CONVENTION BETWEENJAPAN AND THE REPUBLIC OF ESTONIAFOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
AND THE PREVENTION OF TAX EVASION AND AVOIDANCECONVENTION BETWEENJAPAN AND THE REPUBLIC OF ESTONIAFOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
AND THE PREVENTION OF TAX EVASION AND AVOIDANCEJapan and the Republic of Estonia,
Desiring to further develop their economic
relationship and to enhance their co-operation in tax
matters,
Intending to conclude a Convention for the eliminationof double taxation with respect to taxes on income without
creating opportunities for non-taxation or reduced taxation
through tax evasion or avoidance (including through treatyshopping arrangements aimed at obtaining reliefs provided
in this Convention for the indirect benefit of residents ofthird States),
Have agreed as follows:
ARTICLE 1PERSONS COVERED1.
This Convention shall apply to persons who areresidents of one or both of the Contracting States.
2.
For the purposes of this Convention, income derived byor through an entity or arrangement that is treated aswholly or partly fiscally transparent under the tax law ofeither Contracting State shall be considered to be incomeof a resident of a Contracting State but only to the extent
that the income is treated, for purposes of taxation bythat Contracting State, as the income of a resident of thatContracting State.
3.
This Convention shall not affect the taxation by aContracting State of its residents except with respect tothe benefits granted under paragraph 3 of Article 7,paragraphs 2 and 3 of Article 9, and Articles 18, 19, 23,
24, 25 and 28.
ARTICLE 2
TAXES COVERED1.
The existing taxes to which this Convention shallapply are:

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(a)

in Japan:(i)

the income tax;(ii)

the corporation tax;(iii)

the special income tax for reconstruction;(iv)

the local corporation tax; and(v)

the local inhabitant taxes(hereinafter referred to as “Japanese tax”); and(b)

in Estonia, the income tax(hereinafter referred to as “Estonian tax”).

2.
This Convention shall apply also to any identical or
substantially similar taxes that are imposed after the dateof signature of the Convention in addition to, or in placeof, the existing taxes. The competent authorities of theContracting States shall notify each other of any
significant changes that have been made in their taxation
laws.
ARTICLE 3
GENERAL DEFINITIONS
1.
For the purposes of this Convention, unless thecontext otherwise requires:(a)the term “Japan”, when used in a geographicalsense, means all the territory of Japan,
including its territorial sea, in which the laws
relating to Japanese tax are in force, and all
the area beyond its territorial sea, including
the seabed and subsoil thereof, over which Japan
has sovereign rights in accordance withinternational law and in which the laws relating
to Japanese tax are in force;(b)

the term “Estonia” means the Republic of Estonia
and, when used in a geographical sense, theterritory of Estonia and any other area adjacentto the territorial waters of Estonia within
which, under the laws of Estonia and inaccordance with international law, the rights ofEstonia may be exercised with respect to theseabed and its subsoil and their natural
resources;

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(c)

the terms “a Contracting State” and “the other
Contracting State” mean Japan or Estonia, as thecontext requires;(d)the term “person” includes an individual, acompany and any other body of persons;(e)the term “company” means any body corporate or
any entity that is treated as a body corporate
for tax purposes;(f)the term “enterprise” applies to the carrying onof any business;(g)

the term “business” includes the performance ofprofessional services and of other activities ofan independent character;(h)the terms “enterprise of a Contracting State” and“enterprise of the other Contracting State” mean
respectively an enterprise carried on by aresident of a Contracting State and an enterprise
carried on by a resident of the other Contracting
State;(i)the term “international traffic” means any
transport by a ship or aircraft operated by anenterprise of a Contracting State, except when
the ship or aircraft is operated solely between
places in the other Contracting State;(j)the term “competent authority” means:

(k)

(l)

(i)

in Japan, the Minister of Finance or his
authorised representative; and(ii)

in Estonia, the Minister of Finance or his
authorised representative;

the term “national”, in relation to a Contracting
State, means:(i)

any individual possessing the nationality ofthat Contracting State; and(ii)

any legal person, partnership or association
deriving its status as such from the laws inforce in that Contracting State; andthe term “pension fund” means any entity or
arrangement that is:

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(i)

established under the laws of a Contracting
State; and(ii)

operated principally to administer orprovide pensions, retirement benefits orother similar remuneration or to earn income
for the benefit of other pension funds,

provided that it is:(iii)

in the case of Japan, exempt from tax inJapan with respect to income derived fromthe activities described in clause (ii);(iv)

in the case of Estonia, established underthe Investment Fund Act and covered by theFunded Pensions Act or any substantiallysimilar Act introduced after the date ofsignature of the Convention.

2.
As regards the application of this Convention at any
time by a Contracting State, any term not defined thereinshall, unless the context otherwise requires, have themeaning that it has at that time under the law of thatContracting State for the purposes of the taxes to which
the Convention applies, any meaning under the applicable
tax laws of that Contracting State prevailing over ameaning given to the term under other laws of thatContracting State.
ARTICLE 4
RESIDENT1.
For the purposes of this Convention, the term
“resident of a Contracting State” means any person who,
under the laws of that Contracting State, is liable to tax
therein by reason of his domicile, residence, place of heador main office, place of management, place of incorporationor any other criterion of a similar nature, and also
includes that Contracting State and any politicalsubdivision or local authority thereof, as well as apension fund of that Contracting State. This term,
however, does not include any person who is liable to tax
in that Contracting State in respect only of income fromsources in that Contracting State.
2.
Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, thenhis status shall be determined as follows:

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(a)

he shall be deemed to be a resident only of theContracting State in which he has a permanent
home available to him; if he has a permanent homeavailable to him in both Contracting States, heshall be deemed to be a resident only of theContracting State with which his personal andeconomic relations are closer (centre of vitalinterests);(b)

if the Contracting State in which he has his
centre of vital interests cannot be determined,
or if he has not a permanent home available tohim in either Contracting State, he shall bedeemed to be a resident only of the Contracting
State in which he has an habitual abode;(c)

if he has an habitual abode in both Contracting
States or in neither of them, he shall be deemed
to be a resident only of the Contracting State ofwhich he is a national;(d)

if he is a national of both Contracting States orof neither of them, the competent authorities of
the Contracting States shall settle the question
by mutual agreement.

