Article 9. INCOME FROM REAL PROPERTY

Paragraph 1 provides the standard income tax treaty rule that income derived by a resident of a Contracting State from real property, including income from agriculture or forestry, located in the other Contracting State, may be taxed in that other State. The income may also be taxed in the state of residence.

Paragraph 2 defines real property in accordance with the laws of the Contracting States, but provides that it includes, in any case, any interest in land, unsevered products of land, and structures on the land, and excludes boats, ships, and airplanes.

Paragraph 3 clarifies that the Article covers income from any use of real property, without regard to the form of use or lease.

Paragraph 4 provides for a binding election by the taxpayer to be taxed on a net basis. The election is based on U.S. treaty policy and reflects U.S. law. Because this Article provides for net basis taxation, it generally provides the same tax result as Article 6 (Business Profits).