PROTOCOL 

AMENDING THE CONVENTION BETWEEN 

THE UNITED STATES OF AMERICA AND CANADA 

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL 

DONE AT WASHINGTON ON 26 SEPTEMBER 1980 

AS AMENDED BY THE PROTOCOLS DONE ON 14 JUNE 1983, 

28 MARCH 1984, 17 MARCH 1995 AND 29 JULY 1997 

 

The United States of America and Canada, hereinafter referred to as the “Contracting States”, 

DESIRING to conclude a Protocol amending the Convention between the United States of 

America and Canada with Respect to Taxes on Income and on Capital done at Washington on 

26 September 1980, as amended by the Protocols done on 14 June 1983, 28 March 1984, 17 

March 1995 and 29 July 1997 (hereinafter referred to as the “Convention”), 

HAVE AGREED as follows: 
Article 1 

Paragraph 1 of Article III (General Definitions) of the Convention shall be amended by deleting 

the word “and” at the end of subparagraph (i), by replacing the period at the end of 

subparagraph (j) with “; and”, and by adding the following subparagraph: 

(k) The term “national” of a Contracting State means: 

(i) Any individual possessing the citizenship or nationality of that 

State; and 

(ii) Any legal person, partnership or association deriving its status as 

such from the laws in force in that State. 

Article 2 

1. Paragraph 3 of Article IV (Residence) of the Convention shall be deleted and replaced 

by the following: 

3. Where by reason of the provisions of paragraph 1, a company is a 

resident of both Contracting States, then 

(a) If it is created under the laws in force in a Contracting State, but 

not under the laws in force in the other Contracting State, it shall be 

deemed to be a resident only of the first-mentioned State; and 

(b) In any other case, the competent authorities of the Contracting 

States shall endeavor to settle the question of residency by mutual 

agreement and determine the mode of application of this Convention to 

the company. In the absence of such agreement, the company shall not 

be considered a resident of either Contracting State for purposes of 

claiming any benefits under this Convention. 

2. Article IV (Residence) of the Convention shall be amended by adding the following 

after paragraph 5: 

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6. An amount of income, profit or gain shall be considered to be derived by 

a person who is a resident of a Contracting State where: 

(a) The person is considered under the taxation law of that State to 

have derived the amount through an entity (other than an entity that is a 

resident of the other Contracting State); and 

(b) By reason of the entity being treated as fiscally transparent under 

the laws of the first-mentioned State, the treatment of the amount under 

the taxation law of that State is the same as its treatment would be if that 

amount had been derived directly by that person. 

7. An amount of income, profit or gain shall be considered not to be paid to 

or derived by a person who is a resident of a Contracting State where: 

(a) The person is considered under the taxation law of the other 

Contracting State to have derived the amount through an entity that is not 

a resident of the first-mentioned State, but by reason of the entity not 

being treated as fiscally transparent under the laws of that State, the 

treatment of the amount under the taxation law of that State is not the 

same as its treatment would be if that amount had been derived directly 

by that person; or 

(b) The person is considered under the taxation law of the other 

Contracting State to have received the amount from an entity that is a 

resident of that other State, but by reason of the entity being treated as 

fiscally transparent under the laws of the first-mentioned State, the 

treatment of the amount under the taxation law of that State is not the 

same as its treatment would be if that entity were not treated as fiscally 

transparent under the laws of that State. 

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Article 3 

1. The first sentence of paragraph 6 of Article V (Permanent Establishment) of the 

Convention shall be amended by deleting the word “and” preceding the first reference to 

paragraph 5, inserting a comma, and adding the words “and 9,” following that reference to 

paragraph 5. 

2. Paragraph 9 of Article V (Permanent Establishment) of the Convention shall be deleted 

and replaced by the following two paragraphs: 

9. Subject to paragraph 3, where an enterprise of a Contracting State 

provides services in the other Contracting State, if that enterprise is found not to 

have a permanent establishment in that other State by virtue of the preceding 

paragraphs of this Article, that enterprise shall be deemed to provide those 

services through a permanent establishment in that other State if and only if: 

(a) Those services are performed in that other State by an individual 

who is present in that other State for a period or periods aggregating 183 

days or more in any twelve-month period, and, during that period or 

periods, more than 50 percent of the gross active business revenues of 

the enterprise consists of income derived from the services performed in 

that other State by that individual; or 

(b) The services are provided in that other State for an aggregate of 

183 days or more in any twelve-month period with respect to the same or 

connected project for customers who are either residents of that other 

State or who maintain a permanent establishment in that other State and 

the services are provided in respect of that permanent establishment. 

10. For the purposes of this Convention, the provisions of this Article shall 

be applied in determining whether any person has a permanent establishment in 

any State.

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Article 4 

Paragraph 2 of Article VII (Business Profits) of the Convention shall be deleted and replaced 

by the following: 

2. Subject to the provisions of paragraph 3, where a resident of a 

Contracting State carries on, or has carried 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 separate 

person engaged in the same or similar activities under the same or similar 

conditions and dealing wholly independently with the resident and with any 

other person related to the resident (within the meaning of paragraph 2 of Article 

IX (Related Persons)). 

Article 5 

1. Subparagraph 2(a) of Article X (Dividends) of the Convention shall be deleted and 

replaced by the following: 

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

a company which owns at least 10 percent of the voting stock of the company 

paying the dividends (for this purpose, a company that is a resident of a 

Contracting State shall be considered to own the voting stock owned by an 

entity that is considered fiscally transparent under the laws of that State and that 

is not a resident of the Contracting State of which the company paying the 

dividends is a resident, in proportion to the company’s ownership interest in that 

entity); 

2. Paragraph 3 of Article X (Dividends) of the Convention shall be deleted and replaced 

by the following: 

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3. For the purposes of this Article, the term "dividends" means income

from shares or other rights, not being debt-claims, participating in profits, as 

well as income that is subjected to the same taxation treatment as income from

shares under the laws of the State of which the payer is a resident. 

