9911796707
TMI BlogConvention between the Government of the Republic of India and the Government of the Portuguese Republic for the avoidance of double taxation u/s 90X X X X Extracts X X X X X X X X Extracts X X X X ..... EXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE PORTUGUESE REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE PORTUGUESE REPUBLIC DESIRING to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, HAVE agreed as follows : CHAPTER I SCOPE OF THE CONVENTION Article 1 PERSONAL SCOPE This Convention shall apply to pet-sons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political or administrative sub-divisions or local authorities irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the amounts of wages or salaries paid by enterprises. 3. The existing taxes to which this Convention shall apply are in particular : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State ; ( h ) the term international traffic means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State ; ( i ) the term competent authority means: ( i ) in Portugal : the Minister of Finance or the Director-General of Taxation (Director-General dos Impostos) or their authorised representative ; ( ii ) in India : the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; ( j ) the term national means : ( i ) any individual possessing the nationality of a Contracting State : ( ii ) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State ; ( k ) the term fiscal year means : ( i ) In the case of Portugal, the civil year as laid down in the IRS Code or the taxation period as defined in the IRC Code ; ( ii ) in the case of India, previous year as defined under section 3 of the Income-tax Act, 1961. 2. As regards the application of the Conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business through which the business of an enterprise is wholly or partly carried on. 2. The term permanent establishment includes especially: ( a ) a place of management ; ( b ) a branch ; ( c ) an office ; ( d ) a factory ; ( e ) a workshop ; ( f ) a sales outlet ; and ( g ) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including an installation or structure used for the exploration or exploitation of natural resources only if so used for a period of more than 120 days in a fiscal year. 3. A building site, construction, installation or assembly project or supervisory activities in connection therewith, constitutes a permanent establishment only if it lasts more than nine months. 4. Notwithstanding the preceding provisions of this article, the term permanent establishment shall be deemed not to include : ( a ) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise ; ( b ) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery ; ( c ) the maintenance of a stock of goods or merchandise be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment, or otherwise), shall not of itself constitute either company a permanent establishment of the other. CHAPTER III TAXATION OF INCOME Article 6 INCOME FROM IMMOVABLE PROPERTY 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. 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, boats, motor vehicles and aircraft shall not be regarded as immovable property. 3. The provisions of parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year, unless there is good and sufficient reason to the contrary. 6. Where profits include items of income which are dealt with separately in other articles of this Convention, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 SHIPPING AND AIR TRANSPORT 1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State of which the enterprise is a resident. 2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3. Whenever companies from different countries have agreed to carry on an air transportation business together in the form of a consortium, the provisions of paragraph 1 shall apply to such part of the profits of the consortium as corresponds to the participation held in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, consult each other. Article 10 DIVIDENDS 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but : ( a ) Where the dividends are paid by a company which is a resident of Portugal to a resident of India who is the beneficial owner thereof, the Portuguese tax so charged shall not exceed : ( i ) 15 per cent. of the gross amount of the dividends ; or ( ii ) 10 per cent. of the gross amount of the dividends if the beneficial owner is a company that, for an uninterrupted period of two years prior to the payment of the dividend, owns directly at least 25 per cent. of the capital stock (capital social) of the company pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits consist wholly or partly of profits or income arising in such other State. Article 11 INTEREST 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent. of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. 3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempted from tax in that State : ( a ) if the debtor of such interest is that State, a political or administrative sub-division or a local authority thereof ; or ( b ) if interest is paid to the other Contracting State, a political or administrative sub-division or a local authority thereof or an institution (including a financial institution) in connection with any financing granted by them under an agreement between the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SERVICES 1. Royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties or fees for included services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties and fees for included services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent. of the gross amount. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. 3. The term royalties as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or tapes or any other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of article 7 or article 14, as the case may be, shall apply. 7. Royalties and fees for included services shall be deemed to arise in a Contracting State where the payer is that State itself, a political or administrative sub-division thereof, a local authority or a resident of that State. Where, however, the person paying the royalties and fees for included services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the obligation to pay the royalties and fees for included services was incurred, and such royalties and fees for included services are borne by that permanent establishment or fixed base, then such royalties and fees for included services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 8. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties and fees for included services having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income as is attributable to that fixed base may be taxed in that other State ; or ( b ) if his stay in the other State is for a period or periods exceeding in the aggregate 183 days in any twelve months period commencing or ending in the fiscal year concerned ; in that case, only so much of the income as is derived from his activities performed in the other State may be taxed in that other State. 2. The term professional services includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15 DEPENDENT PERSONAL SERVICES 1. Subject to the provisions of articles 16, 18, and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of past employment shall be taxable only in that State. Article 19 GOVERNMENT SERVICE 1. ( a ) Salaries, wages and other similar remuneration, other than pension, paid by a Contracting State or a political or administrative sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State ; ( b ) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who : ( i ) is a national of that State ; or ( ii ) did not become a resident of that State solely for the purpose of rendering the services. 2. ( a ) Any pension paid by, or out of funds created by, a Contracting State or a political or administrative sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State ; ( b ) however, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3. The provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 14, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in the form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever, such income may be taxed in the other Contracting State. CHAPTER IV METHODS FOR ELIMINATION OF DOUBLE TAXATION Article 23 ELIMINATION OF DOUBLE TAXATION 1. The laws in force in either of the Contracting State will continue to govern the taxation of income in the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not residents of one or both of the Contracting States. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs, and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provisions of paragraph 1 of article 9, paragraph 6 of article 11, or paragraph 4 of article 12, apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EXCHANGE OF INFORMATION 1. The competent authorities of the Contracting States shall exchange such information, including authenticated copies of the documents, as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention in so far as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation : ( a ) to carry out administ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... States may, on or before the thirtieth day of June in any calendar year from the fifth year following that in which the notifications have been given, terminate the Convention through diplomatic channels. In such event, the Convention shall cease to have effect : ( a ) in Portugal : ( i ) in respect of taxes withheld at source, the fact giving rise to them appearing on or after the first day of January of the year next following the date on which the period specified in the said notice of termination expires ; ( ii ) in respect of other taxes, as to income arising in the fiscal year beginning on or after the first day of January next following the date on which the period specified in the said notice of termination expires. ( b ) in India : in respect of income arising in any fiscal year beginning on or after the first day of April next following the date on which the period specified in the said notice of termination expires. IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Convention. DONE in duplicate at Lisbon, this September 11th day of 1998, in Hindi, Portuguese and English languages, each text being equally authentic, the English text prevailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 shall be construed in the sense that in so far as the deductibility of the incurred disbursements is concerned, each Contracting State may apply its own procedures regarding the burden of proof. 3. The provisions of 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 subject to the difference between the two rates not being more than 10 per cent. IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have signed this protocol. DONE in duplicate at Lisbon, this September 11th day of 1998, in Hindi, Portuguese and English languages, each text being equally authentic, the English text prevailing in case of doubt. For the Government of the For the Government of the Por- Republic of India tuguese Republic ............................................. .................................................. (P. R. Kumarmangalam) (Fenando Texeira Santos) [Notification No. 11401/F. No. 503/5/91-FTD] - Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
