Finland - Legal Draft

Double Taxation

Avoidance AgreementConvention Between

The Republic Of India And The Republic Of Finland For The Avoidance Of Double

Taxation With Respect To Taxes On Income And On CapitalNotification

No.G.S.R. 786(E),dtd. 20.11.1984.Whereas

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

Government of the Republic of Finland for avoidance of double taxation with

respect to taxes on income and on capital has come into force on the

notification by both the Contracting States to each other of the compliance of

the constitutional requirements, as required by Paragraph 1 of Article 29 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 REPUBLIC OF FINLAND FOR THE AVOIDANCE OF

DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITALThe

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

Finland,Desiring

to conclude a new Convention for the avoidance of double taxation 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 which are

the subject of the present Convention are:a. in Finland:i.

the

state income and capital tax;ii.

the

communal tax;iii.

the

church taxiv.

the

sailors' tax; andv.

the

tax withheld at source from non-residents' income;(hereinafter referred to as " Finnish tax "),a.b. in India:i.

the

income-tax including any surcharge thereon;ii.

the

surtax; andiii.

the

wealth tax;(hereinafter referred to as " Indian tax ")1.2. The Convention shall

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

after the date of signature of the Convention in addition to, or in place of,

the existing taxes. The competent authorities of the Contracting States shall

notify each other of significant changes which have been made in their

respective taxation laws.ARTICLE

3GENERAL

DEFINITIONS1. For the purposes of

this Convention, unless the context otherwise requires:a. the term "

person " includes an individual a company and any other body of persons;b. the term "

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

body corporate for tax purposes;c. the term "

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;d. the term "

national " means any individual possessing the nationality of a

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

its status as such from the laws in force in a Contracting State;e. the term "

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

by an enterprise a Contracting State, except when the ship or aircraft is

operated solely between places in the other Contracting State;f. the term "

competent authority " means:i.

in

Finland, the Ministry of Finance or its authorised representative;ii.

in

India, the Ministry of Finance (Deptt of Revenue).1.2. 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 laws of that State Concerning the taxes to which the Convention

applies.ARTICLE

4FISCAL

DOMICILE1. For the purposes of

this Convention, the term " resident of a Contracting State " means

any person who, under the laws of that State is liable to tax therein by reason

of his domicile, residence, place of management or any other criterion of a

similar nature.2. Where by reason of

the provisions of paragraph 1 an individual is a resident of both Contracting

States then its 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 interest);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.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 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 an enterprise is wholy 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, a quarry or

any other place of extraction of natural resources;g. warehouse; andh. premises used as a

sales outlet or for receiving or soliciting orders. 3. The term "

permanent establishment " also includes:1.2.3.a. a building site, a

construction, assembly or installation project or supervisory activities in

connection therewith, but only where such site, project or activities continue

for a period of more than six months;b. a building site, a

construction, assembly or installation project or supervisory activity being

incidental to the sale of machinery of equipment, where such site, project or

activity 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 or equipment.1.2.3.4. 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 or for scientific research, being activities solely of a

preparatory or auxiliary character in the business of the enterprise.1.2.3.4.5. Notwithstanding the

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

independent status to whom paragraph 7 applies---is acting in Contracting State

on behalf of an enterprise of the other Contracting State that enterprise shall

be deemed to have a permanent establishment in the first-mentioned Contracting

State in respect of any activities which that person undertakes for the

enterprise, if such a person:a. has and habitually

exercises in that State an authority to conclude contracts in the name of the

enterprise, unless the activities of such person are limited to those mentioned

in paragraph 4 which, if exercised through a fixed place of business would not

make this fixed place of business a permanent establishment under the

provisions of that paragraph; orb. has no such

authority, but habitually maintains in the first-mentioned State a stock of

goods or mer chandise from which he regularly delivers goods or merchandise on

behalf of the enterprise.1.2.3.4.5.6. Notwithstanding the

preceding provisions of this Article, an insurance enterprise of a Contracting

State shall, except in regard to re-insurance, be deemed to have a permanent

establishment in the other Contracting State if it collects premiums in the

territory of that other State or insures risks situated therein through a

person other than an agent of an independent status to whom paragraph 7

applies.7. An enterprise shall

not be deemed to have a permanent establishment in a Contracting State merely

because it carries on business in that 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 on behalf of that

