Austria - Legal Draft

Double Taxation

Avoidance AgreementAustriaAgreement between the

Republic of India and the Republic of Austria for the avoidance of Double

Taxation with respect to taxes on incomeNotification

No. G.S.R.588,dtd 5.4.1965.Whereas

the annexed Convention between the Republic of India and the Republic of

Austria for the avoidance of double taxation with respect to taxes on income

has been ratified and the Instruments of Ratification exchanged, as required by

Article XXI of the said Convention: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

provisions of the said Convention shall be given effect to in the Union of

India.ANNEXUREConvention

between the Republic of India and the Republic of Austria for the avoidance of

double taxation with respect to taxes on income.The

Republic of India and the Republic of Austria, desiring to conclude a

Convention for the avoidance of double taxation with respect to taxes on

income.Have

agreed as follows:ARTICLE

I1. The taxes which are

the subject of the present Convention are:a. In Austriai.

the

Einkommensteuer (income tax);ii.

the

Korperschaftsteuer (corporation tax);iii.

the

Beitrag vom Einkommen zur Forderung des Wohnbauesund fur Zwecke des

Familienlasten ausgleiches (Contribution from income for the promotion of

residential building and for the equalisation of family burdens);(hereinafter

refered to as " Austrian tax ");a.b. In India:i.

the

income-tax,ii.

the

super-tax andiii.

the

surchargeimposed

under the Income-tax Act, 1961 (43 of 1961);(hereinafter

referred to as " Indian tax ")1.2. The present

Convention shall also apply to any other taxes of a substantially similar

character imposed in Austria or in India subsequently to the date of signature

of the present Convention.ARTICLE

II1. In the present

Convention, unless the context otherwise requires:a. the terms " one

of the territories " and " the other territory " mean Austria or

India as the context requires;b. the term "

person " includes individuals, companies and all other entities which are

treated as taxable units under the tax laws in force in the respective

territories;c. the term "

company " means any entity which is treated as a body corporate under the

Austrian law or as a company under the Indian law for tax purposes;d. the term " tax

" means Austrian tax or Indian tax, as the context requires;e. the terms "

resident of Austria " and " resident of India " mean,

respectively, a person who is resident (" Wohnsitz " or "

gewohnlicher Aufenthalt ") in Austria for the purposes of Austrian tax and

not resident in India for the purposes of Indian tax, and a person who is

resident in India for the purposes of Indian tax and not resident (" Wohn

sitz " or " gewohnlicher Aufenthalt ") in Austria for the

purposes of Austrian tax. A company shall be regarded as resident in Austria if

it is incorporated in Austria or its business is wholly managed and controlled

in Austria; a company shall be regarded as resident in India if it is incorporated

in India or its business is wholly managed and controlled in India;f. the terms "

Austrian enterprise " and " Indian enter prise " mean,

respectively, an industrial or commercial enterprise or undertaking carried on

by a resident of Austria and an industrial. or commercial enterprise or

undertaking carried on by a resident of India, and the terms " enterprise

of one of the territories and enterprise of the other territory " mean an

Austrian enterprise or an Indian enterprise, as the context requires;g. the term "

permanent establishment " means a fixed place of business in which the

business of the enterprise is wholly or partly carried on.aa. The term "

permanent establishment " shall include a place of management, a branch,

an office, a factory, a workshop, a warehouse, a mine, quarry or other place of

extraction of natural resources, and a permanent sales exhibition.ab.bb. An enterprise of one

of the territories shall be deemed to have a permanent establishment in the

other territory if it carries on in that other territory a construction,

installation or assembly project or the like.ac.bc.cc. The use of mere

storage facilities or the maintenance of a place of business exclusively for

the purchase of goods or merchandise and not for any processing of such goods

or merchandise in the territory of purchase, shall not constitute a permanent

establishment.ad.bd.cd.dd. A person acting in

one of the territories for or on behalf of an enterprise of the other territory

shall be deemed to be a permanent establishment of that enterprise in the

first-mentioned territory, if1. he has and habitually

exercises in the first-mentioned territory a general authority to negotiate and

enter into contracts for or on behalf of the enterprise, unless the activities

of the person are limited exclusively to the purchase of goods or merchandise

for the enterprise, or2. he habitually

maintains in the first-mentioned territory a stock of goods or merchandise

belonging to the enterprise from which the person regularly delivers goods or

merchandise for or on behalf of the enter prise, or3. he habitually secures

orders in the first-mentioned territory exclusively or almost exclusively, for

the enterprise itself, or for the enterprise and other enterprises which are

controlled by it or have a controlling interest in it.ae.be.ce.de.ae.be.af.bf.cf.df.ef. A broker of a

