Protocol

With reference to clause (iii) of subparagraph m) of paragraph 1 of Article 3 of the Convention, it is understood that a pension fund shall be treated as exempt from tax on income derived with respect to the activities described in clause (ii) of that subparagraph even though it is subject to the tax stipulated in Articles 8 or 10-2 of the Corporation Tax Law (Law No. 34 of 1965) of Japan or paragraph 1 of Article 20 of its supplementary provisions.

With reference to Articles 6 and 13 of the Convention, rights to the exploration and exploitation of natural resources shall be regarded as immovable property situated in the Contracting State to whose seabed — and subsoil thereof — these rights apply. Furthermore, the aforementioned rights include rights to interests in, or benefits from assets that arise from, that exploration or exploitation.

With reference to Article 7 of the Convention, it is understood that in the case of profits from survey, supply, installation or construction activities, only so much of them will be attributable to a permanent establishment as results from the actual performance of such activity by that permanent establishment.

With reference to Article 9 of the Convention, it is understood that the fact that the enterprises that have a relationship with each other as described in subparagraph a) or b) of paragraph 1 of that Article have concluded arrangements among them to share the costs and risks of developing, producing or obtaining assets, services, or rights, and to determine the nature and extent of the interests of each participant in those assets, services, or rights, shall not of itself satisfy the conditions as meant in paragraph 1 of that Article.

With reference to Articles 10 and 13 of the Convention, the Netherlands treats income received in connection with the whole or partial winding-up of a company or a purchase of own shares by a company as dividends as referred to in Article 10 of the Convention and not as capital gains as referred to in Article 13 of the Convention.

With reference to paragraph 3 of Article 11 of the Convention, the terms ‘the central bank’ and ‘institution owned by that Government’ mean:

With reference to Article 15 of the Convention, where a company is a resident of the Netherlands, the term ‘members of the board of directors’ includes both a ‘bestuurder’ and a ‘commissaris’. The terms ‘bestuurder’ and ‘commissaris’ mean respectively persons who are charged with the general management of the company and persons who are charged with the supervision thereof.

With reference to Articles 17 and 18 of the Convention, it is understood that whether and to what extent a pension or other similar remuneration falls under Article 17 or under Article 18 of the Convention is determined by the nature (private or governmental) during the period or periods in which the entitlement to such pension or other similar remuneration was built up.

Nothing in the Convention shall prevent Japan from imposing tax at source, in accordance with its laws, on any income and gains derived by a person pursuant to a sleeping partnership (Tokumei Kumiai) contract or other similar contract.

With reference to subparagraph c) of paragraph 2 of Article 21 of the Convention, the shares in the principal class of shares of a company are considered to be regularly traded on one or more recognised stock exchanges in a taxable year if the aggregate number of the shares in that class traded on such stock exchange or exchanges during the twelve months ending on the day before the beginning of that taxable year is at least 6 per cent of the average number of the shares outstanding in that class during that twelve-month period.

With reference to subparagraph c) of paragraph 2 of Article 21 of the Convention, the ‘primary place of management and control’ of a company will be in the Contracting State of which it is a resident only if executive officers and senior management employees exercise day-today responsibility for the strategic, financial and operational policy decision making for the company (including its direct and indirect subsidiaries) more in that Contracting State than in any other state and the staff of such persons conduct the day-to-day activities necessary for preparing and making those decisions more in that Contracting State than in any other state.

With reference to paragraph 5 of Article 24 of the Convention:

With reference to paragraphs 3 and 5 of Article 25 of the Convention, a Contracting State may decline to supply information relating to confidential communications between attorneys, solicitors or other admitted legal representatives in their role as such and their clients to the extent that the communications are protected from disclosure under the domestic laws of that Contracting State.