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00 establish brazil-brazil-double-taxation-conventions_doc_eb000_prsp_v2
 

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    00 establish brazil-brazil-double-taxation-conventions_doc_eb000_prsp_v2 00 establish brazil-brazil-double-taxation-conventions_doc_eb000_prsp_v2 Document Transcript

    • 1 2ed edition 2 Sao Paulo, 2012 3 4 5 6 Brazil Double Taxation Prevention Treaties 7 8 Double Taxation Conventions 9 10 11 12 1. Argentine .....................................................................................................................................................3 13 2. Austria ........................................................................................................................................................ 29 14 3. Belgium...................................................................................................................................................... 56 15 4. Canada ....................................................................................................................................................... 85 16 5. Chile ......................................................................................................................................................... 114 17 6. China ....................................................................................................................................................... 144 18 7. Czech Republic and Slovakia ......................................................................................................... 172 19 8. Denmark ................................................................................................................................................ 199 20 9. Ecuador ................................................................................................................................................... 226 21 10. Finland .................................................................................................................................................... 252 22 11. France ...................................................................................................................................................... 280 23 12. Germany................................................................................................................................................. 306 24 13. Hungary ................................................................................................................................................. 335 25 14. India ......................................................................................................................................................... 364 26 15. Israel ........................................................................................................................................................ 393 27 16. Italy........................................................................................................................................................... 423 28 17. Japan ........................................................................................................................................................ 451 29 18. Korea........................................................................................................................................................ 486Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 1 of 814
    • 30 19. Luxembourg ......................................................................................................................................... 515 31 20. Mexico .................................................................................................................................................... 546 32 21. Netherlands........................................................................................................................................... 548 33 22. Norway ................................................................................................................................................... 576 34 23. Peru .......................................................................................................................................................... 607 35 24. Philippines ............................................................................................................................................. 639 36 25. Portugal .................................................................................................................................................. 668 37 26. South Africa .......................................................................................................................................... 703 38 27. Spain ........................................................................................................................................................ 734 39 28. Sweden .................................................................................................................................................... 764 40 29. Ukraine ................................................................................................................................................... 790 41 42 43Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 2 of 814
    • 44 Argentine 45 46 Date of Conclusion: 17 May 1980 47 Effective Date: 1 January 1983. 48 CONVENTION BETWEEN 49 THE FEDERATIVE REPUBLIC OF BRAZIL AND THE ARGENTINE REPUBLIC 50 FOR THE AVOIDANCE OF DOUBLE TAXATION AND 51 THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. 52 The Government of the Federative Republic of Brazil and the Government of the 53 Argentine Republic, 54 DESIRING to conclude a Convention for the avoidance of double taxation and the 55 prevention of fiscal evasion with respect to taxes on income, 56 HAVE AGREED as follows: 57 Article 1 58 Personal scope 59 This Convention shall apply to persons who are residents of one or both of the 60 Contracting States. 61 Article 2 62 Taxes covered 63 1. The existing taxes to which this Convention shall apply are: 64 a) in the Federative Republic of Brazil: 65 - the federal income tax excluding the tax on excess remittances and on activities 66 of minor importance;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 3 of 814
    • 67 (hereinafter referred to as "Brazilian tax"); 68 b) in the Argentine Republic: 69 - the income tax ("impuesto a las ganancias"); 70 - the capital gain tax ("impuesto a los beneficios eventuales") 71 (hereinafter referred to as "Argentine tax"). 72 2. The Convention shall also apply to any identical or substantially similar 73 taxes that are subsequently in addition to, or in place of, the existing taxes. 74 The competent authorities of the Contracting States shall notify each other 75 of any significant changes that have been made in their respective taxation 76 laws. 77 Article 3 78 General definitions 79 1. For the purposes of this Convention, unless the context otherwise requires: 80 a) the term "Brazil" means the Federative Republic of Brazil; 81 b) the term "Argentina" means the Argentine Republic; 82 c) the term "national" means: 83 - any individual possessing the nationality of a 84 Contracting State; 85 - any legal person, partnership or association deriving its 86 status as such from the laws in force in a Contracting State; 87 d) the terms "a Contracting State" and "the other Contracting State" mean Brazil or 88 Argentina, as the context requires;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 4 of 814
    • 89 e) the term "person" includes an individual, a company and any other body of 90 persons; 91 f) the term "company" means any body corporate or any entity that is treated as a 92 body corporate for tax purposes; 93 g) the terms "enterprise of a Contracting State" and "enterprise of the other 94 Contracting State" mean respectively an enterprise carried on by a resident of a 95 Contracting State and an enterprise carried on by a resident of the other 96 Contracting State; 97 h) the term "international traffic" means any transport by a ship or aircraft or 98 automotive vehicle operated by an enterprise that has its place of effective 99 management in a Contracting State, except when such a ship, aircraft or 100 automotive vehicle is operated solely between places in the other Contracting 101 State; 102 i) the term "tax" means Brazilian tax or Argentine tax, as the context requires; 103 j) the term "competent authority" means: 104 i) - in Brazil: the Minister of Finance, the Secretary of Federal Revenue or their 105 authorized representatives; 106 ii) - in Argentine: the Minister of Economy ("Secretaria de Estado de Hacienda"). 107 2. As regards the application of the Convention by a Contracting State, any 108 term not defined therein shall have the meaning that it has under the law 109 of that Contracting State for the purposes of the taxes to which the 110 Convention applies, unless the context otherwise requires. Where the term 111 has contrary or opposed meanings, the competent authorities of the 112 Contracting States shall, by mutual agreement, establish the interpretation 113 to be adopted.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 5 of 814
    • 114 Article 4 115 Resident 116 1. For the purposes of this Convention, the term "resident of a Contracting State" 117 means any person who, under the laws of that State, is deemed to be a resident 118 thereof by reason of domicile or residence, place of management or any other 119 criterion of a similar nature. 120 2. Where by reason of the provisions of paragraph l an individual is a resident of 121 both Contracting States, then his status shall be determined as follows: 122 a) he shall be deemed to be a resident of the State in which he has a permanent 123 home available to him. If he has a permanent home available to him in both 124 Contracting States, he shall be deemed to be a resident of the Contracting State 125 with which his personal and economic relations are closer (centre of vital 126 interests); 127 b) if the Contracting State in which he has his centre of vital interests cannot be 128 determined, or if he has not a permanent home available to him in either State, he 129 shall be deemed to be a resident of the Contracting State in which he has an 130 habitual abode; 131 c) if he has an habitual abode in both Contracting States or in neither of them, he 132 shall be deemed to be a resident of the Contracting State of which he is a national; 133 d) if he is a national of both Contracting States or of neither of them, the 134 competent authorities of the Contracting States shall settle the question by mutual 135 agreement. 136 3. Where by reason of the provisions of paragraph l a person other than an 137 individual is a resident of both Contracting States, then it shall be deemed to be a 138 resident of the Contracting State in which its place of effective management is 139 situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 6 of 814
    • 140 Article 5 141 Permanent establishment 142 1. For the purposes of this Convention, the term "permanent establishment" means 143 a fixed place of business through which the business of an enterprise is wholly or 144 partly carried on. 145 2. The term "permanent establishment" includes especially: 146 a) a place of management; 147 b) a branch; 148 c) an office; 149 d) a factory; 150 e) a workshop; 151 f) a mine, a quarry or any other place of extraction of natural resources; 152 g) a building site or construction or installation project which lasts for more than 153 six months. 154 3. The term "permanent establishment" shall be deemed not to include: 155 a) the use of facilities solely for the purpose of storage, display or delivery of 156 goods or merchandise belonging to the enterprise; 157 b) the maintenance of a stock of goods or merchandise belonging to the 158 enterprise solely for the purpose of storage, display or delivery; 159 c) the maintenance of a stock of goods or merchandise belonging to the 160 enterprise solely for the purpose of processing by another enterprise; 161 d) the maintenance of a fixed place of business solely for the purpose of 162 purchasing goods or merchandise or of collecting information, for the enterprise; 163 e) the maintenance of a fixed place of business solely for the purpose of 164 advertising, for the supply of information, for scientific research, or similar 165 activities of a preparatory or auxiliary character for the enterprise. 166 4. A person acting in a Contracting State on behalf of an enterprise of the other 167 Contracting State - other than an agent of an independent status to whomEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 7 of 814
    • 168 paragraph 5 applies - shall be deemed to be a permanent establishment in the 169 first-mentioned State if he has, and habitually exercises in that State, an authority 170 to conclude contracts in the name of the enterprise, unless his activities are 171 limited to the purchase of merchandise for the enterprise. 172 However, an insurance company of a Contracting State shall be deemed to have a 173 permanent establishment in the other Contracting State if it receives premiums or 174 insures risks in that other State. 175 5. An enterprise of a Contracting State shall not be deemed to have a permanent 176 establishment in the other Contracting State merely because it carries on business 177 in that other State through a broker, general commission agent or any other agent 178 of an independent status, provided that such persons are acting in the ordinary 179 course of their business. 180 6. The fact that a company which is a resident of a Contracting State controls or is 181 controlled by a company which is a resident of the other Contracting State, or 182 which carries on business in that other State (whether through a permanent 183 establishment or otherwise), shall not of itself constitute either company a 184 permanent establishment of the other. 185 7 .An enterprise of a Contracting State shall be deemed to have a permanent 186 establishment in the other Contracting State if it provides in that other State the 187 services of artistes or athletes to whom Article 17 applies. 188 Article 6 189 Income from immovable property 190 1. Income derived from immovable property, including income from agriculture 191 or forestry, may be taxed in the Contracting State in which such property is 192 situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 8 of 814