enterprise, he shall not be considered an agent of an independent status within

the meaning of this paragraph.8. 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 State (whether through a permanent establishment or

otherwise), shall not of itself constitute either company or a permanent

establishment of the other.ARTICLE

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property (including income from agriculture

or forestry) situated in the other Contracting State may be taxed in that other

State.2.a. The term "

immovable property " shall, subject to the provisions of sub-paragraphs

(b) and (c) have the meaning which it has under the law of the Contracting

State in which the property in question is situated.b. The term "

immovable property " 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.c. Ships and aircraft

shall not be regarded as immovable property.1.2.3. 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. Where the ownership

of shares or other corporate rights in a company entitles the owner of such

shares or corporate rights to the enjoyment of immovable property held by the

company, the income from the direct use letting, or use in any other form of

such right of enjoyment may be taxed in the Contracting State in which the

immovable property is situated.5. The provisions of

paragraph 1 and 3 shall also apply to the income from immovable property of an

enterprise and to income from immovable property used for the performance of

independent personal services.ARTICLE

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. 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.3. In determining the

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

expenses which are incurred for the purposes 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,

which are allowed under the provisions of the domestic law of the Contracting

State in which the permanent establishment is situated. 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, for specific services performed or for

management, or, except in the case of a banking enterprise, by way of interest

on money lent to the permanent establishment. Likewise no account shall be

taken, in determining 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 for specific

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

enterprise, by way of interest on money lent to the head office of the

enterprise or any of its other offices.4. Insofar 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 appointment 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. 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 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. Income derived by an

enterprise of a Contracting State from the operation of aircraft, in

international traffic shall be taxable only in that State.2. Paragraph 1 shall

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

engaged in air transport.3. For the purposes of

this Article:a. interest on funds

connected with the operation of aircraft in international traffic shall be

regarded as income from the operation of such aircraft; andb. the term "

operation of aircraft " shall include transportation by air of persons,

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

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

other enterprises, the incidental lease of aircraft on a charter basis and any

other activity directly, connected with such transportation.ARTICLE

9SHIPPING1. 1.Income of an

enterprise of a Contracting State derived from the other Contracting State from

the operation of ships in international traffic may be taxed in that other

State, but the tax chargeable in that other State on such income shall be

reduced by an amount equal to fifty per cant of such tax.2. 2.Paragraph 1shall

not apply to profits arising as a result of coastal traffic.ARTICLE

10ASSOCIATED

ENTERPRISESWherea. 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

11DIVIDENDS1. Dividends paid by a

company which is 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 law of the State, but

the tax so charged shall not exceed:a. 15 per cent of the

gross amount of the dividends if the recipient is a company (other than a

partnership) which holds directly at least 10 per cent of the capital of the

company paying the dividends;b. 25 per cent of the

gross amount of the dividends in all other cases.This paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.1.2.3. The provisions of

sub-paragraph (a) of paragraph 2 would apply in respect of dividends arising

out of investments made after the date of signature of this Convention.4. 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.5. The provisions of

paragraphs 1 and 2 shall not apply if the recipient 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 a case the provisions

of Article 7 or Article 15, 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 insofar as such dividends are paid to a resident of

that other State or insofar 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

12INTEREST1. Interest arising in a

Contracting State and paid to a resident of the other Contracting State shall

be taxable only in the first-mentioned State, provided, however, the tax so

charged shall not exceed 15 per cent of the gross amount of the interest.2. The provisions of

paragraph 1 would apply in respect of interest payable arising out of

investments made after the date of signature of this Convention.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 and debentures. Penalty charges for late

payment shall not be regarded as interest for the purpose of this Article.4. The provisions of

paragraph 1 shall not apply if the recipient 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.5. Interest shall be

deemed to arise in a Contracting State when the payer is that state itself, a

political sub-division, a statutory body, 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 recipient 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 recipient 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; provided

that where the royalties or fees for technical services are paid to a resident

of the other Contracting State who is the beneficial owner thereof and they are

paid in respect of a right or property which is first granted, or under a

contract which is signed, after the date of signature of this Convention, the

tax so charged shall not exceed 30 per cent of the gross amount of the

royalties and fees for technical services.3. The term "

royalties " as used in this Article means payments of any kind including

rentals received as a consideration for the use of, or the right to use:a. any patent,

trademark, design or model, plan, secret formula or process;b. industrial commercial,

or scientific equipment or information concerning industrial, commercial or

scientific experience;c. any copyright of

literary, artistic or scientific work, cinematograph films or tapes for radio

or television broadcasting;but does not include royalties or other amounts paid in respect of the

operation of mines or quarries or of the extraction or removal or natural

resources.1.2.3.4. 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 individuals for independent personal services mentioned in

