Romania Legal Draft Template

Double Taxation

Avoidance AgreementCONVENTION BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE SOCIALIST

REPUBLIC OF ROMANIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOMENotification

No. G. S. R. 80(E), dtd. 08.02.1988.Notification

No.7754Whereas

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

Government of the Socialist Republic of Romania for the avoidance of double

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

has come into force on the 14th November, 1987, on the exchange of the

Instruments of Ratification by both the contracting States, as required by

paragraph 1 of Article 31 of the said Convention;Now,

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

Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act,

1964 (7 of 1964), 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

SOCIALIST REPUBLIC OF ROMANIA 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 Socialist

Republic of Romania desiring to conclude a Convention for the avoidance of

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

income and to promote and strengthen the economic relations between the two

countries on the basis of equality in rights and reciprocal advantage.Have

agreed as follows:Article

1PERSONAL

SCOPEThis

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

Contracting States.Article

2TAXES

COVERED1. The taxes to which

this Convention shall apply are:a. In the case of India:1. Income-tax and any

surcharge thereon; and2. Surtax;(hereinafter

referred to as "Indian tax").a.b. In the case of

Romania:1. the tax on incomes

derived by individuals and corporate bodies;2. the tax on the

profits of joint companies constituted with the participation of some Romanian

economic organisations and some foreign partners; and3. the tax on income

realised from agricultural activities;(hereinafter

referred to as "Romanian tax").1.2. The Convention shall

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

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

in addition to, or in place of, the taxes referred to in paragraph 1.3. The competent

authorities of the Contracting States shall notify to each other any

significant changes which are made in their respective taxation laws which are

the subject of this Convention and furnish copies of relevant enactments and

regulations.Article

3GENERAL

DEFINITIONS1. In this Convention,

unless the context otherwise requires:a. the term

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

and air space 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;b. the term

"Romania" used in a geographical sense, means the territory of the

Socialist Republic of Romania including the territorial sea and the continental

shelf as well as any other area beyond the territorial waters of Romania where

Romania exercises sovereign rights, in accordance with the international law

and with its own law concerning the exploration and exploitation of the

natural, biological and mineral resources existing in the sea, waters, seabed

and subsoil of these watersc. the terms "a

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

or Romania as the context requires;d. the term

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

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

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

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

"person" shall have the meaning assigned to it in the taxation laws

in force in the respective Contracting States;f. the term

"company" means any body corporate, including a joint company which

is incorporated under the Romanian law or any entity which is treated as a

company under the taxation laws of the respective Contracting States;g. 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;h. the term

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

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

authorised representative, and in the case of Romania the Ministry of Finance

or its authorised representative;i. the term

"national" means:- in the case of India, any individual possessing

the nationality of India and any legal person, partnership or association

deriving its status from the laws in force in India; in the case of Romania,

any individual possessing the citizenship of Romania and any legal person,

partnership or association deriving its status from the laws in force in

Romania:j. the term "a

political sub-division" means a political sub-division in India;k. the term "an

administrative territorial unit" means an administrative territorial unit

in Romania;l. 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.1.2. In the application of

the provisions of this Convention by one of the Contracting States, any term

not defined herein shall, unless the context otherwise requires, have the

meaning which it has under the laws in force in that State relating to the

taxes which are the subject of this Convention.Article

4FISCAL

DOMICILE1. For the purposes of

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

person who is a resident of that State in accordance with the taxation laws of

that State.2. Where by reason of

the provision of paragraph 1, an individual is a resident of both Contracting

States, then, his residential status for the purposes of this Convention shall

be determined in accordance with the following rules:-a. He shall be deemed to

be a resident of the Contracting State in which he has a permanent home

available to him. If he has a permanent home available to him in both

Contracting States, he shall be deemed to be a resident of the Contracting

State with which his personal and economic relations are closer (hereinafter

referred to as his "centre of vital interests");b. If the Contracting

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

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

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

habitual abode;c. If he has an habitual

abode in both Contracting States or in neither of them, he shall be deemed to

be a resident of the Contracting State of which he is a national;d. If he is a national

