Belgium - Legal Draft

Double Taxation

Avoidance AgreementBelgiumIncome-tax Act, 1961:

Notification under section 90: Agreement between the Republic of India and the

Government of the Kingdom of Belgium for the avoidance of double taxation and

the prevention of fiscal evasion with respect to taxes on incomeNotification

No. G. S. R. No. 632(E), dated 31st October, 1997.Whereas

the annexed Agreement between the Government of the Republic of India and the

Government of the Kingdom of Belgium for the avoidance of double taxation and

the prevention of fiscal evasion with respect to taxes on income has come into

force on the 1st day of October, 1997, the thirtieth day after the receipt of

later of notifications by both the Contracting States to each other of the

completion of the procedures required for bringing into force of the said

Agreement in accordance with paragraph 1 of Article 29 of the said Agreement;Now,

therefore, in exercise of the powers conferred under section 90 of the

Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that

all the provisions of the said Agreement shall be given effect to in the Union

of India.ANNEXUREAGREEMENT

BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE

KINGDOM OF BELGIUM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOMEThe

Government of the Republic of India and the Government of the Kingdom of

Belgium,Desiring

to conclude an Agreement for the avoidance of double taxation and the prevention

of fiscal evasion with respect to taxes on income,Have

agreed as follows:CHAPTER

ISCOPE

OF THE AGREEMENTArticle

1PERSONAL

SCOPEThis

Agreement shall apply to persons who are residents of one or both of the

Contracting States.Article

2TAXES

COVERED1.

This

Agreement shall apply to all taxes imposed on total income or on elements of

income including taxes on gains from the sale, exchange or transfer of movable

or immovable property and taxes on the total amounts of wages or salaries paid

by enterprises.The

term "taxes" shall not include any amount which is payable in respect

of any default or omission in relation to the taxes to which the Agreement

applies or which represents a penalty imposed relating to those taxes.2. The existing taxes to

which the Agreement shall apply are:--a. In the case of India:i.

the

income-tax including any surcharge thereon; andii.

the

surtax,(hereinafter

referred to as "Indian tax").a.b.

In

the case of Belgium:i.

the

individual income-tax (l'impot des personnes physiques de personenbelasting);ii.

the

corporate income-tax (l'impot des societes; de vennootschapsbelasting);iii.

the

income-tax on legal entities (l'impot des personnes morales; de

rechtspersonenbelasting);iv.

the

income tax on non-residents (l'impot des non-residents de belasting der

niet-verblijfhouders);v.

the

special levy assimilated to the individual income-tax (la cotisation speciale

assimilee a l'impot des personnes physiques; de met de personenbelasting

gelijkgestelde bijzondere heffing),including

the prepayments, the surcharges on these taxes and prepayments, and the

supplements to the individual income-tax,(hereinafter

referred to as "Belgian tax").3.

The

Agreement shall also apply to any identical or substantially similar tax which

is imposed after the date of signature of the Agreement in addition to, or in

place of, the existing taxes. The competent authorities of the Contracting

States shall, from time to time, notify to each other any significant changes

which have been made in their respective taxation laws.CHAPTER

IIDEFINITIONSArticle

3GENERAL

DEFINITIONS1.

In

this Agreement, unless the context otherwise requires:-a. the term " India

" means the Territory of India and includes the territorial sea and

airspace above it, as well as any other maritime zone in which India has

sovereign rights, other rights and jurisdictions, according to the Indian law

and in accordance with international lawb. the term

"Belgium" means the Kingdom of Belgium when used in a geographical

sense, it means the national territory, the territorial sea and any other area

in the sea within which Belgium, in accordance with international law,

exercises sovereign rights or its jurisdiction;c. the terms "a

Contracting State" and "the other Contracting State" mean India

or Belgium as the context requires;d. the term

"competent authority" means:--i.

in

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

(Department of Revenue) or their authorised representative, andii.

in

the case of Belgium, the Minister of Finance or his authorised representative;a.b.c.d.e. the term

"tax" means "Indian tax" or "Belgian tax" as the

context requires;f. the term

"person" includes an individual, a company and any other entity which

is treated as a taxable unit under the tax laws in force in the Contracting

State of which it is a resident;g. the term

"company" means in the case of India any entity which is a company or

which is treated as a company under the Indian tax law, and in the case of

Belgium any entity which is a company or which is treated as a body corporate

under the Belgian tax law;h. the terms

"enterprise of a Contracting State" and "enterprise of the other

Contracting State" mean respectively an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;a.b.c.d.e.f.g.h.i. the term