    • 193 2. a) The term "immovable property", subject to the provisions of paragraphs "b" 194 and "c" below, shall have the meaning which it has under the law of the 195 Contracting State in which the property in question is situated. 196 b) the term shall in any case include property accessory to immovable property, 197 livestock and equipment used in agriculture and forestry, rights to which the 198 provisions of general law respecting landed property apply, usufruct of 199 immovable property and rights to variable or fixed payments as consideration for 200 the working of, or the right to work, mineral deposits, sources and other natural 201 resources. 202 c) ships, boats and aircraft shall not be regarded as immovable property. 203 3. The provisions of paragraph 1 shall apply to income derived from the direct 204 use, letting, renting or use in any other form of immovable property. 205 4. The provisions of paragraphs 1 and 3 shall also apply to the income from 206 immovable property of an enterprise and to income from immovable property 207 used for the performance of independent personal services. 208 Article 7 209 Business profits 210 1. The profits of an enterprise of a Contracting State shall be taxable only in that 211 State unless the enterprise carries on business in the other Contracting State 212 through a permanent establishment situated therein. If the enterprise carries on 213 business as aforesaid, the profits of the enterprise may be taxed in the other State 214 but only so much of them as is attributable to that permanent establishment. 215 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting 216 State carries on business in the other Contracting State through a permanent 217 establishment situated therein, there shall in each Contracting State be attributed 218 to that permanent establishment the profits which it might be expected to make if 219 it were a distinct and separate enterprise engaged in the same or similar activitiesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 9 of 814
    • 220 under the same or similar conditions and dealing wholly independently with the 221 enterprise of which it is a permanent establishment. 222 3. In determining the profits of a permanent establishment, there shall be allowed 223 as deductions expenses which are incurred for the purposes of the permanent 224 establishment, including executive and general administrative expenses so 225 incurred. 226 4. No profits shall be attributed to a permanent establishment by reason of the 227 mere purchase by that permanent establishment of goods or merchandise for the 228 enterprise. 229 5. Where profits include items of income which are dealt with separately in other 230 Articles of this Convention, then the provisions of those Articles shall not be 231 affected by the provisions of this Article. 232 Article 8 233 Air transport, land transport, shipping and inland waterways transport 234 1. Profits from international traffic by enterprises engaged in the operation of air 235 transport, land transport, shipping and inland waterways transport shall be 236 taxable only in the Contracting State in which the place of effective management 237 of the enterprise is situated. 238 2. If the place of effective management of a shipping enterprise is or of an inland 239 waterways transport enterprise is aboard a ship or boat, then it shall be deemed 240 to be situated in the Contracting State in which the home harbour of the ship or 241 boat is situated, or, if there is no such home harbour, in the Contracting State of 242 which the operator of the ship is a resident. 243 3. The provisions of paragraph 1 shall also apply to profits from the participation 244 in a pool, a joint business or an international operating agency. 245 4. The Convention between Argentina and Brazil of June 21, 1949 for the 246 avoidance of double taxation on income from the operation of shipping and airEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 10 of 814
    • 247 transport and the agreement between Argentina and Brazil of March 15, 1972 248 for the avoidance of double taxation on income from the operation of inland 249 transportation in international traffic shall cease to apply as regards taxes 250 covered by this Convention during the period in which this Convention is in 251 force. 252 Article 9 253 Associated enterprises 254 Where 255 a) an enterprise of a Contracting State participates directly or indirectly in the 256 management, control or capital of an enterprise of the other Contracting State, or 257 b) the same persons participate directly or indirectly in the management, control 258 or capital of an enterprise of a Contracting State and an enterprise of the other 259 Contracting State, 260 and in either case conditions are made or imposed between the two enterprises in 261 their commercial or financial relations which differ from those which would be 262 made between independent enterprises, then any profits which would, but for 263 those conditions, have accrued to one of the enterprises, but, by reason of those 264 conditions, have not so accrued, may be included in the profits of that enterprise 265 and taxed accordingly. 266 Article 10 267 Dividends 268 1. Dividends paid by a company which is a resident of a Contracting State to a 269 resident of the other Contracting State may be taxed in that other State. 270 2. However, such dividends may also be taxed in the Contracting State of which 271 the company paying the dividends is a resident and according to the laws of that 272 State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 11 of 814
    • 273 3. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 274 the dividends, being a resident of a Contracting State, carries on business in the 275 other Contracting State of which the company paying the dividends is a resident 276 through a permanent establishment or a fixed base situated therein, with which 277 the holding by virtue of which the dividends are paid is effectively connected. In 278 such a case, the provisions of Articles 7 or 14, as the case may be, shall apply. 279 4. The term "dividends" as used in this Article means income from shares, 280 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 281 rights, not being debt-claims, participating in profits, as well as income from 282 other corporate rights which is subjected to the same taxation treatment as 283 income from shares by the laws of the Contracting State of which the company 284 making the distribution is a resident. 285 5. Where a company which is a resident of Argentina has a permanent 286 establishment in Brazil, such a permanent establishment may be subject to a tax 287 withheld at source in accordance with Braziian law. 288 6. Where a company which is a resident of a Contracting State derives profits or 289 income from the other Contracting State, that other Contracting State may not 290 impose any tax on the dividends paid by the company, except insofar as such 291 dividends are paid to a resident of that other State or insofar as the holding in 292 respect of which the dividends are paid is effectively connected with a permanent 293 establishment or a fixed base situated in that other State, nor subject the 294 companys undistributed profits to a tax on the companys undistributed profits, 295 even if the dividends paid or the undistributed profits consist wholly or partly of 296 profits or income arising in such other State. 297 Article 11 298 Interest 299 1. Interest arising in a Contracting State and paid to a resident of the other 300 Contracting State may be taxed in that other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 12 of 814
    • 301 2. However, such interest may also be taxed in the Contracting State in which it 302 arises and according to the laws of that State. 303 3. Notwithstanding the provisions of paragraphs 1 and 2: 304 a) interest arising in a Contracting State and paid to the Government of the other 305 Contracting State, a political subdivision thereof or any agency (including a 306 financial institution) wholly owned by that Government or political subdivision 307 shall be exempt from tax in the first-mentioned Contracting State; 308 b) interest from securities, bonds or debentures issued by the Government of a 309 Contracting State, a political subdivision thereof or any agency (including a 310 financial institution) wholly owned by that Government or a political subdivision 311 shall be taxable only in that State. 312 4. The term "interest" as used in this Article means income from government 313 securities, bonds or debentures, whether or not secured by mortgage and whether 314 or not carrying a right to participate in the debtors profits, and from debt-claims 315 of every kind, as well as other income assimilated to income from money lent by 316 the tax law of the Contracting State in which the income arises. 317 5. Interest shall be deemed to arise in a Contracting State when the payer is that 318 State itself, a political subdivision thereof or a resident of that Contracting State. 319 Where, however, the person paying the interest, whether it is a resident of a 320 Contracting State or not, has in a Contracting State a permanent establishment or 321 a fixed base in connection with which the indebtedness on which the interest is 322 paid was incurred, and such interest is borne by such a permanent establishment 323 or fixed base, then such interest shall be deemed to arise in the Contracting State 324 in which the permanent establishment or fixed base is situated. 325 6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 326 the interest, being a resident of a Contracting State, carries on business in the 327 other Contracting State in which the interest arises through a permanent 328 establishment or a fixed base situated therein and the debt-claim in respect ofEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 13 of 814
    • 329 which the interest is paid is effectively connected with such a permanent 330 establishment or fixed base. In such a case the provisions of Article 7 or Article 331 14, as the case may be, shall apply. 332 7. Where, by reason of a special relationship between the payer and the beneficial 333 owner or between both of them and some other person, the amount of the 334 interest, having regard to the debt-claim for which it is paid, exceeds the amount 335 which would have been agreed upon by the payer and the beneficial owner in the 336 absence of such relationship, the provisions of this Article shall apply only to the 337 last-mentioned amount. In such a case, the excess part of the payments shall 338 remain taxable according to the laws of each Contracting State, due regard being 339 had to the other provisions of this Convention. 340 Article 12 341 Royalties 342 1. Royalties arising in a Contracting State and paid to a resident of the other 343 Contracting State may be taxed in that other State. 344 2. However, such royalties may also be taxed in the Contracting State in which 345 they arise and according to the laws of that State. 346 3. The term "royalties" as used in this Article means payments of any kind 347 received as a consideration for the use of, or the right to use, any copyright of 348 literary, artistic or scientific work (including cinematograph films, films or tapes 349 for television or radio broadcasting), any patent, trade mark, design or model, 350 plan, secret formula or process, or for the use of, or the right to use, industrial, 351 commercial, or scientific equipment, or for information concerning industrial, 352 commercial or scientific experience. 353 4. Royalties shall be deemed to arise in a Contracting State when the payer is that 354 State itself, a political subdivision or local authority thereof, or a resident of that 355 State. Where, however, the person paying the royalties, whether he is a resident of 356 a Contracting State or not, has in a Contracting State a permanent establishmentEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 14 of 814
    • 357 or fixed base in connection with which the obligation to pay the royalties was 358 incurred, and such royalties are borne by such permanent establishment or fixed 359 base, then such royalties shall be deemed to arise in the Contracting State in 360 which the permanent establishment or fixed base is situated. 361 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 362 the royalties, being a resident of a Contracting State, carries on business in the 363 other Contracting State in which the royalties arise through a permanent 364 establishment or a fixed base, and the right or property in respect of which the 365 royalties are paid is effectively connected with such a permanent establishment 366 or fixed base. In such a case the provisions of Article 7 or Article 14, as the case 367 may be, shall apply. 368 6. Where, by reason of a special relationship between the payer and the beneficial 369 owner or between both of them and some other person, the amount of the 370 royalties, having regard to the use, right or information for which they are paid, 371 exceeds the amount which would have been agreed upon by the payer and the 372 beneficial owner in the absence of such relationship, the provisions of this Article 373 shall apply only to the last-mentioned amount. In such a case, the excess part of 374 the payments shall remain taxable according to the laws of each Contracting 375 State, due regard being had to the other provisions of this Convention. 376 Article 13 377 Capital gains 378 1. Gains derived from the alienation of property may be taxed in the Contracting 379 State according to the internal law of each State. 380 2. Notwihstanding the provisions of paragraph 1, gains from the alienation of 381 vehicles operated in international traffic, or movable property pertaining to the 382 operation of such vehicles, belonging to an enterprise to which Article 8 applies, 383 shall be taxable only in the Contracting State in which the place of effective 384 management of the enterprise is situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 15 of 814
