Lithuania-France

ARTICLE 23

ELIMINATION OF DOUBLE TAXATION

1. In the case of Lithuania double taxation shall be avoided in the following manner:

1. Where a resident of Lithuania derives income or owns capital which in accordance with this Convention may be taxed in France, unless a more favourable treatment is provided in its domestic law, Lithuania shall allow:
   1. 1. as a deduction from the tax on the income of that resident, an amount equal to the income tax paid thereon in France;
      2. as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid thereon in France.

Such deduction in either case shall not, however, exceed that part of the income or capital tax in Lithuania, 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 France.

2. For the purpose of subparagraph a), where a company that is a resident of Lithuania receives a dividend from a company that is a resident of France in which it owns at least 10 per cent of its shares having full voting rights, the tax paid in France shall include not only the tax paid on the dividend but also the tax paid on the underlying profits of the company out of which the dividend was paid.

2. In the case of France double taxation shall be avoided in the following manner:

1. Notwithstanding any other provision of this Convention, income which may be taxed or shall be taxable only in Lithuania in accordance with the provisions of the Convention, shall be taken into account for the computation of the French tax where such income is not exempted from the corporation tax according to French domestic law. In that case, the Lithuanian tax shall not be deductible from such income, but the resident of France shall, subject to the conditions and limits provided for in subparagraph (i) and (ii), be entitled to a tax credit against French tax. Such tax credit shall be equal:
   1. 1. in the case of income other than that mentioned in sub-paragraph (ii), to the amount of French tax attributable to such income provided that the beneficiary is subject to tax in respect of such income in Lithuania;
      2. in the case of income subject to the corporation tax referred to in Article 7 and paragraph 2 of Article 13 and income referred to in paragraph 5 of Article 6, Articles 10, 11, 12, paragraph 1 of Article 13, paragraph 3 of Article 15, Article 16, paragraphs 1 and 2 of Article 17 and Article 21, to the amount of tax paid in Lithuania in accordance with the provisions of those Articles; however, such tax credit shall not exceed the amount of French tax attributable to such income.
2. A resident of France who owns capital which may be taxed in Lithuania according to paragraphs 1 or 2 of Article 22 shall also be taxable in France in respect of such capital. The French tax shall be computed by allowing a tax credit equal to the amount of the tax paid in Lithuania on such capital. However, such tax credit shall not exceed the amount of the French tax attributable to such capital.
3. i)             It is understood that the term "amount of French tax attributable to such income" as used in subparagraph a) means:

• where the tax on such income is computed by applying a proportional rate, the amount of the net income concerned multiplied by the rate which actually applies to that income;
• where the tax on such income is computed by applying a progressive scale, the amount of the net income concerned multiplied by the rate resulting from the ratio of the tax actually payable on the total net income taxable in accordance with French law to the amount of that total net income.

This interpretation shall apply by analogy to the term "amount of French tax attributable to such capital" as used in subparagraph b).

ii)            It is understood that the term "amount of tax paid in Lithuania" as used in subparagraphs a) and b) means the amount of Lithuanian tax effectively and definitively borne in respect of the items of income or capital in question, in accordance with the provisions of the Convention, by a resident of France who is taxed on those items of income or capital according to the French law.