"international traffic" means any transport by a ship or aircraft

operated by an enterprise of a Contracting State, except when the ship or

aircraft is operated solely between places in the other Contracting State;j. the term

"national" means:-i.

any

individual possessing the nationality of a Contracting State;ii.

any

legal person, partnership and association deriving its status as such from the

laws in force in a Contracting State.As

regards the application of the Agreement by a Contracting State, any term not

defined therein shall, unless the context otherwise requires, have the meaning

which it has under the law of that State concerning the taxes to which the

Agreement applies.Article

4RESIDENT1. For the purposes of

this Agreement, the term "resident of a Contracting State" means any

person who, under the laws of that State, is a resident of that State for the

purposes of the taxes of that State to which the Agreement applies.2. 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 the Agreement shall be

determined in accordance with the following rules:--a. he shall be deemed to be a resident of

the Contracting State in which he has a permanent home available to him; if he

has a permanent home available to him in both Contracting States, he shall be

deemed to be a resident of the Contracting State with which his personal and

economic relations are closer (hereinafter referred to as his "centre of

vital interests");b.if the Contracting

State in which he has his centre of vital interests cannot be determined, or if

he has not a permanent home available to him in either Contracting State, he

shall be deemed to be a resident of the Contracting State in which he has an

habitual abode;c. if he has an habitual abode in both

Contracting States or in neither of them, he shall be deemed to be a resident

of the Contracting State of which he is a national;d.if he is a national

of both Contracting States or of neither of them, the competent authorities of

the Contracting States shall determine the question by mutual Agreement.1.2.3. Where by reason of

the provisions of paragraph 1, a person other than an individual is a resident

of both Contracting States, then it shall be deemed to be a resident of the

Contracting State in which its place of effective management is situated.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

this Agreement, the term "permanent establishment" means a fixed

place of business through which the business of an enterprise is wholly or

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop or a

warehouse;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. an installation or

structure used for the exploration or exploitation of natural resources;h. the provision of

services or facilities in connection with or supply of plant and machinery on

hire used or to be used in, the prospecting for, or extraction or production of

mineral oils;i. a premises used as a

sales outlet or for receiving or soliciting orders;j. a building site or

construction, installation or assembly project or supervisory activities in connection

therewith, where such site, project or activities (together with other such

sites, projects or activities, if any) continue for a period of more than six

months, or where such project or supervisory activity, being incidental to the

sale of machinery or equipment, continues for a period not 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.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

fixed place of business solely for the purpose of purchasing goods or

merchandise, or for collecting information, for the enterprise;d. the maintenance of a

fixed place of business solely for scientific research, for the enterprise.4.

Subject

to the provisions of paragraph 5, a person acting in a Contracting State on

behalf of an enterprise of the other Contracting State shall be deemed to have

a permanent establishment of that enterprise in the first-mentioned State if:--a. he has and habitually

exercises, in that State an authority to conclude contracts on behalf of the

enterprise, unless his activities are limited to the purchase of goods or

merchandise for that enterprise; orb. he habitually

maintains in the first-mentioned Contracting State a stock of goods or

merchandise belonging to the enterprise from which the person regularly

delivers goods or merchandise on behalf of the enterprise; orc. he habitually secures

orders in the first-mentioned Contracting State, 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.1.2.3.4.5. An enterprise of a

Contracting State shall not be deemed to have a permanent establishment in the

other Contracting State merely because it carries on business in that other

State through a broker, general commission agent or any other agent of an

independent status provided that such persons are acting in the ordinary course

of their business. However, when the activities of such an agent are devoted

wholly or almost wholly on behalf of that enterprise itself or on behalf of

that enterprise and other enterprises controlling, controlled by, or subject to

the same common control, as that enterprise, he will not be considered an agent

of an independent status within the meaning of this paragraph.6. The fact that a

company which is a resident of a Contracting State controls or is controlled by

a company which is a resident of the other Contracting State, or which carries

on business in that other Contracting State (whether through a permanent

establishment or otherwise) shall not of itself constitute either company a

permanent establishment of the other.CHAPTER

IIITAXATION

OF INCOMEArticle

6INCOME

FROM IMMOVABLE PROPERTY1.