genuinely independent status who merely acts as in intermediary between an

enterprise of one of the territories and a prospective customer in the other

territory shall not be deemed to be permanent establishment of the enterprise

in the last-mentioned territory.ce.de.ee.fe.af.bf.cf.df.ef.ff. The fact that a

company, which is a resident of one of the territories, has a subsidiary

company which either is a resident of the other territory or carries on a trade

or business in that other territory (whether through a permanent establishment

or otherwise) shall not, of itself constitute that subsidiary company a

permanent establishment of its parent company.a.b.c.d.e.f.g.h. the term "

competent authority " means, in the case of Austria, the Federal Ministry

of Finance, and in the case of India, the Central Government in the Ministry of

Finance, Department of Revenue.1.2. In the application of

the provisions of this Convention in one of the territories any term not

otherwise defined in this Convention shall, unless the context otherwise

requires, have the meaning which it has under the laws in force in that

territory relating to the taxes which are the subject of this Convention.ARTICLE

III1. Subject to the

provisions of paragraph (3) below, tax shall not be levied in one of the

territories on the industrial or commercial profits of an enterprise of the

other territory unless profits are derived in the first-mentioned territory

through a permanent establishment of the said enterprise situated in the

first-mentioned territory. If profits are so derived, tax may be levied in the

first-mentioned territory on the profits attributable to the said permanent

establishment.2. There shall be

attributed to the permanent establishment of an enterprise of one of the

territories situated in the other territory the industrial or commercial

profits which it might be expected to derive in that other terriory if it were

an independent enterprise engaged in the same or similar activities under the

same or similar conditions and dealing at arm's length with the enterprise of

which it is a permanent establishment. In any case, where the ascertainment of

the correct amount of profits attributable to a permanent establishment

presents exceptional difficulties, the profits attributable to the permanent

establishment may be, estimated on a reasonable basis.3. The provisions of

paragraph (1) of this Article shall not be construed its preventing the

taxation in one of the territories in pursuance of the present Convention and

in conformity with the laws of that territory of income (e.g., dividends,

interest, capital gains, fees for technical services, income from the operation

of aircraft, rents or royalties or income from immovable property) derived from

sources therein by a resident of the other territory even if such income is not

attributable to a permanent establishment situated in that former territory.ARTICLE

IVWherea. an enterprise of one

of the territories participates directly or indirectly in the management,

control or capital of an enterprise of the other territory, orb. the persons

participate directly or indirectly in the management, control or capital of an

enterprise of one of the territories and an enterprise of the other territory.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 but for those

conditions would 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

V1. Income derived from

the operation of aircraft by an enterprise of one of the territories shall not

be taxed in the other territory unless the aircraft is operated wholly or

mainly between places within that other territory.2. Paragraph (1) shall

likewise apply in respect of participations in pools of any kind by enterprises

engaged in air transport.3. Income derived from

the operation of aircraft by an Indian enterprise shall likewise not be

subjected to business tax (Gewerbesteuer) in Austria.ARTICLE

VI1. Royalties derived by

a resident of one of the territories from sources in the other territory may be

taxed only in that other territory.2. In this Article, the

term " royalty " means any royalty of other like amount received as

consideration for the right to use copy-rights, artistic or scientific works,

cinematographic films, patents, models, designs, plans, secret processes or

formulae, trademarks and other like properties or rights.ARTICLE

VIIAmount

paid by an enterprise of one of the territories for technical services

furnished by an enterprise of the other territory shall not be subject to tax

by the first-mentioned territory except in so far as such amounts are

attributable to activities actually performed in the first-mentioned territory.

