© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Article 6: Income from immoveable property
ARTICLE 6: INCOME FROM IMMOVEABLE PROPERTY
Right of source State to tax resident of other State
​
"(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." (Model Article 6)
​
Meaning of immoveable property
​
"(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 and aircraft shall not be regarded as immovable property." (Model Article 6)
Income from immoveable property
​
(3) The provisions of paragraph 1 shall 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." (Model Article 6)
​
- Income is not from immoveable property if person never held an interest in the land
"[108] To dispose of this issue in the appeal it is only necessary to decide that if the bundle of rights that Sulpetro acquired under the Illustrative Agreement and which it effectively surrendered to BP in return for the Payments had amounted to the right to work, those rights would still have been too remote to fall within the definition of immovable property within Article 6(1) of the UK/Canada Convention.
[109] I agree that this interpretation derives some support from the similar wording of Article 12 of the UK/Canada Convention..." (HMRC v. Royal Bank of Canada [2025] UKSC 2)
​
"[97] Applying this conclusion to the facts of this case, RBC does not hold, and indeed has never held, an interest in the Buchan field. It cannot therefore be taxed under the fifth limb. What it acquired was a contractual right to receive payments calculated by reference to the sale proceeds derived from sales of oil, to the extent that the price obtained exceeded $20 a barrel. Although RBC accepted that it "stood in the shoes" of Sulpetro as regards its entitlement to the Payments, that cannot alter the fact that it has at no stage held an interest in the Buchan field.
[98] In contrast, Sulpetro would have been within the scope of UK tax on its disposal of its interest in the Buchan field under Article 13, and in particular under the express provisions of Article 13(4) and (5)..." (Royal Bank of Canada v. HMRC [2023] EWCA Civ 695, Falk, Asplin, Nugee LJJJ)
​
RELATIONSHIP TO OTHER ARTICLES​
​
- If treaty renders sum eligible for taxation as gain, cannot be taxed as income
"[140] At this point it is convenient to deal with an additional argument of Mr Bremner QC that the Revenue could still tax the Payments as income, even if they only became eligible for taxation in the UK as a gain within the meaning of Article 13. We reject this argument. It seems wrong that a sum of money which becomes eligible for taxation within the UK as a gain within the meaning of Article 13 can then be taxed in the UK in whatever way the Revenue wishes, regardless of the status of the relevant sum of money. Such an analysis seems to extend too far the flexibility given to the contracting parties, when it comes to the taxation of sums which are rendered eligible for taxation in one contracting state by a particular Article of the Treaty." (Royal Bank of Canada v. HMRC [2022] UKUT 45 (TCC), Edwin Johnson J and Judge Rupert Jones)
​​​