Income

from immovable property may be taxed in the Contracting State in which such

property is situated.2.

The

term "immovable property" shall be defined in accordance with 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 rights to variable or fixed payments as consideration

for the working of, or the right to work, mineral deposits, sources and other

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

7BUSINESS

PROFITS1. 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 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

effected through that permanent establishment.2. Where an enterprise

of a Contracting State carries on business in the other Contracting State

through a permanent establishment situated therein, there shall be attributed

to such permanent establishment the profits which it might be expected to

derive 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.3.a. In the determination

of the profits of a permanent establishment, there shall be allowed as

deductions expenses which are incurred for the purposes of the business of the

permanent establishment including executive and general administrative expenses

so incurred, whether in the State in which the permanent establishment is

situated or elsewhere, subject to the limitations of the taxation laws of that

State:Provided

that where the law of the State in which the permanent establishment is

situated imposes a restriction on the amount of the executive and general

administrative expenses which may be allowed, and that restriction is relaxed

or overridden by any Convention or Agreement between that State and a third

State which is a member of the OECD which enters into force after the date of

entry into force of this Agreement, the competent authority of that State shall

notify the competent authority of the other Contracting State of the terms of

the corresponding paragraph in the Convention or Agreement with that third

State immediately after the entry into force of that Convention or Agreement

and, if the competent authority of the other Contracting State so requests, the

provisions of this sub-paragraph shall be amended by protocol to reflect such

terms.b. However, no such

deduction shall be allowed in respect of amounts, if any, paid (otherwise than

towards reimbursement of actual expenses) by the permanent establishment to the

head office of the enterprise or any of its other offices, by way of royalties,

fees or other similar payments in return for the use of patents or other

rights, or by way of commission or other charges for specific services

performed or for management, or, except in the case of a banking enterprise, by

way of interest on moneys lent to the permanent establishment. Likewise, no

account shall be taken, in the determination of the profits of a permanent

establishment, for amounts charged (otherwise than towards reimbursement of

actual expenses), by the permanent establishment to the head office of the

enterprise or any of its other offices, by way of royalties, fees or other

similar payments in return for the use of patents or other rights, or by way of

commission or other charges for specific services performed or for management,

or, except in the case of a banking enterprise, by way of interest on moneys lent

to the head office of the enterprise or any of its other offices.4. 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 or

paragraph 3 shall preclude such 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 laid down in this article.5. No profits shall be

attributed to a permanent establishment by reason of the mere purchase by that

permanent establishment of goods or merchandise for the purpose of export to

the enterprise of which it is the permanent establishment.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

Agreement, then the provisions of those articles shall not be affected by the

provisions of this article.Article

8SHIPPING

AND AIR TRANSPORT1.

Income

derived from the operation of ships or aircraft in international traffic by an

enterprise of a Contracting State shall not be taxed in the other Contracting

State.2.

For

the purposes of this article:--a. interest on funds

directly connected with the operation of ships or aircraft in international

traffic shall be regarded as income from the operation of such ships or

aircraft and the provisions of Article 11 shall not apply in relation to such

interest; accordingly there will be no withholding tax on such income;b. income derived from

the operation of ships or aircraft in international traffic shall mean income

derived by an enterprise described in paragraph I from the transportation by

sea or air respectively of passengers, mail, livestock or goods carried on by

the owners or lessees or charterers of ships or aircraft including--i.

the

sale of tickets for such transportation on behalf of other enterprises;ii.

any

other activity directly connected with such transportation;iii.

the

leasing of ships or aircraft on charter fully equipped, manned and supplied, or

on a bare boat charter basis where the leasing is incidental to any activity

directly connected with such transportation;a.b.c. income derived from

the operation of ships in international traffic, includes income derived from

the use, maintenance or rental of containers (including trailers and related

equipment for the transport of containers) in connection with the

transportation of goods or merchandise in international traffic, where the

income is derived from an activity which is incidental to any activity directly

connected with such transportation.3.

