ARTICLE 13

Gains

Paragraph 1 states the rule that gains derived from the alienation of real property situated in a Contracting State may be taxed by that State.

Paragraph 2 defines real property situated in each of the Contracting States. In the case of the United States, the term “real property situated in the other Contracting State” includes real property (as described in Article 6) situated in the United States and a United States real property interest as defined under the Foreign Investment in Real Property Tax Act, as amended. Thus, the United States retains its full taxing right under the law. In the case of Barbados, paragraph 2(b) provides that real property situated in Barbados has the meaning it has under Barbadian law and includes real property referred to in Article 6 which is situated in Barbados, as well as an interest in a company, partnership, trust or estate, the assets of which consist wholly or principally of real property situated in Barbados.

Paragraph 3 provides that a Contracting State may tax gains from the alienation of personal property which are attributable to a permanent establishment or to a regular base in that State which belongs to a resident of the other Contracting State.

Paragraph 4 provides that gains derived by an enterprise of a Contracting State from the

alienation of ships, aircraft, or containers operated in international traffic shall be taxable only in that State (i.e., the State of residence).

Paragraph 5 notes that those gains which are included within the definition of royalties in paragraph 3 of Article 12 (Royalties) are taxable in accordance with Article 12 and not this Article.

Paragraph 6 provides that alienation of any property not referred to in the preceding paragraphs of the Article shall be taxable only in the Contracting State of which the alienator is resident.

The term ''gains'' includes gains taxed as capital gains and as ordinary income.

The Article is subject to the saving clause of paragraph 3 of Article 1 (General Scope).