Denmark - Legal Draft

Double Taxation

Avoidance AgreementConvention between

the Republic of India and the Kingdom of Denmark for the avoidance of double

taxation and the prevention of fiscal evasion with respect to taxes on income

and on capitalNotification

No. G.S.R. 853(E), dtd. 25.09,1989.Whereas

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

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

the prevention of fiscal evasion with respect to taxes on income and on capital

has come into force on the 13th day of June, 1989, on the notification by both

the Contracting States to each other of the completion of the constitutional

requirements, as required by paragraph 1 of Article 30 of the said Convention;Now,

therefore, in exercise of the powers conferred by section 90 of the Income-tax

Act, 1961 (43 of 1961), section 24A of the Companies (profits) Surtax Act, 1964

(7 of 1964), and section 44A of the Wealth-tax Act, 1957 (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.ANNEXURECONVENTION

BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF DENMARK FOR THE AVOIDANCE OF

DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASIONWITH RESPECT TO TAXES ON

INCOME AND ON CAPITALThe

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

Denmark;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

1PERSONAL

SCOPEThis

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

Contracting States.Article

2TAXES

COVERED1. The taxes to which

this Convention shall apply are:a. in India:i.

the

income-tax including any surcharge thereon imposed under the Income-tax Act,

1961 (43 of 1961);ii.

the

surtax imposed under the Companies (Profits) Surtax Act,1964 ( 7 of 1964);iii.

the

wealth-tax imposed under the Wealth-tax Act, 1957 (24 of 1957): (hereinafter

referred to as "Indian tax").a.b. in Denmark:i.

the

income-tax to the State (ind komstskatten til staten);ii.

the

municipal income-tax (den kommunale indkomstskat);iii.

the

income-tax to the country municipalities (den amtskommunale indkomstskat);iv.

the

old age pension contribution(folkepensionsbidreget);v.

the

seamen's tax(smandsskatten);vi.

the

special income-tax(den saerlige indkomstskat);vii.

the

curch tax(kitkeskatten);viii.

the

contribution to the sickness "per diem" fund (bidrag til

dagpengefonden);ix.

the

hydrocarbon tax (kulbrinteskatten);x.

the

capital tax to the State (formueskatten til staten);xi.

(hereinafter

referred to as "Danish tax")2. The Convention shall

also apply to any identical or substantially similar taxes which are imposed by

either Contracting State after the date of signature of the present Convention

in addition to, or in place of, the taxes referred to in paragraph 1. The

competent authorities of the Contracting States shall notify each other of any

substantial changes which are made in their respective taxation laws.Article

3GENERAL

DEFINITIONS1. In this Convention,

unless the context otherwise requires:a. the term

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

the air space above it, as well as any other maritime zone in which India has

sovereign rights, other rights and jurisdictions, accordance with international

law;b. the term

"Denmark" means the territory of the Kingdom of Denmark and including

the territorial sea of Denmark and the air space above it, as well as any other

maritime area to the extent that that area in accordance with international law

has been or may hereafter be designated under Danish laws as an area within

which Denmark may exercise sovereign rights for the purpose of exploring an

exploiting the natural resources of the seabed or its sub-soil and the

superjacent waters and with regard to other activities for the economic

exploitation and exploration of the area; the term does not comprise the Faroe

Islands and Greenland;c. the term "a

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

or Denmark as the context requires;d. the term

"tax" means Indian tax or Danish tax, as the context requires, but

shall not include any amount which is payable in respect of any default or

omission in relation to the taxes to which this Convention applies or which

represents a penalty imposed relating to those taxes;e. the term

"person" includes an individual, a company and any otherentity which

is treated as a taxable unit under the taxation laws in force in the respective

Contracting States;f. the term

"company" means any body corporate or any entity which is treated as

a company or body corporate under the taxation laws in force in the respective

Contracting States;g. 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;h. the term

"competent authority" means in the case of India, the Central

Government in the Ministry of Finance(Department of Revenue) or their

authorised representative; and in the case of Denmark, the Minister for Inland

Revenue, Customs and Excise or his authorised representative;i. the term

"national" means any individual possessing the nationality of a

Contracting State and any legal person, partnership or association deriving its

status from the laws in force in a Contracting State;j. 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.2. As regards the

application of the Convention 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 Convention

applies.Article

4RESIDENT1. For the purpose 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. But this term does not include any person who is liable to tax

in that State in respect only of income from sources in that State or capital

situated therein.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 available to him;

