Belgium

[Now See Agreement vide Notification No. GSR 632 (E), dated 31-10-1997]

Agreement for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income between the Government of India and the Government of Belgium

 

Whereas the annexed Agreement between the Government of India and the Government of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has been approved in accordance with the laws in force in each of the two Contracting States, and letters to this effect have been exchanged as required by Paragraph 1 of Article 29 of the said Agreement:

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 Agreement shall be given effect to in the Union of India.

Notification : No. G.S.R. 323(E), dated June 6, 1975.

ANNEXURE

The Government of India and the Government of Belgium,

Desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

CHAPTER I : SCOPE OF THE AGREEMENT

ARTICLE 1 : Personal scope

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2 : Taxes covered

1. This Agreement shall apply to taxes on income imposed on behalf of each Contracting State or of its political 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 sale, exchange or transfer of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises.

3. The existing taxes to which this Agreement shall apply are:

(a)  In the case of India:

 (i)  the income-tax and any surcharge on income-tax imposed under the Income-tax Act, 1961 (43 of 1961); and

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

(hereinafter referred to as " Indian tax ").

(b)  In the case of Belgium:

 (i)  the individual income-tax (I'impot des personnes physiques);

 (ii)  the corporate income-tax (I'impot des societies);

(iii)  the income-tax on legal entities (I'impot des personnes morales);

(iv)  the income-tax on non-residents (I'impot des non-residents);

(v)  the prepayments and additional prepayments (les precomptes et complements de precompte); and

(vi)  the surcharges (decimes et centimes additionnels) on any of the taxes referred to in (i) to (v) above including the communal supplement to the individual income-tax (taxe communale additionelle a I'impot des personnes physiques);

(hereinafter referred to as " Belgian tax ").

4. This Agreement shall also apply to any identical or substantially similar tax which is imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall, from time to time, notify to each other any significant changes which have been made in their respective taxation laws.

CHAPTER II : DEFINITIONS

ARTICLE 3 : General definitions

1. In this Agreement, unless the context otherwise requires:

(a)  the term " India " means the territory of India and includes any area adjacent to the territorial waters of India which, in accordance with international law, has been or may hereafter be designated under the laws of India as an area within which the rights of India with respect to the sea bed and sub-soil and their natural resources may be exercised;

(b)  the term " Belgium " means the territory of the Kingdom of Belgium; it includes any area outside the Belgian national sovereignty which under the Belgian laws concerning the Continental Shelf, and in accordance with international law, has been or may hereafter be designated as an area within which the rights of Belgium with respect to the sea bed and subsoil and their natural resources may be exercised;

(c)  the terms " a Contracting State " and " the other Contracting State " mean India or Belgium as the context requires;

(d)  the term " competent authority " means-in the case of India, the Central Government in the Ministry of Finance (Department of Revenue and Insurance), and in the case of Belgium, the competent authority according to Belgian legislation;

(e)  the term " tax " means " Indian tax " or " Belgian tax " as the context requires;

(f)  the term " person " includes individuals, companies and all other entities which are treated as taxable units under the tax laws in force in the Contracting State of which they are resident;

(g)  the term " company " means in the case of India, any entity which is a company or which is treated as a company under the Indian tax law, and in the case of Belgium, any entity which is a company or which is treated as a body corporate under the Belgian tax law;

(h)  the terms " enterprise of a Contracting State " and " enterprise of the other Contracting State " mean, respectively, an industrial or commercial enterprise or undertaking carried on by a resident of a Contracting State and any such enterprise or undertaking carried on by a resident of the other Contracting State.

2. In the application of the provisions of this Agreement by a Contracting State, any term used but 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 to which this Agreement applies.

