UK/Uruguay Double Taxation Convention
Signed on 24 February 2016
This Convention has not yet entered into force.
This will happen when both countries have completed their legislative procedures and exchanged
diplomatic notes.
An announcement will be made when these procedures have been completed.
HM Revenue & Customs
June 2016
CONVENTION
BETWEEN
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
AND
THE ORIENTAL REPUBLIC OF URUGUAY
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
The United Kingdom of Great Britain and Northern Ireland and
The Oriental Republic of Uruguay
Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital,
Have agreed as follows:
2
CHAPTER I
SCOPE OF THE CONVENTION
Article 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both of the Contracting States.
Article 2
TAXES COVERED
1.
This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions
or local authorities, irrespective of the manner in which they are levied.
2.
There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income
or of capital, including taxes on gains from the alienation of movable or immovable property as well as taxes on capital appreciation.
3.
The existing taxes to which the Convention shall apply are in particular:
a)
in the United Kingdom:
(i)
the income tax;
(ii)
the corporation tax; and
(iii)
the capital gains tax;
(hereinafter referred to as “United Kingdom tax”);
b)
in Uruguay :
(i)
the tax on business income (Impuesto a las Rentas de las Actividades Económicas -IRAE-);
(ii)
the personal income tax (Impuesto a las Rentas de las Personas Físicas -IRPF-);
(iii)
the non-residents income tax (Impuesto a las Rentas de los No Residentes -IRNR-) ;
(iv)
the tax for social security assistance (Impuesto de Asistencia a la Seguridad Social -IASS-); and
(v)
the capital tax (Impuesto al Patrimonio -IP-); (hereinafter referred to as “Uruguayan tax”).
4.
The Convention shall apply also to any taxes that are imposed after the date of signature of the Convention that fall within the terms
of paragraph 1 and to any identical or substantially similar taxes that are so imposed in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been
made in their taxation laws.
CHAPTER II
DEFINITIONS
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
a)
the term “United Kingdom” means Great Britain and Northern Ireland and, when used in a geographical sense, means the territory and territorial
sea of Great Britain and Northern Ireland and the areas beyond that territorial sea over which Great Britain and Northern Ireland exercise sovereign rights or jurisdiction in accordance with their domestic law and international law;
b)
the term “Uruguay” means the Oriental Republic of Uruguay and, when used in a geographical sense means the territory, the airspace and
the maritime areas, where the tax laws are applied under Uruguayan sovereign rights or jurisdiction in accordance with international law and national law;
c)
the terms “a Contracting State” and “the other Contracting State” mean the United Kingdom or Uruguay, as the context requires;
d)
the term “person” includes an individual, a company and any other body of persons;
e)
the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;
f)
the term “enterprise” applies to the carrying on of any business;
g)
the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried
on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
h)
the term “international traffic” means any transport by a ship or aircraft, except when the ship or aircraft is operated solely between
places in a Contracting State and the enterprise that operates the ship or aircraft is not an enterprise of that State;
i)
the term “competent authority” means:
(i)
in the United Kingdom, the Commissioners for Her Majesty’s Revenue and Customs or their authorised representative;
(ii)
in Uruguay, the Ministry of Economy and Finance or its authorised representative;
j)
the term “national” means:
(i)
in relation to the United Kingdom, any British citizen, or any British subject not possessing the citizenship of any other Commonwealth
country or territory, provided he has the right of abode in the United Kingdom; and any legal person, partnership or association deriving its status as such from the laws in force in the United Kingdom;
(ii)
in relation to Uruguay, any individual possessing the nationality or citizenship of Uruguay; and any legal person, partnership or association
deriving its status as such from the laws in force in Uruguay;
k)
the term “business” includes the performance of professional services and of other activities of an independent character;
l)
the term “pension scheme” means any scheme or other arrangement which:
(i)
is generally exempt from income taxation; and
(ii)
operates to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.
2.
As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under
other laws of that State.
Article 4
RESIDENT
1.
For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State,
is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however,
does not include any person who is liable to tax in that State in respect only of income or capital gains from sources in that State or capital situated therein.
2.
Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined
as follows:
a)
he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
b)
if the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to
him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
c)
if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is
a national;
d)
if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question
by mutual agreement.
3.