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

to be a resident of the State with which his personal and economic relations

are closer (centre of vital interests);b. if the 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 State, he shall be deemed to be a

resident of the State in which he has an habitual abode;c. if he has an habitual

abode in both States or in neither of them,. He shall be deemed to be a

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

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

Contracting States shall settle the question by mutual agreement.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

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

5PERMANENT

ESTABLISHMENT1. For the purposes of

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

place of business through which the business of the 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;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. a warehouse in

relation to a person providing storage facilities for others;h. a farm, plantation or

other place where agriculture, forestry, plantation or related activities are

carried on;i. a premises used as a

sales outlet or for receiving or soliciting orders;j. an installation or

structure used for the exploration of natural resources provided that the

activities are carried on for a period or periods of 183 days or more in any

twelve-month period.k. 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 sires, projects or activities, if any) continue for a period of 183

days or more.3. Notwithstanding the

preceding provisions of this Article, the term "permanent

establishment" shall be deemed not to include;a. the use of facilities

solely for the purpose of storage or display of goods or merchandise belonging

to the enterprise;b. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of storage or display;c. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of processing by another enterprise;d. the maintenance of a

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

merchandise, or of 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, for scientific research, or for other activities which have a

preparatory or auxiliary character, for the enterprise.4. Notwithstanding the

provisions of paragraphs 1 and 2, where a person - other than an agent of an

independent status to whom paragraph 5 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 State, ifa. 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 on behalf of the enterprise; orb. he habitually secures

orders in the first-mentioned State, wholly or almost wholly for the enterprise

itself or for the enterprise and other enterprise controlling, controlled by,

or subject to the same common control, as that enterprise.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.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property situated in the other

Contracting State may be taxed in that other State.2. The term

"immovable property" shall have the meaning which it has under the

law of the Contracting State in which the property in question is situated. The

term shall in any case include property accessory to immovable property,

livestock and equipment used in agriculture and forestry, rights to which the

provisions of general law respecting landed property apply, usufruct of

immovable property and right to variable or fixed payments as consideration for

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

natural resources. Ships, boats and aircraft shall not be regarded as immovable

property.3. the provisions of

paragraph 1 shall also 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

independent personal 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 these 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. Subject to the

provisions of paragraph 3, where an enterprise of a Contracting State carries

on business in the other Contracting State through a permanent establishment

situated therein, there shall in each Contracting State be attributed to that

permanent establishment the profits which it might be expected to make if it

were a distinct and separate enterprise engaged in the same or similar

activities under the same or similar conditions and dealing wholly

independently with the enterprise of which it is a permanent establishment. In

any case where the correct amount of profits attributable to a permanent

establishment is incapable of determination or the determination thereof

presents exceptional difficulties, the profits attributable to the permanent

establishment may be estimated on a reasonable basis.3. 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, in accordance with the provisions of an subject to the

limitations of the taxation laws of that State. 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 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, in accordance

with the provisions of and subject to the limitations of the taxation laws of

that State. 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 rights, or buy 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 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.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 enterprise.6. For the purpose 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 not be affected by the

provisions of this article.Article

8AIR

TRANSPORT1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in

international traffic shall be taxable only in that State.2. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.3. the provisions of

paragraph 1 and 2 shall apply to profits derived by the Danish, Norwegian and

Swedish air transport consortium, known as the Scandinavian Airlines System

(SAS), but only to such part of the profit as corresponds to the shareholding

in the consortium held by Det Danske Luftfartsselskab (DDL), the Danish partner

of Scandinavian Airlines System (SAS).4. For the purposes of

this Article, interest on funds connected with the operation of aircraft in

international traffic shall be regarded as profits derived from the operation

of such aircraft, and the provisions of Article 12 shall not apply in relation

to such interest.5. The term "operation

of aircraft" shall mean business of transportation by air of passengers,

mail, livestock or goods carried on by the owners or lessees of charters of

aircraft including the sale of tickets for such transportation on behalf of

other enterprises, the incidental lease of aircraft and any other activity

directly connected with such transportation.Article

9SHIPPING1. Profits derived from

the operation of ships in international traffic shall be taxable only in the

Contracting State in which the place of effective management of the enterprise

is situated.2. Notwithstanding the

provisions of paragraph 1, such profits may be taxed in the other Contracting

State from which they are derived provided that the tax so charged shall not

exceed:a. during the first five

fiscal years after the entry into force of this Convention, 50 per cent., andb. during the subsequent

five fiscal years, 25 per cent., of the tax otherwise imposed by the internal

law of that State. Subsequently, only the provisions of paragraph 1 shall be

applicable.3. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency engaged in the operation of

ships.4. For the purposes of

this Article:a. interest on funds

connected with the operation of ships in international traffic shall be

regarded as income from the operation of such ships and the provisions of

Article 12 shall not apply in relation to such interest andb. profits from the

operation of ships includes profits derived from the use, maintenance of rental

of containers (including trailers and related equipment for the transport of

containers) in connection with the transport of goods or merchandise in

international traffic.Article

10ASSOCIATED

ENTERPRISES1. 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, 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.2.

