CONVENTION

BETWEEN

THE GOVERNMENT OF THE UNITED STATES OF AMERICA

AND

THE GOVERNMENT OF THE REPUBLIC OF VENEZUELA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES

ON INCOME AND CAPITAL

The Government of the United States of America and the Government of the Republic of

Venezuela, desiring to conclude a convention for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income and capital, have agreed as follows:
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ARTICLE 1

General Scope

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

Contracting States, except as otherwise provided in the Convention.

2. The Convention shall not restrict in any manner any exclusion, exemption, deduction,

credit, or other allowance now or hereafter accorded:

a) by the laws of either Contracting State; or

b) by any other agreement between the Contracting States.

3. Notwithstanding the provisions of subparagraph 2 b):

a) the provisions of Article 26 (Mutual Agreement Procedure) of this

Convention exclusively shall apply to any dispute concerning whether a measure is within

the scope of this Convention, and the procedures under this Convention exclusively shall

apply to that dispute; and

b) unless the competent authorities determine that a taxation measure is not

within the scope of this Convention, the non-discrimination obligations of this

Convention exclusively shall apply with respect to that measure, except for such national

treatment or most-favored-nation obligations as may apply to trade in goods under the

General Agreement on Tariffs and Trade. No national treatment or most-favored-nation

obligation under any other agreement shall apply with respect to that measure. 

c) For the purpose of this paragraph, a “measure” is a law, regulation, rule,

procedure, decision, administrative action, or any similar provision or action.

4. Notwithstanding any provision of the Convention except paragraph 5 of this Article,

a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by

reason of citizenship may tax its citizens, as if the Convention had not come into effect.

5. The provisions of paragraph 4 shall not affect:

a) the benefits conferred by a Contracting State under paragraph 2 of Article 9

(Associated Enterprises), and under Articles 24 (Relief from Double Taxation), 25 (NonDiscrimination), and 26 (Mutual Agreement Procedure); and
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b) the benefits conferred by a Contracting State under Articles 20 (Government

Service), 21 (Students, Trainees, Teachers and Researchers), and 28 (Diplomatic Agents

and Consular Officers), upon individuals who are neither citizens of, nor have immigrant

status in, that State.

ARTICLE 2

Taxes Covered

1. The existing taxes to which this Convention shall apply are:

a) in Venezuela: the tax on income and the business assets tax;

b) in the United States: the Federal income taxes imposed by the Internal

Revenue Code (but excluding social security contributions).

2. The Convention shall apply also to any identical or substantially similar taxes that are

imposed after the date of signature of the Convention in addition to, or in place of, the existing

taxes. The competent authorities of the Contracting States shall notify each other of any

significant changes that have been made in their respective taxation laws and of any official

published material concerning the application of the Convention.

ARTICLE 3

General Definitions

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

a) the term “Venezuela” means the Republic of Venezuela;

b) the term “United States” means the United States of America but does not

include Puerto Rico, the Virgin Islands, Guam, or any other United States possession or

territory;

c) the terms “a Contracting State” and “the other Contracting State” mean

Venezuela or the United States as the context requires;

d) the term “person” includes an individual, an estate, a trust, a partnership, a

company, and any other body of persons;
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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; the terms also include an enterprise carried on by a resident of a Contracting State

through an entity that is treated as fiscally transparent in that Contracting State; 

g) the term “national” means:

i) any individual possessing the nationality of a Contracting State; and

ii) any legal person, association, or other entity (including an “entidad” or

“colectividad”) deriving its status as such from the law in force in a Contracting

State;

h) the term “international operation of ships or aircraft” means any transport by a

ship or aircraft, except when such transport is solely between places within a Contracting

State;

i) the term “competent authority” means:

i) in the case of the United States: the Secretary of the Treasury or his

delegate; and

 ii) in the case of Venezuela: the Integrated National Service of Tax

Administration (Servicio Nacional Integrado de Administración

Tributaria–SENIAT), its authorized representative or the authority which is

designated by the Ministry of Finance as a competent authority for the purposes

of this Convention.

2. As regards the application of the Convention by a Contracting State, any term not

defined therein shall, unless the context otherwise requires or the competent authorities agree to

a common meaning pursuant to the provisions of Article 26 (Mutual Agreement Procedure),

have the meaning which it has under the laws of that State concerning the taxes to which the

Convention applies.
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ARTICLE 4

Residence

1. For the purposes of this Convention, the term “resident of a Contracting State”

means:

a) in the case of the United States, any person who, under the laws of the United

States, is liable to tax therein by reason of his domicile, residence, citizenship, place of

incorporation, or any other criterion of a similar nature. The term includes an individual

who is a United States citizen or an alien lawfully admitted to the United States for

permanent residence (a “green card” holder) and who is not a resident of Venezuela

under paragraph 1 b) only if the individual has a permanent home or habitual abode in

the United States.

b) in the case of Venezuela, any resident individual (“domiciliado”), any legal

person that is created or organized under the laws of Venezuela, and any entity or

collectivity (“entidad o colectividad”) formed under the laws of Venezuela which is not

a legal person but is subject to the taxation applicable to corporations in Venezuela.

2. An item of income, profit or gain derived through an entity that is fiscally transparent

under the laws of either Contracting State shall be considered to be derived by a resident of a

State to the extent that the item is treated for purposes of the taxation law of such Contracting

State as the income, profit or gain of a resident.

3. Where by reason of the provisions of paragraph 1, an individual is a resident of both

Contracting States, then his status shall be determined as follows:

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 he has his center of vital interests cannot be determined,

or if he does not have a permanent home available to him in either State, he shall be

deemed to be a resident of the State in which he has an habitual abode;
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c) if he has an habitual abode in both States or in neither of them, he shall be

deemed to be a resident of the State of which he is a national;

d) if he is a national of both States or of neither of them, the competent

authorities of the Contracting States shall endeavor to settle the question by mutual

agreement.

4. Where, by reason of the provisions of paragraph 1, a person other than an individual

is a resident of both Contracting States, the competent authorities of the Contracting States shall

endeavor to settle the question by mutual agreement and determine the mode of application of

the Convention to such person. If they are unable to make such a determination, such person

shall not be considered a resident of either Contracting State for purposes of enjoying benefits

under this Convention.

ARTICLE 5

Permanent Establishment

1. For the purposes of this Convention, the term “permanent establishment” means a

fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

a) a place of management;

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 other place of extraction of natural

resources.

