Protocol - Protocol - Hungary

PROTOCOL At the moment of signing the Convention between the Republic of Hungary and the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following provisions shall form an integral part of the Convention. With reference to Articles 6, 13 and 16 With reference to paragraph 1 of Article 6 and Article 13 it is understood that income from immovable property and capital gains on alienation of immovable property respectively may be taxed in both the Contracting States. With reference to Article 16 it is understood that Directors' fees and other similar payments referred to in the said Article may be taxed in both the Contracting States. With reference to Article 7 (a) In the determination of the profits of a building site or construction, assembly or installation project there shall be attributed to that permanent establishment in the Contracting State in which the permanent establishment is situated only the profits resulting from the activities of the permanent establishment as such. If machinery or equipment is delivered from the head office or another permanent establishment of the enterprise (situated outside that Contracting State) or a third person (situated outside that Contracting State) in connection with those activities or independently therefrom there shall not be attributed to the profits of the building site or construction, assembly or installation project the value of such deliveries. (b) With respect to paragraph 3 it is understood that the administrative and general expenses incurred outside India will be allowed as a deduction in accordance with the provisions of section 44C of the Indian Income-tax Act, 1961, as effective on the date of the signing of this Convention. With reference to Article 10 When the company paying the dividends is a resident of India the tax on distributed profits shall be deemed to be taxed in the hands of the shareholders and it shall not exceed 10 per cent of the gross amount of dividend. With reference to Articles 10, 11 and 12 In respect of Articles 10 (Dividends), 11 (Interest) and 12 (Royalties and fees for technical services), if under any Convention, Agreement or Protocol between India and a third State which is a member of the OECD, India limits its taxation at source on dividends, interest, royalties or fees for technical services to a rate lower or a scope more restricted than the rate or scope provided for in this Convention on the said items of income, the same rate or scope as provided for in that Convention. Agreement or Protocol on the said items of income shall also apply under this Convention. With reference to Article 16 Remuneration received by a member of the Supervisory Board of a company as per the Act on Business Associations (Act CXLIV of 1997) of Hungary will be taxed in accordance with the provisions of Article 16. With reference to Articles 20 and 21 For the purposes of these Articles, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. With reference to Article 24 (a) It is understood that the provisions of Article 24 paragraph 2 shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first-mentioned Contracting State, nor being in conflict with the provisions of paragraph 3 of Article 7. However, the difference in tax rate shall not exceed 13 percentage points. (b) Notwithstanding the provisions of Article 10 paragraph 5 and Article 24 paragraph 2, a company which is a resident of India and which has a permanent establishment in Hungary may be subject to tax in Hungary in addition to the tax on profits attributable to that permanent establishment. However, such additional tax may not exceed 10 per cent of the profits of the enterprise attributable to the permanent establishment after deducting therefrom the tax on profits chargeable on the profits of a company which is a national of Hungary and imposed on the profits of the enterprise attributable to the permanent establishment by Hungary. IN WITNESS whereof the undersigned, being duly authorised thereto, have signed this Agreement. DONE in two originals at New Delhi this 3rd day of November, 2003 in Hindi, the Hungarian and English languages, all three texts being equally authentic. In case of divergence between the texts the English text shall prevail. FOR THE REPUBLIC OF INDIA FOR THE REPUBLIC OF HUNGARY (Murli Manohar Joshi) (Istvan Csillag)