Where

a Contracting State in the profits of an enterprise of that State and taxes

accordingly profits on which an enterprise of the other Contracting State has

been charged to tax in that other State and the profits so included are profits

which would have accrued to the enterprise of the first mentioned State if the

conditions made between the two enterprises had been those which would have

been made between independent enterprises, then that other State shall make an

appropriate adjustment to the amount of the tax charged therein on those

profits. In determining such adjustment due regard shall be had to the other

provisions of this convention and the competent authorities of the Contracting

State shall, if necessary, consult each other.Article

11DIVIDENDS1. Dividends paid by a

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

Contracting State may be taxed in that other State.2. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident, and according to the laws of that State,

but if the recipient is the is the beneficial owner of the dividends, the tax

so charged shall not exceed:a. 15 percent. Of the

gross amount of the dividends if the beneficial owner is a company which owns

at least 25 percent. Of the shares of the company paying the dividends;b. 25 per cent. Of the

gross amount of the dividends in all other cases.The competent authorities of the Contracting States shall by mutual agreement

settle the mode of application of these limitations.This paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.3. The term

"dividends" as used in this Article means income from 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.4. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,

being a resident of a 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 15, as the case may be, shall

apply.5. 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 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

12INTEREST1. Subject to the

provisions of paragraph 4 of Article 8 and paragraph 4(a) of Article 9,

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 the tax so charged on interest payable

in respect of a loan given or debt created after the date of entry into force

of this Convention, shall not exceed:a. 10 per cent of the

gross amount, if such interest is paid on any loan of whatever kind granted by

a bank, andb. 15 per cent of the

gross amount in all other cases.3. Notwithstanding the

provisions of paragraph 2 of this Article, interest arising in a Contracting

State and derived by the Government of the other contracting State, a political

sub-division or local authority thereof, the Central Bank of that other

Contracting State or any agency of that Government, or by any other resident of

that other Contracting State with respect to debt claims of that resident which

are financed, guaranteed or insured by the Government of that other Contracting

State, a political subdivision or local authority thereof, the Central Bank of

that other Contracting State or any agency of that Government, shall be exempt

from tax in the first-mentioned Contracting State.4. 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. Penalty charges

for late payment shall not be regarded as interest for the purpose of this Article.5. The provisions of

paragraph 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 15, as the case may be, shall apply.6. Interest shall be

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

Contracting State in which the permanent 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

13ROYALTIES

AND 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

recipient is the beneficial owner of the royalties or fees for technical

services the tax so charged shall not exceed 20 per cent of the gross amount of

the royalties or fees for technical services.3. 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 cinematography 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.4. The term "fees

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

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

payments, in consideration for the services of technical or other personnel.5. 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 property or contract in respect of 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 15, as the case may be, shall apply.6. Royalties and fees

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

payer is that State itself, a political 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 pay the royalties or fees for technical

services are borne by such 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

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of royalties or fees for technical

services paid exceeds the amount which would have been paid in the absence of

such relationship, the provisions of this Article shall apply to 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

14CAPITAL

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.With

respect to gains derived by the Danish, Swedish and Norwegian air transport

consortium Scandinavian Airlines System (SAS), the provisions of this paragraph

shall apply only to such proportion of the gains as corresponds to the

participation held in that consortium by Det Danske Luftfartsslskab (DDB), the

Danish Partner of Scandinavian Airlines System (SAS).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 in a company

which is a resident of a Contracting State may be taxed in that State provided

that such shares represent at least 10 per cent. Of the share capital of that

company.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

15INDEPENDENT

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 fiscal year of that other State, only so much of

the income as is derived from his activities performed in that other State may

be taxed in that other State.The term "professional services" includes especially independent

scientific, literary, artistic, educational or teaching activities, as well as the

independent activities of physicians, surgeons, lawyers, engineers, architects,

dentists and accountants.Article

16DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 17, 18, 19 and 20, salaries wages and other similar

remuneration derived by a resident of a contracting State in respect of an

employment shall be taxable only in that State unless the employment is

exercised in the other Contracting State. If the employment is so exercised,

such 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 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; andb. 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 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 respect of an

employment exercised aboard a ship or air craft operated in international

traffic by an enterprise of a Contracting State may be taxed in that State.4. Where a resident of