Article 15, in consideration for services of a managerial, technical or

consultancy nature, including the provision of 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 sub-division, a statutory body, 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 obligation to make the payments

was incurred, and such payments are borne by such permanent establishment or

fixed base, then such royalties or fees for technical services shall be deemed

to arise in the State in which the permanent establishment or fixed base is

situated.7. Where, by reason of a

special relationship between the payer and the recipient or between both of

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

services exceeds for whatever reason, the amount which would have been paid in

the absence of such relationship, the provisions of this Article shall apply

only to the last-mentioned amount. In such a case, the excess part of the

payments shall remain taxable according to the law of each Contracting State,

due regard being had to the other provisions of this Convention.ARTICLE

14CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

referred to in paragraph 2 of Article 6 and situated in the other Contracting

State may be taxed in that other State.2. Gains derived by a

resident of a Contracting State from the alienation of shares or other

corporate rights may be taxed in the Contracting State in which the company is

registered.3. 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 with the

whole enterprise) or of such fixed base, may be taxed in that other State.4. 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 in which the place of effective

management of the enterprise is situated.ARTICLE

15INDEPENDENT

PERSONAL SERVICES1. Income derived by a

resident of a Contracting State in respect of professional services or other

independent activities of a similar character may be taxed in that State. Such

income may also be taxed in the other Contracting State if such services are

performed in that other State and if:a. he is present in that

other State or a period or periods aggregating 90 days or more in the relevant

fiscal year; orb. he has a fixed base

regularly available to him in that other State for the purpose of performing

his activities;but in each case only so much of the income as is attributable to those

services.1.2. 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, 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 therefrom may be taxed in that other State.2. Notwithstanding the

provisions of paragraph 1, remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first-mentioned State if:a. the recipient is

present in the other State for a period or periods not exceeding in the

aggregate 183 days in the calendar year concerned, andb. the remuneration is

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

anc. 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 aircraft operated in international

traffic, may be taxed in the Contracting State in which the place of effective

management of the enterprise is situated.ARTICLE

17DIRECTORS'

FEESDirectors'

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 any other similar organ

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

that other State.ARTICLE

18ARTISTES

AND ATHLETES1. Notwithstanding 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 an 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. The provisions of

paragraphs 1 and 2 shall not apply if the visit to a Contracting State of the

entertainer or the athelete is directly or indirectly supported, wholly or

substantially, from the public funds of the other Contracting State, including

a political sub-division, of a statutory body or a local authority of that

other State.ARTICLE

19PENSIONS

AND SOCIAL SECURITY PAYMENTSSubject

to the provisions of paragraph 2 of Article 20 pensions and other similar

remuneration in consideration of past employment paid by a resident of, and

pensions and other payments made under a public scheme which is part of the

social security system of a Contracting State to a resident of the other

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

20GOVERNMENT

SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State or a Statutory body or a local

authority thereof to an individual in respect of services rendered to that

State or body or authority shall be taxable only in that State.b. However, such

remuneration shall be taxable only in the Contracting State of which the

individual is a resident if the services are rendered in that State and the

individual: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 statutory body or a local

authority thereof to an individual in respect of services rendered to that

State or body or authority shall be taxable only in that State.b. However, such pension