3.
Where by reason of the provisions of paragraph 1 aperson other than an individual is a resident of bothContracting States, the competent authorities of theContracting States shall endeavour to determine by mutual
agreement the Contracting State of which such person shallbe deemed to be a resident for the purposes of thisConvention, having regard to its place of head or main
office, its place of effective management, the place where
it is incorporated or otherwise constituted and any otherrelevant factors. In the absence of such agreement, such
person shall not be entitled to any relief or exemption
from tax provided by the Convention.
ARTICLE 5
PERMANENT ESTABLISHMENT
1.
For the purposes of this Convention, the term
“permanent establishment” means a fixed place of businessthrough which the business of an enterprise is wholly or
partly carried on.
2.
The term “permanent establishment” includes
especially:(a)a place of management;

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(b)

a branch;(c)an office;(d)a factory;(e)a workshop; and(f)a mine, an oil or gas well, a quarry or any otherplace of extraction of natural resources.

3.
A building site or construction or installation
project constitutes a permanent establishment only if it
lasts more than twelve months.
4.
Notwithstanding the preceding provisions of this
Article, the term “permanent establishment” shall be deemed
not to include:(a)the use of facilities solely for the purpose ofstorage or display of goods or merchandise
belonging to the enterprise;(b)

the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of storage or display;(c)the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of processing by anotherenterprise;(d)the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;(e)the maintenance of a fixed place of businesssolely for the purpose of carrying on, for theenterprise, any activity not listed insubparagraphs (a) to (d), provided that thisactivity has a preparatory or auxiliary
character; or(f)the maintenance of a fixed place of businesssolely for any combination of activities
mentioned in subparagraphs (a) to (e), provided
that the overall activity of the fixed place ofbusiness resulting from this combination is of apreparatory or auxiliary character.

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5.
Paragraph 4 shall not apply to a fixed place ofbusiness that is used or maintained by an enterprise if thesame enterprise or one or more of the closely related
enterprises carry on business activities at the same place
or at one or more other places in the same Contracting
State and:(a)that place or one of those other places
constitutes a permanent establishment for theenterprise or one or more of the closely related
enterprises under the provisions of this Article;or(b)the overall activity resulting from the
combination of the activities carried on by thetwo or more enterprises at the same place, or by
the same enterprise or one or more of the closely
related enterprises at the different places, is
not of a preparatory or auxiliary character,provided that the business activities carried on by the two
or more enterprises at the same place, or by the same
enterprise or one or more of the closely related
enterprises at the different places, constitutecomplementary functions that are part of a cohesive
business operation.
6.
Notwithstanding the provisions of paragraphs 1 and 2
but subject to the provisions of paragraph 7, where aperson is acting in a Contracting State on behalf of anenterprise and, in doing so, habitually concludes
contracts, or habitually plays the principal role leading
to the conclusion of contracts that are routinely concluded
without material modification by the enterprise, and thesecontracts are:(a)in the name of the enterprise; or(b)for the transfer of the ownership of, or for the
granting of the right to use, property owned bythat enterprise or that the enterprise has theright to use; or(c)for the provision of services by that enterprise,that enterprise shall be deemed to have a permanentestablishment in that Contracting State in respect of any
activities which that person undertakes for the enterprise,
unless the activities of such person are limited to thosementioned in paragraph 4 which, if exercised through afixed place of business, would not make this fixed place ofbusiness a permanent establishment under the provisions ofthat paragraph.

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7.
Paragraph 6 shall not apply where the person acting ina Contracting State on behalf of an enterprise of the other
Contracting State carries on business in the firstmentioned Contracting State as an independent agent andacts for the enterprise in the ordinary course of thatbusiness. Where, however, a person acts exclusively or
almost exclusively on behalf of one or more enterprises towhich it is closely related, that person shall not be
considered to be an independent agent within the meaning of
this paragraph with respect to any such enterprise.
8.
For the purposes of this Convention, a person orenterprise is closely related to a person or enterprise if,
based on all the relevant facts and circumstances, one has
control of the other or both are under the control of thesame persons or enterprises. In any case, a person orenterprise shall be considered to be closely related to aperson or enterprise if one possesses directly or
indirectly more than 50 per cent of the beneficial interestin the other (or, in the case of a company, more than 50
per cent of the aggregate vote and value of the company’s
shares or of the beneficial equity interest in the company)
or if another person or enterprise possesses directly or
indirectly more than 50 per cent of the beneficial interest(or, in the case of a company, more than 50 per cent of theaggregate vote and value of the company’s shares or of thebeneficial equity interest in the company) in the person
and the enterprise or in the two persons or enterprises.
9.
The fact that a company which is a resident of aContracting 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 Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE 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 betaxed in that other Contracting State.

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2.
The term “immovable property” shall have the meaning
which it has under the law of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovable
property, livestock and equipment used in agriculture andforestry, rights to which the provisions of general law
respecting landed property apply, any options or similar
rights to acquire immovable property, usufruct of immovable
property and rights to variable or fixed payments as
consideration for the working of, or the right to work,
mineral deposits, sources and other natural resources;
ships and aircraft shall not be regarded as immovable
property.
3.
The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any otherform of immovable property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise.
ARTICLE 7
BUSINESS PROFITS
1.
Profits of an enterprise of a Contracting State shallbe taxable only in that Contracting State unless theenterprise carries on business in the other Contracting
State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, theprofits that are attributable to the permanentestablishment in accordance with the provisions ofparagraph 2 may be taxed in that other Contracting State.
2.
For the purposes of this Article and Article 23, theprofits that are attributable in each Contracting State to
the permanent establishment referred to in paragraph 1 are
the profits it might be expected to make, in particular inits dealings with other parts of the enterprise, if it werea separate and independent enterprise engaged in the sameor similar activities under the same or similar conditions,taking into account the functions performed, assets used
and risks assumed by the enterprise through the permanentestablishment and through the other parts of theenterprise.