In computing the income so subject to tax, there shall be allowed as deductions

the expenses incurred in the first-mentioned territory in connection with the

activities performed in that territory.ARTICLE

VIIIDividends

paid by a company which is a resident of one of the territories to a resident

of the other territory may be taxed only in the first-mentioned territory.ARTICLE

IXInterest

on bonds, securities, notes, debentures or any other form of indebtedness,

derived by a resident of one of the territories from sources in the other

territory may be taxed only in that other territory.ARTICLE

XIncome

from immovable property may be taxed only in the territory in which the

property is situated. For this purpose any rent or royalty or other income

derived from the operation of a mine, quarry or any other place of extraction

of natural resources shall be regarded as income from immovable property.ARTICLE

XI1. Capital gains derived

from the sale, exchange or transfer of a capital asset, whether movable or

immovable, may be taxed only in the territory in which the capital asset is

situated at the time of such sale, exchange or transfer. For this purpose, the

situs of the shares of a company shall be deemed to be in the territory where

the company is incorporated.2. In this Article the

term " capital asset " does not include movable property in the form

of personal effects (e.g. wearing apparel, jewellery and furniture) held for

personal use by the taxpayer or any member of his family dependent on him.ARTICLE

XII1. Remuneration for

services rendered (other than pensions and annuities) paid out of public funds

of Austria shall not be taxed in India unless the payment is made to a national

of India for services rendered therein.2. Remuneration for

services rendered (other than pensions and annuities) paid out of public funds

of India shall not be taxed in Austria unless the payment is made to a national

of Austria for services rendered therein.3. The provisions of

paragraphs (1) and (2) of this Article shall not apply to payments in respect

of services in connection with any trade or business carried on by either of

the Contracting Parties or political subdivisions thereof for purposes of

profit.4. The provisions of

paragraphs (1) and (2) of this Article shall also apply to remuneration other

than pensions and annuities, paid by the Austrian National Bank, the Austrian

Federal Railways and the Austrian Postal and Telegraph Administration and by

the Reserve Bank of India, the Public Railways Authorities and the Postal

Administration of India.ARTICLE

XIII1. Any pension or

annuity derived by a resident of one of the territories from sources in the

other territory may be taxed only in that other territory.2. In this Article, the

term " pension " means periodic payments made in consideration of

services rendered or by way of compensation for injuries received. The term

" annuity " means sum payable periodically at stated times during

life or during it specified or ascertainable period of time.1ARTICLE

XIV1. Subject to Article

XII, profits or remuneration from professional services or from services as an

employee derived by an individual who is a resident of one of the territories

may be taxed in the other territory only if such services are rendered in that

other territory.2. An individual who is

a resident of Austria shall not be taxed in India on profits or remuneration

referred to in paragraph (1) if --a. he is temporarily

present in India for a period or periods not exceeding in the aggregate 183

days during the relevant " previous year ",b. the serices are

rendered for or on behalf of a resident of Austria.c. the profits or

remuneration are subject to Austrian tax andd. the profits or

remuneration are not deducted in computing the profits of an enterprise

chargeable to Indian tax.1.2.3. An individual who is

a resident of India shall not be taxed in Austria on profits or remuneration

referred to in paragraph (1) if ---a. he is temporarily present in Austria

for a period or periods not exceeding in the aggregate 183 days during a

taxable year.b.the services are

rendered for or on behalf of a resident of India,c. the profits or remuneration are

