Double taxation shall be eliminated as follows:

(1) In Austria:

• (a) Where a resident of Austria derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in San Marino, Austria shall allow:
  • (i) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in San Marino;
  • (ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in San Marino.
• Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in San Marino.
• (b) Where a resident of Austria who is engaged in substantive active business operations in San Marino, derives income which, in accordance with the provisions of Article 7, may be taxed in San Marino, Austria shall, notwithstanding sub-paragraph (a), exempt such income from tax. Notwithstanding sub-paragraph (a), such exemption shall also apply to income derived by a resident of Austria which, in accordance with the provisions of Article 14, may be taxed in San Marino.
• (c) Where in accordance with any provision of the Convention income derived or capital owned by a resident of Austria is exempt from tax in Austria, Austria may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

(2) In San Marino:

• (a) Where a resident of San Marino derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Austria, San Marino shall allow:
  • (i) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Austria;
  • (ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in Austria.
• Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in Austria.
• (b) Where a resident of San Marino who is engaged in substantive active business operations in Austria, derives income which, in accordance with the provisions of Article 7, may be taxed in Austria, San Marino shall, notwithstanding sub-paragraph (a), exempt such income from tax. Notwithstanding sub-paragraph (a), such exemption shall also apply to income derived by a resident of San Marino which, in accordance with the provisions of Article 14, may be taxed in Austria.
• (c) Where in accordance with any provision of the Convention income derived or capital owned by a resident of San Marino is exempt from tax in San Marino, San Marino may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.