AGREEMENT FOR AVOIDANCE OF DOUBLE
TAXATION AND PREVENTION OF FISCAL EVASION WITH SPAIN
Whereas the annexed Convention
between the Government of the Republic of India and the Kingdom of Spain for
the avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income and on capital has entered into force on 12th
January, 1995 after the exchange of Instruments of Ratification as required by
paragraph 2 of Article 30 of the said Convention ;
Now, therefore, in exercise of
the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961),
the Central Government hereby directs that all the provisions of the said
Convention shall be given effect to in the Union of India.
Notification : No. GSR 356(E), dated
21-4-1995.
ANNEXURE
CONVENTION
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE KINGDOM OF SPAIN FOR
THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH
RESPECT TO TAXES
ON INCOME
AND ON CAPITAL
The Government of the Republic of
India and the Government of the Kingdom of Spain desiring to conclude a
Convention for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to taxes on income and on capital have agreed as follows :
ARTICLE 1
PERSONAL
SCOPE
This Convention shall apply to
persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES
COVERED
1. This Convention shall apply to
taxes on income and on capital imposed on behalf of a Contracting State
irrespective of the manner in which they are levied.
2. There shall be regarded as taxes
on income and on capital all taxes imposed on total income, on total capital,
or on elements of income or of capital, including taxes on gains from the
alienation of movable or immovable property, taxes on the total amounts of
wages or salaries paid by enterprises, as well as taxes on capital
appreciation.
3. The existing taxes to which the
Convention shall apply are in particular :
[ (a) |
|
in Spain : |
1. |
|
the income tax on individuals; |
2. |
|
the corporation tax; |
3. |
|
the income tax on non residents; and |
4. |
|
the capital tax; |
|
(hereinafter referred to as "Spanish
tax").] |
|
(b) |
|
In
India : |
(i) |
|
The
income-tax including any surcharge thereon; |
(ii) |
|
The
surtax; and |
(iii) |
|
The
wealth-tax (hereinafter referred to as "Indian tax"). |
4. This Convention shall also apply
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 to each other any significant changes which have been made in their
respective taxation laws.
ARTICLE 3
GENERAL
DEFINITIONS
1. In this Convention, unless the
context otherwise requires :
(a) |
|
the term "Spain" means the territory of
Spain and includes the territorial sea and airspace above it. It also
includes any other maritime zone in which Spain has sovereign rights, other
rights and jurisdiction, according to the Spanish law and in accordance with
international law; |
(b) |
|
the term "India" means the territory of
India and includes the territorial sea and airspace above it. It also
includes 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; |
(c) |
|
the
terms "a Contracting State" and "the other Contracting
State" mean Spain or India as the context requires; |
(d) |
|
the
term "tax" means "Indian tax" or "Spanish tax",
as the context requires; |
(e) |
|
the
term "person" includes an individual, a company, any other body of
persons or any other entity which is treated as a taxable unit under the
taxation laws in force in the respective Contracting State; |
(f) |
|
the
term "company" means any body corporate
or any entity which is treated as a company or body corporate under the
taxation laws in force in the respective Contracting State; |
(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 "national" means : |
(i) |
|
any
individual possessing the nationality of a Contracting State; |
(ii) |
|
any
legal person, partnership and association deriving its status as such from
the law in force in a Contracting State; |
(i) |
|
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; |
(j) |
|
the
term "competent authority" means : |
(i) |
|
in the
case of Spain, the Minister of Economy and Finance or his authorised
representative; |
(ii) |
|
in the case of India, the Central Government in the
Ministry of Finance (Department of Revenue) or its authorised representative. |
2. In the application of this
Convention by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the law of
that Contracting State relating to the taxes which are the subject of this
Convention.
ARTICLE 4
RESIDENT
1. 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 taxation therein by
reason of his domicile, residence, place of management or any other criterion
of similar nature. But this term does not include any person who is liable to
tax in that State in respect only of income from sources in that State, or capital
situated therein.