shall be taxable only in the Contracting State of which the individual is a

resident if he is a national of that State.1.2.3. The provisions of

Article 16, 17 and 19 shall apply to remuneration and pensions in respect of

services rendered in connection with it business carried on by a Contracting

State or a statutory body or a local authority thereof.ARTICLE

21STUDENTS

AND APPRENTICES1. Payments which a

student or business, technical agricultural or forestry apprentice who is or

was immediately before visiting a Contracting State a resident of the other

Contracting State and who is present in the first-mentioned state solely for

the purpose of his education or training receives for the purpose of his

maintenance, education or training shall not be taxed in that State, provided

that such payments arise from sources outside that State.2. A student at a

university or other institution for higher education in a Contracting State, or

a business, technical, agricultural or forestry apprentice who is or was

immediately before visiting the other Contracting State a resident of the

first-mentioned State and who is present in the other Contracting State for a

period or periods not exceeding in the aggregate 183 days in the calendar year

concerned, shall not be taxed in that other State in respect of remuneration

for services rendered in that State, provided that the services are in

connection with his studies or training and the remuneration constitutes

earnings necessary for his maintenance. If he is present in that other State

for a period or periods agregating 183 days or more in the calendar year

concerned, he shall be entitled to the same exemptions, reliefs or reductions

in respect of taxes as are granted to residents of that State.ARTICLE

22OTHER

INCOMEItems

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

with in the foregoing Articles of this Convention shall be taxable only in that

State except that, if such income is derived from sources in the other

Contracting State it may also be taxed in accordance with the law of that other

State.ARTICLE

23CAPITAL1. Capital represented

by immovable property referred to in paragraph 2 of Article 6, owned by a

resident of a Contracting State and situated in the other Contracting State,

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

by shares or other corporate rights referred to in paragraph 4 of Article 6 and

owned by a resident of a Contracting State may be taxed in the Contracting

State in which the immovable property held by the company is situated.3. Capital represented

by 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 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.4. Capital represented

by ships and aircraft operated in national traffic, and by movable property

pertaining to the operation of such ships and aircraft, shall be taxable only

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

enterprise is situated.5. Elements of capital

of a resident of a Contracting State not dealt with in the foregoing paragraphs

of this Article shall be taxable only in that State except that, if such

elements are situated in the other Contracting State they may also be taxed in

accordance with the law of that other State.ARTICLE

24ELIMINATION

OF DOUBLE TAXATION1. .In Finland double

taxation shall be eliminated as follows:a. Where a resident of

Finland derives income or owns capital which in accordance with the provisions

of this Convention may be taxed in India., Finland shall, subject to the

provisions of sub-paragraph (b), allow:i.

as

a deduction from the tax on income of that person, as amount equal to the tax

on income paid in India.ii.

as

a deduction from the tax on capital of that person, an amount equal to the tax on

capital paid in India.Such deduction in either case shall not however, exceed that part of the tax on

income or on capital, 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.a.b. Dividends paid by a

company which is a resident of India to a company which is a resident of

Finland shall be exempt from Finnish tax to the extent that the dividends would

have been exempt from tax under Finnish taxation law if both companies had been

residents of Finland.c. Notwithstanding any

other provision of this Convention, an individual who is a resident of India

and under Finnish taxation law with respect to the Finnish taxes referred to in

Article 2 also is regarded as a resident of Finland may be taxed in Finland.

However, Finland shall allow any Indian tax paid on the income or the capital

as a deduction from Finnish tax in accordance with the provisions of

sub-paragraph (a). The provisions of ibis sub-paragraph shall apply only to

nationals of Finland.d. Where in accordance

with any provisions of the Convention income derived or capital owned by a

resident of Finland is exempt from tax in Finland, Finland may nevertheless, in

calculating the amount of tax on the remaining income or capital of such

resident, take into account the exempted income or capital.1.2. For the purposes of

paragraph 1, taxes paid in India shall be deemed to include any amount which

would have been payable as Indian tax but for a deduction allowed in computing

the taxable income or an exemption or reduction of tax granted for that year

under:a. sections 10(4),

10(4A), 10(6)(viia), 10(15)(iv), 32A, 33A, 35B, 35C, 80HH, 80I, 80J and 80K of

the Income-tax Act, 1961 (No. 43 of 1961), so far as they were in force on and

have not been modified since the date of signature of this Convention, or have

been modified-only in minor respects so as not to affect their general

character; orb. any other provision

which may subsequently be enacted granting an exemption or reduction from tax

which is agreed by the competent authorities of the two contracting States.1.2.3. In India double