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

the Contracting States shall 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

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

5PERMANENT

ESTABLISHMENT1. For the purposes of

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

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

partly carried on.2. The term

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

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

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

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

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

carried on;i. a premises used as a

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

structure used for the exploration of natural resources;k. a building site or

construction, installation or assembly project or supervisory activities in

connection therewith, where such site, project or supervisory activity

(together with other such sites, projects or activities, if any) continues for

a period of more than six months, or where such project or supervisory

activity, being incidental to the sale of machinery or equipment, continues for

a period not exceeding six months and the charges payable for the project or

supervisory activity exceed 10 per cent. of the sale price of the machinery or

equipment.1.2.3. Notwithstanding the

preceding provisions of this article, the term "permanent

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

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

to the enterprise;b. the maintenance of a

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

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

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

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

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

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

fixed place of business solely for the purpose of advertising, for the supply

of information, for scientific research, or for similar activities which have a

preparatory or auxiliary character for the enterprise;f. the selling of goods

or merchandise belonging to the enterprise displayed in an occasional temporary

fair or exhibition in the process of closing down of such fair or exhibition;g. project or

supervisory activity, being incidental to sale of machinery or equipment,

carried on by an enterprise other than the seller of machinery or equipment and

not continuing for a period exceeding six months.However,

the provisions of sub-paragraphs (a) to (g) shall not be applicable where the

enterprise maintains any other fixed place of business in the other Contracting

State for any purposes other than the purposes specified in the said

sub-paragraphs.1.2.3.4. Notwithstanding the

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

independent status to whom paragraph 5 applies-is acting in a Contracting State

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

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

if:a. he has and habitually

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

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

merchandise for the enterprise;b. he has no such

authority, but habituallty 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; orc. he habitually secures

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

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

or subject to the same common control as, that enterprise.1.2.3.4.5. An enterprise of a

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

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

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

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

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

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

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

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

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

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

a company which is a resident of the other Contracting state, or which carried

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

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

permanent establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income from immovable

property may be taxed only in the Contracting State in which such property is

situated.2. The term

"immovable property" shall be defined in accordance with the law and

usage of the Contracting State in which the property 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, oil wells, quarries and other places of

extraction of natural resources. Ships and aircraft shall not be regarded as

immovable property.3. The provisions of

paragraph 1 shall apply to income derived from the direct use, letting, or use

in any other form of immovable property.4. 4.The provisions of

paragraphs 1 and 3 shall also apply to 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. In

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

establishment is incapable of determination or the determination thereof

presents exceptional difficulties, the profits attributable to the permanent establishment

may be estimated on a reasonable basis.3. In the determination

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

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

permanent establishment including executive and general administrative expenses

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

situated or elsewhere, in accordance with the provisions of the taxation laws

of that State. However, no such deduction shall be allowed in respect of

amounts, if any, paid (otherwise than towards reimbursement of actual expenses)

