Article 21-24

1.

Items of income beneficially owned by a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

2.

The provisions of paragraph 1 shall not apply to income, other than income from immovable (real) property as defined in paragraph 2 of Article 6 (Income from Immovable (Real) Property), if the beneficial owner of the income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the income is attributable to such permanent establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.

3.

Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may also be taxed in that other State.

1.

A resident of a Contracting State shall be entitled to all the benefits of this Convention only if it is a ``qualified resident'' as defined in this Article.

2.

A resident of a Contracting State is a qualified resident for a taxable year only if it is either:

a)

an individual;

b)

a Contracting State, a political subdivision or a local authority thereof, or an agency or instrumentality of such State, subdivision or authority;

c)

a company, if:

(i)

on at least half the days of the taxable year the beneficial owners of at least 50 percent of each class of the company's shares are qualified residents by reason of subparagraphs a), b), e), or f) of this paragraph, or U.S. citizens, provided that in the case of indirect ownership, each intermediate owner is a person entitled to benefits of the Convention under this paragraph; and

(ii)

amounts paid or accrued by the company during its taxable year:

A)

to persons that are neither qualified residents nor U.S. citizens,

B)

that are deductible for income tax purposes in the company's State of residence (but not including arm's length payments in the ordinary course of business for services or tangible property), do not exceed 50 percent of the gross income of the company for that year;

d)

a trust or estate, if the ownership of its beneficial interests satisfies the requirement of subparagraph c)i) and its payments to persons who are not qualified residents or U.S. citizens satisfy the requirement of subparagraph c)ii);

e)

a person, if:

i)

beneficial interests representing at least 50 percent of the value of each class of interests in that person are substantially and regularly traded on a recognized stock exchange; or

ii)

the direct or indirect owners of at least 50 percent of each class of interests in that person are persons entitled to benefits under clause i), provided that in the case of indirect ownership, each intermediate owner is a person entitled to benefits of the Convention under this paragraph;

f)

a person described in subparagraph 3 b) of Article 4 (Resident) provided that more than half of the beneficiaries, members or participants, if any, in such persons are qualified residents; or

g)

a United States Regulated Investment Company, or a similar entity in Estonia as may be agreed by the competent authorities of the Contracting States.

3.

a)

A resident of a Contracting State that is not a qualified resident shall be entitled to the benefits of this Convention with respect to an item of income derived from the other State, if:

(i)

the resident is engaged in the active conduct of a trade or business in the first-mentioned State,

(ii)

the income is connected with or incidental to the trade or business, and

(iii)

the trade or business is substantial in relation to the activity in the other State generating the income.

b)

For purposes of this paragraph, the business of making or managing investments will not be considered an active trade or business unless the activity is banking, insurance or securities activity conducted by a bank, insurance company or registered securities dealer.

c)

Whether a trade or business is substantial for purposes of this paragraph will be determined based on all facts and circumstances. In any case, however, a trade or business will be deemed substantial if, for the preceding taxable year, or for the average of the three preceding taxable years, the asset value, the gross income, and the payroll expense that are related to the trade or business in the first-mentioned State equal at least 7.5 percent of the resident s (and any related parties ) proportionate share of the asset value, gross income and payroll expense, respectively, that are related to the activity that generated the income in the other State, and the average of the three ratios exceeds 10 percent.

d)

Income is derived in connection with a trade or business if the activity in the other State generating the income is a line of business that forms a part of or is complementary to the trade or business. Income is incidental to a trade or business if it facilitates the conduct of the trade or business in the other State.

4.

A resident of a Contracting State that is not a qualified resident pursuant to the provisions of paragraph 2 may, nevertheless, be granted benefits of the Convention with respect to income arising in the other Contracting State if the competent authority of that other Contracting State so determines.

5.

For the purposes of this Article, the term ``recognized stock exchange'' means:

a)

the NASDAQ System owned by the National Association of Securities Dealers, Inc. and any stock exchange registered with the U.S. Securities and Exchange Commission as a national securities exchange under the U.S. Securities Exchange Act of 1934;

b)

the Tallinn Stock Exchange (Tallinna Väärtpaberibörs); and

c)

any other stock exchange agreed upon by the competent authorities of the Contracting States.

6.

The competent authorities of the Contracting States shall consult together with a view to developing a commonly agreed application of the provisions of this Article, including the publication of public guidance. The competent authorities shall, in accordance with the provisions of Article 26 (Exchange of Information and Administrative Assistance), exchange such information as is necessary for carrying out the provisions of this Article.

1.

In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident or citizen of the United States as a credit against the United States tax on income:

a)

the Estonian tax paid by or on behalf of such resident or citizen; and

b)

in the case of a United States company owning at least 10 percent of the voting stock of a company which is a resident of Estonia and from which the United States company receives dividends, the Estonian tax paid by or on behalf of the distributing company with respect to the profits out of which the dividends are paid.

2.

In Estonia, double taxation shall be avoided as follows:

a)

where a resident of Estonia derives income which, in accordance with this Convention, may be taxed in the United States, unless a more favorable treatment is provided in its domestic law, Estonia shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid thereon in the United States (other than any such tax imposed by reason of citizenship of the United States); such deduction shall not, however, exceed that part of the income tax in Estonia, as computed before the deduction is given, which is attributable to the income which may be taxed in the United States;

b)

For the purposes of subparagraph a), where a company that is a resident of Estonia receives a dividend from a company that is a resident of the United States in which it owns at least 10 percent of its shares having full voting rights, the tax paid in the United States shall include not only the tax paid on the dividend, but also the appropriate portion of the tax paid on the underlying profits of the company out of which the dividend was paid.

3.

For the purposes of allowing relief from double taxation pursuant to this Article, and subject to such source rules in the domestic laws of the Contracting States as apply for purposes of limiting the foreign tax credit, income derived by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention (other than solely by reason of citizenship in accordance with paragraph 4 of Article 1 (General Scope)) shall be deemed to arise in that other State.

1.

Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall apply to persons who are not residents of one or both of the Contracting States. However, for the purposes of United States taxation, United States nationals who are subject to tax on a worldwide basis are not in the same circumstances as nationals of Estonia who are not residents of the United States.

2.

The taxation on a permanent establishment which an enterprise of a Contracting State, or a fixed base which an individual who is a resident of a Contracting State, has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises or individuals who are residents of that other State carrying on the same activities. The provisions of this paragraph shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities that it grants to its own residents.

3.

Except where the provisions of paragraph 1 of Article 9 (Associated Enterprises), paragraph 7 of Article 11 (Interest), or paragraph 5 of Article 12 (Royalties) apply, interest, royalties and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of the first-mentioned resident, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of a resident of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of the first-mentioned resident, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

4.

Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

5.

Nothing in this Article shall be construed as preventing either Contracting State from imposing a tax as described in paragraph 5 of Article 10 (Dividends).

6.

The provisions of this Article shall, notwithstanding the provisions of Article 2 (Taxes Covered), apply to taxes of every kind and description imposed by a Contracting State or a political subdivision or local authority thereof.

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