3. The term “permanent establishment” likewise encompasses:

a) A building site or construction or installation project, or an installation or

drilling rig or ship used for the exploration of natural resources, but only where such site,

project or activities continue for a period or periods aggregating more than 183 days
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within any twelve month period commencing or ending in the taxable year concerned;

and 

b) The furnishing of services, including consultancy services, by an enterprise

through employees or other personnel engaged by the enterprise for such purpose, but

only where activities of that nature continue (for the same or a connected project) within

the country for a period or periods aggregating more than 183 days in any twelve month

period commencing or ending in the taxable year concerned.

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 of storage, display, or delivery of

goods or merchandise belonging to the enterprise;

b) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of storage, display, or delivery;

c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;

d) the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise, or of collecting information, for the enterprise;

e) the maintenance of a fixed place of business solely for the purpose of carrying

on, for the enterprise, any other activity of a preparatory or auxiliary character;

f) the maintenance of a fixed place of business solely for any combination of the

activities mentioned in subparagraphs a) to e), provided that the overall activity of the

fixed place of business resulting from this combination is of a preparatory or auxiliary

character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person–other than an

agent of an independent status to whom paragraph 6 applies–is acting on behalf of an enterprise

and has and habitually exercises, in a Contracting State an authority to conclude contracts in the

name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that

State in respect of any activities which that person undertakes for the enterprise, unless the

activities of such person are limited to those mentioned in paragraph 4 which, if exercised
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through a fixed place of business, would not make this fixed place of business a permanent

establishment under the provisions of that paragraph.

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 of an independent status, provided that such persons are acting in the

ordinary course of their business. However, when the activities of such an agent are devoted

wholly or almost wholly on behalf of that enterprise and the transactions between the agent and

the enterprise are not made under arm’s length conditions, he shall not be considered an agent of

independent status 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 the other.

ARTICLE 6

Income From Immovable Property (Real Property)

1. Income derived by a resident of a Contracting State from immovable property (real

property), including income from agriculture or forestry, situated in the other Contracting State

may be taxed in that other State.

2. The term “immovable property (real property)” shall have the meaning that it has

under the law of the Contracting State in which the property in question is situated. The term

shall in any case include property accessory to immovable property (real property), livestock and

equipment used in agriculture and forestry, rights to which the provisions of general law

respecting landed property apply, usufruct of immovable property (real 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, boats and aircraft shall not be regarded as

immovable property (real property).

3. The provisions of paragraph 1 shall apply to income derived from the direct use,

letting, or use in any other form of immovable property (real property).
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4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable

property (real property) of an enterprise and to income from immovable property (real property)

used for the performance of independent personal services.

5. A resident of a Contracting State who is liable to tax in the other Contracting State

on income from immovable property (real property) situated in the other Contracting State who

is not otherwise allowed to compute the tax on such income on a net basis as if such income

were business profits attributable to a permanent establishment in such other State shall be

allowed to elect such treatment for any taxable year. Any such election shall be binding for the

taxable year of the election and all subsequent taxable years unless the competent authority of

the Contracting State in which the property is situated agrees to terminate the election.

ARTICLE 7

Business Profits

1. The business 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 as aforesaid, the

business profits of the enterprise may be taxed in the other State, but only so much of them as

are attributable to that permanent establishment.

2. Subject to the provisions of paragraph 4, where an enterprise of a Contracting State

carries on business in the other Contracting State through a permanent establishment situated

therein, there shall in each Contracting State be attributed to that permanent establishment the

business profits which it might be expected to make if it were a distinct and independent

enterprise engaged in the same or similar activities under the same or similar conditions. 

3. Nothing in this Article shall affect the application of any law of a Contracting State

relating to the determination of the tax liability of a person in cases where the information

available to the competent authority of that State is inadequate to determine the profits to be

attributed to a permanent establishment, provided that, on the basis of the available information,

the determination of the profits of the permanent establishment is consistent with the principles

stated in this Article.
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4. In the determination of the business profits of a permanent establishment there shall

be allowed as deductions expenses that are incurred for the purposes of the business of the

permanent establishment, including executive and general administrative expenses so incurred,

whether incurred in the State in which the permanent establishment is situated or elsewhere. 

However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than

towards reimbursement of actual expenses) by the permanent establishment to the head office of

the enterprise or any of its other offices, by way of royalties, fees or other similar payments in

return for the use of patents or other rights, or by way of commission for specific services

performed or for management, or by way of interest on moneys lent to the permanent

establishment. Likewise, no account shall be taken, in the determination of the business profits

of a permanent establishment, for amounts charged (otherwise than towards reimbursement of

actual expenses), by the permanent establishment to the head office of the enterprise or any of its

other offices, by way of royalties, fees or other similar payments in return for the use of patents

or other rights, or by way of commission for specific services performed or for management, or

by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 

A Contracting State may, consistent with its law, impose limitations on deductions, so long as

these limitations are consistent with the concept of net income.

5. No business profits shall be attributed to a permanent establishment by reason of the

mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of this Convention, the business profits to be attributed to the

permanent establishment shall include only the profits or losses derived from the assets or

activities of the permanent establishment and shall be determined by the same method year by

year unless there is good and sufficient reason to the contrary.

7. Where business profits include items of income which are dealt with separately in

other Articles of the Convention, the provisions of those Articles shall not be affected by the

provisions of this Article.

8. In applying paragraphs 1 and 2 of Article 7 (Business Profits), paragraph 6 of Article

10 (Dividends), paragraph 6 of Article 11 (Interest), paragraph 4 of Article 12 (Royalties),

paragraph 3 of Article 13 (Gains), Article 14 (Independent Personal Services) and paragraph 2
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of Article 22 (Other Income), any income or gain attributable to a permanent establishment or

fixed base during its existence is taxable in the Contracting State where such permanent

establishment or fixed base is situated even if the payments are deferred until such permanent

establishment or fixed base has ceased to exist.

ARTICLE 8

Shipping and Air Transport

1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft

in international traffic shall be taxable only in that State. 

2. For the purposes of this Article, profits from the operation of ships or aircraft include

profits derived from the rental of ships or aircraft on a full (time or voyage) basis. They also

include profits from the rental of ships or aircraft on a bareboat basis if such ships or aircraft are

operated in international traffic by the lessee, or if the rental income is incidental to profits from

the operation of ships or aircraft in international traffic. Profits derived by an enterprise from the

inland transport of property or passengers within either Contracting State shall be treated as

profits from the operation of ships or aircraft in international traffic if such transport is

undertaken as part of international traffic. 

3. Profits of an enterprise of a Contracting State from the use, maintenance, or rental of

containers (including trailers, barges, and related equipment for the transport of containers) used

in international traffic shall be taxable only in that State.

