ARTICLE 6

Income from Real Property (Immovable Property)

Paragraph 1 of this Article provides that income derived by a resident of a Contracting State from real property, including income from agriculture and forestry, may be taxed in the other Contracting State if the property is situated in that other State. This right to tax does not depend on whether the income is derived through a permanent establishment in that other State. Also, the Convention does not limit the amount of tax imposed by the other Contracting State on the real property income. Income derived from real property includes income from rights such as an overriding royalty or a net profits interest in a natural resource. Income in the form of rights to explore for or exploit natural resources which a person receives as compensation for services (e.g., exploration services) is, however, subject to the provisions of Article 7 (Business Profits), 14 (Independent Personal Services) or 15 (Dependent Personal Services), as the case may be, rather than the provisions of this Article.

Paragraph 2 defines real property as having the meaning it has under the laws of the Contracting State in which the property is situated.

Paragraph 3 provides that the basic rule in paragraph 1 applies to income derived from the direct use, letting, or any other use of real property.

Paragraph 4 provides that the rules of this Article apply to the income from immovable property of an enterprise or from property used for the performance of independent personal services.

Paragraph 5 of the U.S. Model, which provides a binding election to be taxed on a net basis, was omitted from the Convention; such an election is available under both U.S. and Barbadian domestic law.