CONVENTION

Between the Government of the Grand Duchy of Luxembourg and the Government of the Socialist Republic of Vietnam
for the Avoidance of Double Taxation and the Prevention of Fiscal evasion with respect to income and wealth taxes

 

The Government of the Grand Duchy of Luxembourg and the Government of the Socialist Republic of Vietnam desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal tax evasion with respect to taxes on income and on capital. Have agreed as follows

Article 1

Persons covered

This Convention shall apply to persons who are residents of a Contracting State or who are

Article 2

Taxes Covered

1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State, its political subdivisions or its local authorities, irrespective of the manner in which they are levied.

2. 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 salaries paid by companies, as well as taxes on capital gains.

3. The existing taxes to which the Convention shall apply are:

(a) in the case of Luxembourg:

(i) the personal income tax;

(ii) the corporate income tax;

(iii) the special tax on directors’ fees

(iv) the wealth tax; and

(v) the municipal business tax;

(hereinafter referred to as “Luxembourg tax”);

(b) in the case of Vietnam:

(i) the personal income tax;

(ii) the profit tax; and

(iii) the overseas profit transfer tax;

(hereinafter referred to as “Vietnamese tax”).

4. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Convention. after the date of signature of this Convention in addition to or in place of the existing taxes. replace them. The competent authorities of the Contracting States shall notify each other of any substantial changes in their respective taxation laws. to each other of any substantial changes in their respective taxation laws.

 

Article 3

General Definitions

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

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

(b) the term, Vietnam” means the Socialist Republic of Vietnam; when used in a geographical sense, it means the whole of its national territory, including its territorial waters and the areas beyond and adjacent to its territorial waters and areas beyond and adjacent to its territorial waters, over which Viet Nam exercises, by reason of law and in accordance with international law, sovereign rights with respect to the exploration and exploitation of the natural resources of the seabed, subsoil and overlying waters;

(c) the terms,a Contracting State” and, the other Contracting State” mean, as the case may be, Luxembourg or Vietnam, as the case may be;

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

(e) the term, company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(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 or aircraft operated by an enterprise of a contracting State, except where the ship or aircraft is between points in the other Contracting State; and

(i) the term “competent authority” means:

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

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

 

2. As regards the application of the Convention by a Contracting State, any term not defined therein shall have the meaning which it has under the law of that State concerning the taxes to which the Convention applies, unless the context otherwise requires. unless the context otherwise requires.

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 therein by reason of the person’s domicile, residence, place of management, place of registration or any other criterion of a similar nature. However, this term shall not include any person who is subject to tax in that State only in respect of income from sources in that State or capital situated therein.

 

2. Where, under the provisions of paragraph 1, a person

a) he shall be deemed to be a resident 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 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 center of vital interests cannot be determined, or if he has no permanent home in either State, he shall be deemed to be a resident of the State in which he has a habitual abode;

(c) if such person has a habitual abode in both States or in neither of them, he shall be deemed to be a resident 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.

 

3. 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 of the State in which his place of effective management is situated.

 

Article 5

Permanent Establishment

1. For the purposes of this Convention, the term “permanent establishment” means a place of business through which an enterprise carries on any of its activities. through which an enterprise carries on the whole or part of its business.

2.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

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

(g) a warehouse.

The term “permanent establishment” also includes

(a) a construction or assembly site or supervisory activities carried on therein, but only where such site or activities are for a period of more than six months;

(b) the provision of services, including consulting services, by an enterprise acting through employees or other personnel engaged by the enterprise for that purpose, but only where such activities continue (for the same or a related project) in the territory of the country for a period or periods aggregating more than six months within any twelve-month period.

4. Notwithstanding the foregoing provisions of this Article, a permanent establishment shall be deemed not to exist if:

(a) use is made of facilities solely for the purpose of storing or displaying goods or merchandise belonging to the enterprise;

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

(c) goods belonging to the enterprise are stored solely for 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.

 

5. Notwithstanding the provisions of paragraphs 1 and 2, where having an independent status to which paragraph 6 applies a person – acts in other than an agent Contracting State for an enterprise of another Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person carries on for it if the said person

(a) having a fixed place of business, which would not be considered a permanent establishment under the provisions of that paragraph;.or

(b) not having such authority, it habitually maintains in the first-mentioned State a stock of goods or merchandise from which it regularly makes deliveries of goods or merchandise on behalf of the enterprise.