ARTICLE 4 : Fiscal domicile

1. For the purposes of this Agreement, the term " resident of a Contracting State " means any person who, under the law of that State, is a resident of that State for the purposes of taxation therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both the Contracting States, then his residential status for the purposes of this Agreement shall be determined in accordance with the following rules:

(a)  he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both the Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (hereinafter referred to as his " centre of vital interests ");

(b)  if the Contracting State in which he has his centre of vital interests cannot be determined or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

(c)  if he has an habitual abode in both the 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 the Contracting States or of neither of them, the competent authorities of the Contracting States shall determine the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both the 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 5 : Permanent establishment

1. For the purposes of this Agreement, the term " permanent establishment " means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

2. A " permanent establishment " shall include especially:

(a)  a place of management;

(b)  a branch;

(c)  an office;

(d)  a factory;

(e)  a workshop or a warehouse;

(f)  a mine, a quarry, an oilfield or other place of extraction of natural resources;

(g)  a building site or construction or assembly project or supervisory activities in connection therewith, where such site, project or activity continues for a period of more than six months, or where such project or 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 activity exceed 10 per cent. of the sale price of the machinery or equipment.

3. The term " permanent establishment " shall not be deemed to include:

(a)  the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b)  the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c)  the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(d)  the maintenance of a fixed place of business solely for scientific research, for the enterprise.

4. Subject to the provisions of paragraph 5, a person acting in a Contracting State on behalf of an enterprise of the other Contracting State shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if:

(i)  he has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for that enterprise; or

(ii)  he habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which the person regularly delivers goods or merchandise on behalf of the enterprise; or

(iii)  he habitually secures orders in the first mentioned Contracting State, exclusively or almost exclusively, for the enterprise itself, or for the enterprise and other enterprises which are controlled by it or have a controlling interest in it.

5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, a general commission agent or other agent of a genuinely independent status acting in the ordinary course of his business.

6. The fact that a company which is a resident of a Contracting State, has a subsidiary company which either is a resident of the other Contracting State or carries on a trade or business in that other Contracting State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other.

CHAPTER III : TAXATION OF INCOME

ARTICLE 6 : Income from immovable property

1. Income from immovable property may be taxed in the Contracting State in which such property is situated.

2. The term " immovable property " shall be defined in accordance with the law and usage of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits sources and other natural resources; ships and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph I shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services.

ARTICLE 7 : Business profits

1. Industrial or commercial profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise is engaged in trade or business in the other Contracting State through a permanent establishment situated therein. If the enterprise is engaged in trade or

business as aforesaid, the industrial or commercial profits of the enterprise may be taxed in the other State but only so much of such profits as are attributable to that permanent establishment.

2. Where an enterprise of a Contracting State is engaged in trade or business in the other Contracting State through a permanent establishment situated therein, there shall be attributed to such permanent establishment the industrial or commercial profits which it might be expected to derive if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arms's length with the enterprise of which it is a permanent establishment.

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. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 or paragraph 3 shall preclude such Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the purpose of export to the enterprise of which it is the permanent establishment.

6. The term " industrial or commercial profits " means income derived by an enterprise from the conduct of a trade or business; but does not include income in the form of rents, royalties, fees for technical services, interest, dividends, capital gains, remuneration for labour or personal (including professional) services or income from the operation of ships or aircraft. The items of income so excluded shall be dealt with in accordance with the provisions of the other Articles of this Agreement.

ARTICLE 8 : Air transport and shipping

1. Income derived from the operation of aircraft in international traffic by an enterprise of a Contracting State shall not be taxed in the other Contracting State.

2. Paragraph 1 shall likewise apply in respect of participations in pools of any kind by enterprises engaged in air transport.

3. Income of an enterprise of a Contracting State derived from the other Contracting State from the operation of ships in international traffic may be taxed in that other Contracting State to the extent of one-half of such income and the other half of such income shall be taxable only in the first-mentioned Contracting State. Such income shall be the portion of the world income as computed by the first-mentioned Contracting State, which bears to that world income the same proportion as the receipts from the transportation of passengers, livestock or goods shipped from ports in that other Contracting State bear to the world receipts from the operation of ships.

4. Paragraph 3 shall not apply to profits arising as a result of coastal traffic.

ARTICLE 9 : Associated enterprises

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, or

(b)  the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

ARTICLE 10 : Dividends

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 both the Contracting States.

ARTICLE 11 : Interest

1. Interest on bonds, securities, notes, debentures or any other form of indebtedness, arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in both the Contracting States.

2. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

ARTICLE 12 : Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in both the Contracting States.

2. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

3. The term " royalties " as used in this Article means any royalties, rentals or other amounts paid as consideration for the use of, or the right to use copyrights of literary, artistic or scientific works (including motion picture films, or films or tapes for radio or television broadcasting), patents, designs or models, plans, secret processes or formulae, trade marks or other like property or rights, or for industrial, commercial or scientific equipment, but does not include royalties or other amounts paid in respect of the operation of mines or quarries or of the extraction or removal of natural resources, and does not include income referred to in Article 13.

ARTICLE 13 : Fees for technical services

Income derived by an enterprise of a Contracting State from technical services rendered to an enterprise of the other Contracting State may be taxed in that other Contracting State only in so far as such income is attributable to activities actually performed in that other Contracting State. In computing such income, there shall be allowed as deductions the expenses incurred in that other Contracting State in connection with the activities performed in that Contracting State.

ARTICLE 14 : Capital gains

1. Subject to the provisions of paragraph 3, gains from the sale, exchange or transfer of a capital asset being immovable property, as defined in paragraph 2 of Article 6, or from the sale, exchange or transfer of any movable property, whether tangible, or intangible, may be taxed in the Contracting State in which such property is situated immediately before such sale, exchange or transfer.

2. For the purpose of this Article, the situs of the shares in a company shall be deemed to be in the Contracting State in which the company is incorporated.

3. Capital gains derived from the sale, exchange or transfer of a capital asset being a ship or aircraft may be taxed only in the Contracting State in which such ship or aircraft is registered.

ARTICLE 15 : Independent personal services

1. Income derived by a resident of Belgium in respect of professional services rendered or other independent activities of a similar character performed in India may be taxed in India only if he is present in India for a period or periods exceeding in the aggregate 183 days during the relevant previous year ".

2. Income derived by a resident of India in respect of professional services rendered or other independent activities of a similar character performed in Belgium may be taxed in Belgium only if he is present in Belgium for a period or periods exceeding in the aggregate 183 days during the relevant taxable period.

3. The term " professional services " includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 16 : Dependent personal services

1. Subject to the provisions of Articles 17, 19, 20, 21 and 22, 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 Belgium in respect of an employment exercised in India shall not be taxed in India if:

(a)  he is present in India for a period or periods not exceeding in the aggregate 183 days during the relevant " previous year ";

(b)  the remuneration is paid by, or on behalf of, an employer who is not a resident of India;

(c)  the remuneration is subject to Belgian tax; and

(d)  the remuneration is not deducted in computing profits of an enterprise chargeable to Indian tax.

3. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of India in respect of an employment exercised in Belgium shall not be taxed in Belgium if:

(a)  he is present in Belgium for a period or periods not exceeding in the aggregate 183 days during the relevant taxable period;

(b)  the remuneration is paid by, or on behalf of, an employer who is not a resident of Belgium;

(c)  the remuneration is subject to Indian tax; and

(d) the remuneration is not deducted in computing profits of an enterprise chargeable to Belgian tax.

4. Notwithstanding the preceding provisions of this Article remuneration in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State in international traffic may be taxed only in that Contracting State.

ARTICLE 17 : Director's fees

Director's fees and similar payments (not being remuneration for the discharge of day-to-day functions of a managerial or technical nature) 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 Contracting State.

ARTICLE 18 : Artistes and athletes

Notwithstanding anything contained in Articles 15 and 16, income derived by public entertainers, such as theatre, motion picture, radio or television, artistes and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are exercised.

ARTICLE 19 : Pensions

1. Any pension (including an annuity) other than a pension referred to in Article 20 derived by a resident of a Contracting State from sources within the other Contracting State in consideration of past employment may be taxed in such other Contracting State.

2. The term " annuity " means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

ARTICLE 20 : Governmental functions

1. Remuneration or pensions paid by, or out of funds created by, a Contracting State, or a political sub-division or a local authority thereof to any individual, being a national of that Contracting State, in respect of services rendered to that Contracting State or political sub-division or local authority thereof in the discharge of governmental functions shall be exempt from tax in the other Contracting State.

2. The provisions of articles 16, 17 and 19 shall apply to remuneration or pensions in respect of services in connection with any trade or business carried on by either of the Contracting States or a political sub-division or a local authority thereof for purposes of profit.

