Convention between the
Republic of India and the Kingdom of Denmark for the avoidance of double
taxationand the prevention of fiscal evasion with respect to taxes on the
income and on capital
Notification No. GSR
853(E), dated 25 September, 1989
Whereas the annexed
Convention between the Government of the Republic of India and the Government
of the Kingdom of Denmark for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on capital has
come into force on the 13th day of June, 1989, on the notification by both the
Contracting States to each other of the completion of the constitutional
requirements, as required by paragraph 1 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), section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964),
and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central
Government hereby directs that all the provisions of the said Convention shall
be given effect to in the Union of India.
The Government of the
Republic of India and the Government of the Kingdom of Denmark;
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.
The taxes to which this Convention shall apply are:
(a) in India:
(i) the income-tax including any surcharge
thereon imposed under the Income-tax Act, 1961 (43 of 1961);
(ii) the
surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964);
(iii) the
wealth-tax imposed under the Wealth-tax Act, 1957 (24 of 1957):
(hereinafter referred to
as "Indian tax").
(b) In Denmark:
(i) the income-tax to the State (ind komstskatten til staten);
(ii) the
municipal income-tax (den kommunale indkomstskat);
(iii) the
income-tax to the country municipalities (den amtskommunale indkomstskat);
(iv) the old
age pension contribution (folkepensionsbidreget);
(v) the
seamen's tax (smandsskatten);
(vi) the
special income-tax (den saerlige indkomstskat);
(vii) the
church tax (kirkeskatten);
(viii) the tax on dividends (udbytteskatten);
(ix) the
contribution to the sickness "per diem" fund (bidrag til
dagpengefonden);
(x) the
hydrocarbon tax (kulbrinteskatten);
(xi) the
capital tax to the State (formueskatten til staten);
(hereinafter referred to
as "Danish tax")
2. The Convention shall also apply to any
identical or substantially similar taxes which are imposed by either
Contracting State after the date of signature of the present Convention in addition
to, or in place of, the taxes referred to in paragraph 1. The competent
authorities of the Contracting States shall notify each other of any
substantial changes which are made in their respective taxation laws.
ARTICLE 3: General
definitions.—
1. In this Convention, unless the context otherwise requires:
(a) the term "India" means the
territory of India and includes territorial sea and the air space above it, as
well as any other maritime zone in which India has sovereign rights, other
rights and jurisdictions, according to the Indian law and in accordance with
international law;
(b) the term "Denmark" means the
territory of the Kingdom of Denmark and including the territorial sea of
Denmark and the air space above it, as well as any other maritime area to the
extent that that area in accordance with international law has been or may
hereafter be designated under Danish laws as an area within which Denmark may
exercise sovereign rights for the purpose of exploring and exploiting the
natural resources of the seabed or its sub-soil and the superjacent waters and
with regard to other activities for the economic exploitation and exploration
of the area; the term does not comprise the Faroe Islands and Greenland;
(c) the term "a Contracting State"
and "the other Contracting State" mean India or Denmark as the
context requires;
(d) the term "tax" means Indian
tax or Danish tax, as the context requires, but shall not include any amount
which is payable in respect of any default or omission in relation to the taxes
to which this Convention applies or which represents a penalty imposed relating
to those taxes;
(e) the term "person" includes an
individual, a company and any other entity which is treated as a taxable unit
under the taxation laws in force in the respective Contracting States;
(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 States;
(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 "competent authority"
means in the case of India the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative; and in the case of
Denmark; the Minister for Inland Revenue, Customs and Excise or his authorised
representative;
(i) the term "national" means any
individual possessing the nationality of a Contracting State and any legal
person, partnership or association deriving its status from the laws in force
in a Contracting State;
(j) 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.
2. As regards the application of the
Convention by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the law of
that State concerning the taxes to which the Convention applies.
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 tax therein by reason of his domicile,
residence, place of management or any other criterion of a 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 as follows:
(a) he shall be deemed to be a resident of
the State in which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be deemed to be a
resident of the State with which his personal and economic relations are closer
(centre of vital interests);
(b) if the State in which he has his centre
of vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode;
(c) if he has an habitual abode in both
States or in neither of them, he shall be deemed to be a resident of the State
of which he is a national;
(d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1, a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the State in
which its place of effective management is situated.