3. Paragraph 4 of Article X (Dividends) of the Convention shall be deleted and replaced 

by the following: 

4. The provisions of paragraph 2 shall not apply if the beneficial owner of 

the dividends, being a resident of a Contracting State, carries on, or has carried 

on, business in the other Contracting State of which the company paying the 

dividends is a resident, through a permanent establishment situated therein, and 

the holding in respect of which the dividends are paid is effectively connected to 

such permanent establishment. In such case, the provisions of Article VII 

(Business Profits) shall apply. 

4. Paragraph 5 of Article X (Dividends) of the Convention shall be amended by deleting 

the words “or a fixed base” following the words “effectively connected with a permanent 

establishment”. 

5. Subparagraph 7(c) of Article X (Dividends) of the Convention shall be deleted and 

replaced by the following: 

(c) Subparagraph 2(a) shall not apply to dividends paid by a resident of the 

United States that is a Real Estate Investment Trust (REIT), and subparagraph 

2(b) shall apply only if: 

(i) The beneficial owner of the dividends is an individual holding an 

interest of not more than 10 percent in the REIT; 

(ii) 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 in any class of the REIT’s 

stock; or 

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(iii) The beneficial owner of the dividends is a person holding an 

interest of not more than 10 percent in the REIT and the REIT is 

diversified. 

Otherwise, the rate of tax applicable under the domestic law of the United States 

shall apply. Where an estate or testamentary trust acquired its interest in a REIT 

as a consequence of an individual’s death, for purposes of this subparagraph the 

estate or trust shall for the five-year period following the death be deemed with 

respect to that interest to be an individual. 

Article 6 

Article XI (Interest) of the Convention shall be deleted and replaced by the following: 

Article XI 

Interest 

1. Interest arising in a Contracting State and beneficially owned by a 

resident of the other Contracting State may be taxed only in that other State. 

2. The term "interest" as used in this Article means income from

debt-claims of every kind, whether or not secured by mortgage, and whether or 

not carrying a right to participate in the debtor's profits, and 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 income assimilated to income from money lent by the taxation laws of 

the Contracting State in which the income arises. However, the term “interest” 

does not include income dealt with in Article X (Dividends). 

3. The provisions of paragraph 1 shall not apply if the beneficial owner of 

the interest, being a resident of a Contracting State, carries on, or has carried on, 

business in the other Contracting State in which the interest arises, through a 

permanent establishment situated therein, and the debt-claim in respect of which 

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the interest is paid is effectively connected with such permanent establishment. 

In such case the provisions of Article VII (Business Profits) shall apply. 

4. For the 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 a resident of that State. Where, however, the person paying the 

interest, whether he is a resident of a Contracting State or not, has in a State 

other than that of which he is a resident a permanent establishment in connection 

with which the indebtedness on which the interest is paid was incurred, and such 

interest is borne by such permanent establishment, then such interest shall be 

deemed to arise in the State in which the permanent establishment is situated 

and not in the State of which the payer is a resident. 

5. 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 this Convention. 

6. Notwithstanding the provisions of paragraph 1: 

(a) Interest arising in the United States that is contingent interest of a 

type that does not qualify as portfolio interest under United States law 

may be taxed by the United States but, if the beneficial owner of the 

interest is a resident of Canada, 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 X (Dividends); 

(b) Interest arising in Canada 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 

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or a related person or to any dividend, partnership distribution or similar 

payment made by the debtor to a related person may be taxed by Canada, 

and according to the laws of Canada, but if the beneficial owner is a resident of the United States, 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 X (Dividends); and 

(c) 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. 

7. Where a resident of a Contracting State pays interest to a person other 

than a resident of the other Contracting State, that other State may not impose 

any tax on such interest except insofar as it arises in that other State or insofar as 

the debt-claim in respect of which the interest is paid is effectively connected 

with a permanent establishment situated in that other State. 

Article 7 

1. Paragraph 5 of Article XII (Royalties) of the Convention shall be deleted and replaced 

by the following: 

5. The provisions of paragraphs 2 and 3 shall not apply if the beneficial 

owner of the royalties, being a resident of a Contracting State, carries on, or has 

carried on, business in the other Contracting State in which the royalties arise, 

through a permanent establishment situated therein, and the right or property in 

respect of which the royalties are paid is effectively connected to such 

permanent establishment. In such case the provisions of Article VII (Business 

Profits) shall apply. 

2. Subparagraph 6(a) of Article XII (Royalties) of the Convention shall be deleted and 

replaced by the following: 

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(a) Royalties shall be deemed to arise in a Contracting State when the payer 

is a resident of that State. Where, however, the person paying the royalties, 

whether he is a resident of a Contracting State or not, has in a State a permanent 

establishment in connection with which the obligation to pay the royalties was 

incurred, and such royalties are borne by such permanent establishment, then 

such royalties shall be deemed to arise in the State in which the permanent 

establishment is situated and not in any other State of which the payer is a 

resident; and 

3. Paragraph 8 of Article XII (Royalties) of the Convention shall be amended by deleting 

the words “or a fixed base” following the words “effectively connected with a permanent 

establishment”. 

Article 8 

1. Paragraph 2 of Article XIII (Gains) of the Convention shall be deleted and replaced by

the following: 

2. Gains from the alienation of personal property forming part of the 

business property of a permanent establishment which a resident of a 

Contracting State has or had (within the twelve-month period preceding the date 

of alienation) in the other Contracting State, including such gains from the 

alienation of such a permanent establishment, may be taxed in that other State. 

2. Paragraph 5 of Article XIII (Gains) of the Convention shall be deleted and replaced by

the following: 

5. The provisions of paragraph 4 shall not affect the right of a Contracting 

State to levy, according to its domestic law, a tax on gains from the alienation of 

any property derived by an individual who is a resident of the other Contracting 

State if: 

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(a) The individual was a resident of the first-mentioned State: 

(i) For at least 120 months during any period of 20 

consecutive years preceding the alienation of the property; and 

(ii) At any time during the 10 years immediately preceding 

the alienation of the property; and 

(b) The property (or property for which such property was 

substituted in an alienation the gain on which was not recognized for the 

purposes of taxation in the first-mentioned State): 

(i) Was owned by the individual at the time the individual 

ceased to be a resident of the first-mentioned State; and 

(ii) Was not a property that the individual was treated as 

having alienated by reason of ceasing to be a resident of the 

first-mentioned State and becoming a resident of the other 

 Contracting State. 

