What Are Gains from Alienation?
Gains from Alienation is a tax treaty category covering profits from selling or otherwise disposing of property, allocated between contracting states under treaty rules.
Also known as: Capital Gains Article, Article 13 Gains.
How Gains from Alienation works
Gains from Alienation is the heading concept of the capital gains article, Article 13 in the 2016 United States Model and many other conventions, which decides whether the state where an asset is located or the state where the seller resides may tax a gain arising on a sale or other disposal. Under the 2016 United States Model, gains on real property situated in the other state may be taxed there, as may gains on movable property forming part of a permanent establishment in that state. Gains on property not covered by the specific paragraphs are taxable only in the state of residence of the alienator, which makes the treaty residence determination decisive. Individual treaties differ on shares in property-rich companies, departure-related deemed disposals and relief methods, and domestic law still decides whether and how a gain is taxed at all.
Gains from Alienation vs Capital Gains Tax (CGT)
Unlike capital gains tax, which is a domestic levy with its own rates and exemptions, Gains from Alienation is a treaty allocation rule deciding only which state may tax a gain, without creating a tax by itself.
Example
Illustrative example: A resident of Country A sells an apartment located in Country B and, in the same year, sells listed shares held through a broker in Country B. Under a treaty following the 2016 United States Model wording, Country B may tax the apartment gain, while the share gain generally falls under the residual rule and is taxable only in Country A, which then relieves double taxation on the apartment gain under its treaty and domestic law.
Common misconception
Myth: Selling assets after leaving a country always means only the new country of residence can tax the gain.
Reality: Gains from Alienation articles generally let the state where real property, or permanent establishment property, is located tax the gain, and some treaties address departure-related deemed disposals separately.
Frequently asked questions
What does alienation mean in a tax treaty?
Alienation in a tax treaty generally covers the sale, exchange, transfer or other disposal of property, so the Gains from Alienation article can apply beyond outright sales, subject to the treaty wording and domestic interpretation.
Which country taxes capital gains under a tax treaty?
Under the Gains from Alienation article, real property gains may generally be taxed where the property is situated, while gains on property not specifically covered are typically taxable only in the alienator's state of residence.
Related terms
- Capital Gains Tax (CGT) — Domestic tax which the treaty article allocates
- Immovable Property — Asset class taxable where situated
- Double Tax Treaty (DTT) — Convention containing the gains article
- Deemed Disposal — Departure gains some treaties address specifically
- Non-Resident Capital Gains Tax — Source-state charge on non-residents' gains
Related guides
- Tax treaties and international taxation — How treaties allocate taxing rights
- Capital gains taxation in Malta — Domestic capital gains rules in practice
Sources
Last verified: 2026-10-08. This entry is general information, not tax or legal advice; rules vary by country and change over time.