ARTICLE 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 the enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes
especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a
warehouse in relation to a person providing storage facilities for others;
(h) a farm, plantation or other place where
agriculture, forestry, plantation or related activities are carried on;
(i) a
premise used as a sales outlet or for receiving or soliciting orders;
(j) an installation or structure used for
the exploration of natural resources provided that the activities are carried
on for a period or periods of 183 days or more in any twelve-month period.
(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 183 days or more.
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 of
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of advertising, for the supply of information,
for scientific research, or for other 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;
or
(c) he habitually secures orders in the
first-mentioned State, wholly or almost wholly for the enterprise itself or for
the enterprise and other enterprises controlling, controlled by, or subject to
the same common control, as that enterprise.
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 Contracting 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 situated in the other Contracting
State may be taxed in that other State.
2. The term "immovable property"
shall have the meaning which it has under the law of the Contracting State in
which the property in question is situated. The term shall in any case include
property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general law
respecting landed property apply, usufruct of immovable property and right 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 of 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 these sold through that permanent establishment; or (c) other business
activities carried on in that other State of the same or similar kind as those
effected through that permanent establishment.
2. Subject to the provisions of paragraph
3, where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment. In any case where the correct amount of
profits attributable to a permanent establishment is incapable of determination
or the determination thereof presents exceptional difficulties, the profits
attributable to the permanent establishment may be estimated on a reasonable
basis.
3. In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expenses which
are incurred for the purposes of the business of the permanent establishment
including executive and general administrative expenses so incurred, whether in
the State in which the permanent establishment is situated or elsewhere, in
accordance with the provisions of 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. 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 shall preclude that
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
contained in this Article.
5. No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
6. For the purpose 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.
7. Where profits include items of income
which are dealt with separately in other articles of this Convention, then the
provisions of those articles shall not be affected by the provisions of this
Article.
ARTICLE 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 provisions of paragraphs 1 and 2
shall apply to profits derived by the Danish, Norwegian and Swedish air
transport consortium, known as the Scandinavian Airlines System (SAS), but only
to such part of the profit as corresponds to the shareholding in the consortium
held by Det Danske Luftfartsselskab (DDL), the Danish partner of Scandinavian
Airlines System (SAS).
4. For the purposes of this Article,
interest on funds connected with the operation of aircraft in international
traffic shall be regarded as profits derived from the operation of such
aircraft, and the provisions of Article 12 shall not apply in relation to such
interest.
5. 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 from the operation of
ships in international traffic shall be taxable only in the Contracting State
in which the place of effective management of the enterprise is situated.
2. Notwithstanding the provisions of
paragraph 1, such profits may be taxed in the other Contracting State from
which they are derived provided that the tax so charged shall not exceed:
(a) during the first five fiscal years after the entry into force
of this Convention, 50 per cent, and
(b) during
the subsequent five fiscal years, 25 per cent,
of the tax otherwise
imposed by the internal law of that State. Subsequently, only the provisions of
paragraph 1 shall be applicable.
3. 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.
4. For the purposes of this Article:
(a) interest on funds connected with the
operation of ships in international traffic shall be regarded as income from
the operation of such ships and the provisions of Article 12 shall not apply in
relation to such interest; and
(b) profits from the operation of ships
includes profits derived from the use, maintenance of rental of containers
(including trailers and related equipment for the transport of containers) in
connection with the transport of goods or merchandise in international traffic.
ARTICLE 10: Associated
enterprises.--1. 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.
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 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 State 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:
(a) 15 per cent of the gross amount of the
dividends if the beneficial owner is a company which owns at least 25 per cent
of the shares of the company paying the dividends;
(b) 25 per
cent of the gross amount of the dividends in all other cases.
The competent authorities
of the Contracting States shall by mutual agreement settle the mode of
application of these limitations.