3. Paragraph 7 of Article XIII (Gains) of the Convention shall be deleted and replaced by

the following: 

7. Where at any time an individual is treated for the purposes of taxation by 

a Contracting State as having alienated a property and is taxed in that State by 

reason thereof, the individual may elect to be treated for the purposes of taxation 

in the other Contracting State, in the year that includes that time and all 

subsequent years, as if the individual had, immediately before that time, sold 

and repurchased the property for an amount equal to its fair market value at that 

time. 

4. Subparagraph 9(c) of Article XIII (Gains) of the Convention shall be amended by 

deleting the words “or pertained to a fixed base” following the words “permanent 

establishment”. 

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Article 9 

Article XIV (Independent Personal Services) of the Convention shall be deleted and the 

succeeding Articles shall not be renumbered. 

Article 10 

1. The title of Article XV (Dependent Personal Services) of the Convention shall be 

deleted and replaced by “Income from Employment”. 

2. Paragraphs 1 and 2 of renamed Article XV (Income from Employment) of the 

Convention shall be deleted and replaced by the following: 

1. Subject to the provisions of Articles XVIII (Pensions and Annuities) and 

XIX (Government Service), salaries, wages and other 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) Such remuneration does not exceed ten thousand dollars 

($10,000) in the currency of that other State; or 

(b) The recipient is present in that other State for a period or periods 

not exceeding in the aggregate 183 days in any twelve-month period 

commencing or ending in the fiscal year concerned, and the 

remuneration is not paid by, or on behalf of, a person who is a resident of 

that other State and is not borne by a permanent establishment in that

other State. 

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Article 11 

1. Paragraph 1 of Article XVI (Artistes and Athletes) shall be amended by deleting the 

words “XIV (Independent Personal Services)” following the words “Notwithstanding the 

provisions of Articles” and replacing them with the words “VII (Business Profits)” and by 

deleting the words “XV (Dependent Personal Services)” and replacing them with the words 

“XV (Income from Employment)”. 

2. Paragraph 2 of Article XVI (Artistes and Athletes) shall be amended by deleting the 

words “XIV (Independent Personal Services)” following the words “notwithstanding the 

provisions of Articles VII (Business Profits),” and by deleting the words “XV (Dependent 

Personal Services)” and replacing them with the words “XV (Income from Employment)”. 

3. Paragraph 4 of Article XVI (Artistes and Athletes) shall be amended by deleting the 

words “XIV (Independent Personal Services)” following the words “Notwithstanding the 

provisions of Articles” and replacing them with the words “VII (Business Profits)” and by 

deleting the words “(Dependent Personal Services)” in both places they appear in the paragraph 

and replacing them with the words “(Income from Employment)”. 

Article 12 

Article XVII (Withholding of Taxes in Respect of Personal Services) of the Convention shall 

be deleted and the succeeding Articles shall not be renumbered. 

Article 13 

1. Paragraphs 3 and 4 of Article XVIII (Pensions and Annuities) of the Convention shall 

be deleted and replaced by the following: 

3. For the purposes of this Convention: 

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(a) The term "pensions" includes any payment under a 

superannuation, pension or other retirement arrangement, Armed Forces 

retirement pay, war veterans pensions and allowances and amounts paid 

under a sickness, accident or disability plan, but does not include 

payments under an income-averaging annuity contract or, except for the 

purposes of Article XIX (Government Service), any benefit referred to in 

paragraph 5; and 

(b) The term "pensions" also includes a Roth IRA, within the 

meaning of section 408A of the Internal Revenue Code, or a plan or 

arrangement created pursuant to legislation enacted by a Contracting 

State after September 21, 2007 that the competent authorities have 

agreed is similar thereto. Notwithstanding the provisions of the 

preceding sentence, from such time that contributions have been made to 

the Roth IRA or similar plan or arrangement, by or for the benefit of a 

resident of the other Contracting State (other than rollover contributions 

from a Roth IRA or similar plan or arrangement described in the 

previous sentence that is a pension within the meaning of this 

subparagraph), to the extent of accretions from such time, such Roth IRA 

or similar plan or arrangement shall cease to be considered a pension for 

purposes of the provisions of this Article. 

4. For the purposes of this Convention: 

(a) The term "annuity" means a stated sum paid periodically at stated 

times during life or during a specified number of years, under an 

obligation to make the payments in return for adequate and full 

consideration (other than services rendered), but does not include a 

payment that is not a periodic payment or any annuity the cost of which 

was deductible for the purposes of taxation in the Contracting State in 

which it was acquired; and 

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(b) An annuity or other amount paid in respect of a life insurance or 

annuity contract (including a withdrawal in respect of the cash value 

thereof) shall be deemed to arise in a Contracting State if the person 

paying the annuity or other amount (in this subparagraph referred to as 

the “payer”) is a resident of that State. However, if the payer, whether a 

resident of a Contracting State or not, has in a State other than that of 

which the payer is a resident a permanent establishment in connection 

with which the obligation giving rise to the annuity or other amount was 

incurred, and the annuity or other amount is borne by the permanent 

establishment, then the annuity or other amount shall be deemed to arise 

in the State in which the permanent establishment is situated and not in 

the State of which the payer is a resident. 

2. Paragraph 7 of Article XVIII (Pensions and Annuities) of the Convention shall be

deleted and replaced by the following: 

7. A natural person who is a citizen or resident of a Contracting State and a 

beneficiary of a trust, company, organization or other arrangement that is a 

resident of the other Contracting State, generally exempt from income taxation 

in that other State and operated exclusively to provide pension or employee 

benefits may elect to defer taxation in the first-mentioned State, subject to rules 

established by the competent authority of that State, with respect to any income

accrued in the plan but not distributed by the plan, until such time as and to the 

extent that a distribution is made from the plan or any plan substituted therefor. 