 

6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their ordinary course of business. However, where the activities of such an agent are carried on exclusively or almost exclusively on behalf of that enterprise, he shall not be considered an independent agent within the meaning of this paragraph.

 

7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of that other State. 

 

Article 6

Real estate income

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. (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

 

2. The term “real property” shall have the meaning which it has under the law of the Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, livestock and equipment of and forestry, rights to which the provisions of private law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments for the use or concession of immovable property. for the exploitation or concession of the exploitation of mineral deposits, springs and other natural resources; ships and aircraft are not considered as real estate.

 

3. The provisions of lease or affe of paragraph 1 rmage, as well as apply to any other at rex income from the direct operation of real estate.

 

4. The provisions of paragraphs 1 and 3 shall also apply to income from the real estate of 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 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 business in in the other Contracting State through a permanent establishment situated therein, there shall be attributed in each the profits which it might have made if it had been 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 conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

 

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses permanent establishment, including management expenses and expenses incurred in the course of the business of the permanent establishment, shall be deducted. the State in which the permanent establishment is situated or elsewhere.

 

4. Nothing in this Article shall prevent the application of any law of a Contracting State relating to the determination of the tax liability of a person in any case where the information available to the competent authority of that State is inadequate to determine the profits attributable to a permanent establishment, provided that such law may be applied to the extent that the information is available to the competent authority so permits, in accordance with the principles of this Article.

 

5. If it is customary in a Contracting State to determine the profits attributable to a permanent permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall 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 obtained in accordance with the principles contained in this Article.

 

6. No profit shall be attributed to a permanent establishment by reason of its having merely purchased goods or merchandise for the enterprise.

 

7. 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. otherwise.

 

8. 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 6

Maritime and Air Navigation

1. Profits derived by an enterprise of a Contracting State from the operation in of ships or aircraft shall be taxable only in that Contracting State. international traffic,

 

2. The provisions of paragraph 1 shall also apply to profits from the participation in a The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

 

Article 9

Associated enterprises

1. Where

a) an enterprise of a Contracting State participates directly or indirectly in control or capital of an enterprise of the other Contracting State, or in the management, control or capital 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, At and in either case the two enterprises are bound in their commercial or financial relations by conditions agreed upon or 

b) imposed which differ from those which would be agreed upon between independent enterprises, the profits which, but for these conditions, would have been made by one of the enterprises, but which could not in fact be realized by reason of those conditions, may be included in the profits of that enterprise and taxed accordingly.

 

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been taxed in that other State, and the profits so included have been taxed in that other State, then the profits so included shall be taxed in that other State, and the profits so included are profits that would have accrued to the enterprise of the first-mentioned State if the conditions agreed upon between the two enterprises had been those which would have been agreed upon between independent enterprises, the other State shall, where it agrees with such an adjustment, make an appropriate adjustment to the amount of tax imposed therein on such profits. In the determination of such adjustment, due regard shall be had to the other provisions of this Convention and, if necessary, the competent authorities of the Contracting States shall consult each other.

 

Article 10

Dividends

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

 

2. However, such dividends may also be taxed in the Contracting State However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, but the tax so charged shall not exceed of which the company paying the

(a) 5 percent of the gross amount of the dividends if the beneficial owner is a company that directly or indirectly owns at least 50 percent of the capital of the company paying the dividends or has contributed more than US$10 million, or the equivalent in Luxembourg or Vietnamese currency, to the capital of the company paying the dividends or Vietnamese currency, in the capital of the company paying the dividends;

(b) 10 percent of the gross amount of the dividends if the beneficial owner is a company that directly or indirectly owns at least 25 percent but less than 50 percent of the capital of the company paying the dividends and whose contribution to the capital of the company paying the dividends does not exceed US$10 million, or the equivalent in Luxembourg or Vietnamese currency

(c) 15 percent of the gross amount of the dividends in all other cases. The provisions of this paragraph shall not affect the taxation of the company in respect of the profits which are used to pay the dividends.

 

3. The term “dividends” as used in this article means income from shares or other shares, with the exception of debt claims, as well as income from other shares which is subject to the same tax treatment as income from shares under the laws of the State of which the company making the distribution is a resident.

 

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the resident, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and that the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

5. Where a company that is a resident of a Contracting State derives profits or income from the other Contracting State, that 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 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 State.