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3.
Where, in accordance with paragraph 2, a Contracting
State adjusts the profits that are attributable to apermanent establishment of an enterprise of one of theContracting States and taxes accordingly profits of theenterprise that have been charged to tax in the other
Contracting State, that other Contracting State shall, tothe extent necessary to eliminate double taxation on these
profits, make an appropriate adjustment to the amount of
the tax charged therein on those profits. In determining
such adjustment, the competent authorities of theContracting States shall if necessary consult each other.
4.
Where profits include items of income which are dealt
with separately in other Articles of this Convention, thenthe provisions of those Articles shall not be affected by
the provisions of this Article.
ARTICLE 8SHIPPING AND AIR TRANSPORT
1.
Profits of an enterprise of a Contracting State fromthe operation of ships or aircraft in international traffic
shall be taxable only in that Contracting State.
2.
Notwithstanding the provisions of Article 2, anenterprise of a Contracting State shall be exempt in
respect of its carrying on the operation of ships oraircraft in international traffic from, in the case of anenterprise of Estonia, the enterprise tax of Japan and, inthe case of an enterprise of Japan, any tax similar to theenterprise tax of Japan which is imposed after the date ofsignature of this Convention in Estonia.
3.
The provisions of the preceding paragraphs of this
Article 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 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 capitalof an enterprise of a Contracting State and an
enterprise of the other Contracting State,- 10 -

and in either case conditions are made or imposed between
the two enterprises in their commercial or financial
relations which differ from those which would be madebetween independent enterprises, then any profits which
would, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.
2.
Where a Contracting State includes in the profits ofan enterprise of that Contracting State – and taxes
accordingly – profits on which an enterprise of the other
Contracting State has been charged to tax in that other
Contracting State and the profits so included are profits
which would have accrued to the enterprise of the firstmentioned Contracting State if the conditions made between
the two enterprises had been those which would have been
made between independent enterprises, then that other
Contracting State shall make an appropriate adjustment tothe amount of the tax charged therein on those profits. In
determining such adjustment, due regard shall be had to theother provisions of this Convention and the competentauthorities of the Contracting States shall if necessary
consult each other.
3.
Notwithstanding the provisions of paragraph 1, aContracting State shall not change the profits of anenterprise of that Contracting State in the circumstancesreferred to in that paragraph after the expiry of the time
limits provided for in the laws of that Contracting State
and, in any case, after ten years from the end of thetaxable year in which the profits that would be subjected
to such change would, but for the conditions referred to inthat paragraph, have accrued to that enterprise. The
provisions of this paragraph shall not apply in the case of
fraud or wilful default.
ARTICLE 10
DIVIDENDS
1.
Dividends paid by a company which is a resident of aContracting State to a resident of the other Contracting
State may be taxed in that other Contracting State.
2.
However, dividends paid by a company which is a
resident of a Contracting State may also be taxed in thatContracting State according to the laws of that Contracting
State, but if the beneficial owner of the dividends is a
resident of the other Contracting State, the tax so charged
shall not exceed 10 per cent of the gross amount of thedividends.

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3.
Notwithstanding the provisions of paragraph 2,
dividends paid by a company which is a resident of aContracting State shall be taxable only in the other
Contracting State if the beneficial owner of the dividends
is a resident of that other Contracting State and is acompany which has owned, directly or indirectly, at least
10 per cent of the voting power of the company paying thedividends for the period of six months ending on the dateon which entitlement to the dividends is determined.
4.
The provisions of paragraphs 2 and 3 shall not affectthe taxation of the company in respect of the profits outof which the dividends are paid.
5.
The provisions of paragraph 3 shall not apply in thecase of dividends which are deductible in computing thetaxable income of the company paying the dividends in theContracting State of which that company is a resident.
6.
The term “dividends” as used in this Article means
income from shares or other rights, not being debt-claims,
participating in profits, as well as income from otherrights which is subjected to the same taxation treatment asincome from shares by the laws of the Contracting State ofwhich the company making the distribution is a resident.
7.
The provisions of paragraphs 1, 2 and 3 shall not
apply if the beneficial owner of the dividends, being a
resident of a Contracting State, carries on business in theother Contracting State of which the company paying thedividends is a resident through a permanent establishment
situated therein and the holding in respect of which thedividends are paid is effectively connected with suchpermanent establishment. In such case the provisions ofArticle 7 shall apply.
8.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting
State, that other Contracting State may not impose any tax
on the dividends paid by the company, except insofar as
such dividends are paid to a resident of that other
Contracting State or insofar as the holding in respect ofwhich the dividends are paid is effectively connected witha permanent establishment situated in that other
Contracting State, nor subject the company’s undistributed
profits to a tax on the company’s undistributed profits,even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising insuch other Contracting State.

- 12 -ARTICLE 11
INTEREST
1.
Interest arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.
2.
However, interest arising in a Contracting State may
also be taxed in that Contracting State according to thelaws of that Contracting State, but if the beneficial ownerof the interest is a resident of the other Contracting
State, the tax so charged shall not exceed 10 per cent of
the gross amount of the interest.
3.
Notwithstanding the provisions of paragraph 2,interest arising in a Contracting State shall be taxable
only in the other Contracting State if:(a)the interest is beneficially owned by theGovernment of that other Contracting State, apolitical subdivision or local authority thereof,
the central bank thereof or any institution
wholly owned by that Government; or(b)

the interest is beneficially owned by a residentof that other Contracting State with respect to
debt-claims guaranteed, insured or indirectly
financed by the Government of that other
Contracting State, a political subdivision or
local authority thereof, the central bank thereofor any institution wholly owned by that
Government.

4.
The term “interest” as used in this Article means
income from debt-claims of every kind, whether or notsecured by mortgage and whether or not carrying a right toparticipate in the debtor’s profits, and in particular,
income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures as well as other incomethat is subjected to the same taxation treatment as income
from money lent by the laws of the Contracting State inwhich the income arises. Income dealt with in Article 10
and penalty charges for late payment shall not, however, beregarded as interest for the purposes of this Article.