3. Article XVIII (Pensions and Annuities) of the Convention shall be amended by adding 

the following paragraphs: 

8. Contributions made to, or benefits accrued under, a qualifying retirement 

plan in a Contracting State by or on behalf of an individual shall be deductible 

or excludible in computing the individual's taxable income in the other 

Contracting State, and contributions made to the plan by the individual's 

15
employer shall be allowed as a deduction in computing the employer’s profits in 

that other State, where: 

(a) The individual performs services as an employee in that other 

State the remuneration from which is taxable in that other State; 

(b) The individual was participating in the plan (or another similar 

plan for which this plan was substituted) immediately before the 

individual began performing the services in that other State; 

(c) The individual was not a resident of that other State immediately 

before the individual began performing the services in that other State; 

(d) The individual has performed services in that other State for the 

same employer (or a related employer) for no more than 60 of the 120 

months preceding the individual's current taxation year; 

(e) The contributions and benefits are attributable to the services

performed by the individual in that other State, and are made or accrued 

during the period in which the individual performs those services; and 

(f) With respect to contributions and benefits that are attributable to 

services performed during a period in the individual's current taxation 

year, no contributions in respect of the period are made by or on behalf 

of the individual to, and no services performed in that other State during 

the period are otherwise taken into account for purposes of determining 

the individual's entitlement to benefits under, any plan that would be a 

qualifying retirement plan in that other State if paragraph 15 of this 

Article were read without reference to subparagraphs (b) and (c) of that 

paragraph. 

This paragraph shall apply only to the extent that the contributions or benefits 

would qualify for tax relief in the first-mentioned State if the individual was a 

resident of and performed the services in that State. 

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9. For the purposes of United States taxation, the benefits granted under 

paragraph 8 to a citizen of the United States shall not exceed the benefits that 

would be allowed by the United States to its residents for contributions to, or 

benefits otherwise accrued under, a generally corresponding pension or 

retirement plan established in and recognized for tax purposes by the United 

States. 

10. Contributions made to, or benefits accrued under, a qualifying retirement 

plan in a Contracting State by or on behalf of an individual who is a resident of 

the other Contracting State shall be deductible or excludible in computing the 

individual's taxable income in that other State, where: 

(a) The individual performs services as an employee in the firstmentioned state the remuneration from which is taxable in that State and 

is borne by an employer who is a resident of that State or by a permanent 

establishment which the employer has in that State; and 

(b) The contributions and benefits are attributable to those services 

and are made or accrued during the period in which the individual 

performs those services. 

This paragraph shall apply only to the extent that the contributions or benefits 

qualify for tax relief in the first-mentioned State. 

11. For the purposes of Canadian taxation, the amount of contributions 

otherwise allowed as a deduction under paragraph 10 to an individual for a 

taxation year shall not exceed the individual's deduction limit under the law of 

Canada for the year for contributions to registered retirement savings plans 

remaining after taking into account the amount of contributions to registered 

retirement savings plans deducted by the individual under the law of Canada for 

the year. The amount deducted by an individual under paragraph 10 for a 

taxation year shall be taken into account in computing the individual's deduction 

17
limit under the law of Canada for subsequent taxation years for contributions to 

registered retirement savings plans. 

12. For the purposes of United States taxation, the benefits granted under 

paragraph 10 shall not exceed the benefits that would be allowed by the United 

States to its residents for contributions to, or benefits otherwise accrued under, a 

generally corresponding pension or retirement plan established in and 

recognized for tax purposes by the United States. For purposes of determining 

an individual's eligibility to participate in and receive tax benefits with respect to 

a pension or retirement plan or other retirement arrangement established in and 

recognized for tax purposes by the United States, contributions made to, or 

benefits accrued under, a qualifying retirement plan in Canada by or on behalf of 

the individual shall be treated as contributions or benefits under a generally 

corresponding pension or retirement plan established in and recognized for tax 

purposes by the United States. 

13. Contributions made to, or benefits accrued under, a qualifying retirement 

plan in Canada by or on behalf of a citizen of the United States who is a resident 

of Canada shall be deductible or excludible in computing the citizen's taxable 

income in the United States, where:

(a) The citizen performs services as an employee in Canada the 

remuneration from which is taxable in Canada and is borne by an 

employer who is a resident of Canada or by a permanent 

establishment which the employer has in Canada; and 

(b) The contributions and benefits are attributable to those 

services and are made or accrued during the period in which the 

citizen performs those services. 

This paragraph shall apply only to the extent that the contributions or benefits 

qualify for tax relief in Canada. 

14. The benefits granted under paragraph 13 shall not exceed the benefits 

that would be allowed by the United States to its residents for contributions to, 

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or benefits otherwise accrued under, a generally corresponding pension or 

retirement plan established in and recognized for tax purposes by the United 

States. For purposes of determining an individual's eligibility to participate in 

and receive tax benefits with respect to a pension or retirement plan or other 

retirement arrangement established in and recognized for tax purposes by the 

United States, contributions made to, or benefits accrued under, a qualifying 

retirement plan in Canada by or on behalf of the individual shall be treated as 

contributions or benefits under a generally corresponding pension or retirement 

plan established in and recognized for tax purposes by the United States. 

15. For purposes of paragraphs 8 to 14, a qualifying retirement plan in a 

Contracting State means a trust, company, organization or other arrangement: 

(a) That is a resident of that State, generally exempt from

income taxation in that State and operated primarily to provide 

pension or retirement benefits; 

(b) That is not an individual arrangement in respect of which the 

individual's employer has no involvement; and 

(c) Which the competent authority of the other Contracting State 

agrees generally corresponds to a pension or retirement plan established 

in and recognized for tax purposes by that other State. 

16. For purposes of this Article, a distribution from a pension or retirement 

plan that is reasonably attributable to a contribution or benefit for which a 

benefit was allowed pursuant to paragraph 8, 10 or 13 shall be deemed to arise 

in the Contracting State in which the plan is established. 

17. Paragraphs 8 to 16 apply, with such modifications as the circumstances 

require, as though the relationship between a partnership that carries on a 

business, and an individual who is a member of the partnership, were that of 

employer and employee. 

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Article 14 

Article XIX (Government Service) of the Convention shall be amended by deleting the words 

“XIV (Independent Personal Services)” and replacing them with the words “VII (Business 

Profits)” and by deleting the words “XV (Dependent Personal Services)" and replacing them

with the words “XV (Income from Employment)”. 