 

Article 11

Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxable in that other State.

 

2. 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 recipient of the interest is a resident of that State, the interest may be taxed in that State. of that State, but if the person receiving the interest is the beneficial owner thereof, the tax so charged shall not exceed 10 percent of the tax so charged shall not exceed 10 percent of the gross amount of the interest.

 

3. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by a mortgage or by a provision for participation in the debtor’s profits, and in particular income from government securities and bonds, including premiums and prizes attached to such securities. Penalties for late payment shall not be considered as interest for the purposes of this section.

 

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in another Contracting State in which the interest arises a business activity through a permanent establishment situated therein, or performing independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

5. Interest shall be deemed to arise in a Contracting State when the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the payer of the interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed base in a Contracting State in connection with which the indebtedness on which the interest is paid was incurred and which the indebtedness giving rise to the interest was incurred and which bears the expense of that interest, such interest shall be deemed to arise in the State where the permanent establishment or fixed base is situated.

 

6. Where, by reason of a special relationship between the payer and the beneficial owner or where both maintain the debtor and the beneficial owner, or with other persons, 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 absence of such 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 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.

 

Article 12

Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

 

2. 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 recipient of the royalties is the beneficial owner thereof, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

 

3. 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 trade mark, a design, a model, a copyright, a design patent, a design patent design, plan, formula or secret process, as well as for the use of, or the right to use, industrial, commercial or scientific equipment and for information concerning experience gained in the experience acquired in the industrial, commercial or scientific field.

 

4. 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 performing independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is situated in that other State. property is effectively connected with it. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

5. Royalties shall be deemed to arise in a Contracting State when the payer is that State, a political subdivision State itself, a political subdivision, a local authority or a 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 Contracting State, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation giving rise to the royalties was incurred and which bears the cost of such royalties, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. arising in the State in which the permanent establishment or fixed base is situated.

 

6. 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 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.

 

Article 13

Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of real property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

 

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment that an enterprise of a Contracting State has in the other Contracting State, or of movable property that 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.

in that other State.

 

3. Gains from the alienation of ships or aircraft operated by an enterprise of a Contracting State in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State.

 

4. Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests in a company that owns exclusively or principally real property situated in the other Contracting State may be taxed in that other State.

 

5. Gains from the alienation of any property other than that referred to in paragraphs and 6 shall be taxable only in the Contracting State of which the transferor is a resident.

 

6. The provisions of paragraph 5 shall not affect the right of each Contracting State to levy, according to its own laws, a tax on gains derived by an individual who is a resident of the Contracting State from the alienation of shares or rights in a company, the capital of which is the individual who is a resident of the Contracting State may, in accordance with its own law, impose a tax on gains derived by an individual who is a resident of the Contracting State from the alienation of shares or rights in a company, the capital of which is wholly or partly constituted by shares, and which, under the laws of that State, is a resident of that State.

 

Article 14

Independent Personal Services

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

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

(b) if his stay in the other Contracting State extends over a period or periods equal to or exceeding in the aggregate 183 days in the taxable year concerned; in such case, only that portion of the income derived from the activities carried on in that other State may be taxed in that other State

 

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

 

Article 15

Dependent occupations

1. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State, unless the employment is exercised in the other Contracting State. If the employment is exercised in that State, remuneration derived therefrom may 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 an employment exercised in the other Contracting State shall be 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 183 days in the taxable year concerned, and

(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State, and

(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 preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State.

Article 16

Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State as a member of the board of directors or supervisory board 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 as a from his personal activities as an entertainer, such as a theatre, motion picture, radio or television artiste, exercised in the other Contracting State artist, such as a theater, motion picture, radio or television artiste, or a musician, or as a sportsman, may be taxed in that other State.

 

2. Where income from activities which an entertainer or sportsperson performs personally and in that capacity is attributed not 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.

 

3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by entertainers or athletes who are residents of a Contracting State from their activities in the other Contracting State in connection with a cultural exchange agreed upon by the Governments of the two Contracting States shall be exempt from tax in the other Contracting State.

Article 18

Pensions

1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in respect of past employment shall be taxable only in that State

2. Notwithstanding the provisions of paragraph 1, pensions and other amounts paid under the social security legislation of a Contracting State to a resident of that State shall be taxable only in that State. of the social security legislation of a Contracting State may be taxed in that State.