4. The provisions of paragraphs 1 and 3 shall also apply to profits from 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
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b) the same persons participate directly or indirectly in the management, control,

or capital of an enterprise of a Contracting State and an enterprise of the other

Contracting State,

and in either case, conditions are made or imposed between the two enterprises in their

commercial or financial relations which differ from those that would be made between

independent enterprises, then any profits that, but for those conditions, would have accrued to

one of the enterprises, but by reason of those conditions have not so accrued, 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

charged to tax 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 made between the two

enterprises had been those that would have been made between independent enterprises, then

that other State, if it agrees with such adjustment, shall make a corresponding adjustment to the

amount of the tax charged therein on those profits. In determining such adjustment, due regard

shall be paid to the other provisions of this Convention and the competent authorities of the

Contracting States shall if necessary consult each other.

3. The provisions of paragraph 1 shall not limit any provisions of the law of either

Contracting State that permit the distribution, apportionment, or allocation of income,

deductions, credits, or allowances between persons, whether or not residents of a Contracting

State, owned or controlled directly or indirectly by the same interests when necessary in order to

prevent evasion of taxes or clearly to reflect the income of any such persons.

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 of which the

company paying the dividends is a resident, and according to the laws of that State, but, except
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as provided in paragraph 3, if the beneficial owner of the dividends is a resident of the other

Contracting State, the tax so charged shall not exceed:

a) 5 percent of the gross amount of the dividends if the beneficial owner is a

company that owns at least 10 percent of the voting stock of the company paying the

dividends;

b) 15 percent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which

the dividends are paid.

3. Subparagraph a) of paragraph 2 shall not apply in the case of dividends paid by a

Regulated Investment Company (RIC) or a Real Estate Investment Trust (REIT). In the case of

dividends paid by a RIC, subparagraph b) of paragraph 2 shall apply. In the case of dividends

paid by a REIT, subparagraph b) of paragraph 2 also shall not apply unless:

a) the beneficial owner of the dividends is an individual holding an interest of not

more than 10 percent of the REIT; 

b) the dividends are paid with respect to a class of stock that is publicly traded

and the beneficial owner of the dividends is a person holding an interest of not more than

5 percent of any class of the REIT’s stock; or

c) the beneficial owner of the dividends is a person holding an interest of not

more than 10 percent of the REIT and the REIT is diversified.

4. Notwithstanding paragraph 2, dividends may not be taxed in the Contracting State of

which the company paying the dividends is a resident if the beneficial owner of the dividends is

the other Contracting State or a political subdivision or local authority thereof or a resident of

the other Contracting State that is a governmental entity constituted and operated exclusively to

administer or provide pension benefits, provided in each case that the dividends are not derived

from carrying on a trade or business or from an associated enterprise.

5. 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 other corporate

rights that is subjected to the same taxation treatment as income from shares by the laws of the

State of which the company making the distribution is a resident. The term “dividends” also
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includes income from arrangements, including debt obligations, carrying the right to participate

in, or determined with reference to, profits to the extent so characterized under the laws of the

Contracting State in which the income arises.

6. 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 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 the dividends are attributable to such permanent

establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article

14 (Independent Personal Services), as the case may be, shall apply.

7. A Contracting State may not impose any tax on dividends paid by a company that is a

resident of the other Contracting State, except insofar as the dividends are paid to a resident of

that State or the dividends are attributable to a permanent establishment or a fixed base situated

in that State.

ARTICLE 11

Interest

1. Interest arising in a Contracting State and derived by a resident of the other

Contracting State may be taxed 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 beneficial owner of the interest is a resident of

the other Contracting State, the tax so charged shall not exceed:

a) 4.95 percent of the gross amount of the interest if the interest is beneficially

owned by any financial institution (including an insurance company); and

b) 10 percent in all other cases.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State

shall be exempt from tax in that State if:

a) the interest is paid by that State or a political subdivision or local authority

thereof; 
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b) the beneficial owner of the interest is the other Contracting State or a political

subdivision or local authority thereof or an instrumentality wholly owned by that other

State; or

c) the beneficial owner of the interest is a resident of the other State and the

interest is paid with respect to debt obligations that have been made, guaranteed or

insured, directly or indirectly, by that other State or a wholly owned instrumentality

thereof.

4. a) Notwithstanding the provisions of paragraph 2, interest paid by a resident of a

Contracting State and that is determined with reference to receipts, sales, income, profits

or other cash flow of the debtor or a related person, to any change in the value of any

property of the debtor or a related person or to any dividend, partnership distribution or

similar payment made by the debtor to a related person, and paid to a resident of the

other State also may be taxed in the Contracting State in which it arises, and according

to the laws of that State, but if the beneficial owner is a resident of the other Contracting

State, the gross amount of the interest may be taxed at a rate not exceeding the rate

prescribed in subparagraph b) of paragraph 2 of Article 10 (Dividends); and

b) notwithstanding the provisions of paragraphs 2 and 3, interest that is an

excess inclusion with respect to a residual interest in a real estate mortgage investment

conduit may be taxed by each State in accordance with its domestic law.

5. The term “interest” as used in this Convention means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a right to

participate in the debtor’s profits, and in particular, income from government securities, and

income from bonds or debentures, including premiums or prizes attaching to such securities,

bonds, or debentures, as well as all other income that is treated as interest by the taxation law of

the Contracting State in which the income arises. Income dealt with in Article 10 (Dividends)

and penalty charges for late payment shall not be regarded as interest for the purposes of the

Convention.

6. The provisions of paragraphs 1, 2, 3 and 4 shall not apply if the beneficial owner of

the interest, being a resident of a Contracting State, carries on business in the other Contracting
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State in which the interest arises through a permanent establishment situated therein, or

performs in that other State independent personal services from a fixed base situated therein, and

the interest is attributable to such permanent establishment or fixed base. In such case the

provisions of Article 7 (Business Profits), or Article 14 (Independent Personal Services), as the

case may be, shall apply.

7. For purposes of this Article, interest shall be deemed to arise in a Contracting State

when the payer is that State itself or a political subdivision, local authority, or resident of that

State. Where, however, the person paying the interest, whether a resident of a Contracting

State or not, has in a Contracting State a permanent establishment or a fixed base or derives

profits that are taxable on a net basis in that State under paragraph 5 of Article 6 (Income From

Immovable Property (Real Property)) or paragraph 1 of Article 13 (Gains), and such interest is

borne by such permanent establishment or fixed base or allocable to such profits then such

interest shall be deemed to arise in the State in which the permanent establishment or fixed base

is situated or from which such profits are derived.

8. Where, by reason of a special relationship between the payer and the beneficial owner

or between both of them and some other person, the amount of the interest, having regard to the

debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the

payer and the beneficial owner in the absence of such relationship, the provisions of this Article

shall apply only to the last-mentioned 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 the Convention.

