Double Tax Treaty between Luxembourg & Mongolia | Damalion

CONVENTION

between the Government of the Grand Duchy of Luxembourg and the Government of Mongolia for the avoidance of double taxation and to prevent fiscal fraud with respect to taxes on income and on capital

 

The Government of the Grand Duchy of Luxembourg and the Government of Mongolia desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital 

Have agreed as follows:

Chapter I. – Scope of the Convention

Article 1 

Person covered

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

 

Article 2

Taxes covered

  1. This Convention shall apply to taxes on income and on capital imposed on behalf of of a Contracting State, its political subdivisions or its local authorities, irrespective of the system of collection.
  1. The term “tax on income and capital” means a tax imposed on total income, on total wealth, or on items of income or wealth, including taxes on gains from the alienation of movable or immovable property, taxes on the total amount of wages paid by wages paid by businesses.
  1. The existing taxes to which this Convention shall apply are

(a) in the case of the Grand Duchy of Luxembourg:

(i) the income tax on natural persons;

(ii) the tax on the income of communities

(iii) the special tax on directors’ fees

(iv) wealth tax;

(v) the municipal business tax

(hereinafter referred to as “Luxembourg tax”);

(b) in the case of Mongolia

(i) the personal income tax;

(ii) the corporate income tax 

(hereinafter referred to as “Mongolian tax”).

  1. This Convention shall also apply to any identical or substantially similar taxes imposed after the date of signature of the Convention in addition to or in place of the existing taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of significant changes in their respective taxation laws within a reasonable time after such changes.

 

Chapter II. – Definitions

Article 3

General Definitions

  1. For the purposes of this Convention, unless the context otherwise requires

(a) the terms ,,a Contracting State” and the other Contracting State” mean, as the context requires, Luxembourg or Mongolia;

(b) the term ,,Luxembourg” means, when used in a geographical sense, the territory of the Grand Duchy of Luxembourg;

(c) the term “Mongolia” means, when used in a geographical sense, the territory of Mongolia and any area to which the tax laws of Mongolia are applicable, where  Mongolia exercises, in accordance with international law, its sovereign rights over such an area for the purpose of exploitation of natural resources;

(d) the term “person” includes natural persons, corporations and any other group of persons

(e) the term ,,company” means any person that is a body corporate, joint venture or other entity that is treated as a body corporate for tax purposes by the laws of the Contracting State under which it is constituted

(f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State

(g) the term ,,national” means:

(i) any individual who is a national of a Contracting State;

(ii) any legal person, partnership or association organized under the laws in force in a contracting State;

(h) the term “international traffic” means any transport by a ship, aircraft, road or railroad vehicle operated by an enterprise whose place of effective management is in a Contracting State, except where the ship, aircraft, road or railroad vehicle is operated only between points in the other Contracting State;

(i) the term “competent authority” means:

(i) in relation to Luxembourg, the Minister of Finance or his authorized representative

(ii) in relation to Mongolia, the Minister of Finance or his authorized representative.

  1. In the application of the Convention at any time by a Contracting State, any term or expression not defined therein shall, unless the context otherwise requires, have the meaning that it the law of that State at that time relating to the taxes to which the Convention applies, the meaning given to that term under the tax law of that State prevails over the meaning given to it under other laws of that State.

 

Article 4

Resident

  1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of his domicile, residence, place of management, place of registration or any other criterion of a similar nature. of a similar nature. But this expression does not include persons who are subject to tax in that State only in respect of income from sources in that State or of capital situated therein. located therein. The term shall also apply to that State and to any political subdivision or local authority thereof, to a juridical person of that State or to a This term shall also apply to this State and any of its political subdivisions or local authorities, to a legal person governed by public law of this State or of this authority. It also includes any pension or other employee benefit plan, and any charitable organization, established pursuant to the any charitable organization established under the laws of a Contracting State.
  1. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States

(a) 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 (center of vital interests);

(b) if the State in which such person has his centre of vital interests cannot be determined, or if he has no permanent home in any of the States, he shall be deemed to be resident only of the State in which he has an habitual abode;

(c) if such person 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 has the nationality;

(d) if such person 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.

