On 14 March 2018, officials from Armenia and Denmark signed an income and capital tax treaty. The treaty is the first of its kind directly between the two countries, although the 1986 tax treaty between Denmark and the former Soviet Union had continued to apply, but was terminated.
The treaty covers Armenian profit tax, income tax, and property tax. It covers Danish income tax to the state and income tax to the municipalities.
If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be entitled to claim any relief or exemption from tax provided by the treaty.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries generally apply the credit method for the elimination of double taxation.
Article 29 (Limitation of Benefits) includes the provision that income derived from a Contracting State and legally owned by a resident of the other Contracting State may be taxed in the first-mentioned State in accordance with its domestic law if that income is not subject to taxation in the other Contracting State or is subject to legislation giving access to special benefits for income from foreign sources.
Article 29 also includes a general anti-abuse provision, which provides that a benefit under the treaty will not be granted in respect of an item of income if it is reasonable to conclude 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 would be in accordance with the object and purpose of the relevant provisions of the treaty.
The treaty will enter into force the day following the exchange of the ratification instruments and will apply from 1 January of the year following its entry into force.
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