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5.
The provisions of paragraphs 1, 2 and 3 shall not
apply if the beneficial owner of the interest, being a
resident of a Contracting State, carries on business in theother Contracting State in which the interest arises
through a permanent establishment situated therein and thedebt-claim in respect of which the interest is paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
6.
Interest shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the interest,
whether he is a resident of a Contracting State or not, hasin a Contracting State a permanent establishment inconnection with which the indebtedness on which theinterest is paid was incurred, and such interest is borneby such permanent establishment, then such interest shallbe deemed to arise in the Contracting State in which thepermanent establishment is situated.
7.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest, having
regard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to thelast-mentioned amount. In such case, the excess part ofthe payments shall remain taxable according to the laws ofeach Contracting State, due regard being had to the otherprovisions of this Convention.
ARTICLE 12
ROYALTIES
1.
Royalties arising in a Contracting State and paid to aresident of the other Contracting State may be taxed inthat other Contracting State.
2.
However, royalties arising in a Contracting State may
also be taxed in that Contracting State according to thelaws of that Contracting State, but if the beneficial ownerof the royalties is a resident of the other Contracting
State, the tax so charged shall not exceed 5 per cent of
the gross amount of the royalties.
3.
The term “royalties” as used in this Article means
payments of any kind received as a consideration for theuse of, or the right to use, any copyright of literary,artistic or scientific work including cinematograph films,
or any patent, trade mark, design or model, plan, or secretformula or process, or for information concerningindustrial, commercial or scientific experience.

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4.
The provisions of paragraphs 1 and 2 shall not apply
if the beneficial owner of the royalties, being a residentof a Contracting State, carries on business in the other
Contracting State in which the royalties arise through apermanent establishment situated therein and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
5.
Royalties shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the royalties,
whether he is a resident of a Contracting State or not, hasin a Contracting State a permanent establishment inconnection with which the liability to pay the royalties
was incurred, and such royalties are borne by suchpermanent establishment, then such royalties shall bedeemed to arise in the Contracting State in which thepermanent establishment is situated.
6.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the royalties, having
regard to the use, right or information for which they arepaid, exceeds the amount which would have been agreed uponby the payer and the beneficial owner in the absence ofsuch relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess 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 immovable property referred to in
Article 6 and situated in the other Contracting State may
be taxed in that other Contracting State.
2.
Gains from the alienation of any property, other thanimmovable property referred to in Article 6, forming partof the business property of a permanent establishment which
an enterprise of a Contracting State has in the other
Contracting State, including such gains from the alienationof such a permanent establishment (alone or with the wholeenterprise), may be taxed in that other Contracting State.

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3.
Gains derived by an enterprise of a Contracting State
from the alienation of ships or aircraft operated by thatenterprise in international traffic or any property, otherthan immovable property referred to in Article 6,pertaining to the operation of such ships or aircraft shallbe taxable only in that Contracting State.
4.
Gains derived by a resident of a Contracting State
from the alienation of shares of a company or comparable
interests, such as interests in a partnership, trust orinvestment fund, may be taxed in the other Contracting
State if, at any time during the 365 days preceding thealienation, these shares or comparable interests derived atleast 50 per cent of their value directly or indirectlyfrom immovable property referred to in Article 6 andsituated in that other Contracting State, unless suchshares or comparable interests are traded on a recognised
stock exchange specified in subparagraph (b) of paragraph 7
of Article 22 and the resident and persons related to that
resident own in the aggregate 5 per cent or less of theclass of such shares or comparable interests.
5.
Gains from the alienation of any property, other thanthat referred to in the preceding paragraphs of this
Article, shall be taxable only in the Contracting State ofwhich the alienator is a resident.
ARTICLE 14
INCOME FROM EMPLOYMENT
1.
Subject to the provisions of Articles 15, 17 and 18,
salaries, wages and other similar remuneration derived by aresident of a Contracting State in respect of an employment
shall be taxable only in that Contracting State unless theemployment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as isderived therefrom may be taxed in that other Contracting
State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting Statein respect of an employment exercised in the other
Contracting State shall be taxable only in the firstmentioned Contracting State if:(a)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- 16 -

(b)the remuneration is paid by, or on behalf of, anemployer who is not a resident of the other
Contracting State, and(c)the remuneration is not borne by a permanentestablishment which the employer has in the other
Contracting State.

3.
Notwithstanding the preceding provisions of this
Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated ininternational traffic by an enterprise of a Contracting
State may be taxed in that Contracting State.
ARTICLE 15
DIRECTORS’ FEES
Directors’ fees and other similar payments derived bya resident of a Contracting State in his capacity as amember of the board of directors, or of a similar organ, of
a company which is a resident of the other Contracting
State may be taxed in that other Contracting State.
ARTICLE 16
ENTERTAINERS AND SPORTSPERSONS
1.
Notwithstanding the provisions of Article 14, income
derived by a resident of a Contracting State as anentertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as a sportsperson,from that resident’s personal activities as such exercisedin the other Contracting State, may be taxed in that other
Contracting State.
2.
Where income in respect of personal activities
exercised by an entertainer or a sportsperson acting as
such accrues not to the entertainer or sportsperson but toanother person, that income may, notwithstanding theprovisions of Article 14, be taxed in the Contracting Statein which the activities of the entertainer or sportsperson
are exercised.
ARTICLE 17
PENSIONS
Pensions and other similar remuneration derived by aresident of a Contracting State shall be taxable only inthat Contracting State.

- 17 -ARTICLE 18
GOVERNMENT SERVICE
1.

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

(b)

However, such salaries, wages and other similar
remuneration, other than pensions and othersimilar remuneration, shall be taxable only inthe other Contracting State if the services are
rendered in that other Contracting State and theindividual is a resident of that other
Contracting State who:(i)is a national of that other Contracting
State; or(ii)

did not become a resident of that other
Contracting State solely for the purpose of
rendering the services.

2.
The provisions of Articles 14, 15 and 16 shall apply
to salaries, wages and other similar remuneration, otherthan pensions and other similar remuneration, in respect ofservices rendered in connection with a business carried on
by a Contracting State or a political subdivision or local
authority thereof.
ARTICLE 19
STUDENTS
Payments which a student, business apprentice ortrainee who is or was immediately before visiting aContracting State a resident of the other Contracting Stateand who is present in the first-mentioned Contracting State
solely for the purpose of his education or training
receives for the purpose of his maintenance, education ortraining shall not be taxed in that Contracting State,provided that such payments arise from sources outside thatContracting State. The exemption provided by this Article
shall apply to a business apprentice or trainee only for aperiod not exceeding one year from the date on which hefirst begins his training in that Contracting State.

