The Double Taxation Relief (Taxes on Income) (Iceland) Order 1991

ARTICLE 22 Elimination of double taxation

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):

(a) Icelandic tax payable under the laws of Iceland and in accordance with the provisions of this Convention, whether directly or by deduction, on profits income or chargeablr gains from sources within Iceland (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Icelandic tax is computed;

(b) in the case of a dividend paid by a company which is a resident of Iceland to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Icelandic tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the Icelandic tax payable by the company in respect of the profits out of which such dividend is paid.

(2) (a) Where a resident of Iceland derives income which, in accordance which, in accordance with the provisions of this Convention, may be taxed in the United Kingdom, Iceland shall, subject to the provisions of sub-paragraph (b) of this paragraph, exempt such income from tax but may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted.

(b) Where a resident of Iceland derives income which, in accordance with the provisions of Articles 10, 16, 17 or paragraph (2) of Article 21 of this Convention may be taxed in the United Kingdom, Iceland shall allow as a deduction from the tax on the income of that person an ammount equal to the tax paid in the United Kingdom. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from the United Kingdom.

(3) For the purposes of paragraphs (1) and (2) of this Article ,profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other Contracting State.