    • 385 Article 14 386 Independent personal services 387 1. Income derived by a resident of a Contracting State in respect of professional 388 services or other activities of an independent character shall be taxable only in 389 that State, unless: 390 a. the remuneration for such services or activities is paid by a company 391 which is a resident of the other Contracting State or is borne by a 392 permanent establishment or fixed base situated in that other State; or 393 b. such services or activities are rendered in the other Contracting State and 394 the beneficial owner 395 i. is present in that other state for a period or periods exceeding in the 396 aggregate 183 days in the fiscal year; or 397 ii) has in that other State a fixed base habitually available to him for the exercise 398 of his activities, but only insofar as the income is attributable to that fixed base. 399 2.The term "professional services" includes especially independent scientific, 400 technical, literary, artistic, educational or teaching activities as well as the 401 independent activities of physicians, lawyers, engineers, architects, dentists and 402 accountants. 403 Article 15 404 Dependent personal services 405 1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and 406 other similar remuneration derived by a resident of a Contracting State in respect 407 of an employment shall be taxable only in that State unless the employment is 408 exercised in the other Contracting State. If the employment is so exercised, such 409 remuneration as is derived therefrom may be taxed in that other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 16 of 814
    • 410 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 411 resident of a Contracting State in respect of an employment exercised in the other 412 Contracting State shall be taxable only in the first-mentioned State if: 413 a) the recipient is present in the other State for a period or periods not exceeding 414 in the aggregate 183 days in the fiscal year concerned, and 415 b) the remuneration is paid by, or on behalf of, an employer who is not a resident 416 of the other State, and 417 c) the remuneration is not borne by a permanent establishment or a fixed base 418 which the employer has in the other State. 419 3. Notwithstanding the preceding provisions of this Article, remuneration derived 420 in respect of an employment exercised aboard a vehicle operated in international 421 traffic, by an enterprise to which Article 8 applies, shall be taxed only in the 422 Contracting State in which the place of effective management of the enterprise is 423 situated. 424 Article 16 425 Diretors’ fees 426 Directors fees and other similar payments derived by a resident of a Contracting 427 State in his capacity as a member of the board of directors or of any other board 428 of a company which is a resident of the other Contracting State may be taxed in 429 that other State. 430 Article 17 431 Artistes and athletes 432 Notwithstanding the provisions of Articles 14 and 15, income derived by an 433 entertainer, such as a theatre, motion picture, radio or television artiste, or a 434 musician, or as an athlete, from his personal activities as such exercised may be 435 taxed in the Contracting State in which the activities are exercised.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 17 of 814
    • 436 Article 18 437 Pensions and annuities 438 1.Pensions and other similar remuneration deriving from the rendering of 439 personal services, as well as the annuities and similar income, shall be taxable 440 only in the Contracting State from which they are derived. 441 2. In this Article 442 a.) the term "pensions and other similar remuneration" means periodic payments 443 made after retirement in consideration of past employment or as a compensation 444 for injuries received in connection with past employment; 445 b.) the term "annuities and similar income" means a stated sum payable 446 periodically at stated times during life, or during a specified or ascertainable 447 period of time, under an obligation to make the payments in return for adequate 448 and full consideration in money or moneys worth (other than services rendered). 449 Article 19 450 Government service and social security payments 451 1. a) Remuneration, other than a pension, paid by a Contracting State or a 452 political subdivision or a local authority thereof to an individual in respect of 453 services rendered to that State or subdivision or authority shall be taxable only in 454 that State. 455 b) However, such remuneration shall be taxable only in the other Contracting 456 State if the services are rendered in that State and the individual: 457 i) - is a national of that State; or 458 ii) - not being a national of that State, was a resident of that State during the 459 period preceding the rendering of the services.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 18 of 814
    • 460 2. Any pension paid by, either directly or out of funds created by, a Contracting 461 State or a political subdivision or a local authority thereof to an individual in 462 respect of services rendered to that State or subdivision or authority shall be 463 taxable only in that State. 464 3.The provisions of Articles 15, 16 and 18 shall apply to remuneration and 465 pensions paid in respect of services rendered in connection with a business 466 carried on by a Contracting State or a political subdivision or a local authority 467 thereof. 468 4. Pensions paid out of funds deriving from the Social Security System of a 469 Contracting State shall be taxable only in that State. 470 Article 20 471 Teachers and researchers 472 An individual who is or was immediately before visiting a Contracting State a 473 resident of the other Contracting State and who, at the invitation of the 474 Government of the first-mentioned State or of a university, college, school, 475 museum or other cultural institution of that first-mentioned State or under an 476 official programme of cultural exchange, is present in that State for a period not 477 exceeding two years solely for the purpose of teaching, giving lectures or 478 carrying out research at such institution shall be exempt from tax in that State on 479 his remuneration for such activities, provided that the payment of such 480 remuneration is derived by him from outside that State. 481 Article 21 482 Students and apprentices 483 1. An individual who is, or was immediately before visiting a Contracting State, a 484 resident of the other Contracting State and who is present the first-mentioned 485 Contracting State solely:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 19 of 814
    • 486 a) as a student at a university, college, or school in that first-mentioned 487 Contracting State; 488 b) as a recipient of a scholarship, allowance or award granted by a religious, 489 charitable, scientific or educational organization for the primary purpose of 490 studying or carrying on research; 491 c) as a member of a technical cooperation program developed by the Government 492 of the other Contracting State; or 493 d) "CG Times,Times New Roman"> as an apprentice, 494 shall be exempt from tax in the first-mentioned Contracting State in respect of 495 remittance from abroad for the purpose of his maintenance, education or 496 training. 497 2.An individual who is, or was immediately before visiting a Contracting State, a 498 resident of the other Contracting State and who is present in the first-mentioned 499 Contracting State solely for the purpose of his education or training shall be 500 exempt from tax in the first-mentioned Contracting State for a period not 501 exceeding three consecutive fiscal years in respect of remuneration from 502 employment exercised in that State for the purpose of his maintenance, education 503 or training. 504 Article 22 505 Other income 506 Items of income of a resident of a Contracting State, arising in the other 507 Contracting State and not dealt with in the foregoing Articles, may be taxed in 508 that other State. 509 Article 23 510 Methods for the elimination of double taxationEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 20 of 814
    • 511 1. Where a resident of Brazil derives income which, in accordance with the 512 provisions of this Convention, may be taxed in Argentina, Brazil, notwithstanding 513 the provisions of paragraph 2, shall allow, as a deduction from the tax on the 514 income of that resident, an amount equal to the income tax paid in Argentina. 515 However, such deduction shall not exceed that part of the income tax, as 516 computed before the deduction is given, which is attributable to the income 517 which may be taxed in Argentina. 518 2. Dividends which are taxable in Argentina under the provisions of this 519 Convention, paid by a company being a resident of Argentina to a company being 520 a resident of Brazil which holds more than 10 percent of the capital of the paying 521 company, shall be exempt from tax in Brazil. 522 3.Where a resident of Argentina derives income which, in accordance with the 523 provisions of this Convention may be taxed in Brazil, Argentina shall exempt 524 such income from tax, unless it is deemed to arise in Argentina. 525 Article 24 526 Non-discrimination 527 1. Nationals of a Contracting State shall not be subjected in the other Contracting 528 State to any taxation or any requirement connected therewith, which is other or 529 more burdensome than the taxation and connnected requirements to which 530 nationals of that other State in the same circumstances are or may be subjected. 531 2. The taxation on a permanent establishment which an enterprise of a 532 Contracting State has in the other Contracting State shall not be less favourably 533 levied in that other State than the taxation levied on enterprises of that other 534 Contracting State carrying on the same activities. 535 This provision shall not be construed as obliging a Contracting State to grant to 536 residents of the other Contracting State any personal allowances, relief andEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 21 of 814
    • 537 reductions for taxation purposes on account of civil status or family 538 responsabilities which it grants to its own residents. 539 3. Enterprises of a Contracting State, the capital of which is wholly or partly 540 owned or controlled, directly or indirectly, by one or more residents of the other 541 Contracting State, shall not be subjected in the first-mentioned State to any 542 taxation or any requirement connected therewith which is other or more 543 burdensome than the taxation and connected requirements to which other 544 similar enterprises of the first-mentioned State, the capital of which is wholly or 545 partly owned or controlled, directly or indirectly, by one or more residents of a 546 third State, are or may be subjected. 547 4. This Article applies only to taxes covered by this Convention. 548 Article 25 549 Mutual agreement procedure 550 1. Where a resident of a Contracting State considers that the actions of one or 551 both of the Contracting States result or will result for him in taxation not in 552 accordance with the provisions of this Convention, he may, irrespective of the 553 remedies provided by the domestic law of those States, present his case to the 554 competent authority of the Contracting State of which he is a resident within two 555 years from the first notification of the action resulting in taxation not in 556 accordance with the provisions of this Convention. 557 2. The competent authority shall endeavour, if the objection appears to it to be 558 justified and if it is not itself able to arrive at a satisfactory solution, to resolve the 559 case by mutual agreement with the competent authority of the other Contracting 560 State, with a view to the avoidance of taxation which is not in accordance with 561 this Convention. 562 3. The competent authorities of the Contracting States shall endeavour to resolve 563 by mutual agreement any difficulties or doubts arising as to the interpretation orEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 22 of 814
    • 564 application of the Convention. They may also consult together for cases not 565 provided for in this Convention. 566 4. The competent authorities of the Contracting States may communicate with 567 each other directly for the purpose of reaching an agreement in the sense of the 568 preceding paragraphs. When it seems advisable in order to reach agreement to 569 have an oral exchange of opinions, such exchange may take place through a 570 comission consisting of representatives of the competent authorities of the 571 Contracting States. 572 Article 26 573 Exchange of information 574 1. The competent authorities of the Contracting States shall exchange such 575 information as is necessary for carrying out the provisions of this Convention or 576 of the domestic laws of the Contracting States concerning taxes covered by the 577 Convention and levied under the same Convention. Any information received by 578 a Contracting State shall be treated as secret and shall be disclosed only to persons 579 or authorities (including courts and administrative bodies) concerned with the 580 assessment or collection of the taxes covered by this Convention. 581 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 582 a Contracting State the obligation: 583 a) to carry out administrative measures at variance with the laws and 584 administrative practice of that or of the other Contracting State; 585 b) to supply information which is not obtainable under the laws or in the normal 586 course of the administration of that or of the other Contracting State; 587 c) to supply information which would disclose any trade, business, industrial, 588 commercial or professional secret or trade process, or information, the disclosure 589 of which would be contrary to public policy (ordre public).Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 23 of 814
    • 590 Article 27 591 Diplomatic and consular officials 592 Nothing in this Convention shall affect the fiscal privileges of diplomatic consular 593 officials under the general rules of international law or under the provisions of 594 special agreements. 595 Article 28 596 Entry into force 597 1. This Convention shall be ratified and the instruments of ratification shall be 598 exchanged at Brasilia as soon as possible. 599 2. The Convention shall enter into force upon the exchange of instruments of 600 ratification and its provisions shall have effect: 601 - in respect of taxes withheld at source, on amounts paid, remitted on or after of 602 January 1 of the calendar year immediately following the year in which the 603 Convention enters into force; 604 - in respect of other taxes covered by the Convention, to the taxable period 605 beginning on or after of January 1 of the calendar year immediately following the 606 year in which the Convention enters into force. 607 Article 29 608 Termination 609 This Convention shall remain in force until terminated by a Contracting State. 610 Either Contracting State may terminate this Convention, through diplomatic 611 channels, by giving notice of termination at least six months before the end of any 612 calendar year as of the third year following its entry into force. In such a case the 613 Convention shall apply for the last time: 614 - in respect of taxes withheld at source on amounts paid before the end of the 615 calendar year in which the notice of termination is given;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 24 of 814