  1. Where, under the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, he shall be deemed to be a resident only of the State in which its place of effective management is situated.

 

Article 5

Permanent Establishment

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

(a) a place of management,

(b) a branch office,

(c) an office,

(d) a factory,

(e) a workshop, and

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

  1. A construction or assembly site constitutes a permanent establishment only if its duration exceeds six months.
  1. Notwithstanding the foregoing provisions of this Article, a permanent establishment is permanent establishment” if:
  1. a) that there are no facilities belonging to the enterprise of the merchandises exhibition;

(b) goods belonging to the enterprise are stored solely for the purpose of storage or display

(c) goods belonging to the enterprise are stored solely for the purpose of processing by another enterprise;

(d) a fixed place of business is used solely for the purpose of purchasing goods or gathering information for the enterprise

(e) a fixed place of business is used solely for the purpose of carrying on any other activity of a preparatory or auxiliary character for the enterprise.

  1. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 applies – is acting in a Contracting State on behalf of an enterprise of that State, the person shall be deemed to be acting in that State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for it if that

(a) has and habitually exercises in that State such powers as will enable him to conclude contracts on behalf of the enterprise, unless the activities of such person are limited to those referred to in paragraph 4 which, if exercised through a fixed place of business, would be fixed place of business, would not make it possible to regard such place of business as a permanent

(b) not having such power, it habitually maintains in that State a stock of goods or merchandise from which it regularly removes goods or merchandise for delivery on behalf of the enterprise.

  1. Notwithstanding the foregoing provisions of this Article, an insurance enterprise of a Contracting State shall, except in the case of reinsurance, be deemed to have a permanent establishment in the State if it collects premiums in the territory of that other State or insures risks incurred therein by incurred therein through a person other than an agent of independent status to whom paragraph 7 applies.
  1. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of provided that such persons are acting in the ordinary course of their business. However, where the activities of such agent are carried on wholly or substantially wholly for the for that enterprise, he shall not be considered an agent of independent status within the meaning of this within the meaning of this paragraph.
  1. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a company that is a resident of the other Contracting State or that carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute a permanent establishment of the company a permanent establishment of the other.

 

Chapter III. – Taxation of Income

Article 6

Income from real property

  1. 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.
  1. For the purposes of this Convention, the term “real 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 accessories, livestock and equipment of agricultural and forestry undertakings, rights to which the provisions of to which the provisions of private law concerning landed property, usufruct of immovable property and rights to variable or fixed payments for the working of or the right to work mineral deposits apply. exploitation of mineral deposits, springs and other natural resources; ships, aircraft, road and rail vehicles are not considered real estate.
  1. The provisions of paragraph 1 shall apply to income derived from the operation, lease or The provisions of paragraph 1 shall apply to income derived from the operation, rental or leasing, or any other form of exploitation of property
  1. The provisions of paragraphs 1 and 3 shall also apply to 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

  1. 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 in such a manner, the profits of the enterprise may be taxed in the other State but only so much of its profits as is directly or indirectly attributable to that directly or indirectly to that permanent establishment.
  1. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in its business in the other Contracting State through a permanent establishment situated therein, there shall be attributed in each Contracting State the profits which it might be expected to make if it were a separate enterprise shall be attributed in each Contracting State to that permanent establishment if it had constituted a separate enterprise engaged in the same or similar activities under the same or similar 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.
  1. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses of permanent establishment, including executive and general administrative expenses incurred, shall be deducted by the State in which the permanent establishment is situated or elsewhere.
  1. If it is customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of such profits, on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall prevent such provision of paragraph 2 shall not prevent that Contracting State from determining the taxable profits according to the apportionment in use; the method of apportionment adopted shall, however, be such that the result result is in accordance with the principles contained in this Article.
  1. No profit shall be attributed to a permanent establishment by reason of its having merely purchased goods or merchandise for the enterprise.
  1. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined annually by the same method, unless there are good and sufficient reasons to the contrary.
  1. Where profits include items of income which are dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

