Portuguese - Legal Draft

Double

Taxation Avoidance AgreementAgreement

Between the Government of Republic of India and the Government of The

Portuguese for the avoidance of double taxation and the prevention of fiscal

evasion with respect to taxes on income.Notification No. G. S. R. 542(E) dated 16th June 2000.Whereas the annexed Convention between the Government of the

Republic of India and the Government of the Portuguese Republic for the

avoidance of double taxation and the prevention of fiscal evasion with respect

to taxes on income, has come into force on the 30th April, 2000, thirty days

after the date of exchange of diplomatic notes indicating the completion of

internal legal procedures necessary in each Contracting State for the entry

into force of this Convention in accordance with article 29 of the said

Convention;Now, therefore, in exercise of the powers conferred under section

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

directs that all the provisions of the said Convention shall be given effect to

in the Union of India.ANNEXURECONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE

GOVERNMENT OF THE PORTUGUESE REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND

THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOMETHE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE

PORTUGUESE REPUBLICDESIRING to conclude a Convention for the avoidance of double taxation and

the prevention of fiscal evasion with respect to taxes on income,HAVE agreed as follows:CHAPTER ISCOPE OF THE CONVENTIONArticle 1PERSONAL SCOPEThis Convention shall apply to pet-sons who are residents of one

or both of the Contracting States.Article 2TAXES COVERED1. This

Convention shall apply to taxes on income imposed on behalf of a Contracting

State or of its political or administrative sub-divisions or local authorities

irrespective of the manner in which they are levied.2. There

shall be regarded as taxes on income all taxes imposed on total income or on

elements of income, including taxes on gains from the alienation of movable or

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

enterprises.a. In the

case of the Portuguese Republic:i.

Personal income-tax (imposto sobre o Rendimento das Pessoas

Singulares-IRS);ii.

Corporate Income-tax (imposto sobre o Rendimento das Pessoas

Collectivas-IRC);iii.

Local surtax on corporate income tax (Derrama); (hereinafter

referred to as "Portuguese tax");a.b. In the

case of the Republic of India:The income-tax, including any surcharge thereon;

(hereinafter referred to as "Indian tax").1.2.3.4. 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 any substantial changes which

have been made in their respective taxation laws.CHAPTER IIDEFINITIONSArticle 3GENERAL DEFINITIONS1. For the

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

"Portugal" means the territory of the Portuguese Republic situated in

the European Continent, the archipelagoes of Azores and Madeira, the respective

territorial sea and any other zone in which, in accordance with the laws of

Portugal and international law, the Portuguese Republic has its jurisdiction or

sovereign rights with respect to the exploration and exploitation of the

natural resources of the sea bed and subsoil, and of the superjacent waters;b. the term

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

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

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

and in accordance with international law, including the U. N. Convention on the

Law of the Sea, 1982;c. the terms

"a Contracting State" and "the other Contracting State"

mean Portugal or India, as the context requires;d. the term

"tax" means Portuguese tax or Indian tax as the context requires;e. the term

"person" includes an individual, a company, a body of persons and any

other entity which is treated as a taxable unit under the taxation laws in

force in a Contracting State;a.b.c.d.e.f. the term

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

a body corporate for tax purposes;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

"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;a.b.c.d.e.f.g.h.i. the term

"competent authority" means:i.

In Portugal: The Minister of Finance or the

Director-General of Taxation (Director-General dos Impostos) or their

authorised representative;ii.

In India: The Central Government in the

Ministry of Finance (Department of Revenue) or their authorised representative;a.b.c.d.e.f.g.h.i.j. the term

"national" means:i.

any individual possessing the nationality of a Contracting State:ii.

any legal person, partnership or association deriving its status

as such from the laws in force in a Contracting State;a.b.c.d.e.f.g.h.i.j.k. the term

"fiscal year" means:i.