    • 616 - in respect of other taxes covered by this Convention, to amounts received 617 during the taxable period beginning in the calendar year in which the notice of 618 termination is given. 619 In witness whereof the Plenipontentiaries of the two Contracting States have 620 signed this Convention and have affixed hereto their Seals. 621 Done in Buenos Aires on May 17, 1980, in duplicate, in the Portuguese and 622 Spanih languages, each text being equally authentic. 623 For the Government of For the Government of 624 the Federative Republic of Brazil the Argentine Republic 625 PROTOCOL 626 At the moment of the signature of the Convention for the avoidance of double 627 taxation with respect to taxes on income between the Federative Republic of 628 Brazil and the Argentine Republic, the undersigned, duly authorized thereto, have 629 agreed upon the following provisions which constitute an integral part of the 630 Convention. 631 1. With reference to Article 2 632 It is understood that the tax on profit remittances provided for in the Argentine 633 foreign investment law is not covered by the provisions of Article 2 and, 634 therefore, is not an integral part of the Convention. 635 2. With reference to Article 5 636 It is understood that cases to which Article V, paragraphs 3 "d" and 4, applies are 637 also covered by paragraph 2 of this Article, where the purchase is followed by 638 exportation of the goods or merchandise. 639 3. With reference to Article 7, paragraph 1Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 25 of 814
    • 640 It is understood that in case of amendments in the Brazilian income tax law 641 involving a change in the treatment applicable to branches of Brazilian 642 enterprises located abroad as in force on the date of the signature of this Protocol, 643 Argentina may request the revision of Article 7, paragraph 1, of the Convention. 644 4. With reference to Article 10, paragraph 4 645 It is understood that, in the case of Brazil, the term "dividends" also covers any 646 distribution corresponding to certificates of an investment fund resident of Brazil. 647 5. With reference to Article 11, paragraph 3 "a" 648 It is understood that, for the purposes of Article 11, paragraph 3 "a", the term "an 649 agency" covers those institutions specified by mutual agreement of the competent 650 authorities and: 651 a) in the case of Argentina: the Central Bank of the Argentine Republic, the 652 National Bank of Development and the National Mortgage Bank; 653 b) in the case of Brazil: the Central Bank of Brazil, the National Bank of Economic 654 Development, the regional and state development banks and the National Bank of 655 Housing. 656 6. With reference to Article 11, paragraph 5 657 It is understood that: 658 a) in the case of Argentina, interest is deemed to arise in that State when the 659 capital on which the interest is paid is placed or economically used in its 660 territory; 661 b) in the case of Brazil, interest is deemed to arise in that State when it is paid by a 662 person resident or domiciled in Brazil or by a permanent establishment or fixed 663 base situated therein and belonging to non-residents persons or to persons 664 domiciled abroad.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 26 of 814
    • 665 7. With reference to Article 12, paragraph 3 666 It is understood that the provisions of paragraph 3 of Article 12 apply to income 667 arising from the use or the right to use international news and from the 668 rendering of technical services and of technical, scientific, administrative and 669 similar assistance. 670 8. With reference to Article 12, paragraph 4 671 It is understood that: 672 a) in the case of Argentina, "royalties" are deemed to arise in that State when the 673 property from the transfer of which they arise is placed or economically used in 674 its territory; 675 b) in the case of Brazil, "royalties" are deemed to arise in that State when they are 676 paid by a person resident or domiciled in Brazil or by a permanent establishment 677 or fixed base situated therein and belonging to non-residents persons or to 678 persons domiciled abroad. 679 9. With reference to Article 14 680 It is understood that the provisions of Article 14 shall apply even if the activities 681 are exercised by a company. 682 10.With reference to Article 23 683 It is understood that exemptions and deductions from the Argentine tax on 684 profits, whether total or partial, shall not apply as far as those exemptions or 685 deductions can result in a transfer of revenue to the Brazilian treasury. 686 11. With reference to Article 23, paragraph 3 687 It is understood that income from property situated, placed or economically used 688 in Argentine territory, from performing therein any action or activity that may 689 produce profits, or from events which have ocurred therein, is deemed to arise inEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 27 of 814
    • 690 Argentina. 691 12. With reference to Article 24, paragraph 2 692 a. It is understood that the provisions of paragraph 5 of Article 10 are not in 693 conflict with the provisions of paragraph 2 of Article 24. 694 b. Article 24, paragraph 2, is not deemed to cover the provisions of Argentine 695 law regarding the taxation of a permanent establishment that an enterprise 696 of Brazil has in Argentina. 697 13.With reference to Article 24, paragraph 3 698 The provisions of Brazilian tax law which do not allow that royalties as defined in 699 paragraph 3 of Article 12, paid by a company resident of Brazil to a resident of 700 Argentina which holds at least 50 per cent of the voting capital of that company, 701 be deductible in the determination of the taxable profits of the company which is 702 a resident of Brazil, shall be applicable notwithstanding the provisions of 703 paragraph 4 of Article 24 of this Convention. 704 In witness whereof the Plenipontentiaries of the two Contracting States have 705 signed this Protocol and have affixed hereto their Seals. 706 Done in Buenos Aires on May 17, 1980, in duplicate, in the Portuguese and 707 Spanih languages, each text being equally authentic. 708 For the Government of For the Government of 709 the Federative Republic of Brazil the Argentine Republic 710 711 712Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 28 of 814
    • 713 714 Austria 715Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 29 of 814
    • 716 Date of Conclusion: 24 May 1975 717 Effective Date: 1 January 1977 718 CONVENTION 719 Between the Republic of Austria and the Federative Republic of Brazil for the 720 Avoidance of Double Taxation with Respect to Taxes on Income and on Capital 721 The Republic of Austria and the Federative Republic of Brazil, desiring to 722 conclude a Convention for the avoidance of double taxation with respect to taxes 723 on income and capital, have agreed as follows: 724 Article 1 725 Personal scope 726 This Convention shall apply to persons who are residents of one or both of the 727 Contracting States. 728 Article 2 729 Taxes covered 730 1. The existing taxes to which the Convention shall apply are: 731 a. In the case of Brazil: 732 - the income tax, excluding the tax on excess remittances and on activities 733 of minor importance (hereinafter referred to as " Brazilian tax"). 734 b. In the case of Austria: 735 - 1. the income tax (die Einkommensteuer); 736 - 2. the corporation tax (die Körperschaftsteuer );Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 30 of 814
    • 737 - 3. the contribution from income for the promotion of residential building and 738 for the equalisation of family burdens ( der Beitrag von Einkommen zur 739 Förderung des Wohnbaues and für Zwecke des 740 Familienlastenausgleiches ); 741 - 4. the contribution from income to the emergency (der 742 Katastrophenfondsbeitrag von Einkommen); 743 - 5. the special tax on income (die Sonderabgabe von Einkommen) 744 - 6. the directors tax (die Aufsichtsratsabgabe ); 745 - 7. the capital tax (die Vermögensteuer ); 746 - 8. the contribution from capital to the emergency fund (der 747 Katastrophenfondsbeitrag von Vermögen); 748 - 9. the special tax on capital (die Sonderabgabe vom Vermögen); 749 -10. the tax on property eluding death duties (die Abgabe vom Vermögen, die der 750 Erbschaft ssteuer 751 entzogen sind); 752 - 11. the tax on commercial and industrial enterprises, including the tax levied 753 on the sum of wages 754 (die Gewerbesteuer einschliesslich der Lohnsummensteuer); 755 - 12. the land tax (die Grundsteuer ); 756 - 13. the tax on agricultural and forestry enterprises (die Abgabe von land – und 757 forstwirtschaftlichen Betrieben);Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 31 of 814
    • 758 -14. the contributions from agricultural and forestry enterprises, to the fund for 759 the equalisation.of family burdens (die Beiträge von land- und 760 forstwirtschaftlichen Betrieben zum Ausgleichs fonds für Familienbeihilfen); 761 -15. the tax on the value of vacant plots (die Abgabe von Bodenwert bei 762 unbebauten Grundstücken). 763 2. The Convention shall also apply to any identical or substantially similar taxes 764 which are subsequently imposed in addition to, or in place of, the existing taxes. 765 The competent authorities of the Contracting States shall notify to each other any 766 changes which have been made in their respective taxation laws, especially as far 767 as Article 23, paragraph 7, is concerned. 768 Article 3 769 General definitions 770 1. In this Convention, unless the context otherwise requires: 771 a) the term "Brazil" means the Federative Republic of Brazil; 772 b) the term "Austria" means the Republic of Austria; 773 c) the terms "a Contracting State" and "the other Contracting State" 774 mean Brazil or Austria as the context requires; 775 d) the term "person" comprises an individual, a company and any 776 other body of persons; 777 e) the term "company" means any body corporate or any entity 778 which is treated as a body corporate for tax purposes; 779 f) the terms "enterprise of a Contracting State" and "enterprise of the 780 other Contracting State" mean respectively an enterprise carried on 781 by a resident of a Contracting State and an enterprise carried on by a 782 resident of the other Contracting State;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 32 of 814
    • 783 g) the term "competent authority" means: 784 i) In Brazil: the Minister of Finance, the 785 Secretary of Federal Revenue or their 786 authorized representative; 787 ii) In Austria: the Federal Minister of Finance. 788 2. As regards the application of the Convention by a Contracting State, any 789 term not otherwise defined shall, unless the context otherwise requires, 790 have the meaning which it has under the law of that Contracting State 791 relating to the taxes which are the subject of the Convention. 792 Article 4 793 Fiscal domicile 794 1. For the purposes of this Convention, the term "resident of a Contracting States" 795 means any person who, under the law of that State, is liable to taxation therein by 796 reason of his domicile, residence, place of management or any other criterion of a 797 similar nature. 798 2. Where by reason of the provisions of paragraph 1 an individual is a resident of 799 both Contracting States, then this case shall be determined in accordance with the 800 following rules; 801 a) He shall be deemed to be a resident of the Contracting State 802 in which he has a permanent home available to him. If he has 803 a permanent home available to him in both Contracting 804 States, he shall be deemed to be a resident of the Contracting 805 State with which his personal and economic relations are 806 closest (centre of vital interests). 807 b) If the Contracting State in which he has his centre of vital 808 interests cannot be determined, or if he has not a permanent 809 home available to him in either Contracting State, he shall beEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 33 of 814
    • 810 deemed to be a resident of the Contracting State in which he 811 has an habitual abode; 812 c) If he has an habitual abode in both Contracting States or in 813 neither of them, he shall be deemed to be a resident of the 814 Contracting State of which he is a national; 815 d) if he is a national of both Contracting States or of neither of 816 them, the competent authorities of the Contracting States shall 817 proceed according to Article 25. 818 3. Where by reason of the provisions of paragraph 1 a person other than an 819 individual is a resident of both Contracting States, then it shall be deemed to be a 820 resident of the Contracting State in which its place of effective management is 821 situated. 822 Article 5 823 Permanent establishment 824 1. For the purposes of this Convention, the term "permanent establishment" means 825 a fixed place of business in which the business of the enterprise is wholly or 826 partly carried on. 827 2. The term "permanent establishment" shall include especially: 828 a) a place of management; 829 b) a branch; 830 c) an office; 831 d) a factory; 832 e) a workshop; 833 f) a mine, quarry or other place of extraction of natural resources;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 34 of 814
    • 834 g) a building site or construction or assembly project which exists for more than 835 six months. 836 3. The term "permanent establishment" shall not be deemed to include: 837 a) the use of facilities solely for the purpose of storage, display or delivery of 838 goods or merchandise belonging to the enterprise; 839 b) the maintenance of a stock of goods or merchandise belonging to the 840 enterprise solely for the purpose of storage, display or delivery; 841 c) the maintenance of a stock of goods or merchandise belonging to the 842 enterprise solely for the purpose of processing by another enterprise; 843 d) the maintenance of a fixed place of business solely for the purpose of 844 purchasing goods or merchandise or for collecting information, for the 845 enterprise; 846 e) the maintenance of a fixed place of business solely for the purpose of 847 advertising, for the supply of information, the scientific research or for similar 848 activities which have a preparatory or auxiliary character, for the enterprise. 849 4. A person acting in a Contracting State on behalf of an enterprise of the other 850 Contracting State - other than an agent of an independent status to whom 851 paragraph 5 applies - shall be deemed to be a permanent establishment in the 852 first-mentioned Contracting State if he has, and habitually exercises in that State, 853 an authority to conclude contracts in the name of the enterprise, unless his 854 activities are limited to the purchase of goods or merchandise for the enterprise. 855 5. An enterprise of a Contracting State shall not be deemed to have a permanent 856 establishment in the other Contracting State merely because it carries on business 857 in that other State through a broker, general commission agent or any other agent 858 of an independent status, where such persons are acting in the ordinary course of 859 their business.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 35 of 814