2. Where by reason of the
provisions of paragraph 1 an individual is a resident of both Contracting
States, then his status shall be determined in accordance with the following rules :
(a) |
|
He
shall be deemed to be 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
(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 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. |
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 5
PERMANENT
ESTABLISHMENT
1. 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 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; |
(j) |
|
an
installation or structure used for the exploration or exploitation of natural
resources, but only if so used for a period of more than three months; |
(k) |
|
a
building site or construction, installation or assembly project or
supervisory activities in connection therewith, where such site, project or
activities (together with other such sites, projects or activities, if any)
continue for a period of more than six months in any twelve-months period, 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 and equipment : |
Provided that, for the purpose of this
paragraph, an enterprise shall be deemed to have a permanent establishment in a
Contracting State and to carry on business through that permanent establishment
if it provides services or facilities in connection with or supplies plant and
machinery on hire used or to be used in, the prospecting for, or extraction or
production of mineral oils in the State if the activities continue for a period
of more than thirty days in any twelve-month period.
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 and merchandise, or of collecting information for the enterprise; |
(e) |
|
the maintenance of a fixed place of business solely
for the purpose of advertising, for supply of information, for scientific
research or for similar activities which have a preparatory or auxiliary
character, for the enterprise. |
4. Notwithstanding the provisions
of paragraphs 1 and 2, where a person - other than an agent of an independent status
to whom paragraph 5 applies - is acting in a Contracting State on behalf of an
enterprise of the other Contracting State that enterprise shall be deemed to
have a permanent establishment in the first-mentioned State, 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 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. |
5. An enterprise of a Contracting
State shall not be deemed to have a permanent establishment in the other
Contracting State merely because it carries on business in that other State
through a broker, general commission agent or any other agent of an independent
status, provided that such persons are acting in the ordinary course of their
business. However, when the activities of such an agent are devoted wholly or
almost wholly on behalf of that enterprise itself or on behalf of that
enterprise and other enterprises controlling, controlled by, or subject to the
same common control, as that enterprise, he will not be considered an agent of
an independent status within the meaning of this paragraph.
6. The fact that a company which is
a resident of a Contracting State controls or is controlled by a company which
is a resident of the other Contracting State, or which carries on business in
that other State (whether through a permanent establishment or otherwise),
shall not of itself constitute either company a permanent establishment of the
other.
ARTICLE 6
INCOME
FROM IMMOVABLE PROPERTY
1. Income derived by a resident of
a Contracting State from immovable property (including income from agriculture
or forestry) situated in 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, 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 and aircraft shall not be regarded as immovable
property.
3. The provisions of paragraph 1
shall also apply to income derived from the direct use, letting or use in any
other form of immovable property.
4. The provisions of paragraphs 1
and 3 shall also apply to the income from immovable property of an enterprise
and to income from immovable property used for the performance or independent
personal services.
ARTICLE 7
BUSINESS
PROFITS
1. The profits of an enterprise of
a Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on business as aforesaid, the
profits of the enterprise may be taxed in the other State but only so much of
them as is attributable to (a) that permanent establishment; (b)
sales in that other State of goods or merchandise of the same or similar kind
as those sold through that permanent establishment; or (c) other
business activities carried on in that other State of the same or similar kind
as those effected through that permanent establishment.
2. Subject to the provisions of
paragraph 3, where an enterprise of a Contracting State carries on business in
the other Contracting State through a permanent establishment situated therein,
there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
3. In the determination of 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, research and
development expenses, interest and other similar expenses so incurred, whether
in the State in which the permanent establishment is situated or elsewhere, in
accordance with the provisions of and subject to the limitations of the taxation
laws of that State. However, no such deduction shall be allowed in respect of
amounts, if any, paid (otherwise than towards reimbursement of actual expenses)
by the permanent establishment to the head office of the enterprise or any of
its other offices, by way of royalties, fees or other 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 8
AIR TRANSPORT
1. Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State.
2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
3. The 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 sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation.
ARTICLE 9
SHIPPING
1. 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. The provisions of paragraph 1
shall also apply to profits from the participation in a pool, a joint business
or an international operating agency engaged in the operation of ships.
3. For the purposes of this
Article, profits derived from the operation of ships include profits from 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 the international traffic.
ARTICLE 10
ASSOCIATED ENTERPRISES
1[1]Where,
1. (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.
1[2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly -profits on which an enterprise of the other Contracting State has been charged to tax in that other State and that other State agrees that the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.]
ARTICLE
11
DIVIDENDS
1. Dividends paid by a company
which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.
2. However, such dividends may also
be taxed in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that State, but if the recipient is the
beneficial owner of the dividends the tax so charged shall not exceed 15 per
cent of the gross amount of the dividends.
