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TMI BlogAgreement between the Government of the Republic of India and the Government of the Republic of Bulgaria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxesX X X X Extracts X X X X X X X X Extracts X X X X ..... WEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF BULGARIA 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 Republic of Bulgaria, DESIRING to further expand and facilitate mutual economic relations, HAVE RESOLVED to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and 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 taxes to which the Convention shall apply are : (a) In India: (i) the income-tax, including any surcharge thereon; and (ii) the wealth-tax; (hereinafter referred to as Indian tax); (b) In Bulgaria: (i) the tax on total income; (ii) the tax on profits; and (iii) the tax on buildings; (hereinafter referred to as Bulgarian tax). 2. This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting-State after the date of signature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the application of this Convention by a Contracting-State, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies. Article 4 Resident 1. For the purposes of this Convention, the term resident of a Contracting-State means : (a) in the case of India, any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature; (b) in the case of Bulgaria, any individual who is national of Bulgaria, as well as any legal person which has its head office in Bulgaria or is registered therein. 2. (a) Where by reason of the provisions of paragraph 1 of this Article, an individual is a resident of both Contracting States, then he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the Contracting-State in which he has his centre of vital interests cannot be determined, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3. Where by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific research, or for similar activities which have a preparatory or auxiliary character, for the enterprise; (f) the selling of goods or merchandise belonging to the enterprises displayed in an occasional temporary fair or exhibition in the process of closing down of such fair or exhibition; and (g) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (f), provided that overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. However, the provisions of sub-paragraphs (a) to (g) shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting-State for any purposes other than the purposes specified in the said sub-paragraphs. 4. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 5 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State, if, (a) he has, and habitually ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 Business profits 1. The profits of an enterprise of a Contracting-State shall be taxable only in that State unless the enterprise carries on business in the other Contracting-State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, as is attributable to that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attribute 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 deduction expenses which are incurred for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 1 of this Article and paragraph 2 of Article 10 of the Agreement on merchant shipping dated 18-11-1976, between the Government of the Republic of India and the Government of the Peoples Republic of Bulgaria, income derived by an enterprise of a Contracting State from the operation of ships in international traffic from the ports of the other Contracting State to the ports of third countries and from the ports of third countries to the ports of the other Contracting State may be taxed in the other Contracting State, but the tax imposed in that other Contracting State shall not exceed : (a) 50 per cent of the tax otherwise imposed by the taxation law of that other Contracting State, or (b) 2.50 per cent of the gross amount payable in respect of such operation of ships, whichever is lower. 3. For the purposes of clause (b) of paragraph 2 of this Article, the gross amount payable in respect of the operation of ships shall mean the aggregate of the following amounts, namely : (a) the gross amount paid or payable on account of the carriage of passengers, livestock, mail or goods shipped at a port or ports in the other Contracting State; (b) the gross amount received in the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficial owner of the dividends, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. 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, participating in profits, as well as income from corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7, or Article 15, as the case may be, shall apply. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular, 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 payments shall not be regarded as interest for the purpose of this Article. 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State, in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 15, as the case may be, shall apply. 6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority thereof or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to an employee of the 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 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 Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 15, as the case may be, shall apply. 6. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority thereof, or a resident of that State. Where, however, the person paying the royalties or fees for technical services, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may also be taxed in the other Contracting State : (a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case only so much of the income as is attributable to that fixed base may be taxed in that other State; or (b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant previous year or year of income, as the case may be; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2. The term professional services includes independent, scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 16 Dependent personal services 1. Subject to the provisions of Articles 17, 18, 19, 20, 21 and 22, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural exchange between the two Contracting States, or are supported wholly or substantially, from the public funds of the first-mentioned Contracting State, including any of its political sub-divisions or local authorities. 4. Notwithstanding the provisions of paragraph 2 and Articles 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of that other State, including any of its political sub-divisions or local authorities. Article 19 Remuneration and pensions in respect of Government service 1. (a) Remuneration, other than a pension, paid by a Contracting State or a political 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 remuneration shall be taxable only in the other Contracting State if the services are rendered in that other Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 22 Payments received by professors, teachers and research scholars 1. A professor or teacher who is or was a resident of one of the Contracting States 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 paragraph 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 purpose of this Article and Article 21, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty is a resident. 4. All other elements of capital of a resident of a Contracting State may be taxed in the Contracting State in which such elements of capital are situated. 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 or capital in the respective Contracting States except where provisions to the contrary are made in this Convention. 2. In both the Contracting States, double taxation shall be avoided in the following manner : (a) where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall, subject to the provisions of sub-paragraph (b) of this paragraph, exempt such income or capital from tax but 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 exempted income or capital had not been so exempted ; (b) either of the Contracting States when imposing taxes on its residents may include in the tax base upon which such taxes are imposed the items of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Contracting State to grant to non-residents of that State any personal allowances, reliefs, reductions and deductions for taxation purposes which are by law available only to persons who are so resident. 5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances and under the same conditions. 6. In this Article, the term taxation means taxes which are the subject of this Convention. Article 27 Mutual agreement procedure 1. Where a resident of a Contracting State 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 Convention, he may, notwithstanding the remedies provided by the national laws of these States, present his case to the competent authority of the Contracting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for such purposes but may disclose the information in public court proceedings or in 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. The exchange of information or documents shall be either on a routine basis or on request with reference to particular case or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3. 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 the administrative practice of that or of the other Contracting State ; (b) to supply information or documents which are 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 or documents which would disclose any trade, business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beginning on or after the first day of January, next following the calendar year in which the notice of termination is given; and (ii) in respect of capital which is held on the last day of any year of income beginning on or after the first day of January, next following the calendar year in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, being duly authorised thereto have signed the present Convention. Done in duplicate at Sofia on this 26th day of May of one thousand nine hundred and ninety-four in Hindi, Bulgarian and English languages, all the texts being equally authentic. In case of divergence between any of the two texts, the English text shall prevail. PROTOCOL At the signing today of the Convention between the Government of the Republic of India and the Government of the Republic of Bulgaria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, the undersigned have agreed upon the following provisions which shall form an integral part of the Convention : 1. To Article 7 (Business Profits) : (a) In respect of paragraph 1, the profits attributable to a permanent establishment wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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