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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa

France,   pp. 275-318 PDF (16.0 MB)

Page 288

  (a) Income from immovable property;
  (b) Income from mortgages, from public funds, bonds (including
mortgage bonds), loans, deposits and current accounts;
  (c) Dividends and other income from shares in a corporation;
  (d) Rentals or royalties arising from leasing personal property or
from any interest in such property, including rentals or royalties for
the use of, or for the privilege of using, patents, copyrights, secret
processes and formulae, goodwill, trade marks, trade brands, fran-
chises and other like property;
  (e) Profit or loss from the casual purchase and sale of immovable
or movable property.
  2. Notwithstanding the provisions of paragraph 1 above, the term
"industrial and commercial profits" shall include, in so far as
and financial enterprises are concerned, all items which, in conformity
with the laws in force governing national enterprises, enter into the
computation of profit and loss; it shall not, however, include the
    (a) Income from immovable property;
    (b) Income from mortgages.
  3. In determining industrial and commercial profits there shall be
excluded with the above-mentioned items of income the related ex-
penses (including general overhead) and charges.
  4. Such items of income shall be taxed separately or together with
industrial and commercial profits, in accordance with the laws of the
contracting States, the applicable provisions of the Convention of
April 27, 1932, and the present Convention.
                           ARTncLE III
  Article II of the Convention of April 27, 1932 is replaced by the
  1. If an enterprise of one of the contracting States has a permanent
establishment in the other contracting State, there shall be attributed
to such permanent establishment the net industrial and commercial
profit which it might be expected to derive if it were an independent
enterprise engaged in the same or similar activities under the same
or similar conditions. Such net profit will, in principle, be deter-
mined on the basis of the separate accounts pertaining to such es-
tablishment. Subject to the provisions of this Convention and the
Convention of April 27, 1932, such net profit shall be taxed in ac-
cordance with the legislation of the contracting State in which such
establishment is situated.
  2. The fiscal authorities of the contracting States shall, when
necessary, in execution of the preceding paragraph, rectify the ac-
counts produced, notably to correct errors or omissions, or to re-es-
tablish the prices or remunerations entered in the books at the value
which would prevail between independent persons dealing at arm's

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