This paragraph shall not affect
the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term "dividends"
as used in this Article means income from shares or other rights, not being
debt-claims, participating in profits, as well as income from other corporate
rights which is subjected to the same taxation treatment as income from shares
by the laws of the State of which the company making the distribution is a
resident.
4. The provisions of paragraphs 1
and 2 shall not apply if the beneficial owner of the dividends, being a
resident of a Contracting State, 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 15, as the case may be, shall apply.
5. Where a company which is a
resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company except insofar as such dividends are paid to a resident of
that other State or insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed
base situated in that other State, nor subject the company's undistributed
profits to a tax on the company's undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or income
arising in such other State.
ARTICLE
12
INTEREST
1. 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 or a local authority of the other
Contracting State; or |
(ii) |
|
the
Central Bank of the other Contracting State; |
(b) |
|
interest
arising in a Contracting State shall be exempt from tax in that Contracting
State to the extent approved by the Government of that State if it is derived
and beneficially owned by any person [other than a person referred to in
sub-paragraph (a)] who is a resident of the other Contracting State
provided that transaction giving rise to the debt-claim has been approved in
this regard by the Government of the first-mentioned Contracting State. |
4. The term "interest" as
used in this Article means income from debt-claims of every kind, whether or
not, secured by mortgage and whether or not carrying a right to participate in
the debtor's profits, and in particular, income from Government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
5. The provisions of 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 15, 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
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the Contracting State in
which the permanent 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 13
ROYALTIES AND FEES FOR TECHNICAL SERVICES
1. 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.
1[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 law 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 ten per cent of the gross amount of 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 cinematographic 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 kind to any person other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 15 (Independent Personal Services), in consideration for the services of a technical or consultancy nature, including the provision of services of technical or other personnel.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.
6. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer in that State itself, a political sub-division, 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 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 a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the 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 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
14
CAPITAL
GAINS
1. Gains derived by a resident of a
Contracting State from the alienation of immovable property, referred to in
Article 6, and situated in the other Contracting State may be taxed in that
other State.
2. Gains from the alienation of
movable property forming part of the business property of a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such gains from
the alienation of such a permanent establishment (alone or together with the
whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains from the alienation of
ships or aircraft operated in international traffic or of movable property
pertaining to the operation of such ships or aircraft shall be taxable only in
the Contracting State of which the alienator is a resident.
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 for the alienation of
shares of the capital stock of a company forming part of a participation of at
least 10 per cent in a company which is a resident of a Contracting State may
be taxed in that Contracting State.
6. Gains from the alienation of any
property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be
taxable only in the Contracting State of which the alienator is a resident.
ARTICLE
15
INDEPENDENT
PERSONAL SERVICES
1. Income derived by 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; or |
(b) |
|
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 "taxable
year"; 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. |
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
16
DEPENDENT
PERSONAL SERVICES
1. Subject to the provisions of
Articles 17, 18, 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 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 "taxable year"; and |
(b) |
|
the
remuneration is paid by, or on behalf of, an employer who is not a resident
of the other State; and |
(c) |
|
the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State. |
3. Notwithstanding the preceding
provisions of this Article, remuneration derived in respect of an employment
exercised aboard, a ship or aircraft operated in international traffic, by an
enterprise of a Contracting State may be taxed in that State.
ARTICLE
17
DIRECTORS'
FEES
Directors' fees and similar
payments derived by a resident of a Contracting State in his capacity as a
member of the board of directors of a company which is a resident of the other
Contracting State may be taxed in that other State.
ARTICLE
18
ARTISTES
AND ATHLETES
1. Notwithstanding the provisions
of Articles 15 and 16, income derived by a resident of a 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. While income in respect of
personal activities exercised by an entertainer or an athlete in his capacity
as such accrues not to the entertainer or athlete himself but to another
person, that income may, notwithstanding the provisions of Articles 7, 15 and
16, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised.
3. Notwithstanding the provisions
of paragraphs 1 and 2, income derived by an entertainer or an athlete who is a
resident of a Contracting State from his personal activities as such exercised
in the other Contracting State, shall be taxable only in the first-mentioned
Contracting State, if the activities in the other Contracting State are
supported wholly or substantially from the public funds of the first-mentioned
Contracting State, including any of its political sub-divisions or local
authorities.