Denmark derives remuneration in respect of an employment exercised aboard an

aircraft operated in international traffic by the Scandinavian Airlines System

(SAS) consortium, such remuneration shall be taxable only in Denmark.Article

17DIRECTORS'

FEE AND REMUNERATION OF TOP LEVEL MANAGERIAL OFFICIALS1. Directors' fees and

similar payments derived by a resident of a Contracting State in his capacity

as a member of the board of directors of a company which is a resident of the

other Contracting State may be taxed in that other State.2. Salaries, wages and

other similar remuneration derived by a resident of a Contracting State in his

capacity as an official in a top-level managerial position of a company which

is a resident of the other State.Article

18ENTERTAINERS

AND ATHLETES1. Not withstanding the

provisions of Articles 15 and 16, 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,

15 and 16, 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 articles 7, 15 and 16, where income in respect of

personal activities exercised by an entertainer or an athlete in his capacity

as cuh in a Contracting State accrues not to the entertainer or athlete himself

but to another person, that income shall be taxable only in the other

Contracting State, if that other person is supported wholly or substantially

from the public funds of that other State, including any of its political

sub-divisions or local authorities.Article

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 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.2. 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 taxable only in that State.3. The provisions of

Articles 16 and 17 shall apply to remuneration in respect of services rendered

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

sub-division or local authority thereof.Article

20STUDENTS

AND APPRENTICES1. A student or business

apprentice who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State and who is present in

that other State solely for the purpose of his education or training, shall be

exempt from tax in that other State on:a. payments made to him

by persons residing outside that other State for the purposes of his

maintenance, education or training; andb. remuneration from

employment in that other state not exceeding 20,000 Danish Crowns or its equivalent

in Indian currency during any fiscal year of that State provided that such

employment is directly related to his studies or is necessary for the purpose

of his maintenance.2. The benefits of this

Article shall extend only for such period of time as may be reasonable or

customarily required to complete the education or training undertaken, but in

no event shall any individual have the benefits of this Article, for more than

five consecutive years from the date of his first arrival in that other Contracting

State.Article

21OTHER

INCOME1. Subject to the

provisions of paragraph 2, items of income of a resident of a Contracting

State, wherever arising, which are not expressly dealt with in the foregoing

articles of this Convention, shall be taxable only in that Contracting 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 15, 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 this Convention,

and arising in the other Contracting State may be taxed in that other State.Article

22CAPITAL1. Capital represented

by immovable property referred to in Article 6, owned by a resident of a Contracting

State and situated in the other Contracting State and situated in the other

Contracting State, may be taxed in that other State.2. Capital represented

by movable property forming part if the business property of a permanent

establishment which an enterprise of a contracting State has in the other

Contracting State or by 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 may be taxed in that other

State.ARTICLE

23AVOIDANCE

OF DOUBLE TAXATION1. The laws in force in

either of the Contracting States shall continue to govern the taxation of

income and capital in the respective Contracting State except where express

provision to the contrary is made in this Convention.2. Double taxation shall

be avoided in the case of India as follows:a. Where a resident of

India derives income or owns capital which, in accordance with the provisions

of this Convention, may be taxed in Denmark, shall allow as a deduction from

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

in Denmark, whether directly or by deduction; and as a deduction from the tax

on the capital of that resident an amount equal to the capital tax paid in

Denmark. Such deduction in either case shall not, however, exceed that part of

the income tax or capital tax (as computed before the deduction is given) which

is attributable, as the case may be, to the income or the capital which may be

taxed in Denmark. Further, where such resident is a company by which surtax is

payable in India, the deduction in respect of income-tax paid in Denmark 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 or owns capital which, in accordance with the provisions

of this Convention, shall be taxable only in Denmark, India may include this

income or capital in the tax base but shall allow as a deduction from the

income-tax or capital tax that part of the income-tax or capital tax which is

attributable, as the case may be, to the income derived from or the capital

owned in Denmark;3. Double taxation shall

be avoided in the case of Denmark as follows:a. Subject to the

provisions of sub-paragraph (c), where a resident of Denmark derives income or

owns capital which, in accordance with the provisions of this convention, may

be taxed in India, Denmark shall allow:i. as a deduction from

the tax on the income of that resident, an amount equal to the income-tax paid

in India;ii. as a deduction from

the tax on the capital of that resident, an amount equal to the capital tax

paid in India;a.b. such deduction in

either case shall not, however, exceed that part of the income-tax or capital

tax, as computed before the deduction is given, which is attributable, as the

case may be, to the income or the capital which may be taxed in India.c. Where a resident of