The

provisions of this article shall also apply to income from the participation in

a pool, a joint business or an international operating agency.Article

9ASSOCIATED

ENTERPRISESWhere-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, orb. 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

10DIVIDENDS1. Dividends paid by a

company which is a resident of a Contracting State to a resident of the order

Contracting 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 beneficial owner of the dividends is a resident of the other Contracting

State, the tax so charged shall not exceed 15 per cent. of the gross amount of

the dividends.3. This paragraph shall

not affect the taxation of the company in respect of the profits out of which

the dividends are paid.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 laws of the State of

which the company making the distribution is a resident. This term means also

income, even paid in the form of interest-derived from capital invested by the

members of a company other than a company with share capital, which is a

resident of Belgium.5. 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 case the provisions of

Article 7 or Article 14, as the case may be, shall apply.6. Where a company which

is a resident of a Contracting State derives profits or income from the other

Contracting State, that other State may not impose any tax on the dividends

paid by the company, except in so far as such dividends are paid to a resident

of that other State or in so far as the holding in respect of which the

dividends are paid is effectively connected with a permanent establishment or a

fixed base situated in that other State, nor subject the company's

undistributed profits to a tax on the company's undistributed profits, even if

the dividends paid or the undistributed profits consist wholly or partly of

profits or income arising in such other State.Article

11INTEREST1.

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, but if the beneficial owner of the

interest is a resident of the other Contracting State the tax so charged shall

not exceed:i. 10 per cent. of the

gross amount of the interest, if such interest is paid on any loan of whatever

kind granted by a bank; andii. 15 per cent. of the

gross amount of the interest in all other cases.3.

The

term "interest" as used in this article means income from debt-claims

of every kind, whether or not secured by mortgage and whether or not carrying a

right to participate in the debtor's profits, and in particular, income from

government securities and income from bonds or debentures, including premiums

and prizes attaching to such securities, bonds or debentures, however, the term

"interest" shall not include for the purpose of this article interest

regarded as dividends under the second sentence of paragraph 3 of Article 10.4.

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 case the provisions of Article 7 or

Article 14, as the case may be, shall apply.5.

Interest

shall be deemed to arise in a Contracting State when the payer is that State

itself, a political 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 incurred, and such interest is borne 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.6.

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.Article

12ROYALTIESAND

FEES FOR TECHNICAL SERVICES1. 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

beneficial owner of the royalties or fees for technical services is a resident

of the other Contracting State, the tax so charged shall not exceed 20 per

cent. of the gross amount of the royalties or fees for technical services.3.a. The term "royalties" as used

in this article means payments of any kind received as a consideration for the

use of, or the right to use, any copyright of literary, artistic or scientific

work including cinematograph films, or films or tapes used for radio or

television broadcasting, any patent, trade mark, design or model, plan, secret

formula or process, or for the use of, or the right to use, industrial,

commercial, or scientific equipment, or for information concerning industrial,

commercial or scientific experience.b.the term "fees

for technical services" as used in this article means payments of any kind

to any person, other than payments to an employee of the person making the

payments and to any individual for independent personal services mentioned in

Article 14, in consideration for services of a managerial, technical or consultancy

nature, including the provision of services of technical or other personnel.4. 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 or property in respect of which, or the

contract under which, the royalties or fees for technical services are paid is

effectively connected with such permanent establishment or fixed base. In such

case the provisions of Article 7 or Article 14, as the case may be, shall

apply.5. Royalties and fees

for technical services shall be deemed to arise in a Contracting State when the

payer is that State itself, a political subdivision, 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 of a Contracting State or not,

has in a Contracting State a permanent establishment or a fixed base in

connection with which the liability to make the payments was incurred and the

payments are borne by such permanent establishment or fixed base, then the

royalties or fees for technical services shall be deemed to arise in the State

in which the permanent establishment or fixed base is situated.6. 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, information or technical

services 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 royalties or fees

for technical services shall remain taxable according to the laws of each

Contracting State.Article

13CAPITAL

GAINS1. 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 from the

alienation of movable property forming part of the business property of a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State or of movable property pertaining to a fixed base

available to a resident of a Contracting State in the other Contracting State

for the purpose of performing independent personal services, including such

gains from the alienation of such a permanent establishment (alone or together

with the whole enterprise) or of such fixed base, may be taxed in that other

State.3. Gains from the

alienation of ships or aircraft operated in international traffic or movable

property pertaining to the operation of such ships or aircraft shall be taxable

only in the Contracting State of which the alienator is a resident.4. Gains from the

alienation of shares of the capital stock of a company the property of which

consists directly or indirectly principally of immovable property situated in a

Contracting State may be taxed in that State.5. Gains from the

alienation of shares other than those mentioned in paragraph 4, forming part of

a participation of at least 10 per cent. of the capital stock of a company

which is a resident of a Contracting State may be taxed in that State.6. Gains from the

alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4

and 5 shall be taxable only in the Contracting State of which the alienator is

a resident.Article

14INDEPENDENT

PERSONAL SERVICES1.