ARTICLE 11A

Branch Tax

Notwithstanding any other provisions of this Convention, a company that is a resident of

a Contracting State may be subject in the other Contracting State to a tax in addition to the tax

on profits. Such additional tax, however, may not exceed:

a) 5 percent of the “dividend equivalent amount” of the business profits of the

company that are either attributable to a permanent establishment in that other State or
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are subject to tax on a net basis in that other State under Article 6 (Income From

Immovable Property (Real Property)) or paragraph 1 of Article 13 (Gains); and

b) 10 percent of the “excess interest.” In the case of persons referred to in

subparagraph a) of paragraph 2 of Article 11 (Interest), the tax imposed under this

subparagraph shall not be levied at a rate in excess of 4.95 percent.

ARTICLE 12

Royalties

1. Royalties arising in a Contracting State and derived by 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 beneficial owner is a resident of the other

Contracting State, the tax so charged shall not exceed:

a) 5 percent of the gross amount of the royalties described in subparagraph a) of

paragraph 3; and 

b) 10 percent of the gross amount of the royalties described in subparagraph b)

of paragraph 3.

3. The term “royalties” as used in this Convention means payments of any kind received

in consideration:

a) for the use of, or the right to use, industrial, commercial, or scientific

equipment; or 

b) for the use of, or the right to use, any copyright of literary, dramatic, musical,

artistic, or scientific work, including cinematographic films, tapes, and other means of

image or sound reproduction, any patent, trademark, design or model, plan, secret

formula or process, or other like right or property, or for information concerning

industrial, commercial, or scientific experience. The term “royalties” also includes gains

derived from the alienation of such right or property to the extent that such gains are

contingent on the productivity, use, or disposition thereof.
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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 from a fixed base situated therein, and

the royalties are attributable to such permanent establishment or fixed base. In such case the

provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the

case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when they are in

consideration for the use of, or the right to use, property, information or experience in that

State.

6. Where, by reason of a special relationship between the payer and the beneficial owner

or between both of them and some other person, the amount of the royalties, having regard to

the use, right, or information for which they are paid, exceeds the amount which would have

been agreed upon by the payer and the beneficial owner in the absence of such relationship, the

provisions of this Article shall apply only to the last-mentioned 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 the Convention.

ARTICLE 13

Gains

1. Gains or income derived by a resident of a Contracting State from the alienation of

immovable property (real property) situated in the other Contracting State may be taxed in that

other State.

2. For the purposes of this Article, the term “immovable property (real property)

situated in the other Contracting State” includes immovable property (real property) referred to

in Article 6 (Income From Immovable Property (Real Property)) that is situated in that other

Contracting State and an interest in a partnership, trust or estate to the extent that its assets

consist of immovable property (real property) situated in that other State. It also includes a
- 19 -

United States real property interest or an equivalent interest in Venezuelan immovable property

(real property).

3. Gains or income from the alienation of personal (movable) property that are

attributable to a permanent establishment that an enterprise of a Contracting State has in the

other Contracting State, or that are attributable to a fixed base that is available to a resident of a

Contracting State in the other Contracting State for the purpose of performing independent

personal services, and gains or income from the alienation of such a permanent establishment

(alone or with the whole enterprise) or such a fixed base, may be taxed in that other State.

4. Gains or income derived by an enterprise of a Contracting State from the alienation of

ships, aircraft, or containers operated in international traffic or personal property pertaining to

the operation or use of such ships, aircraft or containers shall be taxable only in that State.

5. Gains or income from the alienation of any property other than property referred to in

paragraphs 1 through 4 shall be taxable only in the Contracting State of which the alienator is a

resident.

ARTICLE 14

Independent Personal Services

1. Subject to the provisions of Article 7 (Business Profits), income derived by an

individual who is a resident of a Contracting State in respect of professional services or similar

activities of an independent character shall be taxable only in that State. However, such income

may be taxed in the other Contracting State if such individual has a fixed base regularly available

to him in the other Contracting State for the purpose of performing those activities. In that

case, only so much of the income as is attributable to that fixed base may be taxed in that other

Contracting State.

2. The term "professional services" includes especially independent scientific, literary,

artistic, educational, or teaching activities as well as the independent activities of physicians,

lawyers, engineers, architects, dentists, and accountants.
- 20 -

ARTICLE 15

Dependent Personal Services

1. Subject to the provisions of Articles 16 (Directors’ Fees), 19 (Pensions, Social

Security, Annuities, and Child Support), 20 (Government Service), and 21 (Students, Trainees,

Teachers and Researchers), 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 so exercised, such

remuneration as is 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 any twelve month period beginning or ending in the taxable

year concerned;

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

that the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration described in

paragraph 1 that is derived by a resident of a Contracting State in respect of an employment as a

member of the crew of a ship or aircraft, or as other personnel regularly employed to serve

aboard a ship or aircraft, operated in international traffic shall be taxable only in that State.

ARTICLE 16

Directors' Fees

Notwithstanding the provisions of Articles 14 (Independent Personal Services) and 15

(Dependent Personal Services), directors' fees and other similar payments derived by a resident

of a Contracting State for services performed in the other Contracting State in his capacity as a
- 21 -

member of the board of directors of a company which is a resident of the other Contracting

State may be taxed in that other State.

ARTICLE 17

Limitation on Benefits

1. A person that is a resident of a Contracting State and derives income from the other

Contracting State shall be entitled to the benefits of this Convention in that other Contracting

State only if such person is:

a) an individual and would not be a resident of another country under the

principles of subparagraphs a) and b) of paragraph 3 of Article 4 (Residence); or

b) a Contracting State, a political subdivision or local authority thereof, a whollyowned instrumentality of a Contracting State, a political subdivision or local authority

thereof, or a company wholly-owned, directly or indirectly, by a Contracting State, a

political subdivision or local authority thereof; or

c) an entity that is a not-for-profit organization (including a pension fund or

private foundation) and that, by virtue of that status, is generally exempt from income

taxation in its Contracting State of residence, provided that more than half of the

beneficiaries, members, or participants, if any, in such organization are entitled to the

benefits of this Convention; or 

d) engaged in the active conduct of a trade or business in the first-mentioned

Contracting State (other than the business of making or managing investments, unless

these activities are banking or insurance activities carried on by a bank or insurance

company), the income derived from the other Contracting State is derived in connection

with, or is incidental to, that trade or business, and the trade or business is substantial in

relation to the activity carried on in the other Contracting State giving rise to the income

in respect of which treaty benefits are being claimed in that other Contracting State; or

e) a company in whose principal class of shares there is substantial and regular

trading on a recognized securities exchange; or
- 22 -

f) a company of which at least 50 percent of each class of shares in the company

is owned directly or indirectly by five or fewer companies entitled to the benefits under

subparagraph e), provided that in the case of indirect ownership, each intermediate

owner is a person entitled to benefits of the Convention under this paragraph; or

g) both of the following conditions are satisfied:

i) more than 50 percent of the beneficial interest in such person (or in the

case of a company, more than 50 percent of the number of shares of each class of

the company's shares) is owned, directly or indirectly, by persons who are

entitled to the benefits of the Convention under subparagraphs a), b), c), e), or f)

or who are citizens of the United States; and

 ii) less than 50 percent of the gross income of such person is used, directly

or indirectly, to meet liabilities (including liabilities for interest or royalties) to

persons who are not entitled to the benefits of the Convention under

subparagraphs a), b), c), e), or f) or who are citizens of the United States.

