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TMI BlogAgreement between the Government of the Republic of India and the Government of the Republic of Italy 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 ..... OF DOUBLE TAXATION AND THE PREVENTION Ob FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Republic of Italy. Desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to lanes on Income. Have agreed as follows CHAPTER 1 SCOPE OF THE CONVENTION 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 The taxes to which the Convention shall apply are :- (a) in the case of India :- 1. the income-tax including any surcharge thereon; and 2. the surtax; (hereinafter referred to as Indian tax ); (b) in the case of Italy : 1. the personal income-tax; 2. the corporate income-tax; and 3. the local income-tax; even if they are collected by withholding taxes at the source; (hereinafter referred to as Italian Tax ). 2. The Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Convention in addition to or in place of, the taxes referred to, in paragraph 1 of this Article. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft is operated solely between places in the other Contracting State; (j) the term national means any individual possessing the nationality of a Contracting State and any legal person, partnership or association deriving its status from the law in force in the Contracting State; (k) the term competent authority means in the case of India, the Central Government in the Ministry of Finance (Deptt. of Revenue) or their authorised representative, and in the case of Italy, the Ministry of Finance; 2. In the application of the provisions of this Convention by one of the Contracting States, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws in force in that State relating to the taxes which are the subject of this Convention. ARTICLE 4 FISCAL DOMICILE 1. For the purposes of this Convention, the term resident of a Contracting State means any person who is a resident of that State in accordance with the taxation laws of that State. 2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his residential status for the purposes of this Convention shall be determined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery and equipment : PROVIDED that for the purpose of this paragraph an enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with or supplies plant and machinery on hire used or to be used in, the prospecting for, or extraction or production of mineral oils in the State. 3. 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 or display 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 or display; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 right to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources shall also be considered as immovable property . Ships, boats and aircraft shall not be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods or merchandise for the purpose of export to the enterprise of which it is the permanent establishment. 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 AIR TRANSPORT 1. Income derived from the operation of aircraft in international traffic by an enterprise of one of the Contracting States shall not be taxed in the other Contracting State. 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. For the purposes of this Article :- (a) interest of funds connected with the operation of aircraft in international traffic shall be regarded as income from the operation of such aircraft; and (b) the term operation of aircraft shall mean business of transportation by air of persons, livestock, goods or mail, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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% of the gross amount of the dividends if the beneficial owner is a company which owns at least 10 per cent of the shares of the company paying the dividends; (b) 25% 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 provisions of paragraph 2(a) would apply in respect of dividends arising out of the investment made after the date of signature of the Convention. 4. The term dividends as used in this Article means income from shares, jouissance shares or jouissance rights, mining shares, founders, shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation laws of the State of which the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits, and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises. 5. The provisions of paragraphs 1 and 2 not apply if the recipient 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 interest shall be taxable in that other Contracting State according to its own law. 6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative sub-division, a local authority 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 establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, 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 the technical services are paid is effectively connected with such permanent establishment or fixed base. In such a case the royalties or fees for technical services shall be taxable in that other Contracting State according to its own law. 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 or administrative sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident or a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character may be taxed in that State. Such income may also be taxed in the other Contracting State if such services are performed in that other State and if : (a) he is present in that other State for a period or periods aggregating 183 days in the relevant fiscal year, or (b) he has a fixed base regularly available to him in that other State for the purpose of performing his activities but only so much of the income as is attributable to that fixed base. 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 and 20 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng any of its political sub-division 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 PENSIONS Subject to the provisions of paragraph 2 of Article 20, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment may be taxed in both the Contracting States. ARTICLE 20 GOVERNMENT SERVICE 1.(a) Remuneration, other than a pension, paid by a Contracting State or a political or administrative sub-division or a local authority thereof to any 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r such period of time as may be necessarily required for the completion of study, research or training, as the case may be. 2. An individual who is a resident of a Contracting State and who visits the other Contracting State for a period not exceeding one year as employee of, or under contract with, an enterprise of the first-mentioned Contracting State or an organisation referred to in paragraph 1 for the primary purpose of acquiring technical, professional or business experience from a person other than such enterprise or organisation shall be exempt from tax in that other Contracting State for such period, to the extent such remuneration does not exceed 5,000,000 Italian Lires or its equivalent in Indian Rupees, as the case may be, in any year. ARTICLE 23 OTHER INCOME Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention may be taxed in both the Contracting States. CHAPTER IV ELIMINATION OF DOUBLE TAXATION ARTICLE 24 METHOD FOR ELIMINATION OF DOUBLE TAXATION 1. The laws in force in either of the Contracting States will continue to govern the taxation of income in the respective Contracting States excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ON 1. The 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 and under the same conditions are or may be subjected. 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 enterprise of that other State carrying on the same activities in the same circumstances or under the same conditions. 3. Nothing contained in this Article shall be construed as obliging a Contracting State to grant to persons not resident in that State any personal allowances, reliefs and reductions for taxation purposes which are by law available only to persons who are so resident. 4. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this 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 States 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the expiration 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 the Convention shall cease to have effect :- (a) in India, in respect of income assessable for any taxable period ( previous year ) commencing on or after the 1st day of April in the calendar year next following that in which such notice is given; (b) in Italy, in respect of income assessable for any taxable period commencing on or after the 1st day of January in the calendar year next following that in which such notice is given. In witness thereof the undersigned, duly authorised thereto by their respective Governments, have signed the present. Done in duplicate at New Delhi the 19th day of February 1993, in the Hindi, Italian and English languages, all texts being equally authoritative except in the case of doubt when the English text shall prevail. (Sd.) (M.V. Chandrasekara Murthy) For the Government of the Republic of India (Sd.) (Claudio Vitalone) For the Government of the Republic of Italy PROTOCOL To the Convention between the Government of the Republic of India and the Government of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Convention or have been modified only in minor respects so as not to affect their general character; (ii) any other provision which may subsequently be made granting an exemption or reduction from tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified only in minor respects so as not to affect its general character; (e) that, with reference to Article 26, paragraph 1, the expression notwithstanding the remedies provided by the national laws means that the mutual agreement procedure is not alternative to the national ordinary proceedings which shall be, in any case, preventively initiated, when the claim is related with an assessment of taxes not in accordance with this Convention. (f) that, with reference to paragraph 3 of Article 29, the provisions herein contained shall not be construed as preventing the competent authorities of the Contracting States from mutually agreeing upon a different procedure for the granting of tax benefits provided by this Convention. In witness thereof the undersigned, duly authorised thereto by their respective Governments, have signed the present Protocol. Don ..... X X X X Extracts X X X X X X X X Extracts X X X X
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