    • 860 6. An insurance company of a Contracting State shall furthermore be deemed to 861 have a permanent establishment in the other State provided that, through a 862 representative, it receives premiums or secures risks in that other State. 863 7. The fact that a company which is a resident of a Contracting State controls or is 864 controlled by a company which is a resident of the other Contracting State, or 865 which carries on business in that other State 866 (whether through a permanent establishment or otherwise), shall not of itself 867 constitute either company a permanent establishment of the other. 868 Article 6 869 Income from immovable property 870 1. Income from immovable property may be taxed in the Contracting State in 871 which such property is situated. 872 2. a) The term "immovable property" shall, subject to the provisions of sub- 873 paragraphs b) and c) below, be defined in accordance with the law of the 874 Contracting State in which the property in question is situated. 875 b) The term "immovable property" shall in any case include property accessory to 876 immovable property, livestock and equipment used in agriculture and forestry, 877 rights to which the provisions of general law respecting immovable property 878 apply, usufruct of immovable property and rights to variable or fixed payments 879 as consideration for the working of, or the right to work, mineral deposits, 880 sources and other natural resources. 881 c) Ships and aircraft shall not be regarded as immovable property. 882 3. The provisions of paragraph 1 shall apply to income derived from the direct 883 use, letting, or use in any other form of immovable property.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 36 of 814
    • 884 4. The provisions of paragraphs 1 and 3 shall also apply to the income from 885 immovable property of an enterprise and to income from immovable property 886 used for the performance of professional services. 887 Article 7 888 Business profits 889 1. The profits of an enterprise of a Contracting State shall be taxable only in that 890 State unless the enterprise carries on business in the other Contracting State 891 through a permanent establishment situated therein. If the enterprise carries on 892 business as aforesaid, the profits of the enterprise may be taxed in the other State 893 but only so much of them as is attributable to that permanent establishment. 894 2. Where an enterprise of a Contracting State carries on business in the other 895 Contracting State through a permanent establishment situated therein, there shall 896 in each Contracting State be attributed to that permanent establishment the 897 profits which it might be expected to make if it were a distinct and separate 898 enterprise engaged in the same or similar activities under the same or similar 899 conditions and dealing wholly independently with the enterprise of which it is a 900 permanent establishment. 901 3. In the determination of the profits of a permanent establishment, there shall be 902 allowed as deductions expenses which are incurred for the purposes of the 903 permanent establishment including executive and general administrative 904 expenses so incurred. 905 4. No profits shall be attributed to a permanent establishment by reason of the 906 mere purchase by that 907 permanent establishment of goods or merchandise for the enterprise. 908 5. Where profits include items of income which are dealt with separately in other 909 Articles of thisEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 37 of 814
    • 910 Convention, then the provisions of those Articles shall not be affected by the 911 provisions of this Article. 912 6. The provisions of paragraphs 1 to 5 shall also apply to income derived by the 913 "Stille 914 Gesellschafter of a "Stille Gesellschaft" of the Austrian law. 915 Article 8 916 Shipping and air transport 917 Profits from the operation of ships or aircraft in international traffic shall be 918 taxable only in the Contracting State in which the place of effective management 919 of the enterprise is situated. 920 Article 9 921 Associated enterprises 922 Where 923 a) an enterprise of a Contracting State participates directly or indirectly in the 924 management, control or capital of an enterprise of the other Contracting State, or 925 b) the same persons participate directly or indirectly in the management, control 926 or capital of an enterprise of a Contracting State and an enterprise of the other 927 Contracting State, 928 and in either case conditions are made or imposed between the two enterprises in 929 their commercial or financial relations which differ from those which would be 930 made between independent enterprises, then any profits which would, but for 931 those conditions, have accrued to one of the enterprises, but, by reason of those 932 conditions, have not so accrued, may be included in the profits of that enterprise 933 and taxed accordingly.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 38 of 814
    • 934 Article 10 935 Dividends 936 1. Dividends paid by a company which is a resident of a Contracting State to .a 937 resident of the other Contracting State may be taxed in that other State. 938 2. However, such dividends may also be taxed in the Contracting State of which 939 the company paying the dividends is a resident, but the tax so charged shall not 940 exceed 15 per cent of the gross amount of the dividends. 941 This paragraph shall not affect the taxation of the company in respect of the 942 profits out of which the dividends are paid. 943 3. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 944 dividends, being a resident of a Contracting State, has in the other Contracting 945 State, of which the company paying the dividends is a resident, a permanent 946 establishment with which the holding by virtue of which the dividends are paid is 947 effectively connected. In such a case, the provisions of Article 7 shall apply. 948 4. The term "dividends" as used in this Article means, income from shares, 949 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 950 rights, not being debt-claims, participating in profits, as well as income from 951 other corporate rights assimilated to income from shares by the taxation law of 952 the State of which the company making the distribution is a resident. 953 5. Where a company which is a resident of Austria has a permanent 954 establishment in Brazil that permanent establishment may be subject to a tax 955 withheld at source in accordance with Brazilian law. However such a tax cannot 956 exceed 15 per cent of the gross amount of the profits of that permanent 957 establishment determined after the payment of the corporate tax related to such 958 profits. 959 6. The tax rate limitation foreseen in paragraphs 2 and 5 shall not apply to 960 dividends or profits paid or remitted from Brazil before the 1st of January, 1976.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 39 of 814
    • 961 Article 11 962 Interest 963 1. Interest arising in a Contracting State and paid to a resident of the other 964 Contracting State may be taxed in that other State . 965 2. However, such interest may be taxed in the Contracting State in which it arises 966 but the tax so charged shall not exceed l5 per cent of the gross amount of the 967 interest. 968 3. Notwithstanding the provisions of paragraphs 1 and 2: 969 a) Interest arising in a Contracting State and paid to the Government. of the other 970 Contracting State, a political subdivision or a public community thereof, or any 971 agency (including a financial institution) wholly owned by that Government, 972 political subdivision or public community, shall be exempt from tax in the first- 973 mentioned Contracting State. 974 b) Interest arising from securities, bonds or debentures issued by the Government 975 of a Contracting State or any agency (including a financial institution) owned by 976 that Government, and paid to a resident of the other Contracting State shall be 977 taxable only in the first mentioned State. 978 4. The term "interest" as used in this Article means income from Government 979 securities, bonds or debentures, whether or not secured by mortgage and whether 980 or not carrying a right to participate in profits, and debt-claims of every kind as 981 well as other income assimilated to income from money lent by the taxation 1aw 982 of the Contracting State, in which the income arises. 983 5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 984 interest, being a resident of a Contracting State, has in the other Contracting State 985 in which the interest arises a permanent establishment with which the debt- 986 claim from which the interest arises is effectively connected. In such a case the 987 provisions of Article 7 shall apply.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 40 of 814
    • 988 6. The limitation established in paragraph 2 shall not apply to interest arising in a 989 Contracting State and paid to a permanent establishment of an enterprise of the 990 other Contracting State which is situated in a third State. 991 7. Interest shall be deemed to arise in a Contracting State when the payer is that 992 Contracting State itself, a political subdivision, a public community or a resident 993 of that State. Where, however, the person paying the interest, whether he is a 994 resident of a Contracting State or not, has in a Contracting State a permanent 995 establishment in connection with which the indebtedness on which the interest is 996 paid was incurred, and such interest is borne by such a permanent establishment, 997 then such interest shall be deemed to arise in the Contracting State in which the 998 permanent establishment is situated. 999 8. Where, owing to a special relationship between the payer and the recipient or 1000 between both of them and some other person, the amount of the interest paid, 1001 having regard to the debt-claim for which it is paid, exceeds the amount which 1002 would have been agreed upon by the payer and the recipient in the absence of 1003 such relationship, the provisions of this Article shall apply to the last-mentioned 1004 amount. In that case, the excess part of the payments shall remain taxable 1005 according to the law of each Contracting State, due regard being had to the other 1006 provisions of this Convention. 1007 Article 12 1008 Royalties 1009 1. Royalties arising in a Contracting State and paid to a resident of the other 1010 Contracting State may be taxed in that other State. 1011 2. However, such royalties may be taxed in the Contracting State in which they 1012 arise, but the tax so charged shall not exceed: 1013 a) 10 per cent of the gross amount of royalties arising from the use 1014 of, or the right to use, any copyright of literary, artistic or scientificEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 41 of 814
    • 1015 work, but not including cinematograph films, films or tapes for 1016 television or radio broadcasting; 1017 b) 25 per cent of the gross amount of royalties arising from the use or the right to 1018 use trade marks; 1019 c)15 per cent in all other cases. 1020 3. The term "royalties" as used in this Article means payments of any kind 1021 received as a consideration for the use of, or the right to use, any copyright of 1022 literary, artistic or scientific work (including cinematograph 1023 films, films or tapes for television or radio broadcasting), any patent, trade marks, 1024 design or model, plan, secret formula or process, as well as for the use of, or the 1025 right to use, industrial, commercial or scientific equipment, or for information 1026 concerning industrial, commercial or scientific experience. 1027 4. Royalties shall be deemed to arise in a Contracting State when the payer is that 1028 State itself, a political subdivision, a public community or a resident of that State. 1029 However, where the person paying the royalties, whether he is a resident of a 1030 Contracting State or not, has in a Contracting State a permanent establishment in 1031 connection with which the obligation to pay the royalties was incurred, and such 1032 royalties are borne by such a permanent establishment, then such royalties shall 1033 be deemed to arise in the Contracting State in which the permanent establishment 1034 is situated. 1035 5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 1036 royalties, being a resident of a Contracting State, has in the other Contracting 1037 State in which the royalties arise, a permanent establishment with which the right 1038 or property giving rise to the royalties is effectively connected. In such a case, the 1039 provisions of Article 7 shall apply. 1040 6. Where, owing to a special relationship between the payer and the recipient or 1041 between both of them and some other person, the amount of the royalties paid,Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 42 of 814