For the purposes of this Convention, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally
transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State but only to the extent that the income is treated, for purposes of taxation by that State, as the income of a resident of that State.
In no case shall the provisions of this paragraph be construed so as to restrict in any way a Contracting State’s right to tax the residents of that State.
4.
Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then the
competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which that person shall be deemed to be a resident for the purposes of this Convention. In the absence of a mutual agreement by the competent
authorities of the Contracting States, the person shall not be considered a resident of either Contracting State for the purposes
of claiming any benefits provided by the Convention, except those provided by Articles
22, 24 and 25.
Article 5
PERMANENT ESTABLISHMENT
1.
For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of
an enterprise is wholly or partly carried on.
2.
The term “permanent establishment” includes especially:
a)
a place of management;
b)
a branch;
c)
an office;
d)
a factory;
e)
a workshop; and
f)
a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3.
The term “permanent establishment” likewise includes:
a)
a building site, a construction, assembly or installation project or supervisory activities in connection
therewith, but only if such site, project or activities last more than 183 days;
b)
the performing of services by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only
if activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned;
c)
for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State
is for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.
4.
Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:
a)
the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
b)
the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
c)
the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
d)
the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information,
for the enterprise;
e)
the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory
or auxiliary character;
f)
the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs a) to e), provided
that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5.
Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph
6 applies- is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect
of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph
4
which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the
provisions of that paragraph.
6.
An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that
State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly
on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered
an agent of an independent status within the meaning of this paragraph.
7.
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the
other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
CHAPTER III
TAXATION OF INCOME
Article 6
INCOME FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated
in the other Contracting State may be taxed in that other State.
2.
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; ships and aircraft shall not be regarded as immovable property.
3.
The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4.
Where the ownership of shares or comparable interests entitles the owner of such shares or interests to the enjoyment of immovable property,
the income from the direct use, letting, or use in any other form of such right to enjoyment may be taxed in the Contracting State in which the immovable property is situated.
5.
The provisions of paragraphs 1, 3 and 4 shall also apply to the income from immovable property of an enterprise.
Article 7
BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in
the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent
establishment.
2.
Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries 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 profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3.
In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes
of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.
4.
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or
merchandise for the enterprise.
5.
For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the
same method year by year unless there is good and sufficient reason to the contrary.
6.
Where profits include items of income or capital gains which are dealt with separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the provisions of this Article.
Article 8
SHIPPING AND AIR TRANSPORT
1.
Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only
in that State.
2.
For the purpose of this Article, profits from the operation of ships or aircraft in international traffic include:
a)
profits from the rental on a bareboat basis of ships or aircraft; and
b)
profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers)
used for the transport of goods or merchandise;
where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships
or aircraft in international traffic.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business
or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1.
Where
a)
an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the
other Contracting State, or
b)
the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and
an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent
enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been
charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent
enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities
of the Contracting States shall if necessary consult each other.
Article 10
DIVIDENDS
1.
Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that
other State.
2.
However, dividends paid by a company which is a resident of a Contracting State may also be taxed in that State according to the laws
of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
a)
5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly
at least 10 per cent of the capital of the company paying the dividends;
b)
15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3.
Notwithstanding the provisions of paragraph 2 dividends shall not be taxed in the Contracting State of which the company paying the dividends
is a resident if the beneficial owner of the dividends is a pension scheme which is a resident of the other Contracting State, provided that the shares or other rights in respect of which such dividends are paid are held for the purpose of an activity mentioned
in subparagraph l) of paragraph 1 of Article 3.
4.
The term “dividends” as used in this Article means income from shares or other rights, not being debt-claims, participating in profits,
as well as any other item which is treated as income from shares by the taxation laws of the State of which the company making the distribution is a resident.
5.
The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State,
carries 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 with such permanent
establishment. In such case the provisions of Article 7 shall apply.
6.
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State
may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment
situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.
Article 11
INTEREST
1.
Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2.
However, interest arising in a Contracting State may also be taxed in that State according to the laws of that State, but if the beneficial
owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3.
Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to a resident of the other Contracting
State who is the beneficial owner thereof shall be taxable only in that other State to the extent that such interest is paid:
a)
to a financial institution on a loan of at least three years for the financing of investment projects;
b)
to that other State, its political subdivisions or local authorities or to its Central Bank or other entity wholly-owned by that State,
political subdivision or local authority;
c)
by the State in which the interest arises or by a political subdivision or local authority thereof;
d)
in respect of a loan granted by, or guaranteed or insured by, that other State or a political subdivision, local authority or export
guarantee department thereof; or
e)
to a pension scheme, provided that the debt-claim in respect of which such interest is paid is held for the purpose of an activity mentioned
in subparagraph l) of paragraph 1 of Article 3.
4.
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 and prizes attaching to such securities, bonds or debentures. Penalty charges for late
payment shall not be regarded as interest for the purpose of this Article. The term shall not include any item which is treated as a dividend under the provisions of Article 10.
5.
The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State,
carries 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 the interest is paid is effectively connected with such permanent establishment. In such
case the provisions of Article 7 shall apply.
6.
Interest shall be deemed to arise in a Contracting State when the payer is 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 Contracting State
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.
7. 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 paid exceeds,
for whatever reason, 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.
Article 12
ROYALTIES
1.
Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2.
However, royalties arising in a Contracting State may also be taxed in that State according to the laws of that State, but if the beneficial
owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
3.
The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use,
any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information (know-how) concerning
industrial, commercial or scientific experience.
4 The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries 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 with such permanent establishment. In such case the provisions of Article 7
shall apply.
5.
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 Contracting State a permanent establishment in connection with which the liability 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.
6.
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 royalties paid exceeds, for whatever reason, 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.
Article 13
CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in
the other Contracting State may be taxed in that other State.
2.
Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise
of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3.
Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic by an enterprise
of that State or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.
4.
Gains derived by a resident of a Contracting State from the alienation of shares, other than shares in which there is regular trading
on a Stock Exchange, or comparable interests, deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.
5.
Gains from the alienation of shares or comparable interests, which entitle the owner of such shares or interests to the enjoyment of
immovable property situated in a Contracting State, may be taxed in that State.
6.
Gains from the alienation of any property, other than that referred to in the preceding paragraphs, shall be taxable only in the Contracting
State of which the alienator is a resident.
Article 14
INCOME FROM EMPLOYMENT
1.
Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar 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)
the recipient is present in the 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
b)
the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
c)
the remuneration is not borne by a permanent establishment which the employer has in the other State.
3.
Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an
employment exercised aboard a ship or aircraft operated in international traffic (other than aboard a ship or aircraft operated solely within the other Contracting State) shall be taxable only in that State.
Article 15
DIRECTORS' FEES
Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of the administrative or supervisory
council, of a company which is a resident of the other Contracting State may be taxed in that other State.
Article 16
ARTISTES AND SPORTSMEN
1.
Notwithstanding the provisions of Article 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre,
motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2.
Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the
entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.
Article 17
PENSIONS
Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall
be taxable only in that State.
Article 18
GOVERNMENT SERVICE
1.
a) Salaries, wages and other similar remuneration paid by a Contracting State or a political subdivision or a local authority thereof
to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b)
However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are
rendered in that State and the individual is a resident of that State who:
(i)
is a national of that State; or
(ii)
did not become a resident of that State solely for the purpose of rendering the services;
and is subject to tax in that State on such salaries, wages and other similar remuneration.
2.
a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting
State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b)
However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident
of, and a national of, that State.
3.
The provisions of Articles 14, 15, 16, and 17 shall apply to salaries, wages, pensions, and other similar remuneration in respect of
services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
Article 19
STUDENTS
Payments which a student or business apprentice who 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 solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
Article 20
OTHER INCOME
1.
Items of income beneficially owned by a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of
this Convention shall be taxable only in that State.
2.
The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article
6, if the beneficial owner of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively
connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
3.
Where, by reason of a special relationship between the resident referred to in paragraph 1 and some other person, or between both of
them and some third person, the amount of the income referred to in that paragraph exceeds the amount (if any) which would have been agreed upon between them in the absence of such a relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the income shall remain taxable according to the laws of each Contracting State, due regard being had to the other applicable provisions of this Convention.
CHAPTER IV
TAXATION OF CAPITAL
Article 21
CAPITAL
1.
Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other
Contracting State, may be taxed in that other State.
2.
Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State may be taxed in that other State.
3.
Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property
pertaining to the operation of such ships and aircraft, shall be taxable only in that Contracting State.