ARTICLE 21 : Teachers and researchers

1. An individual who is a resident of a Contracting State and who, at the invitation of the Government of the other Contracting State or of a university or other recognised educational institution situated in that other Contracting State, visits such other Contracting State for the primary purpose of teaching or engaging in research, or both, at a university or other recognised educational institution shall not be subject to tax by that other Contracting State on his income from personal services for such teaching or research for a period not exceeding 24 months from the date of his arrival in that other Contracting State.

2. This article shall not apply to income from personal services for research if such research is undertaken primarily for the private benefit of a specific person or persons.

3. For the purposes of this Article and Article 22, an individual shall be deemed to be a resident of a Contracting State if he is a resident of the Contracting State in the year in which he visits the other Contracting State or in the year immediately preceding that year.

ARTICLE 22 : Students

1. An individual who is a resident of a Contracting State and visits the other Contracting State solely:

(a)  as a student at a university, college or other recognised educational institution in that other Contracting State, or

(b)  as a business apprentice, or

(c)  for the purpose of study or research, as a recipient of a grant, allowance or award, from a governmental, religious, charitable, scientific or educational organisation, shall be exempt from tax in that other Contracting State:

 (i)  on all remittances from abroad for the purposes of maintenance, education or training;

(ii)  on the grant, allowance or award; and

(iii)  in respect of the amount, representing remuneration for an employment in that other Contracting State, if such remuneration does not exceed 100,000 Belgian Francs or its equivalent in Indian Rupees, as the case may be, in any year.

2. An individual who is a resident of a Contracting State and who visits the other Contracting State for a period not exceeding one year as an employee of, or under contract with, an enterprise of the first-mentioned Contracting State or an organisation referred to in paragraph 1 for the primary purpose of acquiring technical, professional or business experience from a person other than such enterprise or organisation shall be exempt from tax in that other Contracting State in respect of remuneration for an employment in that other Contracting State for such period, if such remuneration does not exceed 120,000 Belgian Francs or its equivalent in Indian Rupees, as the case may be, in any year.

CHAPTER IV : ELIMINATION OF DOUBLE TAXATION

ARTICLE 23

1. The laws in force in either of the Contracting States will continue to govern the assessment and taxation of income in the respective Contracting States except where express provision to the contrary is made in this Agreement.

2. Where a person who is a resident of India derives income which in accordance with the provisions of Chapter III of this Agreement, may be taxed in Belgium, India shall, subject to the provisions of sub-paragraph (a) of paragraph 4, exempt such income from its tax but may, in calculating the tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted.

3. (a) Where a person who is a resident of Belgium derives income which, in accordance with the provisions of Chapter III of this Agreement, may be taxed in India, Belgium shall, subject to the provisions of sub-paragraphs (b) and (c) of this paragraph and sub-paragraph (b) of paragraph 4, exempt such income from its tax but may, in calculating the tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted.

(b) (i) Where a company which is a resident of Belgium owns shares in a company which is a resident of India, the dividends paid thereon to the former company shall be exempt in Belgium from the tax referred to in paragraph 3(b)(ii) of article 2 to the extent that exemption would have been accorded under Belgian law if the two companies had been residents of Belgium.

(ii) A company which is a resident of Belgium and which, during the whole of an accounting period of a company which is a resident of India and is chargeable to Indian tax, has held the direct ownership of shares in the latter company shall also be exempted from the pre-payment on income from movable property (precompte mobilier) chargeable in accordance with Belgian law on the dividends on those shares, provided that it so requests in writing not later than the time limited for the submission of its annual return for corporate tax; on the redistribution to its own shareholders of the dividends so exempted, those dividends may not be deducted from dividends distributed which are subject to the prepayment on income from movable property. This provision shall not apply when the first-mentioned company has elected that its profits be charged to the individual income tax.

(c) Where a resident of Belgium receives income by way of dividends referred to in Article 10 [not being dividends covered by sub-paragraph (b) of this paragraph] or interest referred to in Article 11 or royalties referred to in Article 12 of this Agreement, Belgium shall allow, against the Belgian tax chargeable on such income, a credit in respect of tax chargeable in India on such income, whether actually charged or spared. The credit to be so allowed shall be such proportion of the foreign income as is provided for in Belgian law; however, the credit shall in no case be less than 15 per cent. of the gross amount of dividends, interest or royalties so received after deduction of Indian tax, if any.