    • 1042 having regard to the use, right or information for which they are paid exceeds 1043 the amount which would have been agreed upon by the payer and the recipient 1044 in the absence of such relationship, the provisions of this Article shall apply only 1045 to the last-mentioned amount. In that case, the excess part of the payments shall 1046 be taxable according to the law of each Contracting State, due regard being had 1047 to the other provisions of this Convention. 1048 Article 13 1049 Capital gains 1050 1. Gains from the alienation of immovable property, as defined in paragraph 2 of 1051 Article 6, may be taxed in the Contracting State in which the immovable property 1052 is situated. 1053 2. Gains from the alienation of movable property forming part of the business 1054 property of a permanent establishment which an enterprise of a Contracting State 1055 has in the other Contracting State or of movable property pertaining to a fixed 1056 base available to a resident of a Contracting State in the other Contracting State 1057 for the purpose of performing professional services, including such gains from 1058 the alienation of such a permanent establishment (alone or with the whole 1059 enterprise) or of such a fixed base, may be taxed in the other State. However, 1060 gains from the alienation of ships or aircraft operated in international traffic or 1061 movable property pertaining to the operation of such ships or aircraft shall be 1062 taxable only in the Contracting State in which the place of effective management 1063 of the enterprise is situated. 1064 3. Gains from the alienation of any property or right other than those mentioned 1065 in paragraphs l and 2 may be taxed in both Contracting States. 1066 Article 14 1067 Independent personal services 1068 1. Income derived by a resident of a contracting State in respect of professional 1069 services or other independent activities of a similar nature shall be taxable only inEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 43 of 814
    • 1070 that State, unless the payment of such services and activities is borne by a 1071 permanent establishment situated on the other Contracting State or a company 1072 resident therein. In such a case that income may be taxed in the other State. 1073 2. The term "professional services" includes especially independent scientific, 1074 literary, artistic, educational, technical or teaching activities, as well as 1075 independent activities of physicians, lawyers, engineers, architects, dentists and 1076 accountants. 1077 Article 15 1078 Dependent personal services 1079 1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other 1080 similar remuneration derived by a resident of a Contracting State in respect of an 1081 employment shall be taxable only in that State unless the employment is exercised 1082 in the other Contracting State. If the employment is so exercised, such 1083 remuneration as is derived therefrom may be taxed in that other State. 1084 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 1085 resident of a Contracting State in respect of an employment exercised in the other 1086 Contracting State shall be taxable only in the first-mentioned State if: 1087 a) the recipient is present in the other State for a period or periods not 1088 exceeding in the aggregate 1089 183 days in the fiscal year concerned, and 1090 b) the remuneration is paid by, or on behalf of, an employer who is not a 1091 resident of the other State, and 1092 c) the remuneration is not borne by a permanent establishment or a fixed 1093 base which the employer has in the other State. 1094 2. Notwithstanding the preceding provisions of this article, remuneration in 1095 respect of an employment exercised aboard a ship or aircraft inEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 44 of 814
    • 1096 international traffic, may be taxed in the Contracting State in which the 1097 place of effective management of the enterprise is situated. 1098 Article 16 1099 Directors fees 1100 Directors fees and similar payments derived by a resident of a Contracting State 1101 in his capacity as a member of the board of directors or of any council of a 1102 company which is a resident of the other Contracting State may be taxed in that 1103 other State. 1104 Article 17 1105 Artistes and athletes 1106 1. Notwithstanding the provisions of articles 14 and 15, income derived by public 1107 entertainers, such as theatre, motion picture, radio or television artistes, and 1108 musicians, and by athletes, from their personal activities as such, may be taxed in 1109 the Contracting State in which these activities are exercised. 1110 2. Notwithstanding the other provisions of this Convention, income derived 1111 by an enterprise of a Contracting State from the activity of providing the 1112 services within the other Contracting State of a person referred to in 1113 paragraph 1, whether this person is a resident of a Contracting State or 1114 not, may be taxed in the Contracting State in which these services are 1115 performed. 1116 Article 18 1117 Pensions 1118 Subject to the provisions of Article 19, pensions and other similar remuneration 1119 arising in a Contracting State and paid to a resident of the other Contracting State 1120 in consideration of past employment shall be taxable only in the first-mentioned 1121 State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 45 of 814
    • 1122 Article 19 1123 Governmental and other public functions .. 1124 1. Remuneration, including pensions, paid by, or out of funds created by, a 1125 Contracting State or a political subdivision thereof to any individual in respect of 1126 services rendered to that State or to a political subdivision thereof in the 1127 discharge of functions of a governmental or other public nature shall be taxable 1128 only in that State. 1129 2. Pensions paid from Social Security funds of a Contracting State shall be taxable 1130 only in that State. 1131 3. The provisions of paragraph 1 shall apply to remuneration, received by the 1132 members of the staff of the Austrian Delegation of Commerce in Brazil, if the 1133 recipient is not a national of Brazil. 1134 2. The provisions of Articles 15, 16 and 18 shall apply to remuneration or 1135 pensions in respect of services rendered in connection with any trade or 1136 business carried on by one of the Contracting States or a political 1137 subdivision thereof. 1138 Article 20 1139 Students 1140 1. Payments which a student or business apprentice who is or was formerly a 1141 resident of a Contracting State and who is present an the other Contracting State 1142 solely for the purpose of his education or training receives for the purpose of his 1143 maintenance, education or training shall not be taxed in that other State, 1144 provided that such payments are made to him from sources outside that other 1145 State. 1146 2. Remuneration which a student or business apprentice who is or was formerly a 1147 resident of a Contracting State derives from an employment which he exercises in 1148 the other Contracting State for the purpose of practical training for a period orEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 46 of 814
    • 1149 periods not exceeding in the aggregate 183 days in the year concerned shall not 1150 be taxed in that other State. 1151 Article 21 1152 Income not expressly mentioned 1153 Items of income of a resident of a Contracting State which are not expressly 1154 mentioned in the 1155 foregoing Articles of this Convention shall be taxable only in that State. Such 1156 income may, however, be 1157 taxed in the other Contracting State, if it is paid by a resident of that other State or 1158 a permanent 1159 establishment situated in that other State. 1160 Article 22 1161 Capital 1162 1. Capital represented by immovable property, as defined in paragraph 2 of 1163 Article 6, may be taxed in the Contracting State in which such property is 1164 situated. 1165 2. Capital represented by movable property forming part of the business property 1166 of a permanent establishment of an enterprise, or by movable property pertaining 1167 to a fixed base used for the performance of professional services, may be taxed in 1168 the Contracting State in which the permanent establishment or fixed base is 1169 situated. 1170 3. Ships and aircraft operated in international traffic and movable property 1171 pertaining to the operation of such ships and aircraft, shall be taxable only in the 1172 Contracting State in which the place of effective management of the enterprise is 1173 situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 47 of 814
    • 1174 4. All other elements of capita1 of a resident of a Contracting State shall be 1175 taxable only in that State. 1176 Article 23 1177 Methods for the elimination of double taxation 1178 1. Subject to the provisions of Article 11, paragraph 3b, and Articles 18 and 19, 1179 where a resident of Brazil derives income which, in accordance with the 1180 provisions of this Convention, may be taxed in Austria, Brazil shall allow as a 1181 deduction from the tax on the income of that person, an amount equal to the 1182 income tax paid in Austria. 1183 The deduction shall not, however, exceed that part of the income tax as computed 1184 before the deduction is given which is appropriate to the income which may be 1185 taxed in Austria. 1186 2. Dividends paid by a company which is a resident of Austria to a company 1187 which is a resident of Brazil which owns at least 25 per cent of the share capital 1188 of the paying company shall be exempt from corporation tax in Brazil. 1189 3. Where a resident of Austria derives income which, in accordance with the 1190 provisions of this Convention, may be taxed in Brazil, Austria shall, subject to the 1191 provisions of paragraphs 2 till 5 exempt such income from tax but may, in 1192 calculating tax on the remaining income of that person apply the rate of tax 1193 which would have been applicable if the exempted income had not been so 1194 exempted. 1195 4. Subject to the provisions of Article 11, paragraph 3b, where a resident of 1196 Austria derives income which, in accordance with the provisions of Articles 10, 1197 11, 12 and 13 paragraph 3, may be taxed in Brazil, Austria shall allow as a 1198 deduction from the tax on the income of that person amount equal to the tax paid 1199 in Brazil. Such a deduction shall not, however, exceed that part of the tax, as 1200 computed before the deduction is given, which is appropriate to the income 1201 .derived from Brazil.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 48 of 814
    • 1202 5. For the application of paragraph 4 the tax which has been paid on dividends, 1203 interest or royalties derived from Brazil is to be considered to have been paid at a 1204 rate of 25 percent of the gross amount of the income. 1205 6. Dividends paid by a company which is a resident of Brazil to a company which 1206 is a resident of Austria which owns at least 25 per cent of the share capital of the 1207 paying company shall be exempt from the corporation tax, and the tax on 1208 commercial and industrial enterprises in Austria. 1209 7. As long as royalties which are paid from a company resident in Brazil to a 1210 company resident of Austria which owns more than 50 per cent of the voting 1211 capital of the company paying the royalties are not deductible for tax purposes in 1212 Brazil such royalties will be exempt from tax in Austria. 1213 8. Where a resident of Austria owns capital which in accordance with the 1214 provisions of this convention may be taxed in Brazil, Austria will exempt such 1215 capital from tax. 1216 Where a company which, is a resident of Austria owns at least 25 per cent of the 1217 share capital of a company which is a resident of Brazil, such participation will 1218 be exempt from taxes on capital in Austria. 1219 Article 24 1220 Non-discrimination 1221 1. The nationals of a Contracting State shall not be subjected in the other 1222 Contracting State to any taxation or any requirement connected therewith which 1223 is other or more burdensome than the taxation and connected requirements to 1224 which nationals of that other State in the same circumstances are or may be 1225 subjected. 1226 The term "nationals" means: 1227 a) all individuals possessing the nationality of a Contracting State;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 49 of 814
    • 1228 b) all legal persons, partnerships and associations deriving their status as such 1229 from the law in force in a Contracting State. 1230 3. The taxation on a permanent establishment which an enterprise of a 1231 Contracting State has in the other Contracting State shall not be less favourably 1232 levied in that other State than the taxation levied on enterprises of that other State 1233 carrying on the same activities. 1234 This provision shall not be construed as obliging a Contracting State to grant to 1235 residents of the other Contracting State any personal allowances, relief and 1236 reductions for taxation purposes on account of civil status or family 1237 responsibilities which it grants to its own residents. 1238 4. Enterprises of a Contracting State, the capital of which is wholly or partly 1239 owned or controlled, directly or indirectly, by one or more residents of the other 1240 Contracting State, shall not be subjected in the first-mentioned State to any 1241 taxation or any requirement connected therewith which is other or more 1242 burdensome than the taxation and connected requirements to which other 1243 similar enterprises of the first-mentioned State, the capital of which is wholly or 1244 partly owned or controlled, directly or indirectly, by one or more residents of a 1245 third State, are or may be subjected. 1246 5. In this article the term "taxation" means taxes of every kind and description. 1247 Article 25 1248 Mutual agreement procedure 1249 1. Where a resident of a Contracting State considers that the actions of one or 1250 both of the Contracting States result or will result for him in taxation not in 1251 accordance with the provisions of this Convention, he may, irrespective of the 1252 remedies provided by the domestic law of those States, present his case to the 1253 competent authority of the Contracting State of which he is a resident.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 50 of 814
    • 1254 2. The competent authority shall endeavour, if the objection appears to it to be 1255 justified and if it is not itself able to arrive at a satisfactory solution, to resolve the 1256 case by mutual agreement with the competent authority of the other Contracting 1257 State, with a view to the avoidance of taxation which is not in accordance with 1258 the Convention. 1259 3. The competent authorities of the Contracting States shall endeavour to resolve 1260 by mutual agreement any difficulties or doubts arising as to the interpretation or 1261 application of the Convention. They may also consult together for the elimination 1262 of double taxation in cases not provided for in the convention. 1263 4. The competent authorities of the Contracting States may communicate with 1264 each other directly for the purpose of reaching an agreement in the sense of the 1265 preceding paragraphs. When it seems advisable in order to reach agreement to 1266 have an oral exchange of opinions, such exchange may take place through a 1267 Commission consisting of representatives of the competent authorities of the 1268 Contracting States. 1269 Article 26 1270 Exchange of information 1271 1. The competent authorities of the Contracting States shall exchange such 1272 information as is necessary for carrying out the provisions of this Convention or 1273 of the domestic laws of the Contracting States concerning taxes covered by this 1274 Convention insofar as the taxation thereunder is in accordance with this 1275 Convention. Any information so exchanged shall be treated as secret and shall not 1276 be disclosed to any persons or authorities concerned with the assessment or 1277 collection of the taxes which are the subject of the Convention. 1278 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 1279 a Contracting State the obligation: 1280 a) to carry out administrative measures at variance with the laws and 1281 administrative practice of that or of the other Contracting State;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 51 of 814