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 in so far as such dividends are paid to a resident of that other State
or in so far as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to 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. Subject to the provisions of paragraph 4
of Article 8 and paragraph 4(a) of Article 9, 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 the tax so charged on interest payable in respect of a loan given or
debt credited after the date of entry into force of this Convention, shall not
exceed:
(a) 10 per cent of the gross amount, if such
interest is paid on any loan of whatever kind granted by a bank, and
(b) 15 per
cent of the gross amount in all other cases.
3. Notwithstanding the provisions of
paragraph 2 of this Article, interest arising in a Contracting State and
derived by the Government of the other Contracting State, a political
sub-division or local authority thereof, the Central Bank of that other
Contracting State or any agency of that Government, or by any other resident of
that other Contracting State with respect of debt-claims of that resident which
are financed, guaranteed or insured by the Government of that other Contracting
State, a political sub-division or local authority thereof, the Central Bank of
that other Contracting State or any agency of that Government, shall be exempt
from tax in 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 Contracting 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.
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties or fees for technical services the tax so charged
shall not exceed 20 per cent of the gross amount of the royalties or fees for
technical services.
3. The term "royalties" as used
in this Article means payments of any kind received as a consideration for the
use of, or the right to use, any copyright of literary, artistic or scientific
work including cinematograph films or films or tapes used for radio or
television broadcasting, any patent, trade mark, design or model, plan, secret
formula or process, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information concerning industrial,
commercial or scientific experience.
4. The term "fees for technical
services" as used in this Article means payments of any amount to any
person other than payments to an employee of the person making payments, in
consideration for the services of a managerial, technical or consultancy
nature, including the provision of services of technical or other personnel.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 15, as the case may be, shall apply.
6. Royalties and fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the royalties or fees for technical
services, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the liability to pay the royalties or fees for technical services was
incurred, and such royalties or fees for technical services are borne by such
permanent establishment or fixed base, then such royalties or fees for
technical services shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
7. Where, by reason of special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of royalties or fees for technical services paid
exceeds the amount which would have been paid in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payment shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Convention.
ARTICLE 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 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.
With respect to gains
derived by the Danish, Swedish and Norwegian air transport consortium
Scandinavian Airlines System (SAS), the provisions of this paragraph shall
apply only to such proportion of the gains as corresponds to the participation
held in that consortium by Det Danske Luftfartsselskab (DDL), the Danish
partner of Scandinavian Airlines System (SAS).
4. Gains from the alienation of shares of
the capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a Contracting State
may be taxed in that State.
5. Gains from the alienation of shares
other than those mentioned in paragraph 4 in a company which is a resident of a
Contracting State may be taxed in that State provided that such shares
represent at least 10 per cent of the share capital of that company.
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 an individual who is a
resident of a Contracting State from the performance of professional services
or other independent activities of a similar character shall be taxable only in
that State except in the following circumstances, when such income may also be
taxed in the other Contracting State:
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities in that case, only so much of the income as is attributable to
that fixed base may be taxed in that other State; 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 fiscal year of that other State, only so much of the income as is
derived from his activities performed in that other State may be taxed in that
other State.
The term
"professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities, as well as the
independent activities of physicians, surgeons, lawyers, engineers, architects,
dentists and accountants.
ARTICLE 16: Dependent
personal services.—
1. Subject to the provisions of Articles
17, 18, 19 and 20, 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 provision 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
fiscal year of that other State; 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.
4. Where a resident of Denmark derives
remuneration in respect of an employment exercised aboard an aircraft operated
in international traffic by the Scandinavian Airlines System (SAS) consortium,
such remuneration shall be taxable only in Denmark.
ARTICLE 17: Directors fees
and remuneration of top level managerial officials.—
1. 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.
2. Salaries, wages and other similar
remuneration derived by a resident of a Contracting State in his capacity as an
official in a top-level managerial position of a company which is a resident of
the other Contracting State may be taxed in that other State.
ARTICLE 18: Entertainers
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 a theatre, motion picture, radio or television artiste or
a musician, or as an athlete, from his personal activities as such exercised in
the other Contracting State may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or 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
paragraph 1, income derived by an entertainer or an athlete who is a resident
of a Contracting State from his personal activities as such exercised in the
other Contracting State, shall be taxable only in the first-mentioned
Contracting State, if the activities in the other Contracting State are
supported wholly or substantially from the public funds of the first-mentioned
Contracting State, including any of its political sub-divisions or local
authorities.
