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TMI BlogAgreement between the Government of the Republic of India and the Government of the Republic of India and the Government of the Swiss Confederation or avoidance 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 ..... BETWEEN THE REPUBLIC OF INDIA AND THE SWISS CONFEDERATION FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE SWISS FEDERAL COUNCIL DESIRING to conclude un-Agreement for the avoidance of double taxation with respect to taxes on income, HAVE AGREED as follows: ARTICLE 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1. The taxes to which this Agreement shall apply are: (a) in the case of India: the income-tax including any surcharge thereon; and (b) in the case of Switzerland: the federal, cantonal and communal taxes on income (total income, earned income, income from capital, industrial and commercial profits, capital gains, and other items of income). 2. The Agreement 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 Agreement in addition to, or in place of, the taxes referred to in paragraph 1 of this Article. 3. In this Agreement, the term Indian tax means tax imposed by India, being tax to which this Agreement applies; the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees or charters 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; (k) the term fiscal year means; (i) in the case of India, the previous year as defined in the Income-tax Act of India; and (ii) in the case of Switzerland, the calendar year. 2. In the application of the provisions of this Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which is has under the laws in force in that State Relating to the taxes which are the subject of this agreement. ARTICLE 4 FISCAL DOMICILE 1. For the purposes of this Agreement, the term resident of a Contracting State means any person who, under the laws of that State, is liable to taxation therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature. 2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin a Contracting State by an enterprise through employees or other personnel, but only if: (i) activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve-month period; or (ii) the services are performed within that State for a related enterprise (within the meaning of paragraph 1 of Article 9) for a period or periods aggregating more than 30 days within any twelve-month period. 3. The term permanent establishment shall not be deemed 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 for collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information or for scie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the law of the Contracting State in which the property 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, oilwells, quarries and other places of extraction of natural resources. Ships and aircraft shall not be regarded as immovable property. 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise, and to income from immovable property used for the performance of professional services. ARTICLE 7 BUSINESS PROFITS 1. The business profits of an enterprise of a Contracting State other than the profits from the operation of ships in international traffic, shall be taxable only in that State unless the enterprise carries on business in the other on tracing S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement of enterprise is situated. 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. ARTICLE 9 ASSOCIATED ENTERPRISES 1. Where- (a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued 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 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 divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not exceed 15 per cent of the gross amount interest. 3. Notwithstanding the provisions of paragraph 2, where the interest is paid to a bank carrying on a bona fide banking business or to an enterprise which holds directly or indirectly at least 20 per cent of the capital of the company paying the interest which are a resident of the other Contracting State and are the beneficial owner of the interest the tax so charged in the Contracting State in which the interest arises shall not exceed 10 per cent of the gross amount of the interest. 4. Notwithstanding the previsions paragraph 2 and 3. (a) interest arising in Switzerland and paid to a resident of India shall be taxable only in India if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by the Export-Import Bank of India or by any institution specified and agreed in letters exchanged between the competent authorities of the Contracting State. (b) interest arising in India and paid to a resident of Switzerland shall be taxable only in Switzerland if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured under the Swiss provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement. ARTICLE 12 ROYALTIES AND FEES FOR INCLUDED 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 and 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 or fees for included services is a resident of the other Contracting State, the tax so charged shall not exceed: (a) In the case of royalties referred to in sub-paragraph (a) of paragraph 3 and fees for included services referred to in sub-paragraph (b) of paragraph 4 of this Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph 4, fees for included services does not include amounts paid: (a) For services that are ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property. (b) For teaching in or by educational institutions; (c)For services for the personal use of the individual or individuals making the payment; or (d) To an employee of the person making the payments or to any individual or firm of individuals (other than a company) for professional services falling under Article 14. 6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for included services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for included services arise, through a permanent establishment situated therein, and the contract in respect of which the royalties or fees for included services are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply. 7. Royalties and fees for included services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany, the property of which consists directly or indirectly principally of immovable property situated in a Contracting State, may be taxed in that State. 