Article 19

Public Offices

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

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

(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.

2. (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 subdivision or authority shall be taxable only in that State.

(b) However, such pensions shall be taxable only in the other Contracting State if the individual is a resident of that State and a national of that State.

3. The provisions of Articles 15, 16 and 18 shall apply to salaries, wages and other similar remuneration and to pensions paid in respect of services rendered in connection with a business carried on by a Contracting State. or commercial activity carried on by a Contracting State or a political subdivision or local authority thereof. local authorities.

Article 20

Students and Trainees

1. Amounts that a student or trainee who is, or immediately before visiting a Contracting State was, a resident of the other Contracting State and who to a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the sole purpose of his education or training, receives for his maintenance, education or training shall not be taxable in the training, shall not be taxable in that State provided that they are derived from sources outside that State.

 

2. Notwithstanding the provisions of Articles 14 and 15, remuneration received by a student or trainee received by a student or trainee for services rendered in a Contracting State shall not be taxable in that State provided that such services are related to his education or training.

Article 21

Teachers, Professors, and Researchers

1. An individual who is, or who was immediately before entering a Contracting State, a resident of a Contracting State and who is present in the first-mentioned State primarily for the purpose of teaching, lecturing or research at a university, college, school or other educational or research institution in that State may be taxed in that State. educational or scientific research institution accredited by the Government of the first-mentioned State shall be Government of the first State shall be exempt from taxation in the first State for a period of two years from the first entry into the first State with respect to remuneration received for such teaching, lecturing or such teaching, lecturing or research.

 

2. This section shall apply only to income received for research when such research is undertaken by an individual in the public interest and not primarily for the benefit of another or other private persons.

 

Article 22

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 treated as other income. the preceding Articles of this Convention shall be taxable only in that State.

 

2. 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, being a resident of a Contracting State carries on business in the other Contracting State through a subsidiary business activity through a permanent establishment situated therein or performing independent personal services from a by means of a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with that is effectively connected with it. In such case, the provisions of Article 7 or Article 14, as the case may be shall apply.

Article 23

Assets

1. Capital represented by immovable property referred to in Article 6 owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.

2. 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.

3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Contracting State.

4. Capital items of a resident of a Contracting State shall be taxable only in that State.

Article 24

Methods for Eliminating Double Taxation

1. In Luxembourg, double taxation shall be eliminated in the following manner:

(a) Where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Vietnam, Luxembourg shall, subject to the provisions of subparagraphs (b) to (d), exempt such income or capital from tax, but may, in calculating the amount of tax on the remainder of the resident’s the resident, apply the same rates of tax as if the income or capital had not been exempted.

(b) Where a resident of Luxembourg receives income which, in accordance with the provisions of Articles 10, 11, 12, and 13, paragraphs 4 and 6, are taxable in Vietnam, Luxembourg shall allow a deduction from the tax it levies on the income of that resident of an amount equal to the tax paid in Vietnam. This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to such items of income received from Vietnam.

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

d) Where, due to a reduction granted under the provisions of Vietnamese law to encourage investments in Vietnam, the Vietnamese tax, currently levied on dividends from (other than those referred to in subparagraph c)), interest and royalties Vietnam is lower than the respective rates referred to in Articles 10, 11 and 12, the amount of tax paid in Vietnam on such dividends, interest and royalties shall be treated as being levied at the respective rates referred to in Articles 10, 11 and 12. The provisions of this subparagraph shall apply for a period of 10 years beginning on January 1, 1996. This period may be extended by mutual agreement between the competent authorities. 

 

2. In Vietnam, double taxation shall be eliminated as follows:

(a) Where a resident of Vietnam derives income, profits or gains which under the laws of Luxembourg and in accordance with this Convention may be taxed in Luxembourg, Vietnam shall allow a deduction from the tax it levies on the income, profits or gains in an amount equal to the amount of the tax deduction from the tax it levies on the income, profits or gains, of an amount equal to the amount paid in Luxembourg. However, the amount of the deduction However, the amount of the deduction may not exceed the amount of Vietnamese tax on such income, profits or gains calculated in accordance with Vietnamese tax laws and regulations.

b) Where a company which is a resident of Luxembourg pays dividends to a company which is a resident of Vietnam and which directly holds at least 10 percent of the capital of the company paying dividends, the deduction takes into account (in addition to the Luxembourg tax for which a deduction is allowed under the provisions of subparagraph (a) of this paragraph) of the Luxembourg tax paid by the first company in respect of the profits used to pay the dividends.

