At the moment of signing the Agreement between the Government of the Kingdom of the
Netherlands and the Government of the Kingdom of Bahrain for the Reciprocal Exemption
of Taxes Levied on Income and Profits Derived from International Air Transport, the
undersigned have agreed that the following provision shall form an integral part of
the Agreement.
It is understood that according to Netherlands Value Added Tax (“VAT”) law, the international
transport of goods and passengers outside the Netherlands is not subject to Netherlands
VAT, while the input-VAT is refundable. Moreover, the supply of the following goods
and services is zero-rated in the Netherlands while the input-VAT relating to these
goods and services remains refundable:
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1. aircraft used primarily as international public transport;
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2. goods intended as stores for aircraft referred in sub-paragraph 1);
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3. services supplied in connection with goods which are exported outside the European
Union or stored in a bonded warehouse; and
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4. services supplied in connection with goods referred to in sub-paragraph 1) and 2)
herein.
It is further understood that if the Kingdom of Bahrain were to introduce VAT or a
similar sales tax, an air transport enterprise of the Netherlands would be eligible
to a similar treatment as described in the preceding paragraphs herein.