AGREEMENT

between

the Government of the Hashemite Kingdom of Jordan

and

the Government of the Republic of Croatia

 for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income

____________________________________________________________________

The Government of the Hashemite Kingdom of Jordan and the Government of the Republic of Croatia,

DESIRING to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

 have agreed as follows

Article 1

 PERSONS COVERED

             This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2

 TAXES COVERED

1.        This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.

 2.        There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises.

3.          The existing taxes to which the Agreement shall apply are in particular:                  

a) in the Hashemite Kingdom of Jordan:

            i.          the income tax;

            ii.          the distribution tax;

            iii.         the social services tax;              

( hereinafter referred to as “Jordanian tax”);

 b) in the Republic of Croatia:

            i.          the profit tax;

            ii.          the  income tax;

iii.                  the local income tax and any other surcharge levied 

                        on one of these taxes;    

          ( hereinafter referred  to as “Croatian tax”).

4.      The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

Article 3

 GENERAL DEFINITIONS

1.         For the purposes of this Agreement, unless the context otherwise requires:

a)         the term “ Jordan “  means  the territories of  the Hashemite Kingdom of Jordan,  the territorial waters of Jordan, and  the seabed and subsoil of the territorial waters,  and includes any area extending beyond the limits of the territorial waters of Jordan, and  the seabed and subsoil of any such area, which has been or may hereafter be designated, under the laws of Jordan, and in accordance with international law as an area over which  Jordan has sovereign rights for the purposes of exploring and exploiting the natural  resources, whether living or non-living

b)       the term “Croatia” means the territory of the Republic of Croatia as well as those maritime areas adjacent to the outer limit of territorial sea, including seabed and sub-soil thereof, over which the Republic of Croatia in accordance with international law (and the laws of the Republic of Croatia) exercises its sovereign rights and jurisdiction;       

c)     the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Jordan or Croatia;

d)         the term “tax” means, as the context requires, a Jordanian or Croatian tax;

e)      the term “person” includes an individual, a company and any other body of persons;

f)         the term “company” means any body corporate or any entity which is treated as a body corporate for the tax purposes;

 g)    the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of Contracting State and an enterprise carried on by a resident of the other Contracting State;      

h)        the term “international traffic” means any transport by a ship and aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship and aircraft is operated solely between places in the other Contracting State;

i)         the term “national” means:

i)                    any individual possessing the nationality of a Contracting State;

ii)                   any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

j)         the term “competent authority” means:

i)     in the case of Jordan: the Minister of Finance or his authorised representative;

ii)    in the case of Croatia: the Minister of Finance or his authorised representative.

2.        As regards the application of the Agreement at any time by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. 

Article 4

RESIDENT

1.      For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any local authority thereof. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2.       Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

 a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

 b) if the State in which he has his centre of vital  interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

 c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

d) if he is a national of both States or of  neither of  them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3.        Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.

Article 5

PERMANENT ESTABLISHMENT

1.         For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

 2.         The term “permanent establishment” includes especially:

            a)         a place of management;

            b)         a branch;

            c)         an office;

            d)         a factory;

            e)         a workshop; and

            f)          a mine, an oil or gas well, a quarry or any other place of extraction  of natural resources.

 3.        The term “permanent establishment” likewise encompasses:

 a) a building site, a construction, assembly or installation  project or supervisory activities in connection therewith, but only where they last more than nine months;

 b) the furnishing of services, including consultant services, by an enterprise of a Contracting State through employees or other engaged personnel in the other Contracting State, provided that such activities continue for the same project or a connected project within the country for a period or periods aggregating more than six months within any twelve month period.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

b) the  maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

d) the maintenance of a fixed place of business  solely for the purpose of purchasing goods or merchandise, or of collecting information for the enterprise;

e) the maintenance of a fixed place of business  solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

f) the maintenance of a fixed place of business  solely for the purpose of advertising, or for the supply of information;

g) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs a) to f), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

5.       Notwithstanding the provisions of paragraphs 1 and 2,  where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

6.        Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

7.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly on behalf of that enterprise or its associated enterprises, and the transactions are not made under arm’s length conditions, he will not be considered an agent of an independent status within the meaning of this paragraph.

8.        The fact that a company which is a resident of  a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

1.         Income derived by a resident of a Contracting State from immovable property

(including income from agriculture or forestry) situated  in the other Contracting State may be taxed in that other State.

2.       The term “immovable property“ shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

3.         The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property.

4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article  7

BUSINESS PROFITS

1.       The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

 2.       Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

 3.       In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

4.       Insofar as has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of an apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

 5.      No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6.     For the purpose of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

7.     Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article  8

 SHIPPING AND AIR TRANSPORT

1.      Profits of an enterprise of a Contracting State from the operation of ships and aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2.        If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be  situated in the Contracting State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the Contracting State of which the operator of the ship is a resident.

3.       The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.  

 Article  9

ASSOCIATED ENTERPRISES

1.       Where

 a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

 b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other  Contracting State,

 and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprises and taxed accordingly.

2.       Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other  Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

 3.     A Contracting State shall not change the profits of an enterprise in the circumstances referred to in paragraph 2 of this Article after the expiry of the time limits provided in its tax laws.

 4.     The provisions of paragraph 2 shall not apply in the case of tax fraud.

Article 10

DIVIDENDS

 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

 2.    However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed:

a)     5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds at least 25 per cent of the capital of the company paying the dividends, provided that this holding was not acquired primarily for the purpose of taking advantage of this provision;

 b)     10 per cent of the gross amount of the dividends in all other cases.  