4. (a) In a case to which paragraph 2 of this Article applies, Indian tax may be charged on income chargeable to Belgian tax to the extent that such income has not been charged to tax in Belgium for any taxable period because of the set off of loss carried forward from an earlier taxable period, where such loss is deducted in computing the taxable income in India for any year.

(b) In a case to which sub-paragraph (a) of paragraph 3 of this Article applies, Belgian tax may be charged on income chargeable to Indian tax to the extent that such income has not been charged to tax in India for any assessment year because of the set off of loss carried forward from an earlier assessment year, where such loss is deducted in computing the taxable income in Belgium for any year.

CHAPTER V : SPECIAL PROVISIONS

ARTICLE 24 : Non-discrimination

1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected.

2. The term " nationals of a Contracting State " means:

(a)  all individuals possessing the nationality of that Contracting State;

(b)  all legal persons, partnerships and associations deriving their status as such from the law in force in that Contracting State.

3. 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 enterprise of that other State carrying on the same activities in the same circumstances and under the same conditions.

This provision shall not be construed as preventing Belgium from charging the total amount of profits of a permanent establishment in Belgium of a company being a resident of India or of an entity having its place of effective management in India at the rate of tax provided by the Belgian law, but this rate may not-before the surcharges referred to in paragraph 3(b)(vi) of Article 2-exceed the maximum rate applicable to the whole or a portion of the profits of companies which are residents of Belgium.

4. Nothing contained in this Article shall be construed as obliging a Contracting State to grant to persons not resident in that State any personal allowances, reliefs or reductions for tax purposes which are by law available only to persons who are so resident.

5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances and under the same conditions.

6. In this Article, the term " taxation " means taxes of every kind as specified in this Agreement.

ARTICLE 25 : Mutual agreement procedure

1. Where a taxpayer considers that the action of the taxation authorities of one or both of the Contracting States has resulted or will result for him in double taxation not in accordance with the provisions of this Agreement, he may, notwithstanding the remedies provided by the laws of those Contracting States, address to the competent authority of the Contracting State of which he is a resident an application in writing stating the grounds for claiming revision of the incorrect taxation. The said application must be submitted before the expiry of a period of two years from the notification of liability to or the deduction at source of the second charge to tax.

2. Should the taxpayer's claim be deemed worthy of consideration, the competent authority of the Contracting State to which the claim is made shall endeavour to come to an agreement with the competent authority of the other Contracting State with a view to the avoidance of taxation not in accordance with this Agreement.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties arising as to the application of the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Agreement.

ARTICLE 26 : Exchange of information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or for the prevention of fraud or for the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of this Agreement. Any information so exchanged shall be treated as secret but may be disclosed to persons (including a court or administrative body) concerned with the assessment, collection, enforcement or prosecution in respect of the taxes which are the subject of this Agreement.

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 or administrative practice of that or of the other Contracting State;

(b)  to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c)  to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

ARTICLE 27 : Assistance in collection

Each of the Contracting States shall endeavour to collect, as if it were its own tax, any tax referred to in Article 2, which has been imposed by the other Contracting State and the collection of which is necessary to ensure that any exemption or reduced rate of tax granted under this Agreement by the other Contracting State shall not be enjoyed by persons not entitled to such benefits.

ARTICLE 28 : Miscellaneous

1. Nothing in this agreement shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.

2. Nothing in this Agreement shall affect the taxation on a company which is a resident of Belgium in the event of the repurchase of its own shares or of the distribution of its assets.

CHAPTER VI : FINAL PROVISIONS

ARTICLE 29 : Entry into force

1. This Agreement shall be approved in accordance with the laws in force in each of the Contracting States. It shall enter into force thirty days after the exchange of letters certifying that the proper procedure was fulfilled in each Contracting State. The exchange of letters shall take place at New Delhi.