ARTICLE
19
PENSIONS
Subject to the provisions of
paragraph 2 of Article 20, 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
20
REMUNERATION
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICES
1. (a) Remu-neration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State.
(b) However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other State and the individual is a resident of
that State who :
(i) |
|
is a
national of that State; or |
(ii) |
|
did not become a resident of that State solely for
the purpose of rendering the services. |
2. (a) Any pension paid by,
or out of funds created by a Contracting State or a political sub-division or a
local authority thereof to an individual in respect of services rendered to
that State or sub-division or authority shall 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.
3. The provisions of Articles 16,
17 and 19 shall apply to remuneration and pensions in respect of services
rendered in connection with a business carried on by a Contracting State or a
political sub-division or a local authority thereof.
ARTICLE
21
STUDENTS
Payments which a student or
business apprentice who is or was immediately before visiting a Contracting
State, a resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or training
receives for the purpose of this maintenance, education or training shall not
be taxed in that State, provided that such payments arise from sources outside
that State.
ARTICLE
22
PAYMENTS
RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS
1. 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 an officially recognised university, college, school or other
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 not in the general interest
but primarily for the private benefit of a specific person or persons.
ARTICLE
23
OTHER
INCOME
1. Subject to the provisions of
paragraph 2, items of income of a resident of a Contracting State, wherever
arising, which are not expressly dealt with in the foregoing Articles of this
Convention, shall be taxable only in that Contracting State.
2. The provisions of paragraph 1
shall not apply to income, other than income from immovable property as defined
in paragraph 2 of Article 6, if the recipient of such income, being a resident
of a Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
right or property in respect of which the income is paid is effectively
connected with such permanent establishment, or fixed base. In such a case, the
provisions of Article 7 or Article 15, as the case may be, shall apply.
3. Notwithstanding the provisions
of paragraphs 1 and 2, items of income of a resident of a Contracting State not
dealt with in the foregoing Articles of this Convention, and arising in the
other Contracting State may be taxed in that other State.
ARTICLE
24
CAPITAL
1. Capital represented by immovable
property referred to in Article 6, owned by a resident of a Contracting State
and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by movable
property forming part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
or by movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, may be taxed in that other State.
3. Capital represented by ships or
aircraft, operated in international traffic or by movable property pertaining
to the operation of such ships or aircraft shall be taxable only in the
Contracting State of which the enterprise operating such ships, aircraft or
property is a resident.
4. Capital represented by shares of
the capital stock of a company the property of which consists, directly or
indirectly, principally of immovable property situated in Contracting State may
be taxed in that State.
5. Capital represented by shares of
the capital stock of a company which is a resident of a Contracting State
representing a participation of at least 10 per cent in the capital stock of that
company may be taxed in that Contracting State.
6. All other elements of capital of
a resident of a Contracting State shall be taxable only in that Contracting
State.
ARTICLE
25
ELIMINATION
OF DOUBLE TAXATION
1. The laws in force in either of
the Contracting States will continue to govern the taxation of income and
capital in the respective Contracting States except where express provisions to
the contrary are made in this Convention.