2. Notwithstanding paragraph 1, an entidad or colectividad formed under the laws of

Venezuela otherwise entitled to benefits under paragraph 1 shall not be entitled to the benefits of

this Convention if that entidad or colectividad, or another entidad or colectividad or other

person that controls such entidad or colectividad, has outstanding a class of interests:

a) the terms of which, or which is subject to other arrangements that, entitle its

holders to a portion of the income of the entidad or colectividad derived from the United

States that is larger than the portion such holders would receive absent such terms or

arrangements; and

b) 50 percent or more of the vote or value of which is owned by persons who

are not persons entitled to the benefits of this Convention under subparagraphs a), b), c),

e), or f) of paragraph 1 or citizens of the United States.

3. Notwithstanding paragraph 1, a former long-term resident of the United States shall

not be entitled to the benefits of this Convention for the 10-year period following loss of such

status, if such loss had for one of its principal purposes the avoidance of U.S. tax, determined in
- 23 -

accordance with the provisions of United States law applicable to former U.S. citizens and longterm residents. 

4. A person that is not entitled to the benefits of the Convention pursuant to the

provisions of paragraph 1 may, nevertheless, demonstrate to the competent authority of the

State in which the income arises that such person should be granted the benefits of the

Convention. For this purpose, one of the factors the competent authorities shall take into

account is whether the establishment, acquisition, and maintenance of such person and the

conduct of its operations did not have as one of its principal purposes the obtaining of benefits

under the Convention.

5. For purposes of subparagraph e) of paragraph 1, the term "recognized securities

exchange" means:

a) the Caracas and Maracaibo stock exchanges, the Bolsa Electrónica and any

stock exchange registered with the Comisión Nacional de Valores in accordance with the

Ley de Mercado de Capitales;

 b) the NASDAQ System owned by the National Association of Securities

Dealers, Inc. and any stock exchange registered with the Securities and Exchange

Commission as a national securities exchange for purposes of the Securities Exchange

Act of 1934; and

 c) any other stock exchange agreed upon by the competent authorities of the

Contracting States.

6. For purposes of subparagraph g) ii) of paragraph 1, the term “gross income” means

gross receipts, or where an enterprise is engaged in a business which includes the manufacture or

production of goods, gross receipts reduced by the direct costs of labor and materials

attributable to such manufacture or production and paid or payable out of such receipts.

ARTICLE 18

Artistes and Sportsmen

1. Income derived by a resident of a Contracting State as an entertainer, such as a

theater, motion picture, radio, or television artiste, or a musician, or as a sportsman, from his
- 24 -

personal activities as such exercised in the other Contracting State, which income may be

exempt from tax in that other Contracting State under the provisions of Articles 14

(Independent Personal Services) and 15 (Dependent Personal Services), may be taxed in that

other State except where the amount of the compensation derived by such entertainer or

sportsman, including expenses reimbursed to him or borne on his behalf, from such activities

does not exceed six thousand United States dollars ($6,000) or its equivalent in Venezuelan

bolívares for the taxable year concerned.

2. Where income in respect of activities exercised by an entertainer or a sportsman in his

capacity as such accrues not to the entertainer or sportsman but to another person, that income

of that other person may, notwithstanding the provisions of Articles 7 (Business Profits) and 14

(Independent Personal Services), be taxed in the Contracting State in which the activities of the

entertainer or sportsman are exercised, unless it is established that neither the entertainer or

sportsman nor persons related thereto participate directly or indirectly in the profits of that other

person in any manner, including the receipt of deferred remuneration, bonuses, fees, dividends,

partnership distributions, or other distributions.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities

performed in a Contracting State as an entertainer or sportsman if the visit to that State is

wholly or mainly supported by public funds of one or both of the Contracting States or political

subdivisions or local authorities thereof. In such a case, the income is taxable only in the

Contracting State of which the artiste or sportsman is a resident.

ARTICLE 19

Pensions, Social Security, Annuities, and Child Support

1. Subject to the provisions of Article 20 (Government Service), pensions and other

similar remuneration derived and beneficially owned by a resident of a Contracting State in

consideration of past employment shall be taxable only in that State.

2. Social security benefits paid by a Contracting State to a resident of the other

Contracting State or a citizen of the United States may be taxed in the first-mentioned State.
- 25 -

3. Annuities, other than those covered in paragraph 1, that are derived from a

Contracting State and beneficially owned by an individual resident of the other Contracting State

shall be taxable only in the first-mentioned State. The term "annuities" as used in this paragraph

means a stated sum paid periodically at stated times during a specific time period, under an

obligation to make the payments in return for adequate and full consideration (other than

services rendered).

4. Periodic payments for the support of a minor child made pursuant to a written

separation agreement or a decree of divorce, separate maintenance, or compulsory support, paid

by a resident of a Contracting State to a resident of the other Contracting State, shall be

taxable only in that other State.

ARTICLE 20

Government Service

1. a) Remuneration, other than a pension, paid by a Contracting State or a political

subdivision or a local authority thereof 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 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. Subject to the provisions of paragraph 2 of Article 19 (Pensions, Social Security,

Annuities, and Child Support):

a) Any pension paid by, or out of funds created by, a Contracting State or a

political subdivision or a local authority thereof 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 pension shall be taxable only in the other Contracting State if

the individual is a resident of, and a national of, that State.
- 26 -

3. The provisions of Articles 14 (Independent Personal Services), 15 (Dependent

Personal Services), 16 (Directors' Fees), 18 (Artistes and Sportsmen), and 19 (Pensions, Social

Security, Annuities, and Child Support) shall apply to remuneration and pensions in respect of

services rendered in connection with a business carried on by a Contracting State or a political

subdivision or a local authority thereof.

