completion of the procedures required by its laws for the bringing into force of this Convention. T h i s Convention shall enter into force on the date of the later of t h e s e notifications
2. The provisions of this Convention shall have effect a) with regard to taxes withheld at source, in respect of a m o u n t s p a i d or credited on or after the first day of January next following the date upon which this Convention enters into force; a n d b) with regards to other taxes, in respect of taxable years beginning o n or after the first day of January next following the date u p o n which this C o n v e n t i o n enters into force.

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Article 29 TERMINATION

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic c h a n n e l s , by giving notice of termination ät least six months before the e n d of any calendar year beginning after the expiration of a period of 5 years from the date of its entry into force. In s u c h event, t h e C o n v e n t i o n shall c e a s e to have effect:

a) in respect of taxes withheld at source, to amounts df income derived on or after 1 January in the calendar year next following the year in which the notice is given;

b) in respect of other taxes o n income, to s u c h taxes chargeable for any taxable year beginning on or after 1 January in the calendar year next following the year in which the notice is given.

IN W I T N E S S W H E R E O F the undersigned, duly authorized hereto, have signed this Convention.

Done at Jarusalem this 14 th day of 1996, which corresponds to the Hebrew date 23 Adar, 5756, in duplicate in the Turkish, Hebrew and English languages, all three texts being equally authentic. In the case, of difference in meaning among the texts, the English text shall be the operative one.

FOR T H E G O V E R N M E N T O F

FOR T H E G O V E R N M E N T O F

THE REPUBLIC OF T U R K E Y

T H E STATE O F I S R A E L

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