In the case of Portugal, the civil year as laid down in the IRS

Code or the taxation period as defined in the IRC Code;ii.

in the case of India, "previous year" as defined under

section 3 of the Income-tax Act, 1961.1.2. As

regards the application of the Convention at any time by a Contracting State,

any term not defined therein shall, unless the context otherwise requires, have

the meaning which it has at that time under the law of that State for the

purposes of the taxes to which the Convention applies, any meaning under the

applicable tax laws of that State prevailing over a meaning given to the term

under other laws of that State.Article 4RESIDENT1. 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. This term, however, does not include any person

who is liable to tax in that State in respect only of income from sources in

that State.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 only 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 only 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 only 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 only 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

only of the State in which its place of effective management is situated. If

the State in which its place of effective management is Situated cannot be

determined, then the competent authorities of the Contracting States shall

settle the question by mutual agreement.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 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 sales

outlet; andg. a mine,

an oil or gas well, a quarry or any other place of extraction of natural

resources, including an installation or structure used for the exploration or

exploitation of natural resources only if so used for a period of more than 120

days in a fiscal year.1.2.3. A

building site, construction, installation or assembly project or supervisory

activities in connection therewith, constitutes a permanent establishment only

if it lasts more than nine months.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, display or delivery 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, display or delivery;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 carrying on,

for the enterprise, any other activity of a preparatory or auxiliary character.f. the

maintenance of a fixed place of business solely for any combination of

activities mentioned in sub-paragraphs (a) to (e), provided that the overall

activity of the fixed place of business resulting from this combination is of a

preparatory or auxiliary character.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 6 applies-is acting in a Contracting State

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

shall be deemed to have a permanent establishment in the first-mentioned State,

if -a. he has

and habitually exercises, in that State an authority to conclude contracts on

behalf of the enterprise, unless his activities are limited wholly to the

activities described in paragraph 4;b. he has no

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

of goods or merchandise from which he regularly delivers goods or merchandise

on behalf of the enterprise and some additional activities conducted in that

State on behalf of the enterprise have contributed to the sale of the goods or

merchandise.1.2.3.4.5.6. 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 all independent status,

provided that such persons are acting in the ordinary course of their business.7. 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 6

applies.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 a

permanent establishment of the other.CHAPTER IIITAXATION OF INCOMEArticle 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. 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 rights to variable or fixed payments as consideration

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

natural resources; ships, boats, motor vehicles and aircraft shall not be

regarded as immovable property.3. The

provisions of paragraph 1 shall apply to income derived from the direct use,

letting, or use in any other form of immovable property.4. The

provisions of paragraphs 1 and 3 shall also apply to the income from immovable

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

performance of independent personal services.5. The

foregoing provisions shall also apply to income from movable property, or

income derived from services connected with the use or the right to use the

immovable property, either of which, under the taxation law of the Contracting

State in which the property is situated, is assimilated to income from

immovable property.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 toa. that of

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; ora.b.c. other

business activities carried on in that other State of the same or similar kind

as those effected through that permanenent establishment.1.2. 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

deductions 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, subject to the provisions of the domestic laws of the Contracting

State in which the permanent establishment is situated.4. 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.5. For the

purposes of the preceding paragraphs, the profits to be attributed to the

permanent establishment shall be determined by the same method year by year,

unless there is good and sufficient reason to the contrary.6. 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 8SHIPPING AND AIR TRANSPORT1. Profits

from the operation of ships or aircraft in international traffic shall be

taxable only in the Contracting State of which the enterprise is a resident.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. Whenever

companies from different countries have agreed to carry on an air

transportation business together in the form of a consortium, the provisions of

paragraph 1 shall apply to such part of the profits of the consortium as

corresponds to the participation held in that consortium by a company that is a

resident of a Contracting State.4. For the

purposes of this article, profits from the operation of ships or aircraft in

international traffic shall mean profits derived from the transportation by sea

or air of passengers, mail, livestock or goods carried on by the owner or

lessees or charterers of the ships or aircraft, including profits from:i.

the sale of tickets for such transportation on behalf of other

enterprises;ii.

the incidental lease of ships or aircraft used in such

transportation; andiii.

