# The Double Taxation Relief (Taxes on Income) (Venezuela) Order 1996, Note: Explanatory note


(This note is not part of the Order)
The Convention with Venezuela is set out in Part I of the Schedule to this Order.
The Convention provides for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Article s 5 and 7).
Income and gains from immovable property may be taxed in the country in which the property is situated (Article s 6 and 13).
Profits and gains from international shipping and air transport are generally to be taxed only in the residence state of the operator. However profits derived from the transport of hydrocarbons by ship may be taxed in the other Contracting State (Article s 8 and 13).
The Convention includes rules for determining taxable profits when a company in one country is related to a company in the other (Article 9).
The rate of tax imposed in the country of source on dividends derived and beneficially owned by a resident of the other country shall not, in general, exceed 10 per cent. of the gross amount of the dividends. If the beneficial owner is a company which controls at least 10 per cent. of the voting power in the company paying the dividends, the dividends will generally be taxable only in the recipient’s country of residence (Article 10).
The rate of tax imposed in the country of source on interest derived by a resident of the other country is not to exceed 5 per cent. of the gross amount flowing to the other country provided the recipient is the beneficial owner of the interest. Certain categories of interest will be exempt from tax in the source state (Article 11).
The rate of tax imposed in the country of source on royalties is limited to 7 per cent. of the gross amount in respect of copyright of literary or artistic work and 5 per cent. of the gross amount in respect of patents, trade marks, industrial, commercial or scientific experience; where, in either case, the recipient is the beneficial owner of the royalties (Article 12).
Each country may generally tax capital gains in accordance with its domestic law. Gains arising from the disposal of the assets of a permanent establishment or a fixed base which the taxpayer has in the other country may be taxed in that other country (Article 13).
The earnings of temporary business visitors and some other individuals are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence (Article s 14 and 15). Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in that other country (Article 16). Income derived from the activities of artistes and sportsmen may be taxed in the country in which those activities are performed (Article 17).
Occupational pensions and annuities are to be taxed only in the recipient’s country of residence (Article 18) while government service remuneration is normally to be taxed only by the paying Government (Article 19). There are separate provisions for diplomatic or consular officials (Article 27). Certain payments made to visiting students and business apprentices are generally exempt from tax in the country visited (Article 20).
Other income not specified in the Convention will generally be taxed only by the country of which the beneficial owner is a resident (Article 21).
Where income continues to be taxable in both countries, relief will be given, in effect, in accordance with the laws of each country. The credit to be given in the United Kingdom for tax imposed in Venezuela includes credit for tax spared under certain provisions of Venezuelan law (Article 22).
There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 23) and provisions whereby the United Kingdom ensures that it retains its right to tax a United Kingdom resident member of a Venezuelan resident partnership (Article 24).
There are also provisions for consultation to resolve difficulties in the application or interpretation of the Convention (Article 25) and for exchanges of information between the taxation authorities of the two countries (Article 26).
The Exchange of Notes comprising Part II of the Schedule clarifies the intended interpretation of certain parts of the Convention.
The Convention will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures. It will take effect in the United Kingdom in respect of corporation tax from 1st April in the following calendar year; and from 6th April that year for income tax and capital gains tax (Article 28). The date of entry into force will in due course be published in the London, Edinburgh and Belfast Gazettes.

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Source: https://www.legislation.gov.uk/uksi/1996/2599/note (the official version)
Page: https://openlegislation.uk/double-taxation-relief-taxes-on-income-venezuela-order-1996/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.