THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNION OF SOVIET SOCIALIST REPUBLICS AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

of July 31, 1985

About elimination of double taxation concerning taxes on the income and increase in value of property

The government of the Union of Soviet Socialist Republics and the Government of the United Kingdom of Great Britain and Northern Ireland, confirming the aspiration to develop and deepen economic, trade, industrial, cultural, scientific and technical cooperation, wishing to sign the Convention on elimination of double taxation concerning taxes on the income and increase in value of property, agreed about the following:

Article 1 Scope of the Convention

1. This Convention is applied to persons who for the purposes of the taxation are considered as having the permanent residence in one or in both Contracting States.

2. This Convention extends to the territory of each Contracting State and to those areas of the continental shelf adjacent to external border of the territorial sea of each State over which it performs according to international law the sovereign rights for the purpose of investigation and development of natural resources of these areas.

3. For the purposes of this Convention of the reference to any Contracting State are considered as the including references both to the territory of the relevant State, and to those areas of the continental shelf which adjoin to external border of the territorial sea of this State as it is determined in Item 2 of this Article.

Article 2 Taxes to which the Convention extends

1. This Convention extends to the following taxes:

a) in the Union of Soviet Socialist Republics:

(i) the income tax from foreign legal entities;

(ii) the income tax from the population;

b) in the United Kingdom of Great Britain and Northern Ireland:

(i) income tax;

(ii) tax on corporations;

(iii) tax on the income from property increase in value.

2. This Convention is also applied to any identical or in essence to similar taxes which will be levied by any Contracting State after signature date of this Convention in addition to the existing taxes mentioned in Item 1 of this Article or instead of them.

Article 3 General determinations

1. In this Convention:

a) the terms "Union of Soviet Socialist Republics" and "USSR" mean the territory of all federal republics;

b) the term "United Kingdom" means the territory of Great Britain and Northern Ireland;

c) the term "Contracting state" means, depending on context, the USSR or the United Kingdom;

d) the term "person" means physical person and:

(i) in relation to the USSR - also any legal entity or other organization formed under the laws of the USSR or any federal republic and considered for the purposes of the taxation in the USSR as the legal entity;

(ii) in relation to the United Kingdom - also the company or any corporate education or any other organization considered for the purposes of the taxation in the United Kingdom as corporate education;

e) the term "person with the permanent residence in the Contracting State" means any person who according to the legislation of this State is subject in it to the taxation on the basis of the permanent residence, the permanent residence, the location of governing body or any other criterion of similar nature. This term does not include person who is subject to the taxation in this Contracting State, only if it gains income from sources in it;

f) the term "international delivery" means implementation of any transportation by the sea, air, road or railway transport operated by person with the permanent residence in one Contracting State, except for the transportations performed only between Items in other Contracting State;

g) the term "technical specialists" means the physical persons working as experts in case of accomplishment of any sort of services and includes doctors, scientists, lawyers, accountants, architects, engineers and the personnel occupied with training and control;

h) the term means "competent authority":

(i) in relation to the USSR - the Ministry of Finance of the USSR or the representative authorized by it;

(ii) in relation to the United Kingdom - Management of the internal income or the representative authorized by it.

2. In case of application of this Convention by Contracting States any term which is not determined in it has if other does not follow from context, then value which it has by the legislation of the Contracting State levying taxes to which this Convention extends.

Article 4 the Permanent residence for the purposes of the taxation

1. If according to provisions of the subitem "e" of Item 1 of Article 3 the physical person is considered as the having permanent residence in both Contracting States, its status is determined according to the following rules:

a) it is considered the face having the permanent residence in that Contracting State in which it has the permanent dwelling; if it has the permanent dwelling in both Contracting States, it is considered the face having the permanent residence in that Contracting State in which it has the most close personal and commercial relations (the center of vital interests);

b) if it is impossible to determine in what of Contracting States it has the center of vital interests or if it has no the permanent dwelling in one of Contracting States, it is considered the face having the permanent residence in that Contracting State where it usually lives;

c) if it usually lives in both Contracting States or if it usually does not live in one of them, it is considered the face having the permanent residence in that Contracting State which citizen it is;

d) if each Contracting State considers it as the citizen of the State or if it is not citizen of any of them, competent authorities of Contracting States resolve issue by mutual consent.

2. If according to provisions of the subitem "e" of Item 1 of article 3 the face which is not physical person is considered as the having permanent residence in both Contracting States, it is considered the face having the permanent residence in that Contracting State in which there is its actual governing body.

Article 5 Permanent mission

1. For the purposes of this Convention the term "permanent mission" means any department, office, the agency or other permanent place of activities located in one Contracting State according to the legislation of this State through which person with the permanent residence in other Contracting State fully or partially performs any business activity.

2. Despite provisions of Item 1 of this Article, permanent mission in one Contracting State through which person with the permanent residence in other Contracting State fully or partially performs any business activity does not include:

a) the building site, construction or mounting object if duration of works does not exceed 24 months;

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