Denmark derives income or owns capital which, in accordance with the provisions

of this Convention shall be taxable only in India, Denmark may include this

income or capital in the tax base, but shall allow as a deduction from the

income-tax or capital tax that part of the income-tax or capital tax which is attributable,

as the case may be, to the income derived from or the capital owned in India;d. for the purposes of

the deduction referred to in sub-paragraph (a), the Term "income-tax paid

in India" shall be deemed to include any amount which would have been payable

as Indian tax under the laws of India and in accordance with this Convention

for any year but for an exemption from, or reduction of, tax granted for that

year under:i.

any

other provisions which may be enacted hereafter granting a education in computing

the taxable income or an exemption or reduction in computing the taxable income

or an exemption or reduction from tax which the competent authorities of the

Contracting State agree to be for the purposes of the 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;a.b.c.d.e. For the purposes of

deduction referred to in sub-paragraph (a), Indian tax on interest and

royalties and fees for technical services shall in no case be considered as

having been paid at a rate of less than,i.

in

the case of interest-a. 10 per cent. In the case of banks; andb.15 per cent. In other

cases; andi.ii.

20

percent. In the case of royalties and fees for technical services.Article

24NON-DISCRIMINATION1. The nationals of a

Contracting State shall not be subjected in the other Contracting State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances and under the same conditions are or

may be subjected.2. The taxation of 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 and under the same conditions.3. Nothing contained in

this Article shall be considered as obliging a Contracting State to grant to

persons not resident in that State any personal allowances, relief's,

reductions and deductions for taxation purposes which are by law available only

to persons who are so resident.4. Except where the

provisions of paragraph 1 of Article 10, paragraph 7 of Article 12, or

paragraph 7 of Article 13, apply, interest royalties 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 enterprises, 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.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 requirements 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 which are the subject of this Convention.Article

25MANUAL

AGREEMENT PROCEDURE1. Where a resident of

Contracting State considers that the actions one or both of the Contracting

States result or will result for him in taxation not in accordance with this

Convention, he may, notwithstanding the remedies provided by the domestic laws

of those States, present his case to the competent authority of the Contracting

State of which he is a resident. This case must be presented within three years

of the date of receipt of notice of the action which gives rise to taxation not

in accordance with the Convention.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 an appropriate solution, to resolve the

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

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

Convention. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic laws 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 Convention. They may also consult together for the

elimination of double taxation in cases not provided for in the Convention.4. The competent

authorities of the Contracting States may communicate with each other directly

for the purpose of reaching an agreement in the sense of the preceding

paragraphs. When it seems advisable in order to reach an agreement to have an

oral exchange of opinions, such exchange may take place through a Commission

consisting or representatives of the competent authorities of the Contracting

States.Article

26EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information

(including documents) as is necessary for carrying out the provisions of this

Convention or of the domestic laws of the Contracting States concerning taxes

covered by the Convention, insofar as the taxation there under is not contrary

to the Convention, in particular for the prevention of fraud or evasion of such

taxes. Any information received by a Contracting State shall be treated as

secret in the same manner as information obtained under the domestic laws of

that State. However, if the information is originally regarded as secret in the

transmitting 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, exchange of information regarding tax avoidance.2. The exchange of

information or documents shall be either on a routine basis or on request with

reference to particular cases or both. The competent authorities of the

Contracting State shall agree from time to time on the list of the information

or documents which shall be furnished on a routine basis.3. 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 or administrative practice of

that or of the other Contracting State;b. to supply information

or documents which are 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

or documents which would disclose any trade, business, industrial, commercial

or professional secret or trade process, or information, the disclosure of

which would be contrary to public policy.Article

27ASSISTANCE

IN COLLECTION1. The Contracting

States undertake to lend assistance and support to each other, in the

collection of the taxes to which this convention relates, in the cases where

the taxes are definitely due according to the laws of the State making the

request.2. In the Case of a

request for enforcement or collection, tax claims of either of the Contracting

States which have been finally determined will be accepted for enforcement by

the other Contracting State to which the request is made and collected in that

State in accordance with the laws applicable to the enforcement and collection

of its taxes.3. In the case of Indian

tax, the request will be sent by the Central Board of Direct Taxes to the

Danish Tax Directorate, Stat shattedirektoratet, Postbox 100, DK-3460 Birkerod,

Denmark, and will be accompanied by such certificate as is required by the laws

of India to establish that t