 

Article 8

International transport

  1. 1. Profits from the operation of ships, aircraft, road and railroad vehicles in international traffic shall be taxable only in the Contracting State in which the place of management is situated. vehicles shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
  1. If the place of effective management of a shipping enterprise is on board a ship, that place of effective management shall be deemed to be in the Contracting State where the place of effective management of the shipping enterprise is situated. ship, that place of business shall be deemed to be in the Contracting State in which the home port of that ship is situated, or in the absence of a home port, in the Contracting State in which the place of business is situated. If the place of effective management of a shipping enterprise is on board a ship, that place of effective management shall be deemed to be in the Contracting State in which the home port of that ship is situated or, if there is no home port, in the Contracting State of which the operator of the ship is a resident.
  1. The provisions of paragraph I shall not apply to pool, a joint enterprise or a joint venture. apply to an organization The provisions of paragraph I shall also apply to benefits derived from participation in an international system of exploitation.

Article 9

Associated enterprises

Where

(a) 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

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case the two enterprises are connected in their commercial or financial relations by terms and conditions agreed upon or imposed which differ from those which would be agreed upon between independent enterprises between independent enterprises, the profits which, but for these conditions, would have been made by one of the but for those conditions could not in fact be realized by one of the enterprises, may be included in the profits of that profits of that enterprise and taxed accordingly.

Article 10

Dividends

  1. Dividends paid by a company which is a resident of the other Contracting State may be taxed in that other State. of a Contracting State to a resident of
  1. 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

(a) 5 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which directly owns at least 10 percent of the capital of the company paying the dividends

(b) 15 percent of the gross amount of the dividends, in all other cases. This paragraph shall not affect the taxation of the corporation in respect of the profits out of which the dividends are payment of dividends.

  1. Notwithstanding the provisions of subparagraph (a) of paragraph 2, dividends paid by a company that is a resident of a Contracting State shall not be taxable in that State if the beneficial owner of the dividends is a company which is a resident of the other Contracting State and which has held, for a continuous period of 12 months preceding the date of payment of the dividends, a direct interest of at least 25 per cent. This provision shall apply only to dividends derived from profits from a business or commercial activity, other than an activity consisting of making or managing investments or managing investments, unless the activity is carried on by a banking or insurance company the taxpayer shall be entitled to the benefit of the taxpayer in respect of the taxpayer’s income.
  1. The term “dividends” as used in this Article means income from shares or other income from shares or other rights, with the exception of debt-claims, and income from other shares subject to the same to the same taxation treatment as income from shares under the laws of the State of which the company making the distribution is a resident.
  1. The provisions of paragraphs 1, 2 and 3 shall not apply where 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, carries on business in the other Contracting State of which the company paying the dividends is a resident, through an establishment in that other State. permanent establishment situated therein, or performing independent personal services from a fixed base situated therein, and the and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
  1. The rates of tax provided in paragraph 2 of this Article shall not affect the rate of tax applicable under any production sharing contracts or under any other similar contracts relating to the oil and gas sectors which are entered into by the Government of Mongolia with a person who is a resident of Luxembourg.
  1. Where a company that 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 dividends paid by the company, except to the extent that such dividends are paid to a resident of that other Contracting State or to the extent that 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 shall that other State impose any tax on the undistributed profits distributed profits, on the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other States.

 

Article 11

Interest

  1. Interest arising in a taxable state in that other State. Contracting State and paid to a resident of the other Contracting State shall be taxed in that other State.
  1. 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 interest shall be taxed in that 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 percent of the gross amount of the interest.
  1. Notwithstanding the provision of paragraph 2, interest shall be exempt from tax in the Contracting State

(a) interest on trade debts, including debts evidenced by commercial paper, arising from deferred payments for goods or services supplied or performed by an enterprise performed by a company;

(b) interest paid in respect of a loan made, guaranteed or insured or credit extended, guaranteed or insured by public entities whose purpose is the promotion of exports;