2. In India, double taxation will
be avoided in the following manner :
(a) |
|
Where a
resident of India derives income or owns capital which, in accordance with
the provisions of this Convention, may be taxed in Spain, India shall allow : |
(i) |
|
as a
deduction from the tax on the income of that resident, an amount equal to the
income-tax paid in Spain, whether directly or by deduction; and |
(ii) |
|
as a deduction from the tax on the capital of that
resident, an amount equal to the capital tax paid in Spain. |
|
Such
deduction in either case shall not, however, exceed that part of the
income-tax or capital tax, as computed before the deduction is given, which
is attributable, as the case may be, to the income or the capital which may
be taxed in Spain. |
(b) |
|
Where a
resident of India derives income or owns capital which in accordance with the
provisions of this Convention, shall be taxable only in Spain, India may
include this income or capital in the tax base but shall allow as a deduction
from the income-tax or capital tax, that part of the income-tax or capital
tax which is attributable, as the case may be, to the income derived from or
the capital owned in Spain. |
3. In Spain, subject to the
provisions of its internal law, double taxation will be avoided in the
following manner :
(a) |
|
Where a
resident of Spain derives income or owns capital which, in accordance with
the provisions of this Convention, may be taxed in India, Spain shall allow : |
(i) |
|
as a
deduction from the tax on the income of that resident, an amount equal to the
income-tax paid in India; |
(ii) |
|
as a deduction from the tax on the capital of that
resident, an amount equal to the capital tax paid in India. |
(b) |
|
In the
case of a dividend paid by a company which is a resident of India to a
company which is a resident of Spain and which holds at least 25 per cent of
the capital of the company paying the dividend, the deduction shall take into
account [in addition to the deduction provided under sub-paragraph (a)]
the income-tax paid in India by the company in respect of the profits out of
which such dividend is paid provided that such tax is taken into account in
calculating the base of the Spanish tax. |
|
Such deduction
in either case shall not, however, exceed that part of the income-tax or
capital tax, as computed before the deduction is given, which is
attributable, as the case may be, to the income or the capital which may be
taxed in India. |
|
(c) |
|
Where
in accordance with any provision of the Convention income derived or capital
owned by a resident of Spain is exempt from tax in Spain, Spain may
nevertheless, in calculating the amount of tax on the remaining income or
capital of such resident, take into account the exempted income or capital. |
4. For the purposes of deduction
referred to in paragraph 3, the term "income-tax paid in India" shall
be deemed to include any amount which would have been payable as Indian tax
under the laws of India and in accordance with this Convention for any year but
for an exemption from, or reduction of, tax granted for that year under :
(i) |
|
Sections
10(4), 10(15)(iv), 10A, 10B, 32A, 32AB, 80HH, 80HHC and
80-I of the Income-tax Act, 1961 (43 of 1961) so far as they were in force
on, and have not been modified since, the date of the signature of this
Convention, or have been modified only in minor respects so as not to affect
their general character; or |
(ii) |
|
any
other provisions which may be enacted hereafter granting a deduction in
computing the taxable income or an exemption or reduction from tax which the
competent authorities of the Contracting States agree to be of a
substantially similar character if it has not been modified thereafter or has
been modified only in minor respects so as not to affect its general
character. |
5. The provisions of paragraph 4
shall apply for the first 10 years for which this Convention is effective but
the competent authorities of the Contracting States may consult each other to
determine whether this period shall be extended.
ARTICLE
26
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 taxation on a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on the same
activities in the same circumstances or under the same conditions.
3. 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 in 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.
4. Except where the provisions of
Article 10, paragraph 7 of Article 12, or paragraph 7 of Article 13 apply,
interest, royalties and other disbursements paid by an enterprise of a
Contracting State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible
under the same conditions as if they had been paid to a resident of the
first-mentioned State. Similarly, any debts of an enterprise of a Contracting
State shall, for the purpose of determining the taxable capital of such
enterprise, be deductible under the same conditions as if they had been
contracted to a resident of the first-mentioned State.
ARTICLE
27
MUTUAL
AGREEMENT PROCEDURE
1. Where a resident of a
Contracting State considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with this
Convention, he may, notwithstanding the remedies provided by the national laws
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 26, 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 an appropriate 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 not in accordance with the Convention. Any
agreement reached shall be implemented notwithstanding any time limits in the
national 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 the
Convention. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention. The competent authorities
shall also, by mutual agreement, develop appropriate actions, methods and
techniques to improve the exchange of information carried out under Article 28
of this Convention.
4. The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs. When it seems
advisable in order to reach agreement to have an oral exchange of opinions,
such exchange may take place through a Commission consisting of representatives
of the competent authorities of the Contracting States.
[ARTICLE 28
EXCHANGE
OF INFORMATION
1. The competent authorities of
the Contracting States shall exchange such information (including documents or
certified copies of the documents) as is foreseeably relevant for carrying out
the provisions of this Convention or to the administration or enforcement of
the domestic laws concerning taxes of every kind and description imposed on
behalf of the Contracting States, or of their political subdivisions or local
authorities, insofar as the taxation there under is not contrary to the
Convention. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under
paragraph 1 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, the determination of appeals in
relation to the taxes referred to in paragraph 1, or the oversight of the
above. 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.
Notwithstanding the foregoing,
information received by a Contracting State may be used for other purposes when
such information may be used for such other purposes under the laws of both
Contracting States.