ARTICLE 21

Students, Trainees, Teachers and Researchers

1. a) Except as provided in paragraph 2, an individual who is a resident of a

Contracting State at the beginning of his visit to the other Contracting State and who is

temporarily present in that other Contracting State for the primary purpose of :

i) studying at a university or other recognized educational institution in

that other Contracting State, or 

ii) securing training required to qualify him to practice a profession or

professional specialty, or 

iii) studying or doing research as a recipient of a grant, allowance, or

award from a governmental, religious, charitable, scientific, literary, or

educational organization, 

shall be exempt from tax by that other Contracting State with respect to the amounts described

in subparagraph b) of this paragraph for a period not exceeding 5 taxable years from the date of

his arrival in the other Contracting State, and for such additional period of time as is necessary

to complete, as a full-time student, educational requirements as a candidate for a postgraduate

or professional degree from a recognized educational institution.

b) The amounts referred to in subparagraph a) of this paragraph are:

i) payments from abroad, other than compensation for personal services,

for the purpose of his maintenance, education, study, research, or training;

ii) the grant, allowance, or award; and
- 27 -

iii) income from personal services performed in that other Contracting

State in an aggregate amount not in excess of five thousand United States dollars

($5,000) or its equivalent in Venezuelan bolívares for the taxable year concerned.

2. An individual who is a resident of a Contracting State at the beginning of his visit to

the other Contracting State and who is temporarily present in that other Contracting State as an

employee of, or under contract with, a resident of the first-mentioned Contracting State, for the

primary purpose of:

a) acquiring technical, professional, or business experience from a person other

than that resident of the first-mentioned Contracting State, or

b) studying at a university or other recognized educational institution in that

other Contracting State, 

shall be exempt from tax by that other Contracting State for a period not to exceed 12 months

with respect to his income from personal services in an aggregate amount not in excess of eight

thousand United States dollars ($8,000) or its equivalent in Venezuelan bolívares.

3. An individual who is a resident of a Contracting State at the beginning of his visit to

the other Contracting State and who is temporarily present in the other Contracting State for the

purpose of teaching or carrying on research at a recognized educational or research institution

shall be exempt from tax in the other Contracting State on his income from personal services for

teaching or research at such institution for a period not exceeding two years from the date of the

individual's arrival in that other State. In no event shall any individual have the benefits of this

paragraph for more than five taxable years.

4. This Article shall not apply to income from research if such research is undertaken

not in the public interest but primarily for the private benefit of a specific person or 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 taxable only in that State.
- 28 -

2. The provisions of paragraph 1 shall not apply to income, other than income from

immovable property (real property) as defined in paragraph 2 of Article 6 (Income From

Immovable Property (Real Property)), if the recipient of such income, being a resident of a

Contracting State, carries on business in the other Contracting State through a permanent

establishment situated therein, or performs in that other State independent personal services

from a fixed place situated therein, and the right or property in respect of which the income is

paid is attributable to such permanent establishment or fixed base. In such case the provisions of

Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be,

shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident

of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in

the other Contracting State may also be taxed in that other State.

ARTICLE 23

Capital

1. Capital represented by immovable property (real property) referred to in Article 6

(Income From Immovable Property (Real Property)), 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 personal (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 by personal (movable) property pertaining 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, aircraft, and containers owned by a resident of a

Contracting State and used in international operations, and by personal (movable) property

pertaining to the operation of such ships, aircraft, and containers shall be taxable only in that

State.

4. All other elements of capital of a resident of a Contracting State shall be taxable only

in that State.
- 29 -

ARTICLE 24

Relief from Double Taxation

1. It is understood that double taxation will be avoided in accordance with the following

paragraphs of this Article.

2. When a resident of Venezuela derives income that, in accordance with the provisions

of this Convention, may be taxed in the United States, Venezuela shall allow a relief to such

resident. Such relief shall be allowed in accordance with the provisions and subject to the

limitations of the law of Venezuela, as they may be amended from time to time without changing

the principle hereof. The relief may consist alternatively of:

a) an exemption of such income from Venezuelan tax, or

b) a credit against the Venezuelan tax on income.

3. The United States shall allow to a resident or citizen of the United States as a credit

against the United States tax on income:

a) the income tax paid to Venezuela by or on behalf of such citizen or resident;

and

b) in the case of a United States company owning at least 10 percent of the

voting stock of a company which is a resident of Venezuela and from which the United

States company receives dividends, the income tax paid to Venezuela by or on behalf of

the distributing company with respect to the profits out of which the dividends are paid.

Such credit shall be allowed in accordance with the provisions and subject to the limitations of

the law of the United States (as it may be amended from time to time without changing the

general principle hereof).

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

the taxation and connected requirements to which nationals of that other State in the same

circumstances are or may be subjected. This provision shall, notwithstanding the provisions of
- 30 -

Article 1 (General Scope), also apply to persons who are not residents of one or both of the

Contracting States.

2. The taxation on 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 levied on enterprises of that other State carrying on the same activities. This provision

shall not be construed as obliging a Contracting State to grant to residents of the other

Contracting State 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. Nothing in this Article shall be construed as preventing either Contracting State from

imposing a tax as described in Article 11A (Branch Tax).

4. Except where the provisions of paragraph 1 of Article 9 (Associated Enterprises),

paragraph 8 of Article 11 (Interest), or paragraph 6 of Article 12 (Royalties) apply, interest,

royalties, and other disbursements paid by an enterprise of a Contracting State to a resident of

the other Contracting State shall, for the purposes of determining the taxable profits of such

enterprise, be deductible under the same conditions as if they had been paid to a resident of the

first-mentioned State. Similarly, any debts of a resident of a Contracting State to a resident of

the other Contracting State shall, for the purpose of determining the taxable capital of the firstmentioned resident, be deductible under the same conditions as if they had been contracted to a

resident of the first-mentioned State.

5. 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 the taxation and connected requirements to

which other similarly situated enterprises of the first-mentioned State are or may be subjected.

6. The provisions of this Article shall, notwithstanding the provisions of Article 2

(Taxes Covered), apply to taxes of every kind and description imposed by a Contracting State or

a political subdivision or local authority thereof.
- 31 -

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 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, and the time

limits prescribed in such laws for presenting claims for refund, present his case to the competent

authority of either Contracting State.

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 mutual

agreement with the competent authority of the other Contracting State, with a view to the

avoidance of taxation which is not in accordance with the Convention. Provided that the statute

of limitations has been interrupted in accordance with the steps designated by domestic law, any

agreement reached shall be implemented and complied with, notwithstanding any time limits or

other procedural limitations in the domestic laws of the Contracting States.