6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. ARTICLE 14 PERSONAL SERVICES 1. Subject to the provisions of Articles 15, 17, 18, 19 and 20 salaries, wages, and other similar remuneration in respect of an employment as well as income in respect of professional services or other activities of an independent character, derived by an individual resident of a Contracting State, shall be taxable only in that State, unless the employment, services, or activities are exercised or performed in the other Contracting State. If the employment, services, or activities are so exercised or performed, such remuneration or income as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration or income derived by a resident of a Contracting State in respect of an employment, services, or activities exercised or performed in the other Contracting State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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. ARTICLE 18 GOVERNMENT REMUNERATION AND PENSIONS 1. Remuneration, other than a pension, paid by the Government of a Contracting State to any individual who is a citizen of that State in respect of services rendered in the discharge of governmental functions in the other Contracting State shall be taxable only in the first-mentioned State. 2. Any pension paid by the Government of a Contracting State to any individual in respect of services rendered shall be taxable only in that Contracting State. 3. The provisions of paragraphs 1 and 2 of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by the Government of either of the Contracting States for the purpose of profit. 4. For the purposes of this Article, the term Government shall include any State Government, canton, or local or statutory authority of either Contracting State and, in particular, the Reserve Bank of India and the Swiss National Bank. ARTICLE 19 STUDENTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Where a resident of Switzerland derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Switzerland shall, subject to the provisions of sub-paragraphs (b), (c), and (d), exempt such income from tax but may, in calculating tax on the remaining income of that resident, apply the rate of tax which would have been applicable if the exempted income had not been so exempted; provided, however, that such exemption shall apply to gains referred to in paragraph 4 of Article 13 only if actual taxation of such gains in India is demonstrated. (b) Where a resident of Switzerland derives dividends, interest, royalties, or fees for included services which, in accordance with the provisions of Articles 10, 11, and 12, may be taxed in India, Switzerland shall allow, upon request, a relief to such resident. The relief may consist of: (i) a credit from the Swiss tax on the income of that resident of an amount equal to the tax levied in India in accordance with the provisions of Articles 10, 11, and 12; such credit shall not, however, exceed that part of the Swiss tax, as computed before the credit is given, which is appropriate to the income which may be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on the income of that resident, as computed by reference to the relief referred to in the foregoing sub-paragraph of an amount of: A. 10 per cent of the gross amount of the interest referred to in Article 11, paragraph 2; B. 10 per cent of the gross amount of the royalties referred to in Article 12, paragraph 2, sub-paragraph (a), and of the fees for included services covered by Article 12, paragraph 4, sub-paragraph (b) (i); C. 5 per cent of the gross amount of the fees for included services covered by Article 12, paragraph 4, sub-paragraph (b) (ii). Such credit shall, however, be determined pursuant to the general principles of the relief referred to in sub-paragraph (b) of this paragraph. (d) Where a resident of Switzerland derives interest dealt with in section 10(4) and 10(15) (iv) of the Indian Income Tax Act of 1961 and referred to in Article 11, paragraph 4, sub-paragraph (d), Switzerland shall allow, upon request, a relief to such resident of an amount equal 10 per cent of the gross amount of the interest. ARTICLE 22 NON-DISCRIMINATION 1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for in Articles 10, 11 and 12. 5. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. ARTICLE 24 EXCHANGE OF INFORMATION 1. The competent authorities of the Contracting States shall exchange such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary for carrying out the provisions of this Agreement in relation to the taxes which are the subject of this Agreement. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than those concerned with the assessment and collection of the taxes which are the subject of this Agreement. No information as aforesaid shall be exchanged which would disclose any trade, business, industrial or professional secret or trade process. 2. In no case shall the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and (b) in Switzerland, in respect of income arising in any fiscal year 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 Agreement. Done in duplicate at New Delhi this 2nd day of November, one thousand nine hundred and ninety-four in the Hindi, German, and English languages, all the texts being equally authentic, except in the case of doubt when the English text shall prevail. For the Government of the Republic of India For the Swiss Federal Council PROTOCOL To the Agreement between the Republic of India and the Swiss Confederation for the avoidance of double taxation with respect to taxes on income. At the signing of the Agreement concluded today between the Government of the Republic of India and the Swiss Federal Council for the avoidance of double taxation with respect to taxes on income, the undersigned have agreed upon the following additional provisions which shall form an integral part of the said Agreement. 1. With reference to Article 5 1. It is understood that the remuneration for furnishing of services c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is effectively carried out by the permanent establishment in the State where the permanent establishment is situated; the profits related to that part of the contract which is carried out outside that Contracting State by the head office of the enterprise shall be taxable only in the State of which the enterprise is a resident, provided that the amount payable is not covered under the provisions of Article 12. 3. With reference to Articles 10, 11 and 12 If after the signature of the Protocol of 16-2-2000 under any Convention, Agreement or Protocol between India and a third State which is a member of the OECD India should limit its taxation at source on dividends, interest, royalties or fees for technical services to a rate lower or a scope more restricted than the rate or scope provided for in this Agreement on the said items of income, then, Switzerland and India shall enter into negotiations without undue delay in order to provide the same treatment to Switzerland as that provided to the third State. 4. With reference to Article 12 It is understood that gains derived from the alienation of a right or a property mentioned in paragraph 3 of Article 12 may be taxed according t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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