- 18 -ARTICLE 20
SILENT PARTNERSHIP
Notwithstanding any other provisions of thisConvention, any income and gains derived by a silent
partner in respect of a silent partnership (in the case ofJapan, Tokumei Kumiai) contract or another similar contract
may be taxed in the Contracting State in which such income
and gains arise and according to the laws of thatContracting State.
ARTICLE 21
OTHER INCOME
1.
Items of income beneficially owned by a resident of aContracting State, wherever arising, not dealt with in theforegoing Articles of this Convention shall be taxable onlyin that Contracting State.
2.
The provisions of paragraph 1 shall not apply toincome, other than income from immovable property referred
to in Article 6, if the beneficial owner of such income,being a resident of a Contracting State, carries on
business in the other Contracting State through a permanentestablishment situated therein and the right or property inrespect of which the income is paid is effectively
connected with such permanent establishment. In such casethe provisions of Article 7 shall apply.
3.
Where, by reason of a special relationship between theresident referred to in paragraph 1 and the payer or
between both of them and some other person, the amount of
the income referred to in paragraph 1 exceeds the amountwhich would have been agreed upon between them in theabsence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In
such case, the excess part of the income shall remaintaxable according to the laws of each Contracting State,
due regard being had to the other provisions of thisConvention.
ARTICLE 22
ENTITLEMENT TO BENEFITS
1.
A resident of a Contracting State shall be entitled tobenefits granted by the provisions of paragraph 3 ofArticle 10 or subparagraph (b) of paragraph 3 of Article 11
if such resident is a qualified person as defined inparagraph 2.

- 19 -

2.
A resident of a Contracting State is a qualified
person only if such resident is either:(a)an individual;(b)

the Government of that Contracting State, any
political subdivision or local authority thereof,or the central bank thereof;(c)a company, provided that its principal class ofshares is regularly traded on one or more
recognised stock exchanges;(d)a pension fund, provided that, at the beginningof the taxable year for which the claim to thebenefit is made, at least 50 per cent of its
beneficiaries, members or participants areindividuals who are residents of either
Contracting State; or(e)a person other than an individual, provided that
residents of either Contracting State that are
qualified persons by reason of subparagraph (a),(b), (c) or (d) own, directly or indirectly, atleast 50 per cent of the voting power or otherbeneficial interests of the person.

3.
A resident of a Contracting State shall be entitled toa benefit granted by the provisions of paragraph 3 ofArticle 10 or subparagraph (b) of paragraph 3 of Article 11
with respect to an item of income described in thatparagraph or subparagraph if:(a)in the case of a pension fund, at the beginningof the taxable year for which the claim to thebenefit is made, at least 75 per cent of its
beneficiaries, members or participants areindividuals who are equivalent beneficiaries; or(b)in all other cases, persons that are equivalentbeneficiaries own, directly or indirectly, atleast 75 per cent of the voting power or otherbeneficial interests of that resident.

4.
For the purposes of applying the provisions of
subparagraph (e) of paragraph 2 and subparagraph (b) ofparagraph 3, a resident of a Contracting State shall beconsidered to satisfy the conditions described in thosesubparagraphs only if such resident satisfies thoseconditions during the twelve month period including thedate of the payment (in the case of dividends, the date on
which entitlement to the dividends is determined).

- 20 -

5.

(a)

A resident of a Contracting State shall beentitled to a benefit granted by the provisionsof paragraph 3 of Article 10 or subparagraph (b)of paragraph 3 of Article 11 with respect to an
item of income described in that paragraph or
subparagraph if:(i)the resident is carrying on business in thatContracting State (other than the businessof making or managing investments for the
resident’s own account, unless the businessis banking, insurance or securities businesscarried on by a bank, insurance company or
securities dealer); and(ii)

the item of income is derived in connection
with, or is incidental to, that business.

(b)

If a resident of a Contracting State derives anitem of income from a business carried on by that
resident in the other Contracting State orderives an item of income arising in the other
Contracting State from a closely related person
to the resident, the conditions described insubparagraph (a) shall be considered to besatisfied with respect to such item of income
only if the business carried on in the firstmentioned Contracting State is substantial in
relation to the business carried on in the other
Contracting State. Whether such business issubstantial for the purpose of this subparagraphshall be determined on the basis of all the facts
and circumstances.

(c)

In determining whether a person is carrying on
business in a Contracting State undersubparagraph (a), the business conducted by apartnership in which that person is a partner orthe business conducted by closely related persons
to such person shall be deemed to be conducted bysuch person.

6.
A resident of a Contracting State that is neither aqualified person nor entitled under paragraph 3 or 5 to abenefit granted by the provisions of paragraph 3 of Article
10 or subparagraph (b) of paragraph 3 of Article 11 shallnevertheless be entitled to such benefit if the competentauthority of the Contracting State to which the benefit isclaimed determines that the establishment, acquisition or
maintenance of such resident and the conduct of its
operations did not have as one of the principal purposes
the obtaining of such benefit.

- 21 -

7.

For the purposes of this Article:(a)the term “principal class of shares” means theclass or classes of shares of a company which
represent a majority of the voting power of thecompany;(b)

the term “recognised stock exchange” means:

(c)

(i)

any stock exchange established under theterms of the Financial Instruments andExchange Law (Law No. 25 of 1948) of Japan;(ii)

any regulated market pursuant to the
Directive 2014/65/EU of the European
Parliament and of the Council of 15 May 2014
on markets in financial instruments andamending Directive 2002/92/EC and Directive
2011/61/EU (as amended) or any successor
Directive;(iii)

Hong Kong Exchanges and Clearing, the NASDAQ
System, the New York Stock Exchange,
Singapore Exchange, SIX Swiss Exchange andthe Taiwan Stock Exchange; and(iv)

any other stock exchange which the competentauthorities of the Contracting States agree
to recognise for the purposes of this
Article;the term “equivalent beneficiary” means any
person who would be entitled to a benefit, withrespect to the item of income in respect of which
the benefit of this Convention is claimed to aContracting State, granted by that Contracting
State under the law of that Contracting State,
the Convention or any other international
instrument, provided that such benefit isequivalent to the benefit to be granted to that
item of income under the Convention.