taxation shall be eliminated as follows:a. The amount of Finish

tax payable, under the laws of Finland and in accordance with the provisions of

this Convention, whether directly or by deduction, by a resident of India, in

respect of income which has been subjected to tax both in India and Finland

shall be allowed as a credit against the Indian tax payable in respect of such

income but in an amount not exceeding that proportion of Indian tax which such

income bears to the entire income chargeable to Indian tax.b. For the purposes of

the credit referred to in sub-para graph (a) above, where the resident of India

is a company by which surtax is payable, the credit to be allowed against the

Indian tax shall be allowed in the first instance against the income-tax

payable by the company in India and, as to the balance, if any, against the

surtax payable by it in India.Provided

that income which in accordance with the provisions of this Convention is not

to be, subjected to tax may be taken into account in calculating the rate of

tax to be imposed.ARTICLE

25NON-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 are or may be subjected.2. 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. This

provision shall not be construed as preventing a Contracting State from

charging profits of a permanent establishment which in 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, nor as being in conflict with the provisions

of paragraph 3 of Article 7.3. Nothing contained in

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

individuals not resident in that State any personal allowances, reliefs and

reductions, for taxation purposes which are by law available only to

individuals, who are so resident.4. Nothing contained in

this Article shall be construed as obliging a Contracting State to compute the

shipping profits in the same manner as is done in the case of enterprises of

that 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 State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation connected requirements to which other similar

enterprises of the first-mentioned State are or may be subjected.6. The provisions of

this Article shall apply to all taxes which are covered by this Convention.ARTICLE

26MUTUAL

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

Convention, 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 25, to that of the Contracting State of which he is a national. The

case must be present within three years from the first notification of the

action resulting in taxation not in accordance with the provisions of 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 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 Convention.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. In particular, they may consult together for the

purpose of reaching an agreement on the allocation of income in cases referred to

in Article 10. They may also consult together for the elimination of double

taxation in cases not provided for in the Convention.4. In the event the

competent authorities reach an agreement referred to in paragraphs 2 and 3,

taxes shall be imposed on such income, and refund or credit of taxes shall be

allowed by the Contracting States in accordance with such agreement. It shall

be implemented notwithstanding any time limits in the domestic law of the

Contracting States.5. The competent

authorities of the Contracting States may communicate with each other directly

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

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

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

consisting of representatives of the competent authorities of the Contracting

States.ARTICLE

27EXCHANGE

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 thereunder is not contrary to

the Convention or for the prevention of fraud or evasion of taxes. The exchange

of information is not restricted by Article 1. Any information received by a

Contracting State shall be treated as secret in the same manner as information

obtained under the domestic laws of the State and shall be disclosed only to

persons or authorities (including courts and administrative bodies involved in

the assessment or collection of the enforcement of prosecution in respect of,

or the determination of appeals in relation to, the taxes covered by the

Convention. Such persons or authorities shall use the information only for such

purposes. They may disclose the information in public court proceedings or in

judicial decisions.2. In no case shall the

provisions of paragraph 1 be construed so as to impose on a Contracting State

the obligation:a. to carry out

administrative measures at variance with the laws of the administrative

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

which is not obtainable under the laws or in the normal course of the administration

of that or of the other Contracting States;c. to supply information

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 (order, public).ARTICLE

28DIPLOMATIC

AGENTS AND CONSULAR OFFICERSNothing

in the Convention shall affect the fiscal privileges of diplomatic agents or

consular officers under the general rules of international law or under the

provisions of special agreements.ARTICLE

29ENTRY

INTO FORCE1. The Government of the

Contracting States shall notify each other that the constitutional requirements

for the entry into force of this Convention have been complied with.2. The Convention shall

enter into force thirty days after the date of the later of the notifications

referred to in paragraph 1 and its provisions shall have effect:a. in Finland:i.

in

respect of taxes withheld at source, to income derived on or after 1 January in

the calendar year next following the year in which the Convention enters into

force;ii.

in

respect of other taxes on income, and taxes on capital, to taxes chargeable for

any taxable year beginning on or after 1 January, in the calendar year next

following the year in which the Convention enters into force;a.b. in India, in respect

of taxes for assessment years beginning on