by the permanent establishment to the head office of the enterprise or any of

its other offices, by way of royalties, fees or other similar payments in

return for the use of patents, know-how or other rights, or by way of

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

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

lent to the permanent establishment. Likewise, no account shall be taken, in

the determination of the profits of a permanent establishment, for amounts

charged (otherwise than towards reimbursement of actual expenses), by the

permanent establishment to the head office of the enterprise or any of its

other offices, by way of royalties, fees or other similar payments in return

for the use of patents, know-how or other rights, or by way of commission or

other charges for specific services performed or for management, or except in

the case of a banking enterprise, by way of interest on moneys lent to the head

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

8AIR

TRANSPORT1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in

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

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

joint business or an international operating agency.3. For the purposes of

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

international traffic shall be regarded as profits derived from the operation

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

to such interest.4. The term

"operation of aircraft" shall mean business of transportation by air

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

charterers of aircraft, including the scale of tickets for such transportation

on behalf of other enterprises, the incidental lease of aircraft and any other

activity directly connected with such transportation.Article

9SHIPPING1. Profits derived by an

enterprise of a Contracting State from the operation of ships in international

traffic shall be taxable only in that State.2. Notwithstanding the

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

Contracting State if the shipping activities connected with the operation of

ships in international traffic are carried on in that other State, but the tax

so charged shall not exceed 2.50 per cent. of the gross amount payable in

respect of operation of ships in that other State.3. The provisions of

paragraphs 1 and 2 shall also apply to profits from the participation in a

pool, a joint business or an international operating agency engaged in the

operation of ships.4. For the purposes of

this article, the gross amount payable in respect of operation of ships in a

Contracting State shall mean the aggregate of the following amounts, namely:-a. the gross amount

payable on account of carriage of passengers, livestock, mail or goods shipped

at a port or ports in that Contracting State;b. interest arising in

that Contracting State on funds connected with the operation of ships in international

traffic; andc. the gross amount

payable in that State on account of the use, maintenance or rental of

containers (including trailers and related equipment for the transport of

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

international traffic. The provisions of article 12 shall not apply in relation

to interest referred to in (b) above.1.2.3.4.5. In determining the

income of an enterprise of a Contracting State for the purposes of taxation in

the other Contracting State, no deduction shall be allowed in respect of any

loss or depreciation allowance admissible to that enterprise for any earlier "previous

year" or "calendar year", as the case may be.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 only the 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 laws of that State, but

if the recipient is the beneficial owner of the dividends, the tax so charged

shall not exceed:a. 15 per cent. of the

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

at least 25 per cent. of the shares of the company paying the dividends;b. 20 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 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. In this context, the profits distributed by

Romanian Joint Companies to the capital subscribers are assimilated to

dividends.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 cases, the provisions

of article 7 or article 16 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 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

12INTEREST1. 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 recipient is the beneficial

owner of the interest, the tax so charged shall not exceed 15 per cent. of the

gross amount of the interest.3. Notwithstanding the

provisions of paragraph 2,-a. interest arising in a

Contracting State shall be exempt from tax in that state provided it is derived

and beneficially owned by:i.

the

Government, a political sub-division, an administrative territorial unit, or a

local authority of the other Contracting State; orii.

the

Central Bank of the other Contracting State;a.b. interest arising in a

Contracting State shall be exempt from tax in that state if it is beneficially

owned by a resident of the other Contracting State and is derived in connection

with a loan or credit extended or endorsed by:i.

in

the case of Socialist Republic of Romania, BANCA ROMANA DE COMERT EXTERIOR to

the extent such interest is attributable to financing of exports and imports

only;ii.

in

the case of India, the Export-Import Bank of India (Exim Bank), to the extent

such interest is attributable to financing of exports and imports only;iii.

any

institution of a Contracting State in charge of public financing of external

trade;iv.

any

other person provided that the loan or credit is approved by the Government of

the first-mentioned Contracting State.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 cases, the provisions of article 7 or article 16, as the

case may be, shall apply.6. Interest shall be

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

itself, a political sub-division, an administrative territorial unit, a local

authority or a resident of that State. Where, however, the person paying the

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

Contracting State a permanent establishment or a fixed base in connection with

which the indebtedness on which the interest is paid was incurred, and such

interest is borne by such permanent establishment or fixed base, then such

interest shall be deemed to arise in the Contracting State in which the

permanent establishment or fixed base is situated.7. Where by reason 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 to the last-mentioned amount. In

such cases, 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

13COMMISSION1. Commission 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 commission

may be taxed in the Contracting State in which it arises and according to the

law of that State, but the tax so charged shall not exceed 5 per cent. of the

amount of the commission. The competent authorities of the Contracting State

shall, by mutual agreement, settle the mode of application of this limitation.3. The term