subject to Indian tax, andd.the profits or

remuneration are not deducted in computing the profits of an enterprise

chargeable to Austrian tax.1.2.3.4. Where an individual

permanently or predominantly performs services on ships or aircraft operated by

an enterprise of one of the territories, such services shall be deemed to be

performed in that territory.ARTICLE

XVA

professor or teacher from one of the territories who receives remuneration for

teaching, during a period of temporary residence not exceeding two years, at a

university, college, school or other educational institution in the other

territory, shall not be taxed in that other territory in respect of that

remuneration.ARTICLE

XVI1. An individual from

one of the territories who is tempo-rarily present in the other territory

solely ---a. as a student at a university, college

or school it, that other territory,b.as a business

apprentice, orc. as the recipient of a grant allowance

or award for the primary purpose of study or research from a religious,

charitable, scientific or educational organisation,shall

not be taxed in the other territory in respect of remittances from abroad for

the purposes of his maintenance, education or training, in respect of a

scholarship, and in respect of any amount representing remuneration for an

employment which he exercises in that other territory for the purposes of

practical training.1.2. An individual from

one of the territories who is temporarilly present in the other territory for a

period not exceeding one year, as an employee of, or under contract with, an

enterprise of the former territory or an organisition referred to in paragraph

(1) sub-paragraph (c) above, solely to acquire technical, professional or

business experience from a person other than such enterprise or organisation,

shall not be taxed in that other territory on remuneration for such period,

unless the amount thereof exceeds 50,000---Austrian shillings or its equivalent

in Indian Currency.3. An individual from

one of the territories temporarily present in the other territory under

arrangements with the Government of that other territory solely for the purpose

of training, research or study shall not be taxed in that either territory on

remuneration received in respect of such training, research or study unless the

amount thereof exceeds 80,000--Austrian shillings or its equivalent in Indian

currency.ARTICLE

XVII1. The laws in force in

either of the territories will continue to govern the assessment and taxation

of income in the respective territories except where express provision to the

contrary is made in this Convention.2. Income from sources

within Austria which in accordance with this Convention may be subjected to tax

in Austria either directly or by deduction shall not be subject to Indian tax.3. (3)Income from

sources within India which in accordance with this Convention may be subjected

to tax in India either directly or by deduction shall not be subject to

Austrian tax.4. Notwithstanding the

provisions of paragraphs (2) and (3) of this Article, the items, of income

which under the laws of the two territories should be taken into account for

calculating the rate of tax to be imposed shall continue to be so taken into

account.ARTICLE

XVIIIThe

competent authorities 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 the

present Convention. 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 the present

Convention. No information as aforesaid shall be exchanged by the competent

authority of one of the territories which would disclose any trade, business,

industrial or professional secret or any trade process to the authority of the

other territory.ARTICLE

XIX1. Where a resident of

one of the territories shows proof that the action of the taxation authorities

of the other territory has resulted or will result in double taxation contrary

to the provisions of the present Convention, he shall be entitled to present

his case to the competent authority of the territory of which he is a resident.

Should his claim be deemed worthy of consideration, the competent authority to

which the claim is made shall endeavour to come to an agreement with the

competent authority of the other territory with a view to avoiding double

taxation.2. Should any difficulty

or doubt arise as to the interpretation or application of the present

Convention the competent authorities of both territories may settle the

question by mutual agreement.ARTICLE

XXThe

provisions of the present Convention shall not be construed to restrict in any

manner any exemption, deduction credit or other allowance now or hereafter

accorded by the laws of one of the Contracting States in determining the tax of

that Contracting State.ARTICLE

XXI1. The present

Convention shall be ratified.2. The instruments of

ratification shall be exchanged at Vienna as soon as possible.3. The present

Convention shall enter into force upon the exchange of instruments of

ratification and shall thereupon have effect ---a. in respect of Austrian tax, taxes

which are levied for the calendar year 1962 and for subsequent calendar years,

andb.in respect of Indian

tax, in relation to the income for any " previous year " relevant to

any year of assessment beginning on or after the 1st April 1963.ARTICLE

XXIIThe

present Convention shall continue in effect indefinitely but either of the

Contracting Parties may on or before the 30th of June in any calendar year

after 1965 give to the other Contracting Party notice of termination and, in such

event, the present Convention shall cease to be effective ---a. in respect of Austrian tax, for taxes

