Elimination of Double Taxation
Art. 23
1. The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income which, according to the provisions of this Convention, may be taxed in Bulgaria.
2. However, where a resident of the Netherlands derives items of income which according to Art. 6, Art. 7, paragraph 6 of Art. 10, paragraph 3 of Art. 11, paragraph 5 of Art. 12, paragraphs 1 and 2 of Art. 13, Art. 14, paragraph 1 of Art. 15, Art. 16, paragraph 3 of Art. 18, paragraphs 1 (subparagraph a) and 2 (subparagraph a) of Art. 19 and paragraph 2 of Art. 22 of this Convention may be taxed in Bulgaria and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the total amount of the items of income which are exempt from Netherlands tax under those provisions.
3. Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to paragraph 2 of Art. 10, paragraph 2 of Art. 12, paragraph 5 of Art. 13, Art. 17 and paragraph 2 of Art. 18 of this Convention may be taxed in Bulgaria to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in Bulgaria on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempt from Netherlands tax under the provisions of Netherlands law for the avoidance of double taxation.
4. In Bulgaria double taxation shall be eliminated as follows:
- where a resident of Bulgaria derives income which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, such income shall be exempt from tax in Bulgaria;
- however, such income may nevertheless be taken into account in calculating the amount of tax on the remaining income of such resident;
- notwithstanding the provisions of sub- paragraphs a) and b), where a resident of Bulgaria derives dividends, royalties or capital gains which, in accordance with the provisions of Art.s 10 and 12 and paragraph 5 of Art. 13, may be taxed in the Netherlands, Bulgaria shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in the Netherlands. Such deduction shall not, however, exceed that part of the tax, as computed before the deductions is given, which is attributable to such items of income derived from that other State.
For the purposes of this paragraph in determining the taxes on income paid to the Netherlands, the investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law ("Wet investerings-rekening") shall not be taken into account. For the purposes of this paragraph, the taxes referred to in paragraphs 3a) and 4 of Art. 2 shall be considered taxes on income.