8.
Notwithstanding the other provisions of thisConvention, a benefit under the Convention shall not be
granted in respect of an item of income if it is reasonable
to conclude, having regard to all relevant facts andcircumstances, that obtaining that benefit was one of theprincipal purposes of any arrangement or transaction that
resulted directly or indirectly in that benefit, unless it
is established that granting that benefit in thesecircumstances would be in accordance with the object andpurpose of the relevant provisions of the Convention.

- 22 -ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
1.
Subject to the provisions of the laws of Japan
regarding the allowance as a credit against Japanese tax oftax payable in any country other than Japan, where aresident of Japan derives income from Estonia which may betaxed in Estonia in accordance with the provisions of thisConvention, the amount of Estonian tax payable in respectof that income shall be allowed as a credit against theJapanese tax imposed on that resident. The amount ofcredit, however, shall not exceed the amount of theJapanese tax which is appropriate to that income.
2.
In the case of a resident of Estonia, double taxation
shall be avoided as follows:(a)where a resident of Estonia derives income which,in accordance with the provisions of thisConvention, has been taxed in Japan, Estonia
shall, subject to the provisions of subparagraph(b), exempt such income from tax; and(b)where in accordance with any provision of theConvention income derived by a resident ofEstonia is exempt from tax in Estonia, Estonia
may nevertheless, in calculating the amount of
tax on the remaining income of such resident,
take into account the exempted income.
ARTICLE 24
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 moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the same
circumstances, in particular with respect to residence, areor may be subjected. The provisions of this paragraphshall, notwithstanding the provisions of Article 1, also
apply to persons who are not residents of one or both of
the Contracting States.

- 23 -

2.
The taxation on a permanent establishment which anenterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities. The provisions of this paragraph shallnot be construed as obliging a Contracting State to grant
to residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes on
account of civil status or family responsibilities which it
grants to its own residents.
3.
Except where the provisions of paragraph 1 of Article
9, paragraph 7 of Article 11, paragraph 6 of Article 12 orparagraph 3 of Article 21 apply, interest, royalties andother disbursements paid by an enterprise of a Contracting
State to a resident of the other Contracting State shall,for the purpose of determining the taxable profits of suchenterprise, be deductible under the same conditions as if
they had been paid to a resident of the first-mentioned
Contracting State.
4.
Enterprises of a Contracting State, the capital ofwhich 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 firstmentioned Contracting State to any taxation or any
requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentioned
Contracting State are or may be subjected.
5.
The provisions of this Article shall, notwithstanding
the provisions of Article 2, apply to taxes of every kindand description imposed on behalf of a Contracting State orof its political subdivisions or local authorities.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
1.
Where a person considers that the actions of one orboth of the Contracting 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 Contracting States,
present his case to the competent authority of either
Contracting State. The case must be presented within three
years from the first notification of the action resulting
in taxation not in accordance with the provisions of theConvention.

- 24 -

2.
The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Convention. Any agreement reachedshall be implemented notwithstanding any time limits in thedomestic law of the Contracting States.
3.
The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation orapplication of this 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 with each other directly, including througha joint commission consisting of themselves or theirrepresentatives, for the purpose of reaching an agreementin the sense of the preceding paragraphs of this Article.
5.

Where,(a)under paragraph 1, a person has presented a caseto the competent authority of a Contracting Stateon the basis that the actions of one or both of
the Contracting States have resulted for that
person in taxation not in accordance with theprovisions of this Convention, and(b)the competent authorities are unable to reach an
agreement to resolve that case pursuant toparagraph 2 within two years from thepresentation of the case to the competentauthority of the other Contracting State,

any unresolved issues arising from the case shall be
submitted to arbitration if the person so requests. These
unresolved issues shall not, however, be submitted toarbitration if a decision on these issues has already been
rendered by a court or administrative tribunal of either
Contracting State. Unless a person directly affected by
the case does not accept the mutual agreement that
implements the arbitration decision, that decision shall bebinding on both Contracting States and shall be implemented
notwithstanding any time limits in the domestic laws ofthese Contracting States. The competent authorities of theContracting States shall by mutual agreement settle themode of application of this paragraph.

- 25 -

6.
The provisions of paragraph 5 shall not apply to cases
falling within paragraph 3 of Article 4.
ARTICLE 26
EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevant
for carrying out the provisions of this Convention or to
the administration or enforcement of the domestic laws
concerning taxes of every kind and description imposed onbehalf of the Contracting States, or of their politicalsubdivisions or local authorities, insofar as the taxation
thereunder is not contrary to the Convention. The exchange
of information is not restricted by Articles 1 and 2.
2.
Any information received under paragraph 1 by aContracting State shall be treated as secret in the samemanner as information obtained under the domestic laws ofthat Contracting State and shall be disclosed only topersons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, theenforcement or prosecution in respect of, the determinationof appeals in relation to the taxes referred to inparagraph 1, or the oversight of the above. Such persons
or authorities shall use the information only for such
purposes. They may disclose the information in public
court proceedings or in judicial decisions.
Notwithstanding the foregoing, information received by aContracting State may be used for other purposes when suchinformation may be used for such other purposes under thelaws of both Contracting States and the competent authorityof the Contracting State supplying the information
authorises such use.
3.
In no case shall the provisions of paragraphs 1 and 2
be construed so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)to supply information which is not obtainable
under the laws or in the normal course of theadministration of that or of the other
Contracting State;- 26 -

(c)to supply information which would disclose any
trade, business, industrial, commercial or
professional secret or trade process, orinformation the disclosure of which would becontrary to public policy;(d)to obtain or provide information that would
reveal confidential communications between aclient and an attorney, solicitor or otheradmitted legal representative where such
communications are:(i)

produced for the purposes of seeking orproviding legal advice; or(ii)produced for the purposes of use in existingor contemplated legal proceedings.