(c) interest on loans of any kind – made by a banking enterprise;

(d) interest on loans of any kind not represented by bearer securities (agreement)

(e) interest on deposits – not represented by bearer securities – with a local interest company. paid to the other Contracting State, a political subdivision or a local authority thereof

  1. 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 includes income from government securities and income from bonds or debentures, including premiums and prizes attached to such securities. Penalties for late payment shall not be considered as interest for the purposes of this section.
  1. The provisions of paragraphs 1, 2 and 3 shall not apply where the beneficial owner of the interest resident of a Contracting State carries on business in the other Contracting State in which the interest arises business activity through a permanent establishment situated therein, or performs in the other Contracting State situated therein, or performs in the other Contracting State in which the interest arises independent personal services from a fixed base situated therein, and the debt-claim the debt-claim giving rise to the interest is effectively connected with it. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. Article 14, as the case may be, shall apply.
  1. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. However, where the payer of the interest, whether or not a resident of a Contracting State, is a resident of that State, the interest shall be treated as arising in that State, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness giving rise to the payment of interest was incurred and which bears the expense of that interest, such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
  1. Where, by reason of a special relationship between the payer and the beneficial owner or where both maintain beneficial owner, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount of the for which it is paid, exceeds that which would have been agreed upon by the debtor and the beneficial owner in the In the absence of such a relationship, the provisions of this article shall apply only to the latter 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 other In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being due to the other provisions of this Convention.

 

Article 11

Royalties

  1. Royalties arising in a may be taxed in that other State and paid to a resident of the other Contracting State
  1. 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 royalties may be taxed in that State, but if the beneficial owner of the royalties is a resident of the other Contracting 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 5 percent of the gross amount of the royalties.
  1. The term “royalties” as used in this Article means remuneration of any kind whatsoever paid for the use of, or the right to use, any copyright of literary, artistic or scientific work or scientific work, including cinematograph films, or films or tapes used for radio or television broadcasts, a patent, a trademark, a design, a model, a copyright, a design patent, a design patent design, plan, secret formula or process and for information relating to experience in the industrial, commercial or scientific field.
  1. 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 for the benefit of the recipient. or independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is vested in that property is effectively connected with it. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
  1. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that resident of that State. However, where the payer of the royalties, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed base in connection with which the commitment giving rise to the payment of the royalties was made and which bears the expense of such those royalties shall be deemed to arise in the State in which the permanent establishment or fixed bas is situated.
  1. Where, by reason of a special relationship between the payer and the beneficial owner or where both maintain beneficial owner, the amount of the royalties, having regard to the service for which they are paid, is performance for which they are paid, exceeds the amount that would have been agreed upon by the obligor and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the latter amount. the latter amount. In such a 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 Convention.
  1. Fees for technical services arising in one of the Contracting States and paid to a resident of the other Contracting State who is the beneficial owner thereof and who is subject to tax in that other State by reason of such technical fees, may be taxed in the first-mentioned Contracting State at a rate not exceeding rate not exceeding 5 percent of the gross amount thereof.
  1. The term “technical service fee” as used in this Article means remuneration of any kind paid to remuneration of any kind paid to any person, other than to an employee of the person paying the remuneration, for any paying the compensation, for any technical, management or consulting services.

 

Section 13

Capital Gains

  1. Gains that a resident of a Contracting State Article 6 and situated in the other Contracting State, both from the alienation of may be taxed in that property imm another State.
  1. Gains from the alienation of movable property forming part of the business property of a permanent property that forms part of the business property of a permanent establishment that an enterprise of a Contracting State has in the other Contracting State, or belongs 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 permanent establishment (alone or with the whole enterprise) or fixed base, may be taxed in that other State.
  1. Gains from the alienation of ships, aircraft, road and railroad vehicles operated in international traffic, or movable property used in the operation of such ships, aircraft and railway vehicles shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
  1. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State in which the enterprise is situated.

