Exemption method prevents double taxation by exempting foreign-source income while allowing limited credit for foreign tax paid. The Article establishes the exemption method: a resident State generally exempts income or capital taxable in the other Contracting State, while for specified items (Articles 10, 11, 12, 12A, 12B) it allows a deduction equal to tax paid abroad limited to the tax attributable to those items; exempted items may be considered when computing tax on remaining income or capital; reciprocal rules coordinate exemption and deduction when the other State applies similar provisions.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Exemption method prevents double taxation by exempting foreign-source income while allowing limited credit for foreign tax paid.
The Article establishes the exemption method: a resident State generally exempts income or capital taxable in the other Contracting State, while for specified items (Articles 10, 11, 12, 12A, 12B) it allows a deduction equal to tax paid abroad limited to the tax attributable to those items; exempted items may be considered when computing tax on remaining income or capital; reciprocal rules coordinate exemption and deduction when the other State applies similar provisions.
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