the use, maintenance or rental of containers (including trailers

and related equipment for the transport of containers) by the enterprise

engaged in international traffic in connection with such transportation.1.2.3.4.5. Interest

on funds generated by the operation of ships or aircraft and arising directly

to a permanent establishment of an enterprise of one Contracting State in the

other Contracting State shall be regarded as profits derived from the operation

of ships or aircraft in international traffic. It is clarified that Such

interest shall not refer to interest on funds representing investments.Article 9ASSOCIATED 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 profits which would,

but for those conditions, have accrued to one of the enterprises, but, by

reason of those conditions, have not so accrued, be included in the profits of

that enterprise and taxed accordingly.1.2. Where a

Contracting State includes in the profits of in 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 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

States shall, if necessary, consult each other.Article 10DIVIDENDS1. 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:a. Where the

dividends are paid by a company which is a resident of Portugal to a resident

of India who is the beneficial owner thereof, the Portuguese tax so charged

shall not exceed:i.

15 per cent. of the gross amount of the dividends; orii.

10 per cent. of the gross amount of the dividends if the

beneficial owner is a company that, for an uninterrupted period of two years

prior to the payment of the dividend, owns directly at least 25 per cent. of

the capital stock (capital social) of the company paying the dividends.a.b. Where the

dividends are paid by a company which is a resident of India to a resident of

Portugal who is the beneficial owner thereof, the Indian tax so charged shall

not exceedi.

15 per cent. of the gross amount of the dividends; orii.

10 per cent. of the gross amount of the dividends if the

beneficial owner is a company that, for an uninterrupted period of two fiscal

years prior to the payment of the dividend, owns directly at least 25 per cent.

of the capital stock of the company paying the dividends.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 term

"dividends" as used in this article means income from shares,

"jouissance" shares or "jouissance" rights, mining shares,

founders' shares or other rights not being debt-claims, participating in

profits, as well as income 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. The term also includes profits attributed under an

arrangement for participation in profits (associacao em participacao).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, carries on business in the

other Contracting State of which the company paying the dividends is a

resident, through a permanent establishment situated therein, or performs in

that other State independent personal services from a fixed base situated

therein, and the holding in respect of which the dividends are paid is

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

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

apply. 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 a tax on the company's

undistributed profits, even if the dividends paid or the undistributed profits

consist wholly or partly of profits or income arising in such other State.Article 11INTEREST1. Interest

arising in a Contracting State and paid to a resident of the other Contracting

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

such interest may also be taxed in the Contracting State in which it arises,

and according to the laws of that State, but if the beneficial owner of the

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

not exceed 10 per cent. of the gross amount of the interest. The competent

authorities of the Contracting States shall by mutual agreement settle the mode

of application of this limitation.3. Notwithstanding

the provisions of paragraph 2, interest arising in a Contracting State shall be

exempted from tax in that State:a. if the

debtor of such interest is that State, a political or administrative

sub-division or a local authority thereof; orb. if

interest is paid to the other Contracting State, a political or administrative

sub-division or a local authority thereof or an institution (including a

financial institution) in connection with any financing granted by them under

an agreement between the Governments of the Contracting States.1.2.3.4. 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 paragraphs 1 and 2 shall not apply if the beneficial owner of the

interest, being a resident of a Contracting State, carries on business in the

other Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other State independent

personal services from a fixed base situated therein, and the debt-claim in

respect of which the interest is paid is effectively connected with such

permanent establishment or fixed base. In such case, the provisions of article

7 or article 14, as the case may be, shall, apply.6. Interest

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

itself, a political or administrative sub-division, thereof, 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.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 12ROYALTIES AND FEES FOR INCLUDED SERVICES1. Royalties

and fees for included 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 or fees for included services may also be taxed in the