 

Article 14

Independent Personal Services

  1. Income derived by a resident of a Contracting State from professional services or from other activities of an independent character shall be taxable only in the Contracting State of which the transferor is a resident. of an independent character shall be taxable only in that Contracting State; however, such income may also be taxed in the other State. However, such income may also be taxed in the other Contracting State in the following cases

(a) if such resident has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in such case only that part of the income which is attributable to the said fixed base may be taxed in that other State fixed base may be taxed in that other Contracting State; or

(b) if such resident is present in the other Contracting State for a period or periods exceeding in the aggregate 183 days in any 12-month period commencing or ending in the taxable year concerned, in which case only the portion of the taxable income attributable to such fixed base may be taxed in that other Contracting State. In which case only that portion of the income derived from the business carried on in that other Contracting In such case, only that portion of the income derived from the activity carried on in that other Contracting State may be taxed in that other Contracting State.

  1. The term “professional services” includes, in particular, independent scientific, literary, artistic, educational or teaching activities and the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

 

Article 15

Dependent Professions

  1. Subject to the provisions of Articles 16, 18 and 19, the wages, salaries and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is exercised in that other State, remuneration derived therefrom may be taxed in that other State.
  1. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State received in respect of an employment exercised in the other State shall be taxable only in the first-mentioned State if the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the taxable year concerned, and
  1. Notwithstanding the foregoing provisions of this section, remuneration received in respect of employment on board a ship, aircraft, road or railroad vehicle operated in international traffic 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 received by a resident of a Contracting State in his capacity as a member of the board of directors or a supervisory board 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

Artists and Athletes

  1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State from his personal activities as an entertainer, such as a theatre artist, actor or sportsman, exercised in the other Contracting State artist, such as a theater, motion picture, radio or television artiste, or a musician, or as an sportsmen, may be taxed in that other Contracting State.
  1. Where income in respect of activities exercised by an entertainer or a sportsman personally and in that capacity is attributed not only to the as such is attributed not to the entertainer or athlete himself but to another person, such income may be notwithstanding the provisions of Articles 7, 14 and 15, such income may be taxed in the Contracting State in which the activities of the artist or athlete are carried on.
  1. Notwithstanding the provisions of paragraphs 1 and 2, income derived by an artist or an athlete from from activities exercised in a Contracting State shall be taxable only in the Contracting State of which the artist or athlete is a resident, provided that the visit to the first-mentioned Contracting State is substantially supported by public funds of one or both of the Contracting States, their political subdivisions political subdivisions or local authorities.

 

Article 18

Pensions

  1. 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident or paid to a resident of a Contracting State in respect of past employment shall be taxable only in that State.
  1. Notwithstanding the provisions of paragraph 1, pensions and other amounts paid under the social security laws of the social security legislation of a Contracting State shall be taxable only in that Contracting State.

Article 19

Public Offices

  1. (a) Salaries, wages and other remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or political subdivision or local authority shall be taxable only in that shall be taxable only in that State.

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

(i) is a national of that State, or

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

  1. (a) Pensions paid by a Contracting State or a political subdivision or local authority thereof, either directly or out of funds established by it, to an individual in respect of services rendered to that State or political subdivision or local authority shall be taxable only on the basis of the amount of the pension.

(b) However, such pensions shall be taxable only in the other State if the individual is a resident of that State and has the nationality of that State. The provisions of Articles 15, 16, 17, 18 and 19 shall apply. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other remuneration and to pensions paid in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or local authority thereof.

 

Article 20

Teachers and Researchers

  1. An individual who is or was immediately before visiting a Contracting State a resident of the other State and who is present in the first-mentioned Contracting State primarily to teaching, lecturing or research at a university, college, school or other educational or research institution educational institution or in a scientific research institution accredited by the Government of the first-mentioned Government of the first-mentioned Contracting State, shall be exempt from tax in the first-mentioned Contracting State for a period of three years from the date of his first entry into the first-mentioned Contracting State in respect of remuneration received for such teaching, lectures or research.
  1. The provisions of this Article shall apply only to income derived from research where such research is undertaken by an individual in the public interest and not primarily for the benefit of a private person.

