Article 23. PROPERTY

This Article specifies the circumstances in which a Contracting State may impose tax on property owned by a resident of the other Contracting State. Since neither the United States nor Ukraine imposes a national-level tax on capital, the purpose of this article is to provide rules to deal with any such tax subsequently enacted.

Paragraph 1 provides that real property (as defined in Article 6 (Income from Real Property)) that is owned by a resident of one Contracting State but located in the other Contracting State may be taxed by that other State.

Paragraph 2 provides the same rule for movable property that is part of the business property of a permanent establishment or fixed base that a resident of one Contracting State maintains in the other Contracting State. Such capital may be taxed in that other State.

In both cases, paragraphs 1 and 2, the State of residence may also tax; the taxing right given to the State where the capital is located is not an exclusive right.

Paragraph 3 provides that ships, aircraft or containers owned by a resident of one Contracting State and operated in international traffic may be taxed only in the residence State. This is consistent with the rule of Article 8 (Shipping and Air Transport), that addresses the income from international transportation activities.

Paragraph 4 provides the same rule as paragraph 3, taxation only in the country of residence of the owner, for all other items of property.