4. Notwithstanding the provisions of
paragraph 2 and Articles 7, 15 and 16, where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such in
a Contracting State accrues not to the entertainer or athlete himself but to
another person, that income shall be taxable only in the other Contracting
State, if that other person is supported wholly or substantially from the
public funds of that other State, including any of its political sub-divisions
or local authorities.
ARTICLE 19: Remuneration
and pensions in respect of government service.—
1. (a) Remuneration, 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. 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.
3. The provisions of Articles 16 and 17
shall apply to remuneration in respect of services rendered in connection with
a business carried on by a Contracting State or a political sub-division or
local authority thereof.
ARTICLE 20: Students and
apprentices.—
1. A student or business apprentice who is
or was a resident of one of the Contracting States immediately before visiting
the other Contracting State and who is present in that other State solely for
the purpose of his education or training, shall be exempt from tax in that
other State on:
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that
other State not exceeding 20,000 Danish Crowns or its equivalent in Indian
currency during any fiscal year of that other State provided that such
employment is directly related to his studies or is necessary for the purpose
of his maintenance.
2. The benefits of this Article shall
extend only for such period of time as may be reasonable or customarily
required to complete the education or training undertaken, but in no event
shall any individual have the benefits of this Article, for more than five
consecutive years from the date of his first arrival in that other Contracting
State.
ARTICLE 21: 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 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 22: 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 and
aircraft operated in international traffic and by boats engaged in inland
waterways transport, and by movable property pertaining to the operation of
such ships, aircraft and boats, shall be taxable only in the Contracting State
in which the enterprise is a resident.
4. All other elements of capital of a resident of a Contracting
State shall be taxable only in that State.
ARTICLE 23: Avoidance of
double taxation.—
1. The laws in force in either of the
Contracting States shall continue to govern the taxation of income and capital
in the respective Contracting State except where express provision to the
contrary is made in this Convention.
2. Double taxation shall be avoided in the case of India as
follows:
(a) Where a resident of India derives income
or owns capital which, in accordance with the provisions of this convention,
may be taxed in Denmark, India shall allow as a deduction from the tax on the
income of that resident an amount equal to the income-tax paid in Denmark,
whether directly or by deduction; and as a deduction from the tax on the
capital of that resident an amount equal to the capital tax paid in Denmark.
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 Denmark. Further, where such resident is a company by which surtax is
payable in India, the deduction in respect of income-tax paid in Denmark shall
be allowed in the first instance from income-tax payable by the company in
India and as to the balance, if any, from surtax payable by it in India;
(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 Denmark, 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 Denmark;
3. Double taxation shall be avoided in the case of Denmark as
follows:
(a) Subject to the provisions of
sub-paragraph (c), where a resident of Denmark derives income or owns capital
which, in accordance with the provisions of this Convention, may be taxed in
India, Denmark 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) 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 a resident of Denmark derives
income or owns capital which, in accordance with the provisions of this
convention shall be taxable only in India, Denmark 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 India;
(d) For the purposes of the deduction
referred to in sub-paragraph (a), 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(4A), 10(4B),
10(6)(viia), 10(15)(iv), 10A, 32A, 80HH, 80-I, 80J and 80L 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 for the purposes of the economic development of
India, if it has not been modified thereafter or has been modified only in
minor respects so as not to affect its general character;
(e) For the purposes of deduction referred
to in sub-paragraph (a), Indian tax on interest and royalties and fees for
technical services shall in no case be considered as having been paid at a rate
of less than,
(i) in the case of interest--
(a) 10 per cent in the case of banks; and
(b) 15 per
cent in other cases; and
(ii) 20 per cent in the case of royalties and
fees for technical services.
ARTICLE 24:
Non-discrimination.—
1. The nationals of a Contracting State
shall not be subject 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 of 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 and under the same conditions.
3. 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, reductions and deductions for
taxation purposes which are by law available only to persons who are so
resident.