 

Article 21

Students and trainees

A student or a trainee who is or was immediately before visiting a Contracting State a resident of the other State a resident of the other State and who is present in the first-mentioned State solely for the purpose of his or her education or training, shall be exempted from education or training, shall be exempt from tax in the first-mentioned State in respect of the following amounts or income

(a) amounts derived from sources outside the first-mentioned Contracting State; and

(b) study grants, scholarships or prizes awarded by a contracting State or a scientific, educational or other organization, the Government of one or cultural or non-profit organization the other; and

(c) income derived from personal services performed in the first-mentioned Contracting State.

Article 22

Other Income

  1. Items of income of a resident of a Contracting State, wherever arising, that are not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
  1. The provisions of paragraph 1 shall not apply to income other than income from property as defined in paragraph 2 of Article 6, where the recipient of such income, a resident of a Contracting State, carries on business in the other Contracting State through a or commercial activity through a permanent establishment situated therein, or performs in the other Contracting 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. the right or property giving rise to the income is effectively connected with it. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

Chapter IV. – Taxation of wealth

Article 23

Wealth

  1. The assets of a resident of a Contracting State constituted in the other Contracting State shall be deemed to be assets of that State. in the other Contracting State, shall be By taxable of the immovable property referred to in The taxpayer shall not be liable for any loss or damage arising out of or in connection with the use of the real property referred to in this paragraph.
  1. Capital represented by movable property forming part of the business property of a permanent establishment an enterprise of a Contracting State has in the other Contracting State, or by movable property that belongs to a fixed base belongs 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.
  1. Capital represented by ships, aircraft, road and railroad vehicles operated in international traffic, and by movable property pertaining to the operation of such means of transport, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is if killed.
  1. All other elements of the capital of a resident in that State. The taxable income of a resident of a Contracting State shall be taxable only in that State.

 

Chapter V – Methods for Eliminating Double Taxation

Article 24

Methods for Eliminating Double Taxation

  1. In the case of Luxembourg, double taxation shall be avoided as follows

(a) Where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Mongolia, Luxembourg shall exempt such income or capital from tax, subject to the provisions of subparagraphs (b) and (c), but may nevertheless take into account the exempted income or capital in calculating the amount of tax on the remaining income or capital of the resident.

(b) Where a resident of Luxembourg receives items of income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Mongolia, Luxembourg shall allow a deduction from the tax it levies on the income of that resident in an amount equal to the tax paid in Mongolia. This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to these items of income received from Mongolia.

(c) Where a company which is a resident of Luxembourg receives dividends from Mongolian sources, Luxembourg shall exempt such dividends from tax, provided that such company which is a resident in Luxembourg directly holds since the beginning of its fiscal year at least 10 percent of the capital of the company 10 percent of the capital of the company paying the dividends. The above-mentioned shares or units of the company are, under the same conditions, exempted from the Luxembourg tax on the fortune.

 

  1. In the case of Mongolia, double taxation shall be avoided as follows

(a) Where a resident of Mongolia derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Luxembourg, Mongolia shall

(i) shall take into account the, in addition to the Luxembourg tax on such dividends, the Luxembourg corporate income tax due on the profits from which the dividends are paid.

(ii) in either case, however, such deduction shall not exceed the fraction of the income tax or capital tax, calculated before deduction, corresponding, as the case may be, to the income or capital taxable in Luxembourg.

(b) Where a company which is a resident of Mongolia receives dividends from a company which is a resident of Luxembourg and the Mongolian company holds directly or indirectly at least 10 percent of the capital of the Luxembourg company, the deduction provided for in subparagraph payment of the dividends.