2. The provisions of this Agreement shall have effect:

(a)  In India, in respect of income derived during any previous year beginning on or after the 1st day of January of the calendar year in which the exchange of letters takes place;

(b)  in Belgium:

 (i)  as respects all tax due at source on income credited or payable on or after the 1st day of January of the calendar year in which the exchange of letters takes place;

(ii)  as respects all tax other than tax due at source on income derived during any taxable period ending on or after the 31st day of December of the said calendar year.

ARTICLE 30 : Termination

This Agreement shall continue in effect indefinitely but either of the Contracting States may terminate it after a period of five years from the date on which it enters into force, by giving to the other Contracting State, through the diplomatic channels, written notice of termination, provided that such notice shall be given only on or before the 30th day of June in any calendar year and, in such event, this Agreement shall cease to be effective:

(a)  In India, as respects income derived during any " previous year " beginning on or after the 1st day of January of the calendar year next following that in which the notice is given;

(b)  In Belgium:

 (i)  as respects all tax due at source on income credited or payable on or after the 1st day of January of the calendar year next following that in which the notice is given;

(ii)  as respects all tax other than tax due at source on income derived during any taxable period ending on or after the 31st day of December of the calendar year next following that in which the notice is given.

IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed the present Agreement.

Done in duplicate at Brussels this 7th day of February, 1974, one thousand nine hundred and seventy four in the Hindi, English, French and Netherlands languages, all the four texts having equal authenticity.

For the Government of India For the Government of Belgium

 

(Sd.)	(Sd.)
K. B. LALL	VAN ELSLANDE

 

PROTOCOL

The Government of India and the Government of Belgium

Having entered into an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income,

Have agreed, at the time of signing the said Agreement, on the following provisions which shall constitute an intergral part thereof:

(a)  For the purposes of paragraph 1 of Article 8, interest on funds directly connected with the operation of aircraft in international traffic shall be regarded as income from the operation of such aircraft; and the provisions of Article 11 shall not apply in relation to such interest.

Further, notwithstanding the provisions of Article 29, the provisions of paragraphs 1 and 2 of Article 8 shall have effect from the first day of January, 1967.

(b)  The provisions of paragraph 3 of Article 8 shall not, in the case of India, affect the application of the provisions in sub-sections (1) to (6) of section 172 of the Income-tax Act, 1961, to the assessment of profits derived by a resident of Belgium from occasional shipping or tramp steamers provided that where such resident claims, in accordance with the provisions of sub-section (7) of the said section 172, an adjustment of his tax liability in India on the basis of his total income of the previous year in which the date of departure of the ship from the Indian port falls, the provisions of paragraph 3 of Article 8 of the Agreement will be applied.

(c)  The provisions of sub-paragraphs (b) and (c) of paragraph 3 of Article 23 shall not apply in relation to dividends, interest or royalties arising in India to a resident of Belgium where the holding by virtue of which the dividends are paid or the debt claim from which the interest arises or the right or property giving rise to the royalties is effectively connected with a permanent establishment in India of such resident and such case will instead be governed by the provisions of sub-paragraph (a) of the said paragraph 3.

(d)  The credit referred to in sub-paragraph (c) of paragraph 3 of Article 23 shall be given in an amount of not less than 20 per cent. (instead of 15 per cent.) in a case where a person, who is a resident of Belgium, derives income by way of dividends, interest or royalties which, in accordance with the provisions of this Agreement may be taxed in India but which is at present exempted from taxation in India under the special incentive measures designed to promote economic development in India contained in section 10(15)(iv) and section 80K of the Income-tax Act, 1961, or which may, in future, be exempted from taxation in India under special incentive measures having a similar object, provided that an agreement to that effect is made between the Governments of the Contracting States in respect of such special measures.

(e)  For the purposes of paragraph 4 of Article 25, the term " competent authority " shall mean:

in the case of India, the Chairman, Central Board of Direct Taxes, Government of India; and

in the case of Belgium, the Director General of Direct Taxes.

IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed the present Protocol.

Done at Brussels, in duplicate, in the Hindi, English, French and Netherlands languages this 7th day of February, 1974.

For the Government of India For the Government of Belgium

 

(Sd.)	(Sd.)
K. B. LALL	VAN ELSLANDE