4. Except where the provisions of paragraph
1 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 to a resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible under the
same conditions as they had been contracted to a resident of the
first-mentioned State.
5. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned 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
which are the subject of this Convention.
ARTICLE 25: Manual
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 domestic laws of those States,
present his case to the competent authority of the Contracting State of which
he is a resident. This case must be presented within three years of the date of
receipt of notice of the action which gives rise to taxation not in accordance
with 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
avoidance of taxation which is not in accordance with the Convention. Any
agreement reached shall be implemented notwithstanding any time limits in the
domestic laws of the Contracting States.
3. The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation or application of the
Convention. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
4. The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs. When it seems
advisable in order to reach an 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 26: Exchange of
information.—
1. The competent authorities of the
Contracting States shall exchange such information (including documents) as is
necessary for carrying out the provisions of this Convention or of the domestic
laws of the Contracting States concerning taxes covered by the Convention,
insofar as the taxation thereunder is not contrary to the Convention, in
particular for the prevention of fraud or evasion of such taxes. 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. The
competent authorities shall, through consultation, develop appropriate
conditions, methods and techniques concerning the matters in respect of which
such exchange of information shall be made, including, where appropriate,
exchange of information regarding tax avoidance.
2. The exchange of information or documents
shall be either on a routine basis or on request with reference to particular
cases or both. The competent authorities of the Contracting States shall agree
from time to time on the list of the information or documents which shall be furnished
on routine basis.
3. 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 or documents 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 or documents 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.—
1. The Contracting States undertake to lead
assistance and support to each other, in the collection of the taxes to which
this Convention relates, in the cases where the taxes are definitely due
according to the laws of the State making the request.
2. In the case of a request for enforcement
or collection, tax claims of either of the Contracting States which have been
finally determined will be accepted for enforcement by the other Contracting
State to which the request is made and collected in that State in accordance
with the laws applicable to the enforcement and collection of its taxes.
3. In the case of Indian tax, the request
will be sent by the Central Board of Direct Taxes to the Danish Tax
Directorate, Statshattedirektoratet, Post Box 100, DK-3460 Birkerod, Denmark,
and will be accompanied by such certificate as is required by the laws of India
to establish that the taxes have been finally determined and are due from the
taxpayer.
4. In the case of Danish tax the request
will be sent by the Danish Tax Directorate, to the Central Board of Direct Taxes,
(FTD), Department of Revenue, Ministry of Finance, North Block, New Delhi-110
001, India and will be accompanied by such certificate as is required by the
laws of Denmark to establish that the taxes have been finally determined and
are due from the taxpayer.
5. Where the tax claim has not become final
by reason of its being subject to appeal or any other proceeding, a Contracting
State may, in order to protect its revenues, request the other Contracting
State to take such interim measures in this behalf as are lawful under the laws
of that other Contracting State.
6. A request for assistance in collection
of taxes due from a taxpayer shall be made only if adequate assets of the
taxpayer are not available for recovering the taxes from him in the Contracting
State making the request.
7. The Contracting State in which tax is
recovered in pursuance of paragraphs 1, 2 and 5 of this Article shall
immediately thereafter remit the amount so recovered to the Contracting State
which made the request but it shall be entitled to reimbursement of costs, if
any, incurred in the course of rendering such assistance to the extent mutually
agreed between the competent authorities of the two States.
ARTICLE 28: Diplomatic
agents 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 29: Territorial
extension.—
1. This Convention may be extended by
common agreement either in its entirety or with such modifications as are
agreed upon to any part of the territory of Denmark which is specifically
excluded from the application of the Convention and which imposes taxes
substantially similar in character to those to which the Convention applies.
Any such extension shall take effect from such date and subject to such
modifications and conditions, including conditions as to termination, as may be
specified and agreed between the Contracting States in notes to be exchanged
through diplomatic channels or in any other manner in accordance with their
constitutional procedures.
2. Unless otherwise agreed by both
Contracting States, the termination of the Convention by one of them under
Article 31 shall also terminate, in the manner provided for in that Article,
the application of the Convention to any part of the territory of Denmark to
which it has been extended under this Article.