Income

derived by an Individual who is a resident of a Contracting State from the

performance of professional services or other independent activities of a

similar character shall be taxable only in that State except in the following

circumstances when such income 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; orb.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 "taxable

period", 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.21.2. 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

15DEPENDENT

PERSONAL SERVICES1.

Subject

to the provisions of Articles 16, 17, 18, 19, 20 and 21, 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 there from 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

relevant "previous year" or "taxable period", as the case

may be;b.the remuneration is

paid by, or on behalf of, an employer who is not a resident of the other State;

andc. the remuneration is not deductible in

computing the profits or income of 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 respect of an

employment exercised aboard a ship or aircraft operated in international

traffic by an enterprise of a Contracting State may be taxed in that State.Article

16DIRECTORS'

FEES1.

Directors'

fees and other similar payments derived by a resident of a Contracting State in

his capacity as a member of the board of directors or a similar organ of a

company which is a resident of the other Contracting State may be taxed in that

other State. This provision shall also apply to payments derived in respect of

the discharge of functions which under the laws of the Contracting State of

which the company is a resident are treated as functions analogous to those

stated hereinbefore.2.

Remuneration

derived by a director referred to in paragraph 1 from the company in regard to

the discharge of day-to-day functions of a managerial or technical nature and

remuneration received by a resident of a Contracting State consequent to some

personal activity as a partner of a company, other than a company having a

share capital which is a resident of the other Contracting State, may be taxed

in accordance with the provisions of paragraph 1 of Article 15, as if such

remuneration were derived in respect of an employment.Article

17INCOME

EARNED BY ENTERTAINERS AND ATHLETES1.

Notwithstanding

the provisions of Articles 14 and 15, income derived by a resident of a

Contracting State as an entertainer such as a theatre, motion picture, radio or

television artiste, or a musician, or as an athlete, from his personal

activities as such exercised in the other Contracting State, may be taxed in

that other State.2.

Where

income in respect of personal activities exercised by an entertainer or athlete

in his capacity as such accrues not to the entertainer or athlete himself but

to another person, that income may, notwithstanding the provisions of Articles

7, 14 and 15, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3.

Notwithstanding

the provisions of paragraph 1, income derived by an entertainer or an athlete

who is a resident of a Contracting State from his personal activities as such

exercised in the other Contracting State, shall be taxable only in the

first-mentioned Contracting State, if the activities in the other Contracting

State 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 of Articles 7, 14 and 15, 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 a resident of that other

Contracting State and is supported wholly or substantially from the public

funds of that other State, including any of its political sub-divisions or

local authorities.Article

18NON-GOVERNMENT

PENSIONS AND ANNUITIES1.

Any

pension, other than a pension referred to in Article 19, or any annuity derived

by a resident of a Contracting State from sources within the other Contracting

State shall be taxable only in the first-mentioned Contracting State.2.

Notwithstanding

the provisions of paragraph 1, pensions paid and other payments made under a

public scheme which is part of the social security system of a Contracting

State or a political sub-division or a local authority thereof shall be taxable

only in that State.3.

The

term "pension" means a periodic payment made in consideration of past

services, or by way of compensation for injuries received in the course of

performance of services.4.

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

19REMUNERATION

AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.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 State and the individual is a resident of

that State who:-i.

is

a national of that State; orii.

did

not become a resident of that State solely for the purpose of rendering the

services.1.2.a. Any pension paid by,

or out of funds created 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 pension

shall be taxable only in the other Contracting State if the individual is a

resident of, and a national of, that other State.1.2.3. The provisions of Articles

15, 16 and 18 shall apply to remuneration and pensions in respect of services

rendered in connection with a business carried on by a Contracting State or a

political sub-division or a local authority thereof.Article

20TEACHERS

AND RESEARCHERS1.