"commission" as used in this article means a payment made to a

broker, a general commission agent or to any other person assimilated to such a

broker or agent by the taxation law of the Contracting state in which such

payment arises.4. The provisions of

paragraphs 1 and 2 shall not apply if the recipient of the commission, being a

resident of a Contracting State, has in the other Contracting State in which

the commission arises a permanent establishment with which the activity giving

rise to the commission is effectively connected. In such a case, the provisions

of article 7 shall apply.5. Commission shall be

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

political sub-division, an administrative territorial unit, a local authority

or a resident of that State. Where, however, the person paying the commission,

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

State a permanent establishment in connection with which the activities for

which the payment is made was incurred, and such commission is borne by such

permanent establishment, then such commission shall be deemed to arise in the

Contracting State in which the permanent establishment 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 commission, having regard to the

transaction 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 cases, the excess part of the payment shall remain taxable according to

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

provisions of this Convention.Article

14ROYALTIES

AND FEES FOR TECHNICAL SERVICES1. Royalties and fees

for technical services arising in a Contracting State and paid to a resident of

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

royalties and fees for technical services may also be taxed in the Contracting

State in which they arise and according to the laws of that State but if the

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

services, the tax so charged shall not exceed 22.5 per cent. of the gross

amount of the royalties or fees for technical services.3. The term

"royalties" as used in this article means payments of any kind received

as a consideration for the use of, or the right to use any copyright of

literary, artistic or scientific work, including cinematograph films or films

or tapes used for radio or television broadcasting any patent, trade mark,

design or model, plan, secret formula or process, or for the use of, or the

right to use, industrial, commercial or scientific equipment, or for

information concerning industrial, commercial or scientific experience.4. The term "fees

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

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

payments, in consideration for the 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, and

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 cases, the provisions of

article 7 or article 16, 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, an administrative

territorial unit, a local authority or a resident of that state. Where,

however, the person paying the royalties or fees for technical services,

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

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

liability to pay the royalties or fees for technical services was incurred, and

such royalties or fees for technical services 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 special

relationship between the payer and the beneficial owner or between both of them

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

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

relationship, the provisions of this article shall apply only to the

last-mentioned amount. In such cases, 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

15CAPITAL

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 arising from a

capital asset being ships or aircraft operating in international traffic or

movable property pertaining to the operation of such ships or aircraft by an

enterprise of a Contracting state shall be taxable only in the Contracting

State in which the place of effective management of the enterprise is situated.4. Gains from the

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

consists directly or indirectly principally of immovable property situated in a

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

alienation of 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

16INDEPENDENT

PERSONAL SERVICES1. Income derived by an

individual who is a resident of a Contracting State from the performance of

professional services or other independent activities of a similar character

shall be taxable only in that State except in the following circumstances when

such income may also be taxed in the other Contracting State:a. if he has a fixed

base regularly available to him in the other Contracting State for the purpose

of performing his activities; in that case, only so much of the income as is

attributable to that fixed base may be taxed in that other State; orb. if his stay in the other

Contracting State is for a period or periods amounting to or exceeding in the

aggregate 183 days in the relevant "previous year" or "calendar

year", as the case may be, in that case, only so much of the income as is

derived from his activities performed in that other State may be taxed in that

other state.1.2. The term

"professional services" includes independent, scientific, literary,

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

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

and accountants.Article

17DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of articles 18, 19, 20, 21, 22 and 23, salaries, wages and other

similar remuneration derived by a resident of 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 relevant "previous year" or "calendar

year", as the case may be; 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 operating in international

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

18DIRECTORS'

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

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

capacity as a member of the Board of Directors of a company which is a resident

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

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

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

is a resident of the other Contracting State may be taxed in that other State.Article

19ARTISTES

AND ATHLETES1. Notwithstanding the

provisions of articles 16 and 17, income derived by a resident of Contracting

State as an entertainer such as theatre, motion picture, radio or television

artiste or a musician or as an athlete, from his personal activities as such exercised

in the other Contracting State may be taxed in that other State.2. Where income in