ARTICLE 30: Entry into
force.—
1. The Governments of the Contracting
States shall notify to each other that the constitutional requirements for the
entry into force of this Convention have been complied with.
2. This Convention shall enter into force
on the date of the latter of the notifications referred to in paragraph 1 and its
provisions shall have effect in respect of tax or the income year beginning on
or after 1st January, in the calendar year next following the year in which the
latter of the notifications referred to in paragraph 1 is given, and subsequent
income years.
3. The agreement between the Governments of
India and Denmark for the Avoidance of Double Taxation of Income, signed at
Copenhagen on the 16th September, 1959, shall cease to have effect at the time
when the provisions of this Convention shall be effective in accordance with
the provisions of paragraphs 1 and 2.
ARTICLE 31:
Termination.--This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the Convention,
through diplomatic channels, by giving written notification of termination on
or before the thirtieth day of June of any calendar year following after the
period of five years from the year in which the Convention enters into force.
In such event, the Convention shall cease to have effect, in respect of tax for
the income year beginning on or after 1st January in the calendar year next
following the year in which the notification is given and subsequent income
years.
In witnes whereof the
undersigned, being duly authorised thereto, have signed the present Convention.
Done in duplicate at
Copenhagen this 8th day of March, one thousand nine hundred and eighty nine in
the Hindi, Danish 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.
For the Government of For
the Government of
the Republic of India, the
Kingdom of Denmark
(Sd.) R. C. Sukla. (Sd.)
Jens Rosman.
The Government of India
and the Government of the Kingdom of Denmark:
Having entered into a
convention for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and capital:
Have agreed, at the time
of signing the said Convention, on the following provisions which shall
constitute an integral part thereof:
(1) For the purposes of paragraph 3(e) of
Article 23, it is understood that the rates of tax specified therein shall in
no case exceed the rate of withholding tax applicable to such categories of
income under the Indian tax laws.
(2) For the purposes of Article 27, a request
for assistance in collection of taxes due from a taxpayer shall not be made
unless such taxes aggregate to 2000 Danish Crowns or its equivalent in Indian
currency or more.
In witness whereof the
undersigned duly authorised thereto, have signed the present Protocol.
Done in duplicate at
Copenhagen this 8th day of March, one thousand nine hundred eighty-nine in
Hindi, Danish and English languages, all the texts being equally authentic. In
case of divergence between the three texts, English text shall be the operative
one.
For the Government of For
the Government of
the Republic of India, the
Kingdom of Denmark
(Sd.) R. C. Sukla. (Sd.)
Jens Rosman.
At the moment of signing
the Convention for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income and capital between the
Government of the Republic of India and the Government of the Kingdom of
Denmark, the signatories have agreed that the following provisions shall form
an integral part of the Convention:
1. The convention has been extended to
apply in its entirety to the territory of the Faroe Islands.
2. In the Convention the terms "the
Kingdom of Denmark" and "Denmark" shall also apply to the Faroe
Islands unless the context otherwise, requires.
3. The taxes which in pursuance of the
present Protocol are the subject of the Convention shall include the following
taxes which are levied on the Faroe Islands:
(a) Skat til landskassen (the provincial income-tax)
(b) Kommunalindkomstaskat
(the communal income-tax);
(c) Kirkeskat
(the Church tax);
(d) Udbytteskat (tax on dividends);
(e) Ejendomsavanceafgift
(tax on profit from real estate);
(f) Royaltyafgift
(tax on royalty).
4. The term "competent
authorities" means in the case of the Faroe Islands the Faroe Local
Government or the authority which on behalf of the Local Government has been
authorized to handle questions with reference to the Convention.
5. This Protocol
shall enter into force on and have effect from the same date as the Convention.
In witness whereof the
undersigned, duly authorised thereto, have signed the present Protocol.
6. Done in duplicate at Copenhagen this
8th day of March, one thousand nine hundred and eighty-nine in Hindi, Danish
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.
For the Government of For
the Government of
the Republic of India, the
Kingdom of Denmark,
(Sd.) R. C. Sukla. (Sd.)
Jens Rosman.