An

individual who is a resident of a Contracting State and who, at the invitation

of the Government of the other Contracting State or of a university or other

recognised educational institution situated in that other Contracting State,

visits such other Contracting State for the primary purpose of teaching or

engaging in research, or both, at a university or other recognised educational

institution shall not be subject to tax by that other Contracting State on his

income from personal services for such teaching or research for a period not

exceeding twenty-four months from the date of his arrival in that other

Contracting State.2.

This

article shall not apply to income from personal services for research if such

research is undertaken primarily for the private benefit of a specific person

or persons.3.

For

the purposes of this article and Article 21, an individual shall be deemed to

be a resident of a Contracting State if he is a resident of that Contracting

State in the year in which he visits the other Contracting State or in the year

immediately preceding that year.Article

21PAYMENTS

RECEIVED BY STUDENTS AND APPRENTICES1.

An

individual who is a resident of a Contracting State and visits the other

Contracting State solely:-a. as a student at a

university, college or other recognised educational institution in that other

Contracting State, orb. as a business

apprentice, orc. for the purpose of

study or research, as a recipient of a grant, allowance or award, from a

governmental, religious, charitable, scientific or educational Organisation,

shall be exempt from tax in that other Contracting State,i.

on

all remittances from abroad for the purposes of maintenance, education or

training;ii.

on

the grant, allowance or award; andiii.

in

respect of the amount, representing remuneration for an employment in that

other Contracting State, if such remuneration does not exceed 100,000 Belgian

Francs or its equivalent in Indian rupees, as the case may be, in any year.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 an 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 in respect of the remuneration received from that enterprise or

Organisation for such period, if such remuneration does not exceed 120,000

Belgian Francs or its equivalent in Indian rupees, as the case may be, in any

year.Article

22OTHER

INCOME1.

Items

of income of a resident of a Contracting State, wherever arising, not dealt

with in the foregoing articles of this Agreement 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,

or performs in that other State independent personal services from a fixed base

situated therein, and the right or property in respect of which the income is

paid is effectively connected with such permanent establishment or fixed base.

In such case the provisions of Article 7 or Article 14, as the case may be,

shall apply.3.

Notwithstanding

the provisions of paragraphs 1 and 2, items of income of a resident of a

Contracting State not dealt with in the foregoing articles of the Agreement and

arising in the other Contracting State may also be taxed in that other State.CHAPTER

IVMETHODS

FOR ELIMINATION OF DOUBLE TAXATIONArticle

23ELIMINATION

OF DOUBLE TAXATION1.

The

laws in force in either of the Contracting States will continue to govern the

assessment and taxation of income in the respective Contracting States except

where express provision to the contrary is made in this Agreement.2.

In

the case of India, double taxation shall be avoided as follows:-a. Where a resident of

India derives income which, in accordance with the provisions of the Agreement,

may be taxed in Belgium, India shall allow as a deduction from the tax on the

income of that resident an amount equal to the income-tax paid in Belgium

whether directly or by deduction. Such deduction shall not, however, exceed

that part of the income-tax (as computed before the deduction is given) which

is attributable to the income which may be taxed in Belgium. Further, where

such resident is a company by which surtax is payable in India, the deduction

in respect of income-tax paid in Belgium 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 the Agreement,

shall be taxable only in Belgium, 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 Belgium.1.2.3. In the case of

Belgium, double taxation shall be avoided as follows:-a. Where a resident of

Belgium, derives income which may be taxed in India in accordance with the

provisions of the Agreement, other than those of paragraph 2 of Article 10, of

paragraphs 2 and 6 of Article 11 and of paragraphs 2 and 6 of Article 12,

Belgium shall exempt such income from tax but may, in calculating the amount of

tax on the remaining income of that resident, apply the rate of tax which would

have been applicable if such income had not been exempted.b.i. Where a resident of