4.
If information is requested by a Contracting State inaccordance with this Article, the other Contracting State
shall use its information gathering measures to obtain therequested information, even though that other Contracting
State may not need such information for its own tax
purposes. The obligation contained in the preceding
sentence is subject to the limitations of paragraph 3 but
in no case shall such limitations be construed to permit aContracting State to decline to supply information solely
because it has no domestic interest in such information.
5.
In no case shall the provisions of paragraph 3 beconstrued to permit a Contracting State to decline tosupply information solely because the information is heldby a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it
relates to ownership interests in a person.
ARTICLE 27
ASSISTANCE IN THE COLLECTION OF TAXES
1.
The Contracting States shall lend assistance to eachother in the collection of revenue claims. This assistanceis not restricted by Articles 1 and 2. The competentauthorities of the Contracting States may by mutual
agreement settle the mode of application of this Article.
2.
The term “revenue claim” as used in this Article means
an amount owed in respect of the following taxes, insofar
as the taxation thereunder is not contrary to thisConvention or any other instrument to which the Contracting
States are parties, as well as interest, administrative
penalties and costs of collection or conservancy related tosuch amount:- 27 -

(a)(b)

in Japan:(i)the taxes referred to in clauses (i) to (iv)of subparagraph (a) of paragraph 1 of
Article 2;(ii)

the special corporation tax forreconstruction;(iii)

the consumption tax;(iv)

the local consumption tax;(v)

the inheritance tax; and(vi)

the gift tax;in Estonia:(i)

the income tax;(ii)

the social tax;(iii)

the land tax; and(iv)

the value added tax;(c)

any other tax as may be agreed upon from time totime between the Governments of the Contracting
States through an exchange of diplomatic notes;(d)any identical or substantially similar taxes thatare imposed after the date of signature of thisConvention in addition to, or in place of, thetaxes covered by subparagraph (a), (b) or (c).

3.
When a revenue claim of a Contracting State isenforceable under the laws of that Contracting State and is
owed by a person who, at that time, cannot, under the lawsof that Contracting State, prevent its collection, thatrevenue claim shall, at the request of the competentauthority of that Contracting State, be accepted for
purposes of collection by the competent authority of theother Contracting State. That revenue claim shall becollected by that other Contracting State in accordancewith the provisions of its laws applicable to theenforcement and collection of its own taxes as if therevenue claim were a revenue claim of that other
Contracting State that met the conditions allowing that
other Contracting State to make a request under thisparagraph.

- 28 -

4.
When a revenue claim of a Contracting State is a claim
in respect of which that Contracting State may, under its
law, take measures of conservancy with a view to ensure its
collection, that revenue claim shall, at the request of thecompetent authority of that Contracting State, be acceptedfor purposes of taking measures of conservancy by thecompetent authority of the other Contracting State. Thatother Contracting State shall take measures of conservancy
in respect of that revenue claim in accordance with theprovisions of its laws as if the revenue claim were arevenue claim of that other Contracting State even if, at
the time when such measures are applied, the revenue claim
is not enforceable in the first-mentioned Contracting Stateor is owed by a person who has a right to prevent its
collection.
5.
Notwithstanding the provisions of paragraphs 3 and 4,
a revenue claim accepted by the competent authority of aContracting State for purposes of paragraph 3 or 4 shallnot, in that Contracting State, be subject to the time
limits or accorded any priority applicable to a revenue
claim under the laws of that Contracting State by reason of
its nature as such. In addition, a revenue claim acceptedby the competent authority of a Contracting State for the
purposes of paragraph 3 or 4 shall not, in that Contracting
State, have any priority applicable to that revenue claim
under the laws of the other Contracting State.
6.
Acts carried out by a Contracting State in thecollection of a revenue claim accepted by the competentauthority of that Contracting State for purposes ofparagraph 3 or 4 which if they were carried out by theother Contracting State would have the effect of suspending
or interrupting the time limits applicable to the revenue
claim in accordance with the laws of that other Contracting
State shall have such effect under the laws of that other
Contracting State. The competent authority of the firstmentioned Contracting State shall inform the competentauthority of the other Contracting State of having carriedout such acts.
7.
Proceedings with respect to the existence, validity or
the amount of a revenue claim of a Contracting State shallnot be brought before the courts or administrative bodiesof the other Contracting State.
8.
Where, at any time after a request has been made by
the competent authority of a Contracting State underparagraph 3 or 4 and before the other Contracting State hascollected and remitted the relevant revenue claim to thefirst-mentioned Contracting State, the relevant revenue
claim ceases to be:- 29 -

(a)in the case of a request under paragraph 3, arevenue claim of the first-mentioned Contracting
State that is enforceable under the laws of thatContracting State and is owed by a person who, atthat time, cannot, under the laws of thatContracting State, prevent its collection, or(b)

in the case of a request under paragraph 4, arevenue claim of the first-mentioned Contracting
State in respect of which that Contracting State
may, under its laws, take measures of conservancy
with a view to ensure its collection,

the competent authority of the first-mentioned Contracting
State shall promptly notify the competent authority of theother Contracting State of that fact and, at the option of
the competent authority of the other Contracting State, thecompetent authority of the first-mentioned Contracting
State shall either suspend or withdraw its request.
9.
In no case shall the provisions of this Article beconstrued so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)

to carry out measures which would be contrary to
public policy;(c)

to provide assistance if the other Contracting
State has not pursued all reasonable measures ofcollection or conservancy, as the case may be,available under its laws or administrative
practice;(d)to provide assistance in those cases where theadministrative burden for that Contracting Stateis clearly disproportionate to the benefit to be
derived by the other Contracting State.

ARTICLE 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal
privileges of members of diplomatic missions or consular
posts under the general rules of international law or under
the provisions of special agreements.

- 30 -ARTICLE 29
HEADINGS
The headings of the Articles of this Convention are
inserted for convenience of reference only and shall notaffect the interpretation of the Convention.
ARTICLE 30
ENTRY INTO FORCE
1.
This Convention shall be approved in accordance withthe legal procedures of each of the Contracting States andshall enter into force on the thirtieth day after the dateof exchange of diplomatic notes indicating such approval.
2.