3. The competent authorities of the Contracting States shall endeavor to resolve by

mutual agreement any difficulties or doubts arising as to the interpretation or application of the

Convention. In particular, the competent authorities of the Contracting States may agree:

a) to the same allocation of income, deductions, credits, or allowances of an

enterprise of a Contracting State to its permanent establishment situated in the other

Contracting State;

b) to the same allocation of income, deductions, credits, or allowances between

persons;

c) to the same characterization of particular items of income;

d) to the same application of source rules with respect to particular items of

income;

e) to a common meaning of a term;

f) to increases in any specific amounts referred to in the Convention to reflect

economic or monetary developments; and
- 32 -

g) to the application of the provisions of domestic law regarding penalties, fines,

and interest in a manner consistent with the purposes of the 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 for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 27

Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information

as is necessary for carrying out 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. The exchange of information is not restricted by

Article 1 (General Scope). Any 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)

involved in the assessment, collection, or administration of, the enforcement or prosecution in

respect of, or the determination of appeals in relation to, the taxes covered by the Convention 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.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on a

Contracting State the obligation:

a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

b) to supply information that is not obtainable under the laws or in the normal

course of the administration of that or of the other Contracting State;

c) to supply information that would disclose any trade, business, industrial,

commercial, or professional secret or trade process, or information the disclosure of

which would be contrary to public policy.
- 33 -

3. If information is requested by a Contracting State in accordance with this

Article, the other Contracting State shall obtain the information to which the request relates in

the same manner and to the same extent as if the tax of the first-mentioned State were the tax of

that other State and were being imposed by that other State. If specifically requested by

the competent authority of a Contracting State, the competent authority of the other Contracting

State shall provide information under this Article in the form of depositions of witnesses and

authenticated copies of unedited original documents (including books, papers, statements,

records, accounts, and writings), to the same extent such depositions and documents can be

obtained under the laws and administrative practices of that other State with respect to its own

taxes.

4. For the purposes of this Article, the Convention shall apply, notwithstanding the

provisions of Article 2 (Taxes Covered), to taxes of every kind imposed by a Contracting

State.

ARTICLE 28

Diplomatic Agents and Consular Officers

Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or

consular officers under the general rules of international law or under the provisions of special

agreements.

ARTICLE 29

Entry Into Force

1. This Convention shall be subject to ratification in accordance with the applicable

procedures of each Contracting State. Each Contracting State shall notify the other through the

diplomatic channel, accompanied by an instrument of ratification, when it has completed the

required procedures.

2. The Convention shall enter into force upon the date of the later of the notifications,

accompanied by an instrument of ratification, referred to in paragraph 1, and its provisions shall

have effect:
- 34 -

a) in respect of taxes withheld at source, for amounts paid or credited on or after

January 1 of the year following the date on which the Convention enters into force;

b) in respect of other taxes, for taxable periods beginning on or after January 1 of

the year following the date on which the Convention enters into force.

ARTICLE 30

Termination

1. This Convention shall remain in force until terminated by a Contracting State. Either

Contracting State may terminate the Convention at any time after five years from the date on

which the Convention enters into force, provided that at least six months prior notice of the

termination has been given through the diplomatic channel. In such event, the Convention shall

cease to have effect:

a) in respect of taxes imposed in accordance with Articles 10 (Dividends), 11

(Interest), and 12 (Royalties), for amounts paid or credited on or after January 1 of the

year following the date on which the notice is given; and

b) in respect of other taxes, for taxable periods beginning on or after January 1 of

the year following the date on which the notice is given.

2. The appropriate authority of either Contracting State may request consultations with

the appropriate authority of the other Contracting State to determine whether amendment to the

Convention is appropriate to respond to changes in the law or policy of either Contracting State. 

If these consultations determine that the effect of the Convention or its application have been

unilaterally changed by reason of domestic legislation enacted by a Contracting State such that

the balance of benefits provided by the Convention has been significantly altered, the authorities

shall consult with each other with a view to amending the Convention to restore an appropriate

balance of benefits.
- 35 -

IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective

Governments, have signed this Convention.

DONE at Caracas, in duplicate, in the English and Spanish languages, each text being

equally authentic, this ___________ day of ______________, 199_.

FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT OF

UNITED STATES OF AMERICA: THE REPUBLIC OF VENEZUELA:
PROTOCOL

At the signing today of the Convention between the Government of the United States of

America and the Government of the Republic of Venezuela for the Avoidance of Double

Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, the

Contracting States have agreed upon the following provisions, which shall form an integral part

of the Convention.

1. With reference to paragraph 4 of Article 1 (General Scope)

For purposes of U.S. tax, the term "citizen" shall include a former U.S. citizen whose

loss of such status had as one of its principal purposes the avoidance of U.S. tax, but only for a

period of 10 years following such loss.

2. With reference to paragraph 1a) and b) of Article 3 (General Definitions)

For the sole purposes of this Convention, when referred to in a geographical sense,

Venezuela and the United States include the areas of the seabed and subsoil adjacent to their

respective territorial seas in which they may exercise rights in accordance with domestic

legislation and with international law.

3. With reference to paragraph 1 of Article 4 (Residence)

The term “resident of a Contracting State” shall also include:

a) a Contracting State or a political subdivision or local authority thereof; and

b) a pension trust or any other organization that is constituted and operated

exclusively to provide pension benefits or for religious, charitable, scientific, artistic,

cultural, or educational purposes and that is a resident of that State according to its laws,

notwithstanding that all or part of its income may be exempt from income tax under the

domestic law of that State.

 4. With reference to subparagraph a) of paragraph 3 of Article 5 (Permanent Establishment)

a) It is understood that, if an enterprise (general contractor) that has undertaken

the performance of a comprehensive project subcontracts parts of such project to a

subcontractor, time spent by such subcontractor must be considered as time spent by the

general contractor. The subcontractor has a permanent establishment only if its activities
- 2 -

last more than 183 days in any twelve month period commencing or ending in the taxable

year concerned.

b) The 183 day period begins as of the date on which the construction activity

itself begins; it does not take into account time spent solely on preparatory activities,

such as obtaining permits. 

5. With reference to paragraph 4 of Article 5 (Permanent Establishment)

It is understood that, in order for paragraph 4 of Article 5 (Permanent Establishment) to

apply, the activities listed in subparagraphs 4 a) through f) and conducted by the resident of a

Contracting State must each be of a preparatory or auxiliary character. Therefore, maintaining

sales personnel in a Contracting State would not be an activity excepted under paragraph 4 and,

subject to paragraphs 1, 5 and 6 of Article 5 (Permanent Establishment), would constitute a

permanent establishment.

