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TMI BlogAgreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries - Republic of CroatiaX X X X Extracts X X X X X X X X Extracts X X X X ..... vides that the provisions of the said Agreement shall have effect in India in respect of income arising in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force. 4. Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961) , the Central Government hereby directs that all the provisions of the said Agreement and Protocol between the Government of the Republic of India and the Government of the Republic of Croatia for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the first day of April, 2016, being the first day of the fiscal year next following the calendar year in which the said Agreement entered into force. [Notification No.24/2015/ F. No. 501/09/1995-FTD-I] (Akhilesh Ranjan) Joint Secretary ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF CROATIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR THE PREVENTION OF FISCAL EVASION WITH RESPECT TO T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Law of the Sea; (c) the term person includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; (d) the term company means any body corporate or any entity which is treated as a body corporate for tax purposes; (e) 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; (f) the term international traffic means any transport by a ship or aircraft operated by an enterprise which is a resident of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (g) the term competent authority means: (i) in the case of Croatia, the Minister of Finance or his authorized representative; (ii) in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or its authorized representative; (h) the term national means: (i) any individual possessing the nationality of a Contracting State; (ii) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement. Article 5 PERMANENT ESTABLISHMENT 1. For the purposes of this Agreement, 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 sales outlet; (h) a warehouse in relation to a person providing storage facilities for others; and (i) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on. 3. A building site or construction or assembly project or supervisory activities in connection therewith constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or (c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same control, as that enterprise. 7. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 8 applies. 8. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntracting 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 determining 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 tax laws of that State. 4. No profits shall 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 dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that State and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between independent 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 Agreement 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 if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: (a) 5 percent of the gross amount of the dividends if the benefici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the recipient is the beneficial owner of the interest 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 exempt from tax in that State provided it is derived and beneficially owned by: (i) the Government, a political subdivision or a local authority of the other Contracting State; or (ii) the Central Bank of the other Contracting State or any other bank or governmental financial institutions/agencies that may be mutually agreed upon between the two Contracting States. 4. The term interest as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, 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 purpose of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or fees for technical services. 3. (a) 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, films or tapes or other means of reproduction for radio or television broadcasting, satellite or cable transmission for broadcasting to the general public through any form of electronic media, any patent, trade mark, design or model, plan, secret formula or process, or any industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience (know-how). (b) The term fees for technical services means payment of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in Articles 14 and 15 of this Agreement. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services being a resident of a Contracting State, carries on business in the other Contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 (alone or with the whole enterprise) or of such fixed base, may also be taxed in that other State. 3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State. 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 Contracting State. 6. Gains from the alienation of any property other than that referred to in paragraphs 1 to 5, shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 INDEPENDENT PERSONAL SERVICES 1. Income derived by a resident of a Contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; FEES Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may also be taxed in that other State. Article 17 ARTISTES AND SPORTSPERSONS 1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the visit to that State is subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his studies or is undertaken for the purpose of his maintenance. 2. The benefit of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than five consecutive years from the date of his first arrival in that other Contracting State. Article 21 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1. A professor or teacher who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2. This Article shall not apply to income from research, if such research is undertaken primarily for the private benefit of a specific person or persons. 3. For the purposes of this Article and Article 20, an individual shall be deemed to be a resident of a Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in the Republic of Croatia, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in Croatia whether directly or by deduction at source. Such amount shall not however exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Croatia. 4. Income which in accordance with the provisions of this Agreement, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State. Article 24 NON-DISCRIMINATION 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other 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 residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, 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 of the Agreement. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if ,it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4. The competent authorities of the Contracting States may communicate with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 2 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 4. In no case shall the provisions of paragraph 2 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. Article 27 ASSISTANCE IN THE COLLECTION OF TAXES 1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article. 2. The term revenue claim as used in this Article means an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State. 7. Where, at any time after a request has been made by a Contracting State under paragraphs 3 or 4 and before the other Contracting State has collected and remitted therelevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be: (a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or (b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection. The competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first mentioned State sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first day of January next following the calendar year in which the notice of termination is given; (b) in India: in respect of income arising in any previous year beginning on or after the 1st April next following the calendar year in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement. DONE in two originals at Zagreb this 12 th day of February, 2014 in the Hindi, English and Croatian languages, all three texts being equally authentic. In case of divergence between the texts the English text shall prevail. FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE GOVERNMENT OF THE REPUBLIC OF CROATIA (Smt. Preneet Kaur) Minister of State for External Affairs (Mr. Slavko Linic) Minister of Finance PROTOCOL At the signing of the Agreement between the Government of the Republic of Croatia and the Government of the Republic of India for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following shall form an integral part of the Agreement. Ad Articles 10, 11, 12 and 13 (a) Notwithstanding the provisions of this A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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