Article 25 - Elimination of double taxation - Bulgaria

ARTICLE 25 ELIMINATION OF DOUBLE TAXATION 1. The laws in force in either of the Contracting States shall continue to govern the taxation of income or capital in the respective Contracting States except where provisions to the contrary are made in this Convention. 2. In both the Contracting States, double taxation shall be avoided in the following manner : (a) where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall, subject to the provisions of sub-paragraph (b) of this paragraph, exempt such income or capital from tax but may, in calculating tax on the remaining income or capital of that person, apply the rate of tax which would have been applicable if the exempted income or capital had not been so exempted ; (b) either of the Contracting States when imposing taxes on its residents may include in the tax base upon which such taxes are imposed the items of income which according to the provisions of Articles 9, 11, 12 and 13 of this Convention may also be taxed in the other State but shall allow as a deduction from the amount of tax computed on such a base an amount equal to the tax paid in the other Contracting State. Such deduction shall not, however, exceed that part of tax, leviable by the first-mentioned State, as computed before the deduction is given, which is appropriate to the income which, in accordance with the provisions of Articles 9, 11, 12 and 13 of this Convention may be taxed in the other State. 3. For the purposes of sub-paragraph (b) of paragraph 2, the term tax paid in the other Contracting State shall be deemed to include any amount which would have been payable as tax but for any relief by way of deduction allowed in computing the taxable income or an exemption or a reduction of tax or otherwise under the laws relating to taxation of income in force in that other Contracting State.