4.
All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
CHAPTER V
METHODS FOR ELIMINATION OF DOUBLE TAXATION
Article 22
ELIMINATION OF DOUBLE TAXATION
1. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United
Kingdom or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom or of the profits of a permanent establishment situated in a territory outside the United Kingdom (which shall not
affect the general principle hereof):
a)
Uruguayan tax payable under the laws of Uruguay and in accordance with this Convention, whether directly or by deduction, on profits,
income or chargeable gains from sources within Uruguay (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same
profits, income or chargeable gains by reference to which the Uruguayan tax is computed;
b)
a dividend which is paid by a company which is a resident of Uruguay to a company which is a resident of the United Kingdom shall be
exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
c)
the profits of a permanent establishment in Uruguay of a company which is a resident of the United Kingdom shall be exempted from United
Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
d)
in the case of a dividend not exempted from tax under sub-paragraph b) above which is paid by a company which is a resident of Uruguay
to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in sub-paragraph a) above shall also take into account the Uruguayan
tax payable by the company in respect of its profits out of which such dividend is paid.
For the purposes of this paragraph, profits, income and gains owned by a resident of the United Kingdom which may be taxed in Uruguay in accordance with this Convention shall be
deemed to arise from sources in Uruguay.
2.
In Uruguay, double taxation shall be eliminated as follows:
a)
Residents in Uruguay, deriving income which has, in accordance with United Kingdom law and under the provisions of this Convention, been
subject to taxation in the United Kingdom, may credit the tax so paid against any Uruguayan tax payable in respect of the same income, subject to the applicable provisions of the law of Uruguay. The same shall also apply in respect of capital which has, in
accordance with United Kingdom law and under the provisions of this Convention, been subject to taxation in the United Kingdom; the capital tax so paid may be credited against any Uruguayan tax payable in respect of the same capital, subject to the applicable
provisions of the law of Uruguay. Such deduction shall not, however, exceed that part of the Uruguayan tax on income or capital, as computed before the deduction is given;
b)
Where, in accordance with any provision of the Convention, income derived or capital owned by a resident of Uruguay is exempt from tax
in Uruguay, Uruguay may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.
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CHAPTER VI
SPECIAL PROVISIONS
Article 23
ENTITLEMENT TO BENEFITS
Notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income or capital if it is reasonable to conclude,
having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit
in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention.
Article 24
NON-DISCRIMINATION
1.
Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.
2.
The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be
less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State
any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3.
Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12, paragraph 3 of Article
20 or Article 23 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under
the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of
such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
4.
Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more
residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises
of the first-mentioned State are or may be subjected.
Article 25
MUTUAL AGREEMENT PROCEDURE
1.
Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance
with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph
1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.
2.
The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at
a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented
notwithstanding any time limits in the domestic law of the Contracting States.
3.
The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising
as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.
4.
The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement
in the sense of the preceding paragraphs.
5.
Where,
a)
under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of
one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Convention, and
b)
the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within two years from the presentation
of the case to the competent authority of the other Contracting State,
any unresolved issues arising from the case shall be submitted to arbitration if the person so requests. These unresolved issues shall not, however, be submitted to arbitration
if a decision on these issues has already been rendered by a court or administrative tribunal of either State. Unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision, that decision shall
be binding on both Contracting States and shall be implemented notwithstanding any time limits in the domestic laws
of these States. The competent authorities of the Contracting States shall by mutual agreement
settle the mode of application of this paragraph.
6. The provisions of paragraph 5 shall not apply to cases falling within paragraph 4 of Article 4.
Article 26
EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions
of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder
is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.
2.
Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals
in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding
the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorizes such use.
3.
In no case shall the provisions of paragraphs 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 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 or of the other Contracting
State;
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.
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 solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely 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.
Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions
of special agreements.
CHAPTER VII
FINAL PROVISIONS
Article 28
ENTRY INTO FORCE
1.
Each of the Contracting States shall notify the other, through diplomatic channels, of the completion of the procedures required by its
law for the bringing into force of this Convention. The Convention shall enter into force on the date of the later of these notifications and shall thereupon 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 following the date
on which this Convention enters into force; and
b)
in respect of other taxes, for taxable periods (and in the case of United Kingdom corporation tax, financial years) beginning on or after
the first day of January next following the date on which this Convention enters into force.