3. In no case shall the
provisions of paragraphs 1 and 2 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 (including documents or certified copies of the
documents) 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 (ordre public). |
4. If information is requested by
a Contracting State in accordance with this Article, the other Contracting
State shall use its information gathering measures to obtain the requested
information, even though that other Contracting State may not need such
information for its own tax purposes. The obligation contained in the preceding
sentence is subject to the limitations of paragraph 3 but in no case shall such
limitations be construed to permit a Contracting State to decline to supply
information solely because it has no domestic interest in such information.
5. In no case shall the
provisions of paragraph 3 be construed to permit a Contracting State to decline
to supply information solely because the information is held by a bank, other
financial institution, nominee or person acting in an agency or a fiduciary
capacity or because it relates to ownership interests in a person.]
"ARTICLE
28
EXCHANGE
OF INFORMATION
1. The competent authorities of the
Contracting States shall exchange such information (including copies of
documents when relevant) as is necessary for carrying out the provisions of the
Convention or of the domestic laws of the Contracting States concerning taxes
covered by the Convention, insofar as the taxation thereunder is not contrary
to the Convention, in particular for the prevention of fraud or tax evasion and
of tax avoidance. 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.
However, if the information is originally regarded as secret in the
transmitting State, it shall be disclosed only to persons or authorities
(including courts and administrative bodies) involved in the assessment or
collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to the taxes which are the subject of the
Convention. Such persons or authorities shall use the information only for such
purposes but may disclose the information in public court proceedings or in
judicial decisions.
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 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." |
[ARTICLE 28A
ASSISTANCE
IN THE COLLECTION OF TAXES
1. The Contracting States shall
lend assistance to each other in the collection of revenue claims. This
assistance is not restricted by Articles 1 and 2. The competent authorities of
the Contracting States may by mutual agreement settle the mode of application
of this Article.
2. The term "revenue
claim" as used in this Article means an amount owed in respect of taxes of
every kind and description imposed on behalf of the Contracting States, or of
their political sub-divisions or local authorities, insofar as the taxation
there under is not contrary to this Convention or any other instrument to which
the Contracting States are parties, as well as interest, administrative
penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a
Contracting State is enforceable under the laws of that State and is owed by a
person who, at that time, cannot, under the laws of that State, prevent its
collection, that revenue claim shall, at the request of the competent authority
of that State, be accepted for purposes of collection by the competent
authority of the other Contracting State. That revenue claim shall be collected
by that other State in accordance with the provisions of its laws applicable to
the enforcement and collection of its own taxes as if the revenue claim were a
revenue claim of that other State.
4. When a revenue claim of a
Contracting State is a claim in respect of which that State may, under its law,
take measures of conservancy with a view to ensure its collection, that revenue
claim shall, at the request of the competent authority of that State, be
accepted for purposes of taking measures of conservancy by the competent
authority of the other Contracting State. That other State shall take measures
of conservancy in respect of that revenue claim in accordance with the
provisions of its laws as if the revenue claim were a revenue claim of that
other State even if, at the time when such measures are applied, the revenue
claim is not enforceable in the first- mentioned State or is owed by a person
who has a right to prevent its collection.
5. Notwithstanding the provisions
of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for
purposes of paragraph 3 or 4 shall not, in that State, be subject to the time
limits applicable to a revenue claim under the laws of that State by reason of
its nature as such. In addition, a revenue claim accepted by a Contracting
State for the purposes of paragraph 3 or 4 shall not, in that State, have any
priority applicable to that revenue claim under the laws of the other
Contracting State.
6. Proceedings with respect to
the existence, validity or the amount of a revenue claim of a Contracting State
shall not be brought before the courts or administrative bodies of the other
Contracting State.
7. Where, at any time after a
request has been made by a Contracting State under paragraph 3 or 4 and before
the other Contracting State has collected and remitted the relevant revenue
claim to the first-mentioned State, the relevant revenue claim ceases to be
(a) |
|
in the case of a request under paragraph 3, a revenue claim of the
first-mentioned State that is enforceable under the laws of that State and is
owed by a person who, at that time, cannot, under the laws of that State,
prevent its collection, or |
(b) |
|
in the case of a request under paragraph 4, a revenue claim of the
first-mentioned State in respect of which that State may, under its laws,
take measures of conservancy with a view to ensure its collection, the
competent authority of the first-mentioned State shall promptly notify the
competent authority of the other State of that fact and, at the option of the
other State, the first-mentioned State shall either suspend or withdraw its
request. |
8. In no case shall the
provisions of this Article 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 carry out measures which would be contrary to public policy (order
public); |
(c) |
|
to provide assistance if the other Contracting State has not pursued
all reasonable measures of collection or conservancy, as the case may be,
available under its laws or administrative practice; |
(d) |
|
to provide assistance in those cases where the
administrative burden for that State is clearly disproportionate to the
benefit to be derived by the other Contracting State.] |
[ARTICLE 28B
LIMITATION
OF BENEFIT
1. The Contracting States declare
that their domestic rules and procedures with respect to the abuses of law
(including tax treaties) may be applied to the treatment of such abuses.
