Proclamation giving notice that the annexed November 30, 1995 supplementary agreement, entitled Protocol to the Tax Convention Between the Government of Canada and the Government of the French Republic signed on May 2, 1975 and amended by the Protocol of January 16, 1987, came into force on September 1, 1998 — “2
“2 In the case of France, double taxation shall be avoided as follows: (a) income arising in Canada and taxable or taxable only in Canada in accordance with the provisions of the Convention shall be taken into account in calculating the French tax when the recipient is a resident of France and the income is not exempt from the corporation tax under French law. In such case, the Canadian tax shall not be deductible from such income, but the recipient shall be entitled to a tax credit deductible from the French tax. This tax credit is equal: (i) for income not referred to in (ii), to the amount of French tax corresponding to such income; (ii) for income referred to in Articles 10, 11 and 12, in paragraphs 1 and 5 of Article 13, in paragraph 3 of Article 15, in Article 16, in paragraphs 1 and 2 of Article 17, in paragraph 3 of Article 18 and in Article 21, to the amount of tax paid in Canada in accordance with the provisions of those Articles; however, it may not exceed the amount of French tax corresponding to such income. It is understood that the term amount of tax paid in Canada means the amount of Canadian tax effectively and finally paid in respect of such income, in accordance with the Convention, by the resident of France receiving such income. (b) A resident of France who owns taxable capital in Canada in accordance with the provisions of paragraphs 1, 2, 3 or 4 of Article 22 may also be taxed in France in respect of such capital. The French tax is calculated subject to a deduction of a tax credit equal to the amount of Canadian tax on such capital. This tax credit shall not exceed that amount of the French tax which is attributable to such capital. (c) Notwithstanding any other provision of the Convention: (i) where a deceased person was at the time of his death a resident of France, France shall apply the inheritance tax to all of the property taxable in accordance with its domestic legislation and shall allow as a deduction from that tax an amount equal to the Canadian tax paid on the gains which, at the time of death and under the provisions of the Convention, were taxable in Canada; such deduction shall not, however, exceed that share of the French inheritance tax, as computed before the deduction is given, attributable to the property in respect of which the deduction shall be allowed; (ii) where a deceased person was at the time of his death a resident of Canada, France shall apply the inheritance tax to all of the property taxable in accordance with its domestic legislation and shall allow as a deduction from that tax an amount equal to the Canadian tax paid on the gains which, at the time of death and under the provisions of paragraph 4 of Article 13, were taxable only in Canada, and that are not referred to in paragraph 5 of the same Article; such deduction shall not, however, exceed the lessor of the two following shares: (aa) the share of the inheritance tax, as calculated before the deduction is given, attributable to the property from the alienation of which are derived the gains referred to above and in respect of which the deduction shall be allowed; and (bb) the share of the Canadian tax attributable to such property, as calculated before the deduction provided for in paragraph 1(c). (d) It is understood that the term amount of French tax corresponding to such income used in subparagraph (a) means: (i) where the tax payable in respect of such income is calculated by applying a proportional rate, the product of the taxable amount of such net income multiplied by the rate which is applied to such net income; (ii) where the tax payable in respect of such income is calculated by applying a progressive scale, the product of the taxable amount of such net income multiplied by the rate resulting from the ratio between the tax actually payable in respect of the total net income taxable under the laws of France and the amount of such total net income. This interpretation applies by analogy to the term that amount