Contracting State in which they arise and according to the laws of that State,

but if the beneficial owner of the royalties and fees for included services is

a resident of the other Contracting State, the tax so charged shall not exceed

10 per cent. of the gross amount. The competent authorities of the Contracting

States shall by mutual agreement settle the mode of application of this

limitation.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 cinematograph films or tapes

or any other means of reproduction for use in connection with 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. For the

purposes of this article "fees for included services" means payments

of any kind, other than those mentioned in articles 14 and 15 of this

Convention, to any person in consideration of the rendering of any technical or

consultancy services (including through the provisions of services of technical

or other personnel) if such services:a. are

ancillary and subsidiary to the application or enjoyment of the right, property

or information for which a payment described in paragraph 3 is received, orb. make

available technical knowledge, experience, skill, know-how or processes or

consist of the development and transfer of a technical plan or technical design

which enables the person acquiring the services to apply the technology

contained therein.1.2.3.4.5. Notwithstanding

paragraph 4, "fees for included services" does not include payments:a. for

services that are ancillary and subsidiary, as well as inextricably and

essentially linked, to the sale of property;b. for

services that are ancillary and subsidiary to the rental of ships, aircraft,

containers or other equipment used in connection with the operation of ships or

aircraft in international craft;c. for

teaching in or by educational institutions;d. for

services for the personal use of the individual or individuals making the

payment;e. to an

employee of the person making the payments or to any individual or firm of

individuals (other than a company) for professional services as defined in

article 14;f. for

services rendered in connection with an installation or structure used for the

exploration or exploitation of natural resources referred to in paragraph 2(f)

of article 5;g. for

services referred to in paragraph 3 of article 5.1.2.3.4.5.6. The

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

royalties and fees for included services, being a resident of a Contracting

State, carries on business in the other Contracting State, in which the

royalties and fees for included services arise, through a permanent

establishment situated therein, or performs in that other State independent

personal services from a fixed base situated therein, and the right or property

in respect of which the royalties and fees for included services are paid is

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

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

apply.7. Royalties

and fees for included services shall be deemed to arise in a Contracting State

where the payer is that State itself, a political or administrative

sub-division thereof, a local authority or a resident of that State. Where,

however, the person paying the royalties and fees for included services,

whether he is a resident of a Contracting State or not, has in a Contracting

State a permanent establishment or fixed base in connection with which the

obligation to pay the royalties and fees for included services was incurred,

and such royalties and fees for included services are borne by that permanent

establishment or fixed base, then such royalties and fees for included services

shall be deemed to arise in the State in which the permanent establishment or

fixed base is situated.8. Where, by

reason of a special relationship between the payer and the beneficial owner or

between both of them and some other person, the amount of the royalties and

fees for included services having regard to the use, right or information for

which they are paid, exceeds the amount which would have been agreed upon by

the payer and the beneficial owner in the absence of such relationship, the

provisions of this article shall apply only to the last mentioned amount. In

such case, the excess part of the payments shall remain taxable according to

the laws of each Contracting State, due regard being had to the other

provisions of this Convention.Article 13CAPITAL GAINS1. Gains

derived by a resident of a Contracting State from the alienation of immovable

property referred to in article 6 and situated in the other Contracting State

may be taxed in that other State.2. Gains

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

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

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

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

for the purpose of performing independent personal services, including such

gains from the alienation of such a permanent establishment (alone or 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 enterprise is a resident.4. Gains

from the alienation of shares in the capital stock of a company the property of

which consists directly or indirectly principally of immovable property

situated in a Contracting State may also be taxed in that State. Gains from the

alienation of shares other than those mentioned above in a company which is a

resident of a Contracting State may be taxed in that State.5. Gains

from the alienation of any property other than that referred to in paragraphs

1, 2, 3 and 4 shall be taxable only in the Contracting State of which the

alienator is a resident.Article 14INDEPENDENT PERSONAL SERVICES1. Income

derived by a resident of a Contracting State in respect of professional services

or other activities of an independent 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 State is for a period or periods exceeding in the aggregate

183 days in any twelve months period commencing or ending in the fiscal year

concerned; in that case, only so much of the income as is derived from his

activities performed in the other State may be taxed in that other State.1.2. The term