 The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

 This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3.       The term “dividends” as  used in this Article means income from shares, or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

 4.        The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5.       Where a company which is a resident of a  Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11

INTEREST

1.      Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2.       However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

 The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

3.       The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article.

 4.         The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 

 5.        Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

6.    Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

 7.       The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.

 Article 12

 ROYALTIES

 1.     Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.

2.        However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but  if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

 3.        The term “royalties” as used in this Article means payments of any kind, received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematography films, films or tapes or other means for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or industrial, commercial, or scientific experience (know-how).

 4.        The provisions of  paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a  Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

 5.      Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority thereof or a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or the fixed base is situated.

 6.      Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last - mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 13

 CAPITAL GAINS

1.      Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State. 

 2.          For the purposes of paragraph 1, gains from the alienation of immovable property situated in the other Contracting State shall include gains from shares (including stock and any security), other than shares quoted on a stock exchange, deriving the greater part of their value directly or indirectly from immovable property situated in that other State.

 3.       Gains from the alienation of shares other than those mentioned in paragraph 2, representing a participation of 25 per cent in a company which is a resident of a Contracting State may be taxed in that State.

 4.       Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of  such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.                

5.          Gains derived by an enterprise of a Contracting State  from the alienation of ships and aircraft operated in international traffic, or movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

6.        Gains from the alienation of any property other than that referred to in paragraphs 1 to 5 shall be taxable only in the Contracting State of which the alienator is a resident.

Article  14

 INDEPENDENT PERSONAL SERVICES

1.     Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in one of the following circumstances, when such income may also be taxed in the other Contracting State:

a)  if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. In that case only so much of the income may be taxed in that other State as is attributable to that fixed base; or

b)  if his stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days in the calendar year concerned. In that case only so much of the income may be taxed in that other State as is derived from his activities performed in that other State.

2.     The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

1.       Subject to the provisions of Articles 16, 18, and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2.       Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment  exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

a)  the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the calendar year concerned, and

 b)  the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

c)  the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3.      Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship and aircraft operated in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

Article 16

 DIRECTOR'S FEES

Director's fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other Contracting State.

Article 17

ARTISTS AND SPORTSMEN

1.      Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artist, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2.    Where income in respect of personal activities exercised by an entertainer, or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

3.     Notwithstanding the provisions of paragraphs 1 and 2 of this Article, income referred to in this Article shall be exempted from tax in the Contracting State in which the activities of the entertainer or sportsman are exercised, if such activities are substantially financed from the public funds of the both States, or are carried on under culture agreement or arrangement between the Contracting States.  

Article 18 

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

Article 19

GOVERNMENT SERVICE

1. a) Remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or local authority shall be taxable only in that State.

b) However, such  remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

i.                     is a national of that State; or

ii.       did not become a resident of that State solely for the purpose of rendering the services.                                

2. a) Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of  services rendered to that State or local authority shall be taxable only in that State.

b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3.     The provisions of Articles 15, 16 and 18 shall apply to remuneration, and pensions, in respect of services rendered in connection with a business carried on by a Contracting State or  a local authority thereof.

Article 20 

TEACHERS AND RESEARCHES

1.         An individual who visits one of the Contracting States for a period not exceeding two years for the purpose of teaching or engaging in research at a school, university, college or other recognized educational institution in that Contracting State and who was immediately before that visit a resident of the other Contracting State, shall be exempted from tax by the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding two years from the date he first visits that State for such purpose, provided that payment of such remuneration is derived by him from sources outside that Contracting State.

2.      This Article shall only apply to income from research if such research is undertaken by the individual in the public interest and not primarily for the benefit of some other private person or persons.

Article 21

STUDENTS AND APPRENTICES

Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

Article 22

OTHER INCOME

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

2.        The provisions of  paragraph 1 shall not  apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such 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 right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

Article  23

 AVOIDANCE OF DOUBLE TAXATION

1.   In the case of a resident of Jordan, double taxation shall be avoided as follows:

 Where a resident of Jordan derives income which, in accordance with the provisions of this Agreement, may be taxed in Croatia, Jordan shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Croatia.

 Such deduction in either case shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Croatia.

 2.   In the case of a resident of Croatia, double taxation shall be avoided as follows:

 Where a resident of Croatia derives income which, in accordance with the provisions of this Agreement, may be taxed in Jordan, Croatia shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Jordan.

Such deduction in either case shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Jordan.

                                                         Article  24

NON - DISCRIMINATION

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 the residence are or may be subjected.

2.       The taxation on a permanent establishment which an enterprise 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 enterprise of that other State carrying on the same activities. This provision 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 which it grants to its own residents.

3.         Except where the provisions of paragraph 1 of Article 9, paragraph 6 of Article 11, or of paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid 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. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

Article 25

MUTUAL AGREEMENT PROCEDURE

1.      Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.  

2.      The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3.     The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4.       The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article  26

 EXCHANGE OF INFORMATION

1.     The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Articles 1 and 2 of this Agreement.Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings, or in judicial decisions.

2.       In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

a)      to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;

b)      to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

c)       to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy ( ordre public ).                                   

Article 27

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

Article  28

ENTRY INTO FORCE

This Agreement shall enter into force 30 days after the date of receipt of the latter notification through diplomatic channels indicating the completion of the internal legal procedures determined in each Contracting State for the entry into force of this Agreement. This Agreement shall have effect in respect of income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which this Agreement enters into force.

Article  29

DENUNCIATION

This Agreement shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June of any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give written notice of denunciation to the other Contracting State through diplomatic channels. In such event this Agreement shall cease to have effect in respect of income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which the notice of denunciation is given.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have signed this Agreement.  

DONE at …….., on ………………, in two originals, in the Arabic, Croatian and English languages, all texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.

For the Government of                                                    For the Government of

the Republic of Croatia                                                   the Hashemite Kingdom of Jordan