Article 23 - Avoidance of double taxation - Denmark

ARTICLE 23 AVOIDANCE OF DOUBLE TAXATION 1. The laws in force in either of the Contracting States shall continue to govern the taxation of income and capital in the respective Contracting State except where express provision to the contrary is made in this Convention. 2. Double taxation shall be avoided in the case of India as follows : (a) Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Denmark, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Denmark, whether directly or by deduction; and as a deduction from the tax on the capital of that resident an amount equal to the capital tax paid in Denmark. Such deduction in either case shall not, however, exceed that part of the income-tax or capital tax (as computed before the deduction is given) which is attributable, as the case may be, to the income or the capital which may be taxed in Denmark. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income-tax paid in Denmark shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from surtax payable by it in India; (b) Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, shall be taxable only in Denmark, India may include this income or capital in the tax base but shall allow as a deduction from the income-tax or capital tax that part of the income-tax or capital tax which is attributable, as the case may be, to the income derived from or the capital owned in Denmark. 3. Double taxation shall be avoided in the case of Denmark as follows : (a) Subject to the provisions of sub-paragraph (c), where a resident of Denmark derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in India, Denmark shall allow : (i) as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in India; (ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in India; (b) Such deduction in either case shall not, however exceed that part of the income-tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in India; (c) Where a resident of Denmark derives income or owns capital which, in accordance with the provisions of this Convention shall be taxable only in India, Denmark may include this income or capital in the tax base, but shall allow as a deduction from the income-tax or capital tax that part of the income-tax or capital tax which is attributable, as the case may be, to the income derived from or the capital owned in India; (d) For the purposes of the deduction referred to in sub-paragraph (a), the term income-tax paid in India shall be deemed to include any amount which would have been payable as Indian tax under the laws of India and in accordance with this Convention for any year but for an exemption from, or reduction of, tax granted for that year under : (i) sections 10(4), 10(4A), 10(4B), 10(6) (viia), 10(15)(iv), 10A, 32A, 80HH, 80-I, 80J and 80L of the Income Tax Act, 1961 (43 of 1961), so far as they were in force on, and have not been modified since, the date of the signature of this Convention or have been modified only in minor respects so as not to affect their general character; or (ii) any other provisions which may be enacted hereafter granting a deduction in computing the taxable income or an exemption or reduction from tax which the competent authorities of the Contracting States agree to be for the purposes of the economic development of India, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character; (e) For the purposes of deduction referred to in sub-paragraph (a), Indian tax on interest and royalties and fees for technical services shall in no case be considered as having been paid at a rate of less than, (i) in the case of interest (a) 10 per cent in the case of banks; and (b) 15 per cent in other cases; and (ii) 20 per cent in the case of royalties and fees for technical services.