"professional services" includes especially independent scientific,

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

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

and accountants.Article 15DEPENDENT PERSONAL SERVICES1. Subject

to the provisions of articles 16, 18, and 19, 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 any twelve months period commencing or ending in

the fiscal year concerned, 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.1.2.3. 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 of which the enterprise is a resident.Article 16DIRECTORS' FEESDirectors' fees and other similar payments derived by a resident

of Contracting State in his capacity as a member of the board of directors or

supervisory board (in Portugal, conselho fiscal) or of another similar organ of

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

that other State.Article 17ARTISTES AND SPORTSMEN1. Notwithstanding

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

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

or television artiste, or a musician, or as a sportsman, 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

sportsman in his capacity as such accrues not to the entertainer or sportsman

himself but to another person, that income may, notwithstanding the provisions

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

activities of the entertainer or sportsman are exercised.3. However,

such income shall not be taxed in the State mentioned in paragraph 1 if the

said activities are exercised during a visit to that State by a resident of the

other Contracting State and when such visit is wholly or substantially financed

by that other State, a political or administrative sub-division or a local authority

thereof.Article 18PENSIONSSubject to the provisions of paragraph 2 of article 19, pensions

and other similar remuneration paid to a resident of a Contracting State in

consideration of past employment shall be taxable only in that State.Article 19GOVERNMENT SERVICE1.a. Salaries,

wages and other similar remuneration, other than pension, paid by a Contracting

State or a political or administrative sub-division or a local authority

thereof to an individual in respect of services rendered to that State or

sub-division or authority shall be taxable only in that State;b. However,

such salaries, wages and other similar remuneration shall be taxable only in

the other Contracting State if the services are rendered in that State and the

individual is a resident of that State who:i.

is a national of that State; orii.

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

rendering the services.1.2.a. Any

pension paid by, or out of funds created by, a Contracting State or a political

or administrative sub-division or a local authority thereof to an individual in

respect of services rendered to that State or sub-division or authority shall

be taxable only in that State;b. however,

such pension shall be taxable only in the other Contracting State if the individual

is a resident of, and a national of, that State.1.2.3. The

provisions of articles 15, 16, 17 and 18 shall apply to salaries, wages and

other similar remuneration, and to pensions, in respect of services rendered in

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

administrative sub-division or a local authority thereof.Article 20PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A

professor, teacher or research scholar who is or was a resident of the

Contracting State immediately before visiting the other Contracting State for

the purpose of teaching or engaging in research, or both, at a university,

college, school or other approved institution in that other Contracting State

shall be exempt from tax in that other State on any remuneration for such

teaching or research for a period not exceeding two years from the date of his

arrival in that other State.2. This

article shall not apply to income from research, if such research is undertaken

primarily for the private benefit of a specific person or persons.3. For the

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

resident of a Contracting State if he is resident in that State in the fiscal

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

preceding fiscal year.4. For the

purposes of paragraph 1 "approved institution" means an institution

which has been approved in this regard by the competent authority of the

concerned State.Article 21STUDENTS AND TRAINEESPayments which a student, a business apprentice or trainee 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:a. arise

from sources outside that State;b. are

remuneration from employment in that other State in an amount not exceeding US

$ 3000 per annum during a period not exceeding two years from the day of his

first arrival in that other Contracting State, provided that such employment is

directly related to his studies.Article 22OTHER INCOMES1. Items of

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

in the foregoing articles of this Convention, shall be taxable only in that

State.2. The

provisions of paragraph 1 shall not apply to income, other than income from

immovable property as defined in paragraph 2 of article 6, if the recipient of

such income, being a resident of a Contracting State, carries on business in

the other Contracting State through a permanent establishment situated therein,

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

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

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

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

shall apply.3. Notwithstanding

the provisions of paragraph 1, if a resident of a Contracting State derives

income from sources within the other Contracting State in the form of

lotteries, crossword puzzles, races including horse races, card games and other

games of any sort or gambling or betting of any form or nature whatsoever, such

income may be taxed in the other Contracting State.CHAPTER IVMETHODS FOR ELIMINATION OF DOUBLE TAXATIONArticle 23ELIMINATION OF DOUBLE TAXATION1. The laws