Belgium derives items of his aggregate income for Belgian tax purposes which

are dividends taxable in accordance with paragraph 2 of Article 10, and not

exempt from Belgian tax according to sub-paragraph (c), interest taxable in

accordance with paragraph 2 or 6 of Article 11, or royalties taxable in

accordance with paragraph 2 or 6 of Article 12, the Indian tax levied on that

income shall be allowed as a credit against Belgian tax relating to such income

in accordance with the existing provisions of Belgian law regarding the

deduction from Belgian tax of taxes paid abroad.ii. Where a resident of

Belgium derive; fees for technical services which have been taxed in India in

accordance with paragraph 2 or 6 of Article 12, the provisions of Belgian tax

law with respect to earned income derived from sources outside Belgium and

subject to foreign tax shall apply.a.b.c. Where a company which

is a resident of Belgium owns shares in a company which is a resident of India,

the dividends which are paid to it by the latter company and which may be taxed

in India in accordance with paragraph 2 of Article 10, shall be exempt from the

corporate income-tax in Belgium under the conditions and limits provided for in

Belgian law.d. Where in accordance

with Belgian law, losses incurred by an enterprise carried on by a resident of

Belgium in a permanent establishment situated in India have been effectively

deducted from the profits of that enterprise for its taxation in Belgium, the

exemption provided for in sub-paragraph (a) shall not apply in Belgium to the

profits of other taxable periods attributable to that establishment to the extent

that those profits have also been exempted from tax in India by reason of

compensation for the said losses.e. For the purposes of

sub-paragraph (b)(i) the term "Indian tax levied" shall be deemed to

include any amount which would have been payable as Indian tax under the laws

of India and in accordance with the provisions of the Agreement for any year

but for a deduction allowed in computing the taxable income or an exemption

from or a reduction of tax granted for that year underi. sections 10(4),

10(4B), 10(15)(iv) and 80L of the Income-tax Act, 1961 (43 of 1961), so far as

they were in force on, and have not been modified since, the date of the

signature of the Agreement, or have been modified only in minor respects so as

not to affect their general character; orii. any other provision

which may be enacted after the Agreement enters into force granting a deduction

in computing the taxable income or an exemption from or a reduction of tax and

which the competent authorities of the Contracting States agree to be for the

purposes of economic development of India, if it has not been modified

thereafter or has been modified only in minor respects so as not to affect its

general character; the competent authorities may in such a case decide as to

the period for which the benefit of this clause shall apply.CHAPTER

VSPECIAL

PROVISIONSArticle

24NON-DISCRIMINATION1.

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 taxed. This provision shall, notwithstanding the provisions of Article

1, also apply to persons who are not residents of one or both of the

Contracting States.2.

Subject

to the provisions of paragraph 3 of Article 7, 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 enterprises of that other State carrying on the same

activities in the same circumstances or under the same conditions.3.

The

provisions of paragraph 2 shall not be construed as preventing:-a. a Contracting State from charging the

profits of a permanent establishment which an enterprise of the other

Contracting State has in the first-mentioned State at a rate of tax which is

higher than that imposed on the profits of a similar enterprise of the

first-mentioned Contracting State;b.Belgium from imposing

the movable property prepayment on dividends paid to a permanent establishment

in Belgium of a company which is a resident of India.1.2.3.4. 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 or

reductions for tax 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 requirement 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 of every kind as specified in this

Agreement.Article

25MUTUAL

AGREEMENT PROCEDURE1.

Where

a person 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 provisions

of this Agreement, he may, irrespective of the remedies provided by the

domestic law of those States, present his case to the competent authority of

the Contracting State of which he is a resident or, if his case comes under

paragraph 1 of Article 24, to that of the Contracting State of which he is a

national. The case must be presented within two years from the first

notification of the action resulting in taxation not in accordance with the

provisions of the Agreement.2.

The

competent authority shall endeavour, if the objection appears to it to be

justified and if it is not itself able to arrive at a satisfactory solution, to

resolve the case by mutual agreement with the competent authority of the other

Contracting State, with a view to the avoidance of taxation which is not in

accordance with the Agreement:Provided

that the case has been presented within the time period specified in paragraph

1, any agreement reached shall be implemented notwithstanding any time limits

in the domestic law of the Contracting State.3.

The

competent authorities of the Contracting States shall endeavour to resolve by

mutual agreement any difficulties or doubts arising as to the interpretation or

application of the Agreement.4.

The

competent authorities of the Contracting States may communicate with each other

directly for the purpose of giving effect to the provisions of the Agreement.

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

26EXCHANGE

OF INFORMATION1.

The

competent authorities of the Contracting States shall exchange such information

as is necessary for carrying out the provisions of this Agreement or of the

domestic laws of the Contracting States concerning taxes covered by the

Agreement, in so far as the taxation thereunder is not contrary to the

Agreement, in particular for the prevention of fraud or evasion of such taxes.

The exchange of information is not restricted by article 1. Any