 

Chapter VI. – Special provisions

Article 25

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 burdensome than those to which nationals of that other State in the same circumstances are or may be subjected.
  1. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation of enterprises of that other Contracting 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 the personal deductions, allowances and reductions for taxation purposes on account of civil status or family responsibilities, family status or dependency that it grants to its own residents.
  1. 3. Unless the provisions of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 are applicable paragraph 6 of Article 12 shall apply, interest, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, in determining the taxable profits of that profits of that enterprise under the same conditions as if they had been paid to a resident of the first resident of the first-mentioned State. Similarly, debts of an enterprise of a Contracting State to a resident of the other of the other Contracting State shall, for the purpose of determining the taxable capital of that enterprise, be deductible under the same conditions as if they had been incurred to a resident of the first-mentioned State.
  1. 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 those to which other similar enterprises of the first-mentioned State are or may be subjected.
  1. The provisions of paragraph 3 shall not affect the provisions of the taxation laws of a Contracting State to counteract State to counteract transactions or arrangements for the purpose of tax evasion.

 

Article 26

Mutual Agreement Procedure

  1. Where a person considers that the actions of one or both of the Contracting States result or will result in taxation not in accordance with the provisions of the States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, submit its case to the competent authority of the Contracting State of which it is a resident or, if its case 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 submitted within three years after the first notification of the measure that results in taxation not in accordance with The case must be submitted within three years after the first notification of the measure that results in taxation not in accordance with the provisions of the Convention.
  1. The competent authority shall endeavor, 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 country. competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. The agreement shall be applied irrespective of the time limits provided by the domestic law of the States.
  1. The competent authorities of the Contracting States shall endeavor by mutual agreement to resolve any difficulties or difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.
  1. The competent authorities of the Contracting States may communicate directly with each other with a view to reaching an agreement as described in the preceding paragraphs. The representatives of the competent authorities of the Contracting States may meet for an oral exchange of views, where appropriate for the purpose of reaching agreement.

 

Article 27

Exchange of Information

  1. The competent authorities of the Contracting States shall exchange such information as is necessary to the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention and in particular to prevent fraud in connection with The exchange of information is not restricted by Article 1. Information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of taxes covered by the Convention, the proceedings or the determination of the taxable amount. the assessment or collection of, proceedings or prosecutions in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. in relation to such taxes. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court proceedings or in judgments. State The provisions of paragraph 1 shall not be construed as imposing an obligation on the State:

(a) to take administrative action at variance with its own laws and administrative practice or those of the other Contracting State

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret, or information the disclosure of which would be contrary to public policy.

Article 28

Exclusion of Certain Companies

This Convention shall not apply to holding companies within the meaning of the special legislation of Luxembourg legislation currently governed by the law of July 31, 1929 and the Grand Ducal decree of December 17, 1938. It shall also not apply to income derived by a resident of Mongolia from such companies, nor to shares or other equity securities of such companies owned by such person.

 

Article 29

Members of Diplomatic Missions and Consular Posts

The provisions of this Convention shall not affect the tax privileges enjoyed by members of diplomatic missions or consular posts under the general rules of international law or under the provisions of any other treaty. of international law or under the provisions of special agreements.

 

Article 30

Entry into force

  1. The present is possible. Convention shall be ratified and the instruments of ratification shall be exchanged as soon as
  1. The Convention shall enter into force at the time of the exchange of instruments of ratification and its provisions shall apply

(a) in respect of taxes withheld at source, to income paid or credited on or after the first day of January in the calendar year in which the Convention enters into force

(b) in respect of other taxes on income and capital, to income and capital relating to any taxable year beginning on or after the first day of January in the calendar year in which the Convention enters into force.

 

Article 31

Denunciation

This Convention shall remain in force until terminated by a Contracting State. Each Contracting State may denounce the Convention through diplomatic channels with a minimum of six months notice before the end of each calendar year following the period of five years from the date on which the Convention enters into force. In such event, the Convention shall cease to have effect

(a) in respect of taxes withheld at source, to income paid or credited on or after the first day of January in the calendar year next following that in which notice is given

(b) in respect of other income taxes and capital taxes, to income and capital in respect of any taxation year commencing on or after the first day of January in the calendar year immediately following the year in which notice is given.

 

IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed this Convention.

DONE in duplicate at Ulaanbaatar, this 5th day of June 1998 in the Mongolian and French languages, both texts being equally authentic.

 

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