2.
Notwithstanding the provisions of paragraph 1:
a)
the provisions of Article 21 (Capital) of this Convention shall not take effect unless the Contracting States so agree through an exchange
of diplomatic notes; and
b)
the provisions of Article 25 (Mutual agreement procedure) and Article 26 (Exchange of information) shall have effect from the date of
entry into force of this Convention, without regard to the taxable period to which the matter relates.
Article 29
TERMINATION
This Convention shall remain in force until terminated by one of the Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving
notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Convention. In such event, the Convention shall cease to have effect:
a)
in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following
that in which the notice of termination is given; and
b)
in respect of other taxes, for taxable periods (and in the case of United Kingdom corporation tax, financial years) beginning on or after
the first day of January of the year next following that in which the notice of termination is given.
IN WITNESS WHEREOF
the undersigned, duly authorised thereto, have
signed this Convention.
Done
in duplicate at Montevideo on this 24th
day of February 2016 in the
English and the Spanish languages, both texts being equally authentic.
For The United Kingdom
For The Oriental Republic
of Great Britain and
of Uruguay:
Northern Ireland:
Benjamin Lyster-Binns
Rodolfo Nin Novoa
PROTOCOL
The United Kingdom of Great Britain and Northern Ireland
And
The Oriental Republic of Uruguay
Have agreed, at the time of signing the Convention between the two States for the avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and on capital, upon the following provisions which shall form an integral part of the said Convention.
1.
In relation to Paragraph l) of Article 3
It is understood that the term “pension scheme” means:
a)
in the case of the United Kingdom, pension schemes (other than a social security scheme) registered under Part 4 of the Finance Act 2004,
including pension funds or pension schemes arranged through insurance companies and unit trusts where the unit holders are exclusively pension schemes.
b)
in the case of Uruguay, the Banco de Previsión Social, the pension funds (Fondos de Ahorro Previsional) and the insurance entities, regulated
by Law 16.713 and other social security entities regulated by Uruguayan laws, including pension funds or pension schemes arranged through insurance companies and unit trusts where the unit holders are exclusively pension schemes.
The Competent Authorities may agree to include in the above, pension schemes of identical or substantially similar economic or legal nature which are introduced by way of statute
or legislation in either State after the date of signature of the Convention.
2.
In relation to Article 4:
It is understood that the term “resident of a Contracting State” includes:
a)
a pension scheme established in that State; and
b)
an organisation that is established and is operated exclusively for religious, charitable, scientific, cultural, or educational purpose
(or for more than one of those purposes) and that is a resident of that State according to its laws, notwithstanding that all or part of its income or gains may be exempt from tax under the domestic law of that State.
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3.
In relation to Article 17
It is understood that pensions from past employment include pensions from self-employment.
When according to Article 17 of this Convention, pensions are exempted from tax in a Contracting State, and these pensions according to the law in force in the other Contracting
State are not taxed in that other Contracting State, the first-mentioned State may tax such pensions at the statutory rate provided for in its domestic law.
4.
In relation to Article 20
It is understood that notwithstanding the provisions of paragraph 1 of Article 20, where an amount of income is paid to a resident of a Contracting State out of income received
by trustees or personal representatives administering the estates of deceased persons and those trustees or personal representatives are residents of the other Contracting State, that amount shall be treated as arising from the same sources, and in the same
proportions, as the income received by the trustees or personal representatives out of which that amount is paid.
Any tax paid by the trustees or personal representatives in respect of the income paid to the beneficiary shall be treated as if it had been paid by the beneficiary.
5.
In relation to Article 24
It is understood that nothing contained in this Article shall be construed as obliging either Contracting State to grant to individuals not resident in that State any of the personal
allowances, reliefs and reductions for tax purposes which are granted to individuals so resident or to its nationals.
IN WITNESS WHEREOF
the undersigned, duly authorised thereto, have
signed this Protocol.
Done
in duplicate at Montevideo on this 24th
day of February 2016 in the
English and the Spanish languages, both texts being equally authentic.
For The United Kingdom
For The Oriental Republic
of Great Britain and
of Uruguay:
Northern Ireland:
Benjamin Lyster-Binns
Rodolfo Nin Novoa
43