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TMI BlogConvention between the Republic of India and the Kingdom of Norway for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capitalX X X X Extracts X X X X X X X X Extracts X X X X ..... effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF NORWAY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of the Kingdom of Norway desiring to conclude a Convention for the avoidance of double taxation and prevention of fiscal evasion with respect of taxes on income and on capital, have agreed as follows: ARTICLE 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1. The existing taxes to which the Convention shall apply are in particular: (a) In India: (i) the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961); (ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (iii) the wealth-tax imposed under the Wealth-tax Act, 1957 (27 of 1957); (hereinafter referred to as " Indian tax "). (b) In Norway: (i) the national tax on income (inntektsskatt til staten); (ii) the country municipal tax on income ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean India or Norway as the context requires; (d) the term "tax" means Indian tax or Norwegian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty imposed relating to those taxes; (e) the term "person" includes an individual, a company and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; (f) the term "company" means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; (g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (h) the term "competent authority" means in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHMENT 1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of 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 mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) a warehouse in relation to a person providing storage facilities for others; (h) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; (i) a premises used as a sales outlet or for receiving or soliciting orders; (j) an installation or structure used for the exploration of natural resources; (k) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than three months together with other such sites, projects or activities, if any; (l) the furnishing of services, including consultancy services, by an enterprise throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrolled by, or subject to the same common control as, that enterprise. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other 5[enterprises] controlling, controlled by, or subject to the same common control as, that enterprise, he shall not be considered as an agent of an independent status within the meaning of this paragraph if it is shown that the transactions between the agent and the enterprise were not made under arms-length conditions. In that case, the provisions of paragraph 4 shall apply. 6. The fact that a company which is a resident of a Contracting State controls or is controlled 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of the other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges, for specific services 6[perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly in so far as profits derived by Det Norske Luftfartsselskap A/S (DNL), the Norwegian partner of the Scandinavian Airlines System (SAS), are in proportion to its share in that organisation. 4. For the purposes of this article, interest on funds connected with the operation of aircraft in international traffic shall be regarded as profits derived from the operation of such aircraft, and the provisions of article 12 shall not apply in relation to such interest. 5. The term " operation of aircraft " shall mean business of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees or characters of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. ARTICLE 9 SHIPPING 1. Profits derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State. 2. Notwithstanding the provisions of paragraph 1, profits derived from the operation of ships in international traffic may be taxed in the Contracting State in which such opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. ARTICLE 11 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 if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed: (a) 15 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends and the dividends are attributable to a new contribution; (b) 25 per cent of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The term "dividends" as used in this article means income from shares or other rights, not being debt-claims, par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by: (i) the Government, a political sub-division or a local authority of the other Contracting State; or (ii) the Central Bank of the other Contracting State; (b) interest arising in a Contracting State shall be exempt from tax in that Contracting State to the extent approved by the Government of that State if it is derived and beneficially owned by any person other than a person referred to in sub-paragraph (a) who is a resident of the other Contracting State provided that the transaction giving rise to the debt-claim has been approved in this regard by the Government of the first-mentioned Contracting State to be in the interest of the industrial development of that State. 4. The term " interest " as used in this article means income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of entry into force of this Convention, the tax so charged shall not exceed 20 per cent of such fees. For the purposes of this paragraph, if a lower rate of Indian tax is agreed upon with any other State than Norway after the entry into force of this Convention, such rate shall be applied. 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 films or tapes used for 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 scientific experience. 4. The term "fees for technical services" as used in this article means payments of any amount to any person other than payments to an employee of a person making payments, in consideration for the services of a managerial, technical or consultancy nature, including the provision of services of technical or other personnel. 5. The provisions of paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (along or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property (including containers and related equipment) pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident. 4. Gains from the alienation of shares of the capital stock of a company, the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State. 6. Gains from the alienation of any property other than that mentioned in the preceding paragraphs shall be taxable only in the Contracting St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnected with the activities of a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. Where a resident of Norway derives remuneration in respect of an employment exercised aboard in aircraft operated in international traffic by the Scandinavian Airlines System (SAS) consortium, such remuneration shall be taxable only in Norway. ARTICLE 17 DIRECTORS' FEES AND REMUNERATION OF TOP LEVEL MANAGERIAL OFFICIALS 1. Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State. 2. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top-level managerial position of a company which is a resident of the other Contracting State may be taxed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of, and a national of that other State; or (ii) such pension is exempt from tax in the first-mentioned State. 3. The provisions of articles 16, 17 and 20 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. ARTICLE 20 NON-GOVERNMENT PENSIONS, ANNUITIES AND ALIMONY 1. Any pension, other than a pension referred to in article 19, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State may be taxed in the first-mentioned Contracting State. 2. The term "pension" means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 3. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth. 4. Alimony received by a resident of Norway and paid by a resident of India shall be exempt from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or exploitation of the seabed and subsoil and their natural resources situated in that other State shall, subject to paragraphs 3 and 4 of this article, be deemed in relation to those activities to be carrying on business in that other State through a permanent establishment or fixed base situated therein. 3. The provisions of paragraph 2 shall not apply where the activities are carried on for a period not exceeding 30 days in the aggregate in any 12 months period. However, for the purposes of this paragraph: (a) activities carried on by an enterprise associated with another enterprise shall be regarded as carried on by the enterprise with which it is associated if the activities in question are substantially the same as those carried on by the last-mentioned enterprise; (b) two enterprises shall be deemed to be associated if one is controlled directly or indirectly by the other, or both are controlled directly or indirectly by a third person or persons. 4. Profits derived by a resident of a Contracting State from the transportation of supplies or personnel to a location, or between locations, where activities in connection with the exploration or exploitation of the seab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personnel services, may be taxed in that other State. 3. Capital represented by ships and aircraft operated in international traffic and by movable property (including containers and related equipment) pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State of which the owner of such ships, aircraft or property is a resident. 4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State. ARTICLE 25 ELIMINATION 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 States except where express provision to the contrary is made in this Convention. 2. Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Norway, India shall al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting 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. This paragraph does not apply to article 17. 6. For the deduction indicated in paragraph 4, Indian tax on interest shall be considered as having been paid at a rate of not less than 15 per cent. 7. The provisions of paragraphs 5 and 6 of this article shall apply for the first 10 years for which this Convention is effective, but the competent authorities of the Contracting States may consult each other to determine whether this period shall be extended. 8. Where, under this Convention, a resident of a Contracting State is exempt from tax in that Contracting State in respect of income derived or capital owned in the other Contracting State, then the first-mentioned Contracting State may, in calculating tax on the remaining income or capital of that person, apply the rate of tax which would have been applicable if the income or capital exempted from tax in accordance with this Convention had not been so exempted. ARTICLE 26 NON-DISCRIMINATION 1. Nationals of a Contracting Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected in the same circumstances and under the same conditions. 7. The provisions of this article shall not be construed as obliging a contracting State to grant to nationals of the other Contracting State not being nationals of the first Contracting State any exceptional tax relief accorded to repatriating nationals of this Contracting State. ARTICLE 27 MUTUAL AGREEMENT PROCEDURE 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident, or if his case comes under paragraph 1 of article 26, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n judicial decisions. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchange of information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 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 administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; (c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy. ARTICLE 29 ASSISTANCE IN COLLECTION 1. The Contracting States undertake to lend assistance and support to each other in the collection for taxes covered by this Convention which may no longer be contested in the State making the request. 2. A request for assistance in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct: (a) in India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the Convention is signed; (b) in Norway, in respect of taxes on income or on capital relating to the calendar year (including accounting periods beginning in any such year) next following that in which the Convention is signed. 2. The agreement between the Government of Norway and the Government of India for the avoidance of double taxation of income, signed on the 20th July, 1959, shall terminate and cease to have effect in respect of taxes on income to which the present agreement applies in accordance with the provisions of paragraph 1 of this article. ARTICLE 32 TERMINATION This Convention shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State, through diplomatic channels, written notice of termination. In such event, this Convention shall cease to have effect: (a) in India, in respect of income arising in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l apply for the first time in respect of taxes on income or capital relating to the calendar year (including accounting periods beginning in such year) next following that in which the exchange of notes is made: "3 and 4: Where a resident of Norway derives income or owns capital which in accordance with the provisions of this Convention may be taxed in India, Norway shall allow as a deduction from the income-tax or capital tax of that person an amount equal to the tax paid in India. Such deduction shall not, however, exceed that part of the Norwegain tax, as computed before the deduction is given, which is appropriate to the income derived from or capital owned in India." IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed the Protocol. Done in duplicate at New Delhi this 31st day of December one thousand nine hundred and eighty-six in the Hindi, Norwegian and English languages, all texts being equally authentic. In case of divergence between any of the texts, the English text shall be operative. For the Government of the Republic of India Sd/- CHAND K. TIKKU For the Government of the. Kingdom of Norway Sd/- KAARE DAEHLEN 22[V. U. Eradi, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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