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 that to which nationals of that other State are or may be subjected. nationals of that other State who are in the same situation. This provision shall also apply, notwithstanding the provisions of Article 1, to persons who are not residents of a Contracting State of one or both of the Contracting States.

 

2. 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 State carrying on the same activities. This provision shall not be construed This provision shall not be construed to require a Contracting State to grant to residents of the other Contracting personal deductions, allowances and reductions for taxation purposes on account of civil status or family responsibilities that it grants to its own residents.

3. Unless the provisions of paragraph 1 of Article 9, paragraph 6 of Article 11 or paragraph 6 of Article 12 are applicable, interest, royalties and other expenses paid by an enterprise of an enterprise of a Contracting State to a resident of the other Contracting State shall, in determining the taxable profits of that same conditions as if they had been paid to a resident of the first-mentioned State, in determining the taxable profits of that paid to a resident of the first-mentioned State. Similarly, debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of that enterprise, be deductible under the same conditions as if they had been incurred to a resident of the first State. It is understood that the provisions of this paragraph shall not be construed to prevent the application by a Contracting State of the thin capitalization provisions of its domestic law.

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 burdensome than those to which to which other similar enterprises of the first-mentioned State are or may be subjected.

5. The provisions of paragraphs 2 and 4 of this Article shall not apply to Vietnamese tax on transfers of profits abroad and to Vietnamese taxes on agricultural production activities.

6. The provisions of this Article shall not be construed to require either Contracting State to grant to individuals who are not residents of that State the personal deductions, allowances and reductions of tax that are accorded to individuals who are resident in that State.

7. Notwithstanding the provisions of this Article, as long as Vietnam continues to grant licenses to investors on the basis of the Law on Foreign Investment in Vietnam which specifies the tax regime specifies the tax regime to which the investor is subject, such tax regime shall not be considered to be contrary to the terms of paragraphs 2 and 4 of this Article.

8. The provisions of this Article shall apply only to taxes that are the subject of this

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 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 the Contracting State of which it is a resident or, if its case comes under paragraph 1 of Article 25, to that of the Contracting State of which it is 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 provisions of the Convention.

 

2. 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 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 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 Contracting States.

 

3. The competent authorities of the Contracting States shall endeavor, by mutual agreement, to resolve any difficulties or doubts to which the interpretation or application of the Convention may give rise. Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

 

4. 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. If an oral exchange of views If it appears that an oral exchange of views will facilitate such agreement, such exchange of views may take place in a Commission composed of representatives of the competent authorities of the Contracting States.

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, in particular the Convention, in particular for the prevention of tax evasion or tax fraud. 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, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court hearings or in judgments.

 

2. The provisions of paragraph Contracting State the obligation:

(a) to take administrative measures or those of the other Contracting State

(b) to furnish information that is not obtainable under the laws of that or of the other Contracting State;

(c) provide information that would reveal trade, industry, professional or commercial secrets or be construed as imposing on any person or in public.

Article 28

Members of Diplomatic Missions and Consular Posts

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

Article 29

Entry into force

1. Each Contracting State shall notify the other State in writing through diplomatic channels of the completion of the constitutional formalities required by its law for the entry into force of this Convention. This Convention shall enter into force on the date of the later of these notifications.

 

2. This Convention shall apply

(a) in respect of taxes withheld at source, to income that accrues on or after January 1 1996;

(b) in respect of other taxes on income and capital, to taxes due for any taxable year beginning on or after January 1, 1996.

Article 30

Denunciation

This Convention shall remain in force until terminated by one of the Contracting States. Each of the Contracting States may denounce the Convention by giving at least six months’ written notice before the end of each calendar year following the period of five years from the date at which the Convention enters into force notified through diplomatic channels to the other Contracting State.  In such case, the Convention shall cease to have effect:

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

(b) in respect of income and capital taxes, to taxes payable for any taxable year beginning on or after January 1 of the calendar year immediately following the year in which the notice is given

 

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have executed this Agreement. 

 

DONE in duplicate at Hanoi, on 4 March 1996 in Vietnamese, French, and English languages, all texts being equally authentic.