This Convention shall have effect:(a)with respect to taxes levied on the basis of ataxable year, for taxes for any taxable years
beginning on or after 1 January in the calendar
year next following that in which the Convention
enters into force; and(b)with respect to taxes levied not on the basis ofa taxable year, for taxes levied on or after 1
January in the calendar year next following thatin which the Convention enters into force.
ARTICLE 31
TERMINATIONThis Convention shall remain in force until terminatedby a Contracting State. Either Contracting State may
terminate the Convention by giving notice of termination
through diplomatic channels to the other Contracting Stateat least six months before the end of any calendar year
beginning after expiry of five years from the date of entry
into force of the Convention. In such event, theConvention shall cease to have effect:(a)with respect to taxes levied on the basis of ataxable year, for taxes for any taxable years
beginning on or after 1 January in the calendar
year next following that in which the notice isgiven; and(b)with respect to taxes levied not on the basis ofa taxable year, for taxes levied on or after 1
January in the calendar year next following thatin which the notice is given.

- 31 -

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Convention.
DONE in duplicate at Tallinn this thirtieth day ofAugust, 2017 in the English language.
For Japan:

For the Republic of Estonia:

Y. Yanagisawa

T Tõniste- 32 -PROTOCOLAt the signing of the Convention between Japan and theRepublic of Estonia for the Elimination of Double Taxation
with respect to Taxes on Income and the Prevention of Tax
Evasion and Avoidance (hereinafter referred to as “theConvention”), Japan and the Republic of Estonia have agreed
upon the following provisions, which shall form an integral
part of the Convention:
1.
With reference to paragraph 2 of Article 1 of theConvention:
The term “fiscally transparent” means situations
where, under the tax law of a Contracting State, income orpart thereof of an entity or arrangement is taxed not at
the level of the entity or arrangement but at the level ofthe persons who have an interest in that entity or
arrangement as if that income or part thereof were directly
derived by such persons at the time when that income orpart thereof is realised whether or not that income or part
thereof is distributed by that entity or arrangement tosuch persons.
2.
Notwithstanding the provisions of the Convention,
income derived by a resident of a Contracting State fromshares of a company or comparable interests, such as
interests in a partnership, trust or investment fund, may
be taxed in the other Contracting State and according to
the laws of that other Contracting State if, at any time
during the 365 days preceding the payment of the income,these shares or comparable interests derived at least 50
per cent of their value directly or indirectly from
immovable property referred to in Article 6 of theConvention and situated in that other Contracting State.
3.
With reference to paragraph 5 of Article 25 of theConvention:(a)

The competent authorities of the Contracting
States shall by mutual agreement establish aprocedure in order to ensure that an arbitration
decision will be implemented within two years
from a request for arbitration as referred to inparagraph 5 of Article 25 of the Convention
unless actions or inaction of a person directly
affected by the case in respect of which therequest for arbitration has been made hinder the
resolution of the case or unless the competentauthorities of the Contracting States and that
person otherwise agree.

- 33 -

(b)An arbitration panel shall be established inaccordance with the following rules:(i)

An arbitration panel shall consist of threearbitrators who are individuals withexpertise or experience in international tax
matters.

(ii)

Each of the competent authorities of theContracting States shall appoint one
arbitrator, whether he is a national ofeither Contracting State or not. The two
arbitrators appointed by the competentauthorities of the Contracting States shallappoint the third arbitrator who serves as
the chair of the arbitration panel inaccordance with the procedures agreed by thecompetent authorities of the Contracting
States.

(iii)

No arbitrator shall be an employee of the
tax authority of either Contracting State,
nor have dealt with the case in respect ofwhich the request for arbitration has been
made in any capacity. The third arbitrator
shall not be a national of either
Contracting State, nor have had his usual
place of residence in either Contracting
State, nor have been employed by either
Contracting State.

(iv)

The competent authorities of the Contracting
States shall ensure that all arbitrators
agree, in statements sent to each of thecompetent authorities of the Contracting
States, prior to their acting in thearbitration proceedings, to abide by and be
subject to the same confidentiality and nondisclosure obligations as those provided forin paragraph 2 of Article 26 of theConvention and the laws of the Contracting
States.

(v)

Each of the competent authorities of theContracting States shall bear the costs of
its appointed arbitrator and its own
expenses. The costs of the third arbitrator
and other expenses associated with theconduct of the arbitration proceedings shallbe borne by the competent authorities of theContracting States in equal shares.

- 34 -

(c)The competent authorities of the Contracting
States shall provide the information necessary
for the arbitration decision to all arbitrators
without undue delay.

(d)An arbitration decision shall be treated asfollows:(e)(i)

An arbitration decision has no precedential
value.

(ii)

An arbitration decision shall be final,
unless that decision is found to be
unenforceable by a court of either
Contracting State due to a violation ofparagraph 5 of Article 25 of the Convention,of this paragraph or of any procedural rule
determined in accordance with paragraph 5 of
Article 25 of the Convention andsubparagraph (a) that may reasonably haveaffected the decision. If the decision isfound to be unenforceable due to theviolation, the request for arbitration shallbe considered not to have been made and thearbitration proceedings shall be considered
not to have taken place (except for the
purposes of clauses (iv) and (v) of
subparagraph (b)).

Where at any time before the arbitration panel
has delivered a decision on a case to thecompetent authorities of the Contracting States
and to the person who made the request forarbitration in respect of the case:(i)the competent authorities of the Contracting
States reach a mutual agreement to resolve
the case pursuant to paragraph 2 of Article
25 of the Convention; or(ii)that person withdraws the request forarbitration; or(iii)

a decision concerning the case is rendered
by a court or administrative tribunal ofeither Contracting State during thearbitration proceedings,

the procedures under Article 25 of the Convention
in respect of the case shall terminate.

- 35 -

(f)Where a case in respect of which a request forarbitration has been made is pending inlitigation or appeal, the mutual agreement that
implements the arbitration decision on the caseshall be considered not to be accepted by the
person directly affected by the case if any
person directly affected by the case who is aparty to the litigation or appeal does notwithdraw, within 60 days after receiving thearbitration decision, from consideration by therelevant court or administrative tribunal allissues resolved in the arbitration proceedings.
In this case, the case shall not be eligible forany further consideration by the competentauthorities of the Contracting States.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Protocol.
DONE in duplicate at Tallinn this thirtieth day ofAugust, 2017 in the English language.
For Japan:
Y. Yanagisawa

For the Republic of Estonia:
T Tõniste- 36 -