    • 1282 b) to supply information which is not obtainable under the laws or in the normal 1283 course of the administration of that or of the other Contracting State; 1284 c) to supply information which would disclose any business, industrial, 1285 commercial or professional secret or trade process, or information, the disclosure 1286 of which would be contrary to public policy (ordre public). 1287 Article 27 1288 Diplomatic and consular officials 1289 Nothing in this Convention shall affect the fiscal privileges of diplomatic missions 1290 or consular officials under the general rules of international law or under the 1291 provisions of special agreements. 1292 Article 28 1293 Entry into force 1294 1. This Convention shall be ratified and the instruments of ratification shall be 1295 exchanged at Brasilia. 1296 2. The Convention shall enter into force upon the exchange of instruments of 1297 ratification and ifs provisions shall have effect for the first time: 1298 a) In Brazil: 1299 I - as respects taxes withheld at source to amounts paid or remitted on or after 1300 January 1 of the calendar year immediately following the year in which the 1301 Convention enters into force; 1302 II - as respects other taxes covered by this Convention to taxable year beginning 1303 on or after January 1 of the calendar year immediately following the year in 1304 which the Convention enters into force. 1305 b) In Austria:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 52 of 814
    • 1306 1. for any taxes levied for the calendar year immediately following the year in 1307 which the Convention enters into force. 1308 2. Notwithstanding the provisions of paragraph 2, Article 8 of this Convention 1309 shall have effect, except for the Austrian tax on the sum of wages, for taxes levied 1310 after the first day of January of 1968. 1311 Article 29 1312 Termination 1313 Either Contracting State may terminate this Convention after a period of three 1314 years from the date on which this Convention enters into force by giving to the 1315 other Contracting State, through diplomatic channels, a written notice of 1316 termination, provided that any such notice shall be given only on or before the 1317 thirtieth day of June in any calendar year. 1318 In such a case this Convention shall apply for the last time: 1319 a) In Brazil: 1320 I- as respects taxes withheld at source, to amounts paid or remitted before the 1321 expiration of the calendar year in which the notice of termination calendar year 1322 in which the notice of termination is given; 1323 II - as respects other taxes covered by this Convention, to the taxable year 1324 beginning in the calendar year in which the notice of termination is given. 1325 b) In Austria: 1326 - for any taxes levied in the calendar year in which the notice of termination is 1327 given. 1328 In witness whereof the Plenipotentiaries of the two Contracting States have signed 1329 the present Convention and affixed thereto their seals.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 53 of 814
    • 1330 Done in duplicate at Viena on 24th May of 1975, in Portuguese and German 1331 languages, each text being equally authentic. 1332 PROTOCOL 1333 At the moment of the signature of the Convention for the avoidance of double 1334 taxation with respect to taxes on income and capital, between the Federative 1335 Republic of Brazil and the Republic of Austria, the undersigned, being duly 1336 authorized thereto, have agreed upon the following provisions which constitute 1337 an integral part of the present Convention. 1338 1. It is understood that the provisions of Article 10, paragraph 5, are not in 1339 conflict with the provisions of Article 24, paragraph 3. 1340 2. Loans and credits granted by the Osterreichischen Kontrollbank 1341 Aktiengesellschaft and by the Bank of Brazil in the quality of a public financial 1342 organization shall be treated as loans and credits granted by the Austrian or 1343 Brazilian Governments. Interest derived from such loans or credits shall be taxed 1344 according to the provisions of Article 11, paragraph 3 a. Relief from double 1345 taxation, shall, in the case of Austria, be given by applying Article 23, paragraphs, 1346 4 and 5. - 1347 3. In the event that Brazil, after the . signature of the present Convention, would 1348 allow that royalties, referred to in Article 12, paragraph 3, paid by a company 1349 which is a resident of Brazil to a resident of a third 1350 State not located in Latin-America and which holds at least 50 per cent of the 1351 voting capital of the company which is a resident of Brazil, be deductible at the 1352 moment of the determination of the profits of this company, an equal deduction 1353 will be automatically applicable, under similar conditions, to a company which is 1354 a resident of Brazil paying royalties to a resident of Austria.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 54 of 814
    • 1355 It is understood that the present disposition of the Brazilian law regarding the 1356 non-deductibility of royalties as indicated above is not in conflict with Article 24, 1357 paragraph 4, of the Convention. 1358 4. Concerning Article 13, paragraph 3, it is understood that a Contracting State 1359 does not have the right of taxing gains derived by a resident of the other 1360 Contracting State, if such gains are obtained from the selling of 1361 shares or quotas of a company which is not a resident of the first-mentioned 1362 State. 1363 5. The Brazilian tax on excess remittances shall not apply to income remitted 1364 which does not exceed 12 per cent of the capital registered in the Central Bank of 1365 Brazil. 1366 In order to determine the amount subject to the Brazilian excess remittances tax, 1367 the Brazilian tax on dividends and royalties, after the beginning of the fifth year 1368 of the entry into force of this Convention, shall be considered as having been paid 1369 at a rate of 25 per cent. 1370 6. Whenever Brazil establishes a tax on capital both Contracting States will 1371 renegotiate all the dispositions related to the taxation of capital. 1372 Done in duplicate at Viena on 24th May of 1975, in Portuguese and German 1373 languages, each text being equally authentic. 1374Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 55 of 814
    • 1375 1376 1377 Belgium 1378Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 56 of 814
    • 1379 Date of Conclusion: 23 June 1972 1380 Effective Date: 1 January 1974 1381 CONVENTION BETWEEN THE FEDERATIVE REPUBLIC OF BRAZIL AND THE 1382 KINGDOM OF BELGIUM FOR THE AVOIDANCE OF DOUBLE TAXATION AND 1383 THE SETTLEMENT OF OTHER QUESTIONS WITH RESPECT TO TAXES ON 1384 INCOME. 1385 The President of the Federative Republic of Brazil and His Majesty the King of 1386 Belgians, 1387 Desiring the avoidance of double taxation and the settlement of other questions 1388 with respect to taxes on income, decided to conclude a Convention and, for this 1389 purpose, appointed their Plenipotentiaries who 1390 Have agreed as follows: 1391 1392 ARTICLE 1 1393 Personal scope 1394 This Convention shall apply to persons who are residents of one or both of the 1395 Contracting States. 1396 ARTICLE 2 1397 Taxes covered 1398 1. The taxes to which this Convention shall apply are: 1399 a) in the case of Belgium: 1400 - the individual income tax ("limpôt des personnes physiques";Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 57 of 814
    • 1401 - the corporate income tax ("limpôt des sociétés"); 1402 - the income tax on legal entities ("limpôt des personnes morales"); 1403 - the income tax on non-residents ("limpôt des non-résidents"; 1404 including the prepayments (précomptes") and its additional prepayments 1405 compléments de précomptes), the additional surcharges on the mentioned tax 1406 and prepayments, and including the municipal supplement to the individual tax 1407 ("la taxe communale additionelle à limpôt des personnes physiques"); 1408 (hereinafter referred to as "Belgian tax"); 1409 b) in the case of Brazil: 1410 - the federal income tax , excluding the tax on excess remittances and on 1411 activities of minor importance; 1412 (hereinafter referred to as "Brazilian tax"); 1413 2. The Convention shall also apply to any identical or substantially similar future 1414 taxes that are imposed in addition to, or in place of, the existing taxes. 1415 1416 ARTICLE 3 1417 General definitions 1418 1. In the present Convention: 1419 a) the term "Brazil",when used in a geographical sense, means the Federative 1420 Republic of Brazil, 1421 b) The term "Belgium", when used in a geographical sense,means the territory of 1422 the Kingdom of Belgium, including any territory outside the national sovereigntyEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 58 of 814
    • 1423 of Belgium which in accordance with international law has been or may 1424 hereafter be designated, under the laws of Belgium concerning the continental 1425 shelf, as an area within which the rights of Belgium with respect to the sea bed 1426 and the sub-soil and their natural resources may be exercised; 1427 c) the terms "a Contracting State" and "the other Contracting State" mean Brazil or 1428 Belgium, as the context requires; 1429 d) the term "person" includes an individual, a company and any other body of 1430 persons; 1431 e) the term "company" means any legal person or any entity that is treated as a 1432 legal entity for tax purposes; 1433 f) the terms "enterprise of a Contracting State" and "enterprise of the other 1434 Contracting State" mean respectively an enterprise carried on by a resident of a 1435 Contracting State and an enterprise carried on by a resident of the other 1436 Contracting State; 1437 g) the term "competent authority" means: 1438 I - in Brazil: the Minister of Finance, the Secretary of Federal Revenue or 1439 their authorized representatives; 1440 II - in Belgium: the competent authority under Belgium law. 1441 2. As regards the application of the Convention by a Contracting State, any term 1442 not otherwise defined shall, unless the context otherwise requires, have the 1443 meaning that it has under the law of that State relating to the taxes to which the 1444 Convention applies. 1445 ARTICLE 4 1446 Fiscal domicileEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 59 of 814
    • 1447 1. For the purposes of this Convention, the term "resident of a Contracting State" 1448 means any person who, under the laws of that Contracting State, is liable to tax 1449 therein by reason of his domicile, residence, place of management or any other 1450 criterion of a similar nature; it also includes companies under belgian law – not 1451 being companies limited by shares – which have opted for their profits to be 1452 subjected to the individual income tax. 1453 2. Where by reason of the provisions of paragraph l an individual is considered to 1454 be a resident of both Contracting States, then his status shall be determined in 1455 accordance with the following rules: 1456 a) he shall be deemed to be a resident of the State in which he has a permanent 1457 home available to him. If he has a permanent home available to him in both 1458 Contracting States, he shall be deemed to be a resident of the Contracting State 1459 with which his personal and economic relations are closer (center of vital 1460 interests); 1461 b) if the Contracting State in which he has his center of vital interests cannot be 1462 determined, or if he has not a permanent home available to him in either of the 1463 Contracting State, he shall be deemed to be a resident of the Contracting State in 1464 which he has an habitual abode; 1465 c) if he has an habitual abode in both Contracting States or in neither of them, he 1466 shall be deemed to be a resident of the Contracting State of which he is a national; 1467 d) if he is a national of both Contracting States or of neither of them, the 1468 competent authorities of the Contracting States shall settle the question by mutual 1469 agreement. 1470 3. Where by reason of the provisions of paragraph l a person other than an 1471 individual is deemed to be a resident of both Contracting States, then it shall be 1472 deemed to be a resident of the Contracting State in which its place of effective 1473 management is situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 60 of 814
    • 1474 ARTICLE 5 1475 Permanent establishment 1476 1. For the purposes of this Convention, the term "permanent establishment" means 1477 a fixed place of business through which the business of an enterprise is wholly or 1478 partly carried on. 1479 2. The term "permanent establishment" includes especially: 1480 a) a place of management; 1481 b) a branch; 1482 c) an office; 1483 d) a factory; 1484 e) a workshop; 1485 f) a mine, a quarry or any other place of extraction of natural resources; and 1486 g) a building site or construction or assembly project which exists for more than 1487 six months. 1488 3. An establishment shall not be deemed to be permanent, if: 1489 a) the facilities are used solely for the purpose of storage, display or delivery of 1490 goods or merchandise belonging to the enterprise; 1491 b) a stock of goods or merchandise belonging to the enterprise is maintained 1492 solely for the purpose of storage, display or delivery; 1493 c) a stock of goods or merchandise belonging to the enterprise is maintained 1494 solely for the purpose of processing by another enterprise;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 61 of 814
