Article 14. CAPITAL GAINS

This Article sets forth the circumstances in which gains derived by a resident of one Contracting State may be taxed by tlie other Contract­ ing State.

Under paragraph (l ), gains from the alienation of tangible personal (movable) property forming part of the business property of a permanent establishment which a resident of a Contracting State has in the other Contracting State or gains from the sale of tangible personal (movable) property pertaining to a fixed base available to a resident of a Contract• ing State in the other Contracting State for the .purpose of performing independent personal services, including gains from the alienation of the permanent establishment (along or together with the whole enterprise) or the fixed base, may be taxed in that other State. However, gains derived by a resident of a Contracting State from the alienation of ships, aircraft or containers operated by such resident in international traf!ic will only be subject to tax in the State of the operator's residence, notwithstanding the fact that profits derived by such resident from sources within the other Contracting State from the operation of such ships or aircraft may be taxed by both States under Article 9 (Shipping and Air Transport). Gains which are considered to be royalties under paragraph (3) of Article

13 (Royalties) will only be taxed in accordance with the provisions of Article 13.

Paragraph (2) provides that gains from the alienation of any property other than those mentioned in paragraph (l) or those mentioned in Article

7 (Real Property) will only be taxed in the Contracting State of which the alienator is a resident.

1f the recipient of the gain is a resident of one Contracting State and a citizen of the other Contracting State, that other Contracting State may tax the recipient without regard to this Article because of the saving clause of paragraph. (3) of Article 6 (General Rules of Taxation).