2. It is understood that the
benefits under this Convention shall not be granted to a person, which is not
the beneficial owner of the items of income derived from the other Contracting
State.
3. This Convention does not
prevent Contracting States to apply domestic Controlled Foreign Corporation
(CFC) rules.
4. Benefits under this Convention
shall not be available to a resident of a Contracting State, or with respect to
any transaction undertaken by such a resident, if the main purpose or one of
the main purposes of the creation, existence, incorporation, registration or
presence of such a resident or of the transaction undertaken by him, was to
obtain benefits under this Convention that would not otherwise be available.]
ARTICLE
29
DIPLOMATIC
AND CONSULAR OFFICERS
Nothing in this Convention shall
affect the fiscal privileges of diplomatic agents or consular officers under
the general rules of international law or under the provisions of special
agreements.
ARTICLE
30
ENTRY
INTO FORCE
1. This Convention shall be
ratified and the instruments of ratification shall be exchanged as soon as
possible.
2. This Convention shall enter into
force upon the exchange of the instruments of ratification and its provisions
shall have effect :
(a) |
|
in
Spain : |
|
in respect of taxes chargeable on income or on
capital for any taxable year beginning on or after the first day of January
of the calendar year next following that in which the Convention enters into
force. |
|
(b) |
|
in
India : |
(i) |
|
in
respect of income arising in any taxable year beginning on or after the first
day of April of the calendar year next following that in which the Convention
enters into force, |
(ii) |
|
in
respect of capital which is held on the last day of any taxable year
beginning on or after the first day of April of the calendar year next
following that in which the Convention enters into force. |
ARTICLE
31
TERMINATION
1. The Convention shall remain in
force indefinitely, but either of the Contracting States may, on or before the
thirtieth day of June in any calendar year beginning after the expiration of a period
of five years from the date of its entry into force, give to the other
Contracting State through diplomatic channels, written notice of termination.
In such event, the Convention shall cease to have effect :
(a) |
|
in
Spain, in respect of taxes chargeable for any taxable year beginning on or
after the first day of January of the calendar year next following that in
which the notice of termination is given; |
(b) |
|
in
India, in respect of income arising in any taxable year beginning on or after
the first day of April of the calendar year next following that in which the
notice of termination is given and in respect of capital which is held on the
last day of any taxable year beginning on or after the first day of April
next following the calendar year in which the notice of termination is given. |
IN WITNESS whereof the
undersigned, being duly authorised thereto, have signed the present Convention.
DONE in duplicate at New Delhi
this 8th day of February, one thousand nine hundred and ninety three in the
Hindi, Spanish and English languages, all the texts
being equally authentic. In case of divergence between any of the texts, the
English text shall be the operative one.
PROTOCOL
At the moment of signing the
Convention between the Government of the Republic of India and the Government
of the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with respect to taxes on income and on capital, the
undersigned have agreed upon the following provisions which shall be an
integral part of the Convention :
1. In respect of clause (d)
of paragraph 1 of Article 3 (General Definitions), it is understood that the
term "tax" 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.
2. In respect of clause (g)
of paragraph 2 of Article 5 (Permanent Establishment), it is understood that this
clause refers to a warehouse where space is rented to other persons.
3. In respect of clauses (b)
and (c) of paragraph 1 of Article 7 (Business Profits), it is understood
that in the case of any doubt as to whether the goods or merchandise sold are
of the similar kind as those sold through the permanent establishment or
whether the other business activities carried on are of the similar kind as
those effected through the permanent establishment, the competent authorities
may consult each other with a view to resolving the case by mutual agreement.
4. In respect of paragraph 3 of
Article 7 (Business Profits), it is understood that in case of any substantial
changes in the provisions of the taxation laws of a Contracting State relating
to limitation on the deductibility of the expenses which are incurred for the
purposes of the business of a permanent establishment, the competent
authorities of the Contracting States shall consult each other on the necessity
of modifying the provisions of this paragraph.
5. In respect of Article 8 (Air
Transport) and Article 9 (Shipping), it is understood that interest on funds
connected with the operation of aircraft or ships in international traffic
shall be regarded as profits derived from the operation of such aircraft or
ships, as the case may be, and the provisions of Article 12 (Interest) shall
not apply in relation to such interest.
6. Paragraph 2 of Article 11
(Dividends), shall not be applicable, in the case of Spain, to the income
attributable, whether distributed or not, to the shareholders of the
corporations and entities referred to in Article 12.2 of Law 44/1978 of 8
September, 1978, and Article 19 of Law 61/1978 of 27 December, 1978, as long as
the said income is not subject to the Spanish Corporation Tax. Such income may
be taxed in Spain according to its Internal Law.
7. The competent authorities shall
initiate the appropriate procedures to review the provisions of Article 13
(Royalties and fees for technical services) after a period of five years from
the date of its entry into force. However, if under any Convention or Agreement
between India and a third State which is a Member of the OECD, which enters
into force after 1-1-1990, India limits its taxation at source on royalties or
fees for technical services to a rate lower or a scope more restricted than the
rate or scope provided for in this Convention on the said items of incomes, the
same rate or scope as provided for in that Convention or Agreement on the said
items of income shall also apply under this Convention with effect from the
date on which the present Convention comes into force or the relevant Indian
Convention or Agreement, whichever enters into force later.
8. In respect of paragraph 2 of
Article 26 (Non-discrimination), it is understood that the provision of this
paragraph shall not be construed as preventing a Contracting State from
charging the profits of a permanent establishment which an enterprise of the
other Contracting State has in the first-mentioned State at a rate of tax which
is higher than that imposed on the profits of a similar enterprise of the
first-mentioned State, nor as being in conflict with the provisions of
paragraph 3 of Article 7 (Business Profits) of this Convention. It is also
understood that in no case the taxation of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State shall be
less favourably levied than the taxation levied on a permanent establishment of
an enterprise of a third State carrying on the same activities under a double
taxation Convention concluded by the other Contracting State with that third
State.
9. Notwithstanding the provisions
of paragraph 4 of Article 26 (Non-discrimination), it is understood that in the
case of India, payments by way of interest, royalties and fees for technical
services made by an enterprise of India to a resident of Spain, shall not be
allowed as a deduction for the purpose of determining the taxable profits of
such enterprise unless tax has been paid or deducted at source from such
payments under Indian law and in accordance with the provisions of this
Convention.
10. For the purposes of this
Convention, it is understood that the term "taxable year" in the case
of India shall mean the "previous year" as defined in the Income-tax
Act, 1961.
[11. It is understood that Article
28 (exchange of information) allows that Contracting States may use other
techniques to obtain information which may be relevant to both Contracting
States such as simultaneous examination, tax examination abroad and
industry-wide exchange of information
(i) |
|
in accordance with the domestic laws and administrative procedures of
each Contracting State and; |
(ii) |
|
provided that a procedure has been
agreed upon by the competent authorities of both Contracting States in
accordance with paragraph 3 of Article 27 of the Convention.] |
[12. With respect to Article 28A
It is understood that paragraph 4
of Article 28A (Assistance in the collection of taxes) will include interim
measures of conservancy by freezing the assets before a revenue claim is raised
against a person in accordance with the laws of both Contracting States.]
[13. With respect to Article 28B
It is understood that the term
'transaction' referred to in paragraph 4 of Article 28B (Limitation of Benefit)
includes the transaction of the creation, assignment or alienation of any
shares, debt-claims, assets or other rights where the main purpose or one of
the main purposes of such creation, assignment or alienation was to take
advantage of this Convention.]
IN WITNESS whereof the
undersigned, being duly authorised thereto, have signed the present Protocol.
DONE in duplicate at New Delhi
this 8th day of February, one thousand nine hundred and ninety-three in the
Hindi, Spanish and English languages, all the texts
being equally authentic. In case of divergence between any of the texts, the
English text shall be the operative one.