6. With reference to paragraph 4 of Article 7 (Business Profits)

Expenses allowed as a deduction include a reasonable allocation of expenses, including

executive and general administrative expenses, research and development expenses, interest, and

other expenses, incurred in the taxable year for the purposes of the enterprise as a whole (or the

part thereof which includes the permanent establishment), regardless of where incurred, but only

to the extent that such expenses have not been deducted by such enterprise and are not reflected

in other deductions allowed to the permanent establishment, such as the deduction for the cost

of goods sold or of the value of the purchases. The allocation of such expenses must be

accomplished in a manner that reflects to a reasonably close extent the factual relationship

between the deduction and the permanent establishment and the enterprise. In determining the

allocation of a specific deduction to the permanent establishment, examples of bases and factors

which may be considered include, but are not limited to:

a) comparison of units sold,

b) comparison of the amount of gross sales or receipts,

c) comparison of costs of goods sold,

d) comparison of profit contribution,
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e) comparison of expenses incurred, assets used, salaries paid, space utilized,

and time spent which are attributable to the activities of the permanent establishment,

and

f) comparison of the amount of gross income.

Research and development expense incurred with respect to the same product line may be

allocated to a permanent establishment based on a ratio of the gross receipts of the permanent

establishment to the total gross receipts of the enterprise with respect to that product line. 

Venezuela will not provide a deduction with respect to any expenses allocable to income not

subject to tax in Venezuela because of its territorial system of taxation. 

7. With reference to Article 8 (Shipping and Air Transport)

The provisions of Article 8 (Shipping and Air Transport) shall not affect the provisions

of the Agreement of December 29, 1987, between the Government of the United States of

America and the Government of the Republic of Venezuela for the avoidance of double taxation

with respect to shipping and air transport.

8. With reference to Article 10 (Dividends)

It is understood that the reference in Article 10 (Dividends) paragraph 4 to “a

governmental entity constituted and operated exclusively to administer or provide pension

benefits” shall include, in the case of Venezuela, private, public or mixed entities operating under

or pursuant to the Ley del Subsistema de Pensiones, enacted under the Ley Orgánica del Sistema

de Seguridad Social Integral, so long as the system under which the entities are operating

provides universal coverage; requires mandatory contributions by both employers and

employees; limits the discretion of employers or employees to direct investment; restricts

distributions or borrowings, directly or indirectly, except upon or until death, retirement or

disability; and requires that accounts be maintained at only one such qualifying entity at a time. 

Such entities also must be operated, and their investment parameters established, pursuant to

governmental oversight and regulation. The term also shall include any equivalent entities in the

United States.
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9. With reference to Article 11 (Interest)

The instrumentalities referred to in paragraph 3 shall include the U.S. Export-Import

Bank, the Federal Reserve Banks and the Overseas Private Investment Corporation, the

Venezuelan Banco de Comercio Exterior, the Banco Central de Venezuela and the Fondo de

Inversiones de Venezuela and such other instrumentalities as the competent authorities may

agree upon.

10. With reference to Article 11A (Branch Tax)

a) In the case of the United States the term “dividend equivalent amount” shall

have the meaning it has under the laws of the United States, as it may be amended from

time to time without changing the general principle thereof.

b) The term “excess interest” means the excess, if any, of:

i) interest deductible in one or more taxable years in computing the

corporation’s profits that are either attributable to a permanent establishment in

the other Contracting State or subject to tax in that other State under Article 6

(Income From Immovable Property (Real Property)) or Article 13 (Gains), over 

ii) the interest paid by or from such permanent establishment or trade or

business. 

11. With reference to paragraph 3 of Article 12 (Royalties)

Payments received as consideration for technical services or assistance, including studies

or surveys of a scientific, geological or technical nature, for engineering works including the

plans related thereto, or for consultancy or supervisory services or assistance shall be considered

payments to which the provisions of Article 7 (Business Profits) or Article 14 (Independent

Personal Services) apply.

12. With reference to Article 14 (Independent Personal Services)

Article 14 (Independent Personal Services) shall be interpreted according to the

Commentary on Article 14 (Independent Personal Services) of the 1992 Model Convention for

the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital of the

Organization for Economic Cooperation and Development, and of any guidelines which, for the

application of such Article, may be developed in the future. Accordingly, it is understood that
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the tax will be imposed on net income as if the income were attributable to a permanent

establishment and taxable under Article 7 (Business Profits).

13. With reference to Article 15 (Dependent Personal Services) and Article 16 (Directors’

Fees)

The terms “similar remuneration” and “similar payments” include benefits in kind

received in respect of an employment and any other benefits, whether or not considered as salary

in the domestic legislation of both Contracting States (including, but not limited to, the use of a

residence or automobile, health or life insurance coverage and club memberships, provision of

meals, food and groceries, child care, reimbursement of medical, pharmaceutical and dental care

expenses, provision of work clothing, toys and school supplies, scholarships, reimbursement of 

training course expenses, mortuary and burial expenses).

14. With reference to paragraph 3 of Article 17 (Limitation on Benefits)

The term “long-term resident” shall mean any individual who is a lawful permanent

resident of the United States in 8 or more taxable years during the preceding 15 taxable years. 

In determining whether the threshold in the preceding sentence is met, there shall not count any

year in which the individual is treated as a resident of Venezuela under this Convention, or as a

resident of any country other than the United States under the provisions of any other tax treaty

of the United States, and, in either case, the individual does not waive the benefits of such treaty

applicable to residents of the other country.

15. With reference to paragraph 2 of Article 19 (Pensions, Social Security, Annuities, and

Child Support)

The term “social security benefits” as used in this paragraph is intended to include United

States tier 1 Railroad Retirement benefits.

16. With reference to Article 21 (Students, Trainees, Teachers and Researchers)

The amounts specified in paragraphs 1 b) iii) and 2 shall be in addition to any personal

exemption otherwise allowed under the domestic law of that other Contracting State.
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17. With respect to paragraph 1 of Article 25 (Non-Discrimination)

It is understood that a non-resident of a Contracting State who is subject to tax by that

State on his worldwide income by reason of being a national thereof is not in the same

circumstances as a non-resident of that State who is subject to tax on income only from sources

in that State.

18. With respect to paragraph 2 of Article 26 (Mutual Agreement Procedure)

The competent authorities shall endeavor to resolve such cases as promptly as possible.

19. With respect to Article 27 (Exchange of Information)

It is understood that in order to comply with the provisions contained in Article 27

(Exchange of Information) the competent authorities of the Contracting States are empowered

by their respective domestic laws to obtain information held by persons other than taxpayers,

including information held by financial institutions, agents and trustees.
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IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective

Governments, have signed this Protocol.

DONE at Caracas, in duplicate, in the English and Spanish languages, each text being

equally authentic, this ___________ day of ______________, 199_.

FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT OF

UNITED STATES OF AMERICA: THE REPUBLIC OF VENEZUELA: