Introduction to the Law of Double Taxation Conventions

S. 909 Allocation rules

9.1 Income from immovable property

9.1.1 Immovable property

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Income from immovable property is dealt with by treaty provisions patterned after Art. 6 OECD Model. The concept of immovable property is set out in Art. 6(2) OECD Model: “The term ‘immovable property’ shall have the meaning which 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, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources”. These terms have to be interpreted as far as possible within the context of the OECD Model.

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Art. 6 OECD Model covers income arising from the immediate utilization of the property and the rental or lease of the property, as well as income arising from any other use of real estate. The general rule applies irrespective of the form of exploitation of the immovable property. However, capital gains d...