Article 15 

Article XX (Students) of the Convention shall be deleted and replaced by the following: 

Payments received by an individual who is a student, apprentice, or business 

trainee, and is, or was immediately before visiting a Contracting State, a resident 

of the other Contracting State, and who is present in the first-mentioned State for 

the purpose of the individual’s full-time education or full-time training, shall not 

be taxed in that State, provided that such payments arise outside that State, and 

are for the purpose of the maintenance, education or training of the individual. 

The provisions of this Article shall apply to an apprentice or business trainee 

only for a period of time not exceeding one year from the date the individual first 

arrives in the first-mentioned State for the purpose of the individual’s training. 

Article 16 

1. Paragraphs 4, 5 and 6 of Article XXI (Exempt Organizations) of the Convention shall 

be renumbered as paragraphs 5, 6 and 7 respectively. 

2. Paragraphs 1 through 3 of Article XXI (Exempt Organizations) of the Convention shall 

be deleted and replaced by the following four paragraphs: 

1. Subject to the provisions of paragraph 4, income derived by a religious, 

scientific, literary, educational or charitable organization shall be exempt from

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tax in a Contracting State if it is resident in the other Contracting State, but only 

to the extent that such income is exempt from tax in that other State. 

2. Subject to the provisions of paragraph 4, income referred to in Articles X 

(Dividends) and XI (Interest) derived by a trust, company, organization or other 

arrangement that is a resident of a Contracting State, generally exempt from 

income taxation in a taxable year in that State and operated exclusively to 

administer or provide pension, retirement or employee benefits shall be exempt 

from income taxation in that taxable year in the other Contracting State. 

3. Subject to the provisions of paragraph 4, income referred to in Articles X 

(Dividends) and XI (Interest) derived by a trust, company, organization or other 

arrangement that is a resident of a Contracting State, generally exempt from 

income taxation in a taxable year in that State and operated exclusively to earn 

income for the benefit of one or more of the following: 

(a) An organization referred to in paragraph 1; or 

(b) A trust, company, organization or other arrangement 

referred to in paragraph 2; 

shall be exempt from income taxation in that taxable year in the other 

 Contracting State. 

4. The provisions of paragraphs 1, 2 and 3 shall not apply with respect to 

the income of a trust, company, organization or other arrangement from carrying 

on a trade or business or from a related person other than a person referred to in 

paragraphs 1, 2 or 3. 

Article 17 

Article XXII (Other Income) of the Convention shall be amended by adding the following 

paragraph: 

21
4. Notwithstanding the provisions of paragraph 1, compensation derived by 

a resident of a Contracting State in respect of the provision of a guarantee of 

indebtedness shall be taxable only in that State, unless such compensation is 

business profits attributable to a permanent establishment situated in the other 

Contracting State, in which case the provisions of Article VII (Business Profits) 

shall apply. 

Article 18 

Paragraph 2 of Article XXIII (Capital) of the Convention shall be amended by deleting the 

phrase “, or by personal 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,”. 

Article 19 

Subparagraph 2(b) of Article XXIV (Elimination of Double Taxation) of the Convention shall 

be deleted and replaced with the following: 

(b) In the case of a company which is a resident of Canada owning at least 

10 percent of the voting stock of a company which is a resident of the United 

States from which it receives dividends in any taxable year, Canada shall allow 

as a credit against the Canadian tax on income the appropriate amount of income

tax paid or accrued to the United States by the second company with respect to 

the profits out of which the dividends are paid. 

22
Article 20 

1. Paragraph 1 of Article XXV (Non-Discrimination) of the Convention shall be deleted 

and replaced by the following: 

1. Nationals of a Contracting State shall not be subjected in the other 

Contracting State to any taxation or any requirement connected therewith that is 

more burdensome than the taxation and connected requirements to which 

nationals of that other State in the same circumstances, particularly with respect 

to taxation on worldwide income, are or may be subjected. This provision shall 

also apply to individuals who are not residents of one or both of the Contracting 

States. 

2. Paragraph 2 of Article XXV (Non-Discrimination) of the Convention shall be deleted, 

and paragraphs 3 to 10 of Article XXV shall be renumbered accordingly. 

3. Renumbered paragraph 3 of Article XXV (Non-Discrimination) of the Convention shall 

be amended by deleting the words “Article XV (Dependent Personal Services)" and replacing 

them with the words “Article XV (Income from Employment)”. 

Article 21 

1. Paragraph 6 of Article XXVI (Mutual Agreement Procedure) of the Convention shall be 

deleted and replaced by the following: 

6. Where, pursuant to a mutual agreement procedure under this Article, the 

competent authorities have endeavored but are unable to reach a complete 

agreement in a case, the case shall be resolved through arbitration conducted in 

the manner prescribed by, and subject to, the requirements of paragraph 7 and 

any rules or procedures agreed upon by the Contracting States by notes to be 

exchanged through diplomatic channels, if: 

23
(a) Tax returns have been filed with at least one of the Contracting 

States with respect to the taxable years at issue in the case; 

(b) The case: 

(i) Is a case that: 

(A) Involves the application of one or more Articles 

that the competent authorities have agreed in an exchange 

of notes shall be the subject of arbitration; and 

(B) Is not a particular case that the competent 

authorities agree, before the date on which arbitration 

proceedings would otherwise have begun, is not suitable 

for determination by arbitration; or 

(ii) Is a particular case that the competent authorities agree is 

suitable for determination by arbitration; and 

(c) All concerned persons agree according to the provisions of 

subparagraph 7(d). 

7. For the purposes of paragraph 6 and this paragraph, the following rules 

and definitions shall apply: 

(a) The term “concerned person” means the presenter of a case to a 

competent authority for consideration under this Article and all other 

persons, if any, whose tax liability to either Contracting State may be 

directly affected by a mutual agreement arising from that consideration;

(b) The “commencement date” for a case is the earliest date on 

which the information necessary to undertake substantive consideration 

for a mutual agreement has been received by both competent authorities; 

(c) Arbitration proceedings in a case shall begin on the later of: 

(i) Two years after the commencement date of that case, 

unless both competent authorities have previously agreed to a 

different date, and 

24
(ii) The earliest date upon which the agreement required by 

subparagraph (d) has been received by both competent 

authorities; 

(d) The concerned person(s), and their authorized representatives or 

agents, must agree prior to the beginning of arbitration proceedings not 

to disclose to any other person any information received during the 

course of the arbitration proceeding from either Contracting State or the 

arbitration board, other than the determination of such board; 

(e) Unless a concerned person does not accept the determination of 

an arbitration board, the determination shall constitute a resolution by 

mutual agreement under this Article and shall be binding on both 

Contracting States with respect to that case; and 

(f) For purposes of an arbitration proceeding under paragraph 6 and 

this paragraph, the members of the arbitration board and their staffs shall 

be considered “persons or authorities” to whom information may be 

disclosed under Article XXVII (Exchange of Information) of this 

Convention. 

Article 22 

 1. Subparagraph 8(a) of Article XXVI A (Assistance in Collection) of the Convention 

shall be deleted and replaced by the following: 

(a) Where the taxpayer is an individual, the revenue claim relates either to a 

taxable period in which the taxpayer was a citizen of the requested State or, if 

the taxpayer became a citizen of the requested State at any time before 

November 9, 1995 and is such a citizen at the time the applicant State applies for 

collection of the claim, to a taxable period that ended before November 9, 1995; 

and 

25
2. Paragraph 9 of Article XXVI A (Assistance in Collection) of the Convention 

shall be deleted and replaced by the following: 

9. Notwithstanding the provisions of Article II (Taxes Covered), the 

provisions of this Article shall apply to all categories of taxes collected, and to 

contributions to social security and employment insurance premiums levied, by 

or on behalf of the Government of a Contracting State. 

Article 23 

Article XXVII (Exchange of Information) of the Convention shall be deleted and replaced by 

the following: 

Article XXVII 

Exchange of Information 

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

information as may be relevant for carrying out the provisions of this 

Convention or of the domestic laws of the Contracting States concerning taxes 

to which this Convention applies insofar as the taxation thereunder is not 

contrary to this Convention. The exchange of information is not restricted by 

Article I (Personal Scope). Any information received by a Contracting State 

shall be treated as secret in the same manner as information obtained under the 

taxation laws of that State and shall be disclosed only to persons or authorities 

(including courts and administrative bodies) involved in the assessment or 

collection of, the administration and enforcement in respect of, or the 

determination of appeals in relation to the taxes to which this Convention 

applies or, notwithstanding paragraph 4, in relation to taxes imposed by a 

political subdivision or local authority of a Contracting State that are 

substantially similar to the taxes covered by this Convention under Article II 

(Taxes Covered). Such persons or authorities shall use the information only for 

26
such purposes. They may disclose the information in public court proceedings or 

in judicial decisions. The competent authorities may release to an arbitration 

board established pursuant to paragraph 6 of Article XXVI (Mutual Agreement 

Procedure) such information as is necessary for carrying out the arbitration 

procedure; the members of the arbitration board shall be subject to the 

limitations on disclosure described in this Article.

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

Article, the other Contracting State shall use its information gathering measures 

to obtain the requested information, even though that other 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 a Contracting State to decline to 

supply information because it has no domestic interest in such information. 

3. In no case shall the provisions of paragraph 1 and 2 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 State or of the other Contracting State; 

(b) To supply information which is not obtainable under the laws or 

in the normal course of the administration of that State or of the other 

Contracting State; or 

(c) To supply information which 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 

(ordre public). 

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

notwithstanding the provisions of Article II (Taxes Covered): 

(a) To all taxes imposed by a Contracting State; and 

27
(b) To other taxes to which any other provision of this Convention 

applies, but only to the extent that the information may be relevant for 

the purposes of the application of that provision. 

5. In no case shall the provisions of paragraph 3 be construed to permit a 

Contracting State to decline to supply information because the information is 

held by 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. 

6. 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). 

7. The requested State shall allow representatives of the requesting State to 

enter the requested State to interview individuals and examine books and 

records with the consent of the persons subject to examination. 

Article 24 

1. Paragraph 2 of Article XXIX (Miscellaneous Rules) of the Convention shall be deleted 

and replaced by the following: 

2. (a) Except to the extent provided in paragraph 3, this Convention 

shall not affect the taxation by a Contracting State of its residents (as 

determined under Article IV (Residence)) and, in the case of the United 

States, its citizens and companies electing to be treated as domestic 

corporations. 

(b) Notwithstanding the other provisions of this Convention, a 

former citizen or former long-term resident of the United States, may, for

28
the period of ten years following the loss of such status, be taxed in 

accordance with the laws of the United States with respect to income

from sources within the United States (including income deemed under 

the domestic law of the United States to arise from such sources). 

2. Subparagraph 3(a) of Article XXIX (Miscellaneous Rules) shall be deleted and replaced 

by the following: 

(a) Under paragraphs 3 and 4 of Article IX (Related Persons), 

paragraphs 6 and 7 of Article XIII (Gains), paragraphs 1, 3, 4, 5, 6(b), 7, 

8, 10 and 13 of Article XVIII (Pensions and Annuities), paragraph 5 of 

Article XXIX (Miscellaneous Rules), paragraphs 1, 5, and 6 of Article 

XXIX B (Taxes Imposed by Reason of Death), paragraphs 2, 3, 4, and 7 

of Article XXIX B (Taxes Imposed by Reason of Death) as applied to 

estates of persons other than former citizens referred to in paragraph 2 of 

this Article, paragraphs 3 and 5 of Article XXX (Entry into Force), and 

Articles XIX (Government Service), XXI (Exempt Organizations), 

XXIV (Elimination of Double Taxation), XXV (Non-Discrimination) 

and XXVI (Mutual Agreement Procedure); 

Article 25 

Article XXIX A (Limitation on Benefits) of the Convention shall be deleted and replaced by 

the following: 

Article XXIX A 

Limitation on Benefits 

1. For the purposes of the application of this Convention by a Contracting 

State, 

(a) a qualifying person shall be entitled to all of the benefits of this 

Convention; and 

29
(b) except as provided in paragraphs 3, 4 and 6, a person that is 

not a qualifying person shall not be entitled to any benefits of this 

 Convention. 

2. For the purposes of this Article, a qualifying person is a resident of 

a Contracting State that is: 

(a) a natural person; 

(b) a Contracting State or a political subdivision or local authority 

thereof, or any agency or instrumentality of any such State, subdivision 

or authority; 

(c) a company or trust whose principal class of shares or units (and 

any disproportionate class of shares or units) is primarily and regularly 

traded on one or more recognized stock exchanges; 

(d) a company, if five or fewer persons each of which is a company 

or trust referred to in subparagraph (c) own directly or indirectly more 

than 50 percent of the aggregate vote and value of the shares and more 

than 50 percent of the vote and value of each disproportionate class of 

shares (in neither case including debt substitute shares), provided that 

each company or trust in the chain of ownership is a qualifying person; 

(e) (i) a company, 50 percent or more of the aggregate vote and 

value of the shares of which and 50 percent or more of the vote 

and value of each disproportionate class of shares (in neither case 

including debt substitute shares) of which is not owned, directly 

or indirectly, by persons other than qualifying persons; or 

(ii) a trust, 50 percent or more of the beneficial interest in 

which and 50 percent or more of each disproportionate interest in 

which, is not owned, directly or indirectly, by persons other than 

qualifying persons; 

30
where the amount of the expenses deductible from gross income (as 

determined in the State of residence of the company or trust) that are 

paid or payable by the company or trust, as the case may be, for its 

preceding fiscal period (or, in the case of its first fiscal period, that 

period) directly or indirectly, to persons that are not qualifying persons is 

less than 50 percent of its gross income for that period; 

(f) an estate; 

(g) a not-for-profit organization, provided that more than half of the 

beneficiaries, members or participants of the organization are qualifying 

persons; 

(h) a trust, company, organization or other arrangement described in 

paragraph 2 of Article XXI (Exempt Organizations) and established for 

the purpose of providing benefits primarily to individuals who are 

qualifying persons, or persons who were qualifying persons within the 

five preceding years; or 

(i) a trust, company, organization or other arrangement described in 

paragraph 3 of Article XXI (Exempt Organizations) provided that the 

beneficiaries of the trust, company, organization or other arrangement 

are described in subparagraph (g) or (h). 

3. Where a person is a resident of a Contracting State and is not a 

qualifying person, and that person, or a person related thereto, is engaged in the 

active conduct of a trade or business in that State (other than the business of 

making or managing investments, unless those activities are carried on with 

customers in the ordinary course of business by a bank, an insurance company, a 

registered securities dealer or a deposit-taking financial institution), the benefits 

of this Convention shall apply to that resident person with respect to income

derived from the other Contracting State in connection with or incidental to that 

trade or business (including any such income derived directly or indirectly by 

that resident person through one or more other persons that are residents of that 

31
other State), but only if that trade or business is substantial in relation to the 

activity carried on in that other State giving rise to the income in respect of 

which benefits provided under this Convention by that other State are claimed. 

4. A company that is a resident of a Contracting State shall also be entitled 

to the benefits of Articles X (Dividends), XI (Interest) and XII (Royalties) if: 

(a) Its shares that represent more than 90 percent of the aggregate 

vote and value of all of its shares and at least 50 percent of the vote and 

value of any disproportionate class of shares (in neither case including 

debt substitute shares) are owned, directly or indirectly, by persons each 

of whom is a qualifying person or a person who: 

(i) Is a resident of a country with which the other Contracting 

State has a comprehensive income tax convention and is entitled 

to all of the benefits provided by that other State under that 

convention; 

(ii) Would qualify for benefits under paragraphs 2 or 3 if that 

person were a resident of the first-mentioned State (and, for the 

purposes of paragraph 3, if the business it carried on in the 

country of which it is a resident were carried on by it in the firstmentioned State); and 

(iii) Would be entitled to a rate of tax in the other Contracting 

State under the convention between that person's country of 

residence and that other State, in respect of the particular class of 

income for which benefits are being claimed under this 

Convention, that is at least as low as the rate applicable under this 

Convention; and 

(b) The amount of the expenses deductible from gross income (as 

determined in the company’s State of residence) that are paid or payable 

by the company for its preceding fiscal period (or, in the case of its first 

fiscal period, that period) directly or indirectly to persons that are not 

32
qualifying persons is less than 50 percent of the company’s gross 

income for that period. 

5. For the purposes of this Article, 

(a) The term "debt substitute share" means: 

(i) A share described in paragraph (e) of the definition "term

preferred share" in the Income Tax Act, as it may be amended 

from time to time without changing the general principle thereof; 

and 

(ii) Such other type of share as may be agreed upon by the 

competent authorities of the Contracting States. 

(b) The term "disproportionate class of shares" means any class of 

shares of a company resident in one of the Contracting States that entitles

the shareholder to disproportionately higher participation, through 

dividends, redemption payments or otherwise, in the earnings generated 

in the other State by particular assets or activities of the company; 

(c) The term "disproportionate interest in a trust" means any interest 

in a trust resident in one of the Contracting States that entitles the interest 

holder to disproportionately higher participation in, or claim to, the 

earnings generated in the other State by particular assets or activities of 

the trust; 

(d) The term "not-for-profit organization" of a Contracting State 

means an entity created or established in that State and that is, by reason 

of its not-for-profit status, generally exempt from income taxation in that 

State, and includes a private foundation, charity, trade union, trade 

association or similar organization; 

(e) The term "principal class of shares" of a company means the 

ordinary or common shares of the company, provided that such class of 

shares represents the majority of the voting power and value of the 

33
company. If no single class of ordinary or common shares represents the 

majority of the aggregate voting power and value of the company, the 

“principal class of shares” are those classes that in the aggregate 

represent a majority of the aggregate voting power and value of the 

company; and 

(f) The term "recognized stock exchange" means: 

(i) 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; 

(ii) Canadian stock exchanges that are "prescribed stock 

 exchanges" or "designated stock exchanges" under the 

Income Tax Act; and 

(iii) Any other stock exchange agreed upon by the Contracting 

States in an exchange of notes or by the competent authorities of 

the Contracting States. 