in force in either of the Contracting State will continue to govern the

taxation of income in the respective Contracting States except, where

provisions to the contrary are made in this Convention.2. In the

case of Portugal double taxation shall be eliminated as follows:3. Where a

resident of Portugal derives income which, in accordance with the provisions of

this Convention, may be taxed in India, Portugal shall allow as a deduction

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

paid in India. Such deduction shall not, however, exceed that part of the

income-tax as computed before the deduction is given, which is attributable to

the income which may be taxed in India.4. In the

case of India, double taxation shall be eliminated as follows:5. Where a

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

this Convention, may be taxed in Portugal, India shall allow as a deduction

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

paid in Portugal, whether directly or by deduction at source. Such amount shall

not, however, exceed that part of the income-tax, as computed before the

deduction is given, which is attributable to the income which may be taxed in

Portugal.6. Where in

accordance with any provisions of this Convention income derived by a resident

of a Contracting State is exempt from tax in that State, such State may

nevertheless, in calculating the amount of tax on the remaining income of such,

resident, take into account the exempted income.7. The tax

paid in a Contracting State mentioned in paragraphs 1 and 2 of this article

shall be deemed to include the tax on dividends, interest, royalties and fees

for included services and business profits which would have been payable as

laid down in this Convention but for the legal provisions concerning tax

reduction or exemption of the Contracting States for the encouragement of

genuine investment or economic development. The provisions of this paragraph

shall apply for the first seven years during which this Convention is

applicable. This period may be extended by mutual agreement between the

competent authorities.CHAPTER VSPECIAL PROVISIONSArticle 24NON-DISCRIMINATION1. Nationals

of a Contracting State shall not be subjected in the other Contracting State to

any taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances, in particular with respect to

residence, are or may be subjected. This provision shall, notwithstanding the

provisions of article 1, also apply to persons who are not residents of one or

both of the Contracting States.2. 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. This provision shall not be construed as

obliging a Contracting State to grant to residents of the other Contracting

State any personal allowances, reliefs, and reductions for taxation purposes on

account of civil status or family responsibilities which it grants to its own

residents.3. Except

where the provisions of paragraph 1 of article 9, paragraph 6 of article 11, or

paragraph 4 of article 12, apply, interest, royalties, technical fees and other

disbursements paid by an enterprise of a Contracting State to a resident of the

other Contracting State shall, for the purpose of determining the taxable

profits of such enterprise, be deductible under the same conditions as if they

had been paid to a resident of the first-mentioned State.4. 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 and connected requirements to which other similar

enterprises of the first-mentioned State are or may be subjected.5. The

provisions of this article shall, notwithstanding the provisions of article 2,

apply to taxes of every kind and descriptionArticle 25MUTUAL AGREEMENT PROCEDURES1. 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 24, to that of the Contracting State of which he is a

national. The case must be presented 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. Any agreement reached shall be implemented

notwithstanding any time limits in the domestic laws of the Contracting States.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 this 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, including through a joint commission consisting of themselves or

their representatives, for the purpose of reaching an agreement in the sense of

the preceding paragraphs.Article 26EXCHANGE OF INFORMATION1. The

competent authorities of the Contracting States shall exchange such

information, including authenticated copies of the 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 in so far as

the taxation thereunder is not contrary to the Convention. 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 that State and shall be disclosed only to

persons or authorities (including courts and administrative bodies) concerned

with the assessment or collection of, the enforcement or 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 and administrative

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

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

the administration of that or of the other Contracting State;c. to supply

information which 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 27COLLECTION ASSISTANCE1. The

Contracting States agree to provide mutual assistance and support for

recovering, in accordance with the respective provisions and rules of their

legislations or regulations, the taxes covered by this Convention, when these

amounts are definitely due under the laws and regulations of the Contracting

State seeking the assistance for such recovery.2. The

competent authorities of the Contracting States shall consult each other to

decide the mode of application of this article in case they consider the

rendering of assistance for collection of taxes feasible.Article 28MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTSNothing in this Convention shall affect the fiscal privileges of

members of diplomatic missions and consular posts under the general rules of

international law or under the provisions of special agreements.Article 29ENTRY INTO FORCE1. This

Convention shall enter into force on the thirtieth day after the date on which

diplomatic notes indicating the completion of internal legal procedures

necessary in each Contracting State for the entry into force of this Convention

have been exchanged.2. This

Convention shall apply:a. In

Portugal:i.

in respect of taxes withheld at source, the fact giving rise to

them appearing on or after the first day of January in the year next following

the year in which his Convention enters