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TMI BlogConvention Between The Government of The Republic of India And The Government of The Kingdom of Sweden 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 ..... (27 of 1957), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE KINGDOM OF SWEDEN 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 Sweden; Desiring 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: 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: ( a ) in India: ( i ) the income-tax and any surcharge thereon; ( ii ) the surtax; and ( iii ) the wealth-tax; (hereinafter referred to as Indian tax ); ( b ) In Sweden: ( i ) the State income-tax, including the sailors' tax and the coupon tax; ( ii ) the tax on the undistributed profits of companies and the tax on distribution in connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity means: ( i ) in India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representative. ( ii ) in Sweden, the Minister of Finance or his authorized representative; ( i ) the term fiscal year means ( i ) in the case of India, previous year as understood under the laws concerning taxes on income in force in India; and ( ii ) in the case of Sweden, the calendar year. 2. As regards the application of this Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws 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 any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, 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, then his status shall be determined as follows: ( a ) he shall be deemed to be a resident of the State in which he has a permanent home ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 scientific research, being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise. 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person-other than an agent of an independent status to whom paragraph 6 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 in respect of any activities which that perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration for the working of, or the rights to work, mineral deposits, sources and other natural resources; ships, boats 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 paragraph 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 independent personal services. ARTICLE 7 BUSINESS PROFITS 1. The profits of an enterprise of a Contracting State shall be taxable 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 but only so much of them as is attributable to ( a ) that permanent establishment; ( b ) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or ( c ) other business activities carried on in that other State of the same or similar kind as those e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which under the laws of the first-mentioned State would not be allowed to be deducted in the case of an enterprise of that State. 4. No profits shall be attributable to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2, shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this article. 6. 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. 7. Where profits include items of income which are dealt with separately in other articles of this Convention, then the provisions of those articles shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of passengers, mail, livestock or goods shipped from that other State. 4. The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. ARTICLE 10 ASSOCIATED ENTERPRISES 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State. 6. As used in paragraph 2 of this article, the term new contribution means any share capital, other than bonus shares, issued after the date of entry into force of this Convention by a company which is a resident of a Contracting State, and beneficially owned by a resident of the other Contracting State. ARTICLE 12 INTEREST 1. Interest 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 interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, provided that where the resident of the other Contracting State is the beneficial owner of the interest and it is paid in respect of a loan or debt first created after the date of entry into force of this Convention, the tax so charged shall not exceed 15 per cent. of the gross amount of the interest. 3. Notwithstanding the provisions of paragraph 2 of this article: ( a ) where the interest is paid to a financial institution carrying on a bona fide banking business which is a resident of the other Contracting State and is the beneficial owner of the interest, the tax charged in the Contracting State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7. where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, 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 such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical 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 technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are 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 such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. ARTICLE 14 CAPITAL GAINS 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may be taxed in that other State. 2. Gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, 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 State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: ( a ) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year of that other State; ( b ) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and ( c ) the remuneration is not borne by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 20, pensions and other similar remuneration in consideration of past employment, annuities and payments under the social security legislation arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned State. 2. 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. ARTICLE 20 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 State and the individual is a resident of that State who: ( i ) is a national of that State; or ( ii ) did not become a resident of that State solely for the purpose of rendering the services. 2. ( a ) Any pension paid by, or out of funds created by, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t other State and approved by the appropriate educational authority of that State, visits that other State for the primary purpose of teaching or engaging in research, or both, at such university or other educational institution shall be exempt from tax by that other State on his income from personal services for teaching or research at such university or other educational institution for a period less than one year from the date of his arrival in that State. 2. The exemption granted under paragraph 1 shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or specific persons. ARTICLE 23 OTHER INCOME 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing articles of this Convention shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is given) which is attributable, as the case may be, to the income or the capital which may be taxed in Sweden. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income-tax paid in Sweden shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from surtax payable by it in India. ( b ) Where a resident of India derives income which, in accordance with the provisions of this Convention, shall be taxable only in Sweden, India may include this income in the tax base but shall allow as a deduction from the income-tax that part of the income-tax which is attributable to the income derived from Sweden. 3. ( a ) Where a resident of Sweden derives income which, in accordance with the provisions of this Convention, may be taxed in India, Sweden shall allow-subject to the provisions of the law of Sweden concerning credit for foreign tax (as it may be amended from time to time without changing the general principle hereof)-as a deduction from the tax on such income, an amount equal to the income-tax paid in India in respect of such income. ( b ) For the purposes of the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal tax prevailing in India at the time of signature of this Convention or a tax comparable thereto. ( f ) Notwithstanding the provisions of sub-paragraph ( a ) of this paragraph, dividends paid by a company which is a resident of India to a company which a resident of Sweden shall be exempt from Swedish tax to the extent that the dividends would have been exempt under Swedish law if both companies had been Swedish companies. This exemption shall not apply unless- ( i ) the profits out of which the dividends are paid have been subjected to the normal corporate tax prevailing in India at the time of signature of this Convention or an income-tax comparable thereto, or ( ii ) the dividends paid by the company which is a resident of India consist wholly or almost wholly of dividends which that company has received, in the year or previous years, in respect of shares held by it in a company which is a resident of a third State and which would have been exempt from Swedish tax if the shares in respect of which they are paid had been held directly by the company which is a resident of Sweden. ( g ) The provisions of sub-paragraphs ( b ) and ( c ) of this paragraph shall apply for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erewith 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. 5. In this article, the term taxation means taxes which are the subject of this Convention. 6. Except where the provisions of article 10, paragraph 7 of article 12, or paragraph 7 of article 13, apply, interests, royalties and fees for technical services, and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransmitting State, it 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 which are the subject of the Convention. Such persons or authorities shall use the information only 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, exchanges 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 and 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 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any subsequent year; ( b ) In India: in respect of income arising in any fiscal year beginning on or after 1st April next following the calendar year in which the notice of termination is given and in respect of capital which is held at the expiry of any fiscal year beginning on or after 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 Convention. Done at Stockholm this seventh day of June 1988 in duplicate in the English language. For the Government of the Republic of India, Sd/- B. M. Oza, Ambassador of India. For the Government of the Kingdom of Sweden, Sd/- Sten Anderson, Foreign Minister of Sweden. PROTOCOL At the signing of the Convention between the Government of the Republic of India and the Government of the Kingdom of Sweden 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 be an integral part of the Convention: (1) With reference to paragraph 4 of article 12, it is understood that income from debt-claims, and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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