6. Where a person that is a resident of a Contracting State is not entitled 

under the preceding provisions of this Article to the benefits provided under this 

Convention by the other Contracting State, the competent authority of that other 

State shall, upon that person's request, determine on the basis of all factors 

including the history, structure, ownership and operations of that person 

whether: 

(a) Its creation and existence did not have as a principal purpose the 

obtaining of benefits under this Convention that would not otherwise be 

available; or 

(b) It would not be appropriate, having regard to the purpose of 

this Article, to deny the benefits of this Convention to that person. 

34
The person shall be granted the benefits of this Convention by that other State 

where the competent authority determines that subparagraph (a) or (b) applies. 

7. It is understood that this Article shall not be construed as restricting in 

any manner the right of a Contracting State to deny benefits under this 

Convention where it can reasonably be concluded that to do otherwise would 

result in an abuse of the provisions of this Convention. 

Article 26 

1. Paragraph 1 of Article XXIX B (Taxes Imposed by Reason of Death) of the Convention 

shall be deleted and replaced by the following: 

1. Where the property of an individual who is a resident of a Contracting 

State passes by reason of the individual’s death to an organization that is 

referred to in paragraph 1 of Article XXI (Exempt Organizations) and that is a 

resident of the other Contracting State, 

(a) If the individual is a resident of the United States and the 

organization is a resident of Canada, the tax consequences in the United 

States arising out of the passing of the property shall apply as if the 

organization were a resident of the United States; and 

(b) If the individual is a resident of Canada and the organization is a 

resident of the United States, the tax consequences in Canada arising out 

of the passing of the property shall apply as if the individual had 

disposed of the property for proceeds equal to an amount elected on 

behalf of the individual for this purpose (in a manner specified by the 

competent authority of Canada), which amount shall be no less than the 

individual’s cost of the property as determined for purposes of Canadian 

tax and no greater than the fair market value of the property. 

35
2. Paragraph 5 of Article XXIX B (Taxes Imposed by Reason of Death) of the Convention 

shall be deleted and replaced by the following: 

5. Where an individual was a resident of the United States immediately 

before the individual's death, for the purposes of subsections 70(5.2) and (6) of 

the Income Tax Act, both the individual and the individual's spouse shall be 

deemed to have been resident in Canada immediately before the individual's

death. Where a trust that would be a trust described in subsection 70(6) of that 

Act, if its trustees that were residents or citizens of the United States or domestic 

corporations under the law of the United States were residents of Canada, 

requests the competent authority of Canada to do so, the competent authority 

may agree, subject to terms and conditions satisfactory to such competent 

authority, to treat the trust for the purposes of that Act as being resident in 

Canada for such time and with respect to such property as may be stipulated in 

the agreement. 

Article 27 

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

procedures in the United States and Canada. The Contracting States shall notify each other in 

writing, through diplomatic channels, when their respective applicable procedures have been 

satisfied. 

2. This Protocol shall enter into force on the date of the later of the notifications referred to 

in paragraph 1, or January 1, 2008, whichever is later. The provisions of this Protocol shall 

have effect: 

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

the first day of the second month that begins after the date on which this Protocol enters 

into force;

36
(b) In respect of other taxes, for taxable years that begin after (or, if the later of the 

notifications referred to in paragraph 1 is dated in 2007, taxable years that begin in and 

after) the calendar year in which this Protocol enters into force. 

3. Notwithstanding paragraph 2, 

(a) Paragraph 1 of Article 2 of this Protocol shall have effect with respect to 

corporate continuations effected after September 17, 2000; 

(b) New paragraph 7 of Article IV (Residence) of the Convention as added by 

Article 2 of this Protocol shall have effect as of the first day of the third calendar year 

that ends after this Protocol enters into force; 

(c) Article 3 of this Protocol shall have effect as of the third taxable year that ends 

after this Protocol enters into force, but in no event shall it apply to include, in the 

determination of whether an enterprise is deemed to provide services through a 

permanent establishment under paragraph 9 of Article V (Permanent Establishment) of 

the Convention, any days of presence, services rendered, or gross active business 

revenues that occur or arise prior to January 1, 2010; 

(d) In applying Article 6 of this Protocol to interest paid or credited during the first 

two calendar years that end after entry into force of this Protocol, paragraph 1 of Article 

XI (Interest) of the Convention shall be read as follows: 

1. Interest arising in a Contracting State and beneficially owned by a 

resident of the other Contracting State may be taxed only in that other State. 

However, if the interest is not exempt under paragraph 3 of Article XI (Interest) 

as it read on January 1, 2007, and the payer of the interest and the beneficial 

owner of the interest are related, or would be deemed to be related if the 

provisions of paragraph 2 of Article IX (Related Persons) applied for this

purpose, such interest may also be taxed in the Contracting State in which it 

arises, and according to the laws of that State, but the tax so charged shall not 

exceed the following percentage of the gross amount of the interest: 

(a) If the interest is paid or credited during the first calendar year that 

ends after entry into force of this paragraph, 7 percent; and 

37
(b) If the interest is paid or credited during the second calendar year 

that ends after entry into force of this paragraph, 4 percent; 

(e) Paragraphs 2 and 3 of Article 8 of this Protocol shall have effect with respect to 

alienations of property that occur (including, for greater certainty, those that are deemed 

under the law of a Contracting State to occur) after September 17, 2000; 

(f) Article 21 of this Protocol shall have effect with respect to 

(i) Cases that are under consideration by the competent authorities as of the 

date on which this Protocol enters into force; and 

(ii) Cases that come under such consideration after that time, 

and the commencement date for a case described in subparagraph (f)(i) shall be the date 

on which the Protocol enters into force; and 

(g) Article 22 of this Protocol shall have effect for revenue claims finally 

determined by an applicant State after November 9, 1985. 

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

respective Governments, have signed this Protocol. 

DONE in duplicate at Chelsea this twenty-first day of September 2007 in the English 

and French languages, each text being equally authentic. 

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF 

THE UNITED STATES OF AMERICA: CANADA: 

38