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

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

another person, that income may, notwithstanding the provisions of articles 7,

16 and 17, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3. Notwithstanding the

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

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

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

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

State are supported wholly or substantially from the public funds of the

first-mentioned Contracting State, including any of its political sub-

divisions, administrative territorial units or local authorities.4. Notwithstanding the

provisions of paragraph 2 and articles 7, 16 and 17, where income in respect of

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

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

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

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

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

sub-divisions, administrative territorial units or local authorities.Article

20REMUNERATION

AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State, a political sub-division, an

administrative territorial unit or a local authority thereof to an individual

in respect of services rendered to that State, sub-division, unit or authority

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

remuneration shall be taxable only in the other Contracting State if the

services are rendered in that other State and the in 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, a political sub-division, an

administrative territorial unit or a local authority thereof to an individual

in respect of services rendered to that State, sub-division, unit or authority

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

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

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

articles 17, 18 and 19 shall apply to remuneration and pensions in respect of

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

State, a political sub-division, an administrative territorial unit or a local

authority thereof.Article

21NON-GOVERNMENT

PENSIONS AND ANNUITIES1. Any pension, other

than a pension referred to in article 20 or any annuity derived by a resident

of Contracting State from sources within the other Contracting State may be

taxed only in the first-mentioned Contracting State.2. The term

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

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

performance of services.3. The term

"annuity" means a stated sum payable periodically as stated times

during life or during a specified or ascertainable period of time, under an

obligation to make the payments in return for adequate and full consideration

in money or money's worth.Article

22STUDENTS,

APPRENTICES AND PERSONS SENT FOR SPECIALISATION1. An individual who is

or was resident of one of the other Contracting State and who is temporarily

present in the other Contracting State solely:a. as a student at a

recognised university, college or school in that other State; orb. as a business

apprentice; orc. as the recipient of a

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

charitable, scientific, or educational organisation; shall be exempt from tax

in that other State for a period of six years from his arrival in that other

Contracting State in respect of -i.

the

remittance from abroad for the purposes of his maintenance, education, study or

training;ii.

the

grant, allowance or award; andiii.

any

remuneration from abroad.1.2. The same exemption

shall apply to income derived by the above- mentioned individual from an employment

which he exercises in the other Contracting State in order to supplement his

means for maintenance, education, training and other expenses for

specialisation, for a period limited to two years from his arrival in that

other State.3. A resident of one of

the Contracting States present in the other Contracting State under

arrangements with the Government of that other State or any agency or

instrumentality thereof solely for the purpose of training, study or

orientation shall be exempt from tax for a period not exceeding two years from

his arrival in that other Contracting State in respect of remuneration received

by him on account of such training or study.4. For the purposes of

paragraph 1, the term "recognised university, college or school"

means a university, college or school which has been recognised in this regard

by the competent authority of the concerned Contracting State.Article

23PROFESSORS,

TEACHERS AND RESEARCH SCHOLARS1. A professor or

teacher who is or was a resident of one of the Contracting States 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 specific person or persons.3. For the purposes of

this article and article 22, an individual shall be deemed to be a resident of

a Contracting State, if he is resident in that Contracting State in the

"previous year" or the "calendar year", as the case may be,

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

"previous year" or the "calendar 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

Contracting State.Article

24OTHER

INCOME1. Items of income of a

resident of a Contracting State, wherever arising, which are not expressly

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

in that Contracting State.2. The provisions of

paragraph 1 shall not apply to income, other than income from immovable

property as defined in paragraph 2 and 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 cases, the provisions of article 7 or article 16, as the case may be,

shall apply.3. Notwithstanding the

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

Contracting State not dealt with in the foregoing articles of this Convention,

and arising in the other Contracting State may also be taxed in that other

State.Article

25AVOIDANCE

OF DOUBLE TAXATION1. The laws in force in

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

income in the respective Contracting States except where provisions to the

contrary are made in the Convention.2. The amount of

Romanian tax payable, under the laws of Romania