which are levied for the calendar years following the year in which the notice

of termination is given, andb.in respect of Indian

tax, in relation to the income which arises on or after the 1st of January

following the year in which the notice of termination is given.In

witness whereof the undersigned Plenipotentiaries have signed the present

Convention.Done

in duplicate at New Delhi, in the English language.This

24th day of September, 1963.For

the Republic of India: For the Republic of AustriaShrimati

Tarkeshwari Sinha, Dr. George Schlumberger,Deputy

Minister of Finance, Ambassador of the Republic Government of India. of Austria

in India.NEW

DELHI,the

24th September, 1963.Dear

Sir,The

Convention between the Republic of India and the Republic of Austria for the

avoidance of Double Taxation with respect to taxes on income being signed

today, I have the honour, on behalf of the Government of India, to inform you

that where a resident of one of the territories fulfils an order for the sale

of machinery to a resident of the other territory and it is incidental to the

sale of the machinery that a person or reasons employed by the resident of the

first-mentioned territory should proceed to that other territory for assisting

in the installation of the machinery therein, such activity shall not be deemed

to constitute a permanent establishment unless it is carried on for a period

exceeding one month or the expenses incurred on such activity are more than ton

per cent of the total sale price for the order.I

shall be grateful if you confirm your agreement to the above understanding of

the provisions of Article 11(1)(g)(bb) of the said Convention, and that in such

case, this note and your reply thereto shall be deemed to be part of the

Convention.Please

accept, Mr. Ambassador, the assurance of my high consideration.Shrimati

Tarkeshwari Sinha.ToHis

Excellency Dr. George Schlumberger.Ambassador

of the Republicof

Austria in India,New

Delhi.New

Delhi24th

September, 1963,Madam,With

reference to the Convention, signed today, between the Republic of Austria and

the Republic of India for the avoidance of Double Taxation with respect to

taxes on income, you have informed me of the following:"

The Convention between the Republic of India and the Republic of Austria for

the avoidance of Double Taxation with respect to taxes on income being signed

today, I have the honour, on behalf of the Government of India, to inform you

that where a resident of one of the territories fulfils an order for the sale

of machinery to a resident of the other territory and it is incidental to the

sale of the machinery that a person or persons employed by the resident of the

first-mentioned territory should proceed to that other territory for assisting

in the installation of the machinery therein such activity shall not be deemed

to constitute a permanent establishment, unless it is carried on for a period

exceeding one month or the expenses incurred on such activity are more than ten

per cent of the total sale price for the order.I

shall be grateful if you confirm your agreement to the above understanding of

the provisions of Article II (1)(g)(bb) of the said Convention, and that in such

case, this note and your reply thereto shall be deemed to be part of the

Convention."I

have the honour to inform you that this proposal meets my approval. Your note

of today's date and my reply thereto shall therefore be part of the Convention.Accept,

Madam Minister, the assurance of my high consideration.DR.

GEORGE SCHLUMBERGER.ToShrimati

Tarkeshwari Sinha,Deputy

Minister of Finance,Government

of India,New

DelhiDouble

Taxation Avoidance Agreement - India and Austria: CorrigendaNotification

No. G.S.R.1250,dtd. 27.08.1965In

the Notification of the Ministry of Finance(Department of Revenue) No.G.S.R.588

dtd.05.04.1965,published at pages 167 to 175 in Part II-Section

3-Sub-section(i) of the Gezzette of India,Extraordinary,dtd. 09.04.1965,-1. at page 168,-i. in the fifth line,

for "of taxes", read "to taxes", (56 I.T.R. (Statutes) page

17, line 16)ii. in the twelfth line,

for "and", read "und", (page 17, line 23)iii. in the thirty-eight

line for "Austrian enterprise" and "India enterprise",

'read' "resident of Austria" and "Resident of India"

respectively; (page 18, line 13)1.2. at page 169, -i. in the thirty-ninth

line, for "territories", read "territories," (page 18, line

49)ii. in the forty-second

line, for "not", read "not," (page 18, line 52)iii. in the forty-sixth

line, for "and", read "and,", (page 19, line 2)iv. in the forty-ninth

line, for "shall", read "shall,"; (page 19, line 5)1.2.3. at page 171 in the

twenty-sixth line, -i.

for

"India", read "Austria", (page 20, line 23)ii.

for

"Austria", read "India"; (page 20, line 43)1.2.3.4. at page 172, in the

forty-eight line for"territory

under arrangements with the Government of that other territory solely ",

read "territory on remuneration received in respect of such training,

research or study "; (page 22, line 25)5.

at

page 173 in the seventh line, for "Article", read

"Article,".(page 22, line 38)