The Use of the OECD Commentary
Elgar Tax Law and Practice series
Chapter 5: INCOME FROM IMMOVABLE PROPERTY, CAPITAL GAINS, AND CAPITAL (ARTT. 6, 13 AND 22)
According to Art. 6 § 1 income derived by a resident of the RC from immovable property (including income from agriculture/forestry) situated in the SC may be taxed in the SC. There is however an alternative model of taxation only in the SC when the treaty rules attribute the exclusive right to tax of the SC, departing from the Model. The immovable (hereafter imm.) property article deals only with income which a resident of a CS derives from immovable property situated in the other CS. It does not, therefore, apply to income from immovable property situated in the CS of which the recipient is a resident or situated in a third country; Art. 21 § 1 applies to such income (see infra at para 11.56). The application of Art. 6 is essentially based on domestic laws of the CSs in particular with respect to how the income from immovable property is actually taxed. Domestic laws are especially applied under the treaties to determine the amount of taxable income from immovable property, which is often assessed as ‘notional income’. For example, X, a resident of Germany, owned immovable property in the Netherlands that was neither used by him nor located to third parties. Special rules in the Netherlands domestic laws applied, providing for taxation of the immovable property on the base of notional income from the own use of immovable property. The Court held that such domestic rules were applicable in so far as they resulted from policies
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