    • 1495 d) a fixed place of business is used solely for the purpose of purchasing goods or 1496 merchandise or of collecting information, for the enterprise; 1497 e) a fixed place of business is maintained solely for the purpose of advertising, for 1498 the supply of information, for scienific research or for similar activities which 1499 have a preparatory or auxiliary character for the enterprise. 1500 4. A person acting in a Contracting State on behalf of an enterprise of the other 1501 Contracting State - other than an agent of an independent status to whom 1502 paragraph 5 applies - shall be deemed to be a permanent establishment in the 1503 first-mentioned State if he has, and habitually exercises, in a Contracting State an 1504 authority to conclude contracts in the name of the enterprise, unless his activities 1505 are limited to the purchase of goods or merchandise for the enterprise. 1506 However, an insurance company of one of the Contracting States shall be deemed 1507 to have a permanent establlishment in the other Contracting State provided, 1508 through the intermediary of a representative not included among the persons 1509 indicated in paragraph 5 below, it collects insurance premiums in the territory of 1510 the other Contracting State or if it insures risks situated in such a territory. 1511 5. An enterprise of a Contracting State shall not be deemed to have a permanent 1512 establishment in the other Contracting State merely because it carries on business 1513 in that other Contracting State through a broker, general commission agent or 1514 any other agent of an independent status, provided that such persons are acting 1515 in the ordinary course of their business. 1516 6. The fact that a company which is a resident of a Contracting State controls or is 1517 controlled by a company which is a resident of the other Contracting State, or 1518 which carries on business in that other State (whether through a permanent 1519 establishment or otherwise), shall not of itself constitute either company a 1520 permanent establishment of the other. 1521 ARTICLE 6Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 62 of 814
    • 1522 Income from immovable property 1523 1. Income from immovable property may be taxed in the Contracting State in 1524 which such property is situated. 1525 2. a) The term "immovable property" shall have the meaning which it has under 1526 the law of the Contracting State in which the property in question is situated. 1527 b) the term shall in any case include property accessory to immovable property, 1528 livestock and equipment used in agriculture and forestry, rights to which the 1529 provisions of general law respecting landed property apply, usufruct of 1530 immovable property and rights to variable or fixed payments as consideration for 1531 the working of, or the right to work, mineral deposits, sources and other natural 1532 resources; ships and aircraft shall not be regarded as immovable property. 1533 3. The provision of paragraph 1 shall apply to income derived from the direct 1534 use, letting or lease, or use in any other form of immovable property. 1535 4. The provisions of paragraphs 1 and 3 shall also apply to income from 1536 immovable property of an enterprise and to income from immovable property 1537 used for the performance of professional services. 1538 ARTICLE 7 1539 Business profits 1540 1. The profits of an enterprise of a Contracting State shall be taxable only in that 1541 State unless the enterprise carries on business in the other Contracting State 1542 through a permanent establishment situated therein. If the enterprise carries on 1543 business as aforesaid, the profits of the enterprise may be taxed in the other State 1544 but only so much of them as is attributable to that permanent establishment. 1545 2. Where an enterprise of a Contracting State carries on business in the other 1546 Contracting State through a permanent establishment situated therein, there shall 1547 in each Contracting State be attributed to that permanent establishment theEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 63 of 814
    • 1548 profits which it might be expected to make if it were a distinct and separate 1549 enterprise engaged in the same or similar activities under the same or similar 1550 conditions and dealing wholly independently with the enterprise of which it is a 1551 permanent establishment. 1552 3. In determining the profits of a permanent establishment, there shall be allowed 1553 as deductions expenses which are incurred for the purposes of the permanent 1554 establishment, including executive and general administrative expenses so 1555 incurred. 1556 4. No profits shall be attributed to a permanent establishment by reason of the 1557 mere purchase by that permanent establishment of goods or merchandise for the 1558 enterprise. 1559 5. Where profits include items of income which are dealt with separately in other 1560 Articles of this Convention, then the provisions of those Articles shall not be 1561 affected by the provisions of this Article. 1562 ARTICLE 8 1563 Shipping and air transport 1564 1. Profits from the operation of ships or aircraft in international traffic shall be 1565 taxable only in the Contracting State in which the place of effective management 1566 of the enterprise is situated. 1567 2. If the place of effective management of a shipping enterprise is aboard a ship, 1568 then it shall be deemed to be situated in the Contracting State in which the home 1569 harbour of the ship is situated, or, if there is no such home harbour, in the 1570 Contracting State of which the operator of the ship is a resident. 1571 ARTICLE 9 1572 Associated enterprisesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 64 of 814
    • 1573 Where 1574 a) an enterprise of a Contracting State participates directly or indirectly in the 1575 management, control or capital of an enterprise of the other Contracting State, or 1576 b) the same persons participate directly or indirectly in the management, control 1577 or capital of an enterprise of a Contracting State and an enterprise of the other 1578 Contracting State, 1579 and in either case conditions are made or imposed between the two enterprises in 1580 their commercial or financial relations which differ from those which would be 1581 made between independent enterprises, then any profits which would, but for 1582 those conditions, have accrued to one of the enterprises, but, by reason of those 1583 conditions, have not so accrued, may be included in the profits of that enterprise 1584 and taxed accordingly. 1585 ARTICLE 10 1586 Dividends 1587 1. Dividends paid by a company which is a resident of a Contracting State to a 1588 resident of the other Contracting State may be taxed in that other State. 1589 2. However, such dividends may also be taxed in the Contracting State of which 1590 the company paying the dividends is a resident and according to the laws of that 1591 Contracting State, but the tax so charged shall not exceed l5 per cent of the gross 1592 amount of the dividends. 1593 The provisions of this paragraph shall not affect the taxation of the company in 1594 respect of the profits out of which gave rise to the payment of the dividends. 1595 3. The term "dividends" as used in this Article means income from shares, 1596 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 1597 rights, not being debt-claims, participating in profits, as well as income from 1598 other corporate rights which is subjected to the same taxation treatment asEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 65 of 814
    • 1599 income from shares by the laws of the Contracting State of which the company 1600 making the distribution is a resident. This term also means income, even in the 1601 form of interest, which is taxable as income from capital invested by the 1602 associates in companies, other than joint stock companies, resident in Belgium. 1603 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 1604 the dividends, being a resident of a Contracting State, carries on business in the 1605 other Contracting State of which the company paying the dividends is a resident 1606 through a permanent establishment situated therein, and the holding by virtue of 1607 which the dividends are paid is effectively connected with such permanent 1608 establishment. In such a case the provisions of Article 7 shall apply. 1609 5. Where a company which is a resident of Belgium has a permanent 1610 establishment in Brazil, such a permanent establishment may be subject to a tax 1611 withheld at source in accordance with the Brazilian law, but such a tax shall not 1612 exceed 15 per cent of the gross amount of the profits of the permanent 1613 establishment determined after the payment of the corporate tax related to such 1614 profits. 1615 6. The limitation of the rate of tax provided in paragraphs 2 and 5 above shall not 1616 apply to dividends and profits paid or transferred prior to the first of January of 1617 1976. 1618 ARTICLE 11 1619 Interest 1620 1. Interest arising in a Contracting State and paid to a resident of the other 1621 Contracting State may be taxed in that other State. 1622 2. However, such interest may be taxed in the Contracting State in which it arises 1623 and according to the laws of that State, but the tax so charged shall not exceed 15 1624 per cent of the gross amount of the interest. 1625 3. Notwithstanding the provisions of paragraph 2:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 66 of 814
    • 1626 a) interest from loans and credits granted by the Government of a Contracting 1627 State shall be exempt from tax in the State in which that interest arises; 1628 b) the tax rate shall not exceed 10 percent on interest from loans and credit 1629 granted, for a period of at least 7 years, by banking establishments with the 1630 participation from public bodies of specialized financing which are tied to the 1631 sale of equipment, or to the study, installation or supplying of industrial or 1632 scientific complexes as well as public works. 1633 4. The term "interest" as used in this Article means income from government 1634 securities, bonds, whether or not secured by mortgage and whether or not 1635 carrying a right to participate in profits, and debt-claims of every kind, as well as 1636 other income assimilated to income from money lent by the tax law of the 1637 Contracting State in which the income arises. 1638 This term does not include interest assimilated to dividends, under Article 10, 1639 paragraph 3, second sentence of this Convention 1640 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 1641 the interest, being a resident of a Contracting State, carries on business in the 1642 other Contracting State in which the interest arises through a permanent 1643 establishment situated therein and the debt-claim in respect of which the interest 1644 is paid is effectively connected with such permanent establishment. In such a case 1645 the provisions of Article 7 shall apply. 1646 6. The tax rate limitation provided for in paragraphs 2 and 3 shall not apply to 1647 interest arising in a Contracting State and paid to a permanent establishment of 1648 an enterprise of the other Contracting State which is situated in a third State. 1649 7. Interest shall be deemed to arise in a Contracting State when the payer is that 1650 State itself, a political subdivision, a local authority or a resident of that 1651 Contracting State. Where, however, the person paying the interest, whether it is a 1652 resident of a Contracting State or not, has in a Contracting State a permanent 1653 establishment in connection with which the indebtedness on which the interest isEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 67 of 814
    • 1654 paid was incurred, and such interest is borne by such a permanent establishment, 1655 then such interest shall be deemed to arise in the Contracting State in which the 1656 permanent establishment is situated. 1657 8. Where, by reason of a special relationship between the payer and the beneficial 1658 owner or between both of them and some other person, the amount of the 1659 interest, having regard to the debt-claim for which it is paid, exceeds the amount 1660 which would have been agreed upon by the payer and the beneficial owner in the 1661 absence of such relationship, the provisions of this Article shall apply only to the 1662 last-mentioned amount. In such a case, the excess part of the payments shall 1663 remain taxable according to the laws of each Contracting State, due regard being 1664 had to the other provisions of this Convention. 1665 ARTICLE 12 1666 Royalties 1667 1. Royalties arising in a Contracting State and paid to a resident of the other 1668 Contracting State may be taxed in that other State. 1669 2. However, such royalties may be taxed in the Contracting State in which they 1670 arise and according to the laws of that State, but the tax so charged shall not 1671 exceed: 1672 a. 10 per cent of the gross amount of the royalties arising 1673 from the use or the right to use any copyright of 1674 literary, artistic or scientific work or for the use of, or 1675 the right to use, any films or video tapes for television 1676 or radio broadcasting produced by a resident of one of 1677 the Contracting States; 1678 b. 25 percent of the gross amount of royalties paid for the 1679 use of a trademark or commercial name; 1680 c. 15 percent in all other cases.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 68 of 814
    • 1681 3. The term "royalties" as used in this Article means payments of any kind 1682 received as a consideration for the use of, or the right to use, any copyright of 1683 literary, artistic or scientific work, including cinematograph films, films or tapes 1684 for television or radio broadcasting, any patent, trade mark, design or model, 1685 plan, secret formula or process, or for the use of, or the right to use, industrial, 1686 commercial, or scientific equipment, or for information concerning industrial, 1687 commercial or scientific experience. 1688 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 1689 the royalties, being a resident of a Contracting State, carries on business in the 1690 other Contracting State in which the royalties arise through a permanent 1691 establishment situated therein, and the right or property in respect of which the 1692 royalties are paid is effectively connected with such a permanent establishment. 1693 In such a case the provisions of Article 7 shall apply. 1694 5. Royalties shall be deemed to arise in a Contracting State when the payer is that 1695 Contracting State itself, a political subdivision, a local authority or a resident of 1696 that Contracting State. Where, however, the person paying the royalties, whether 1697 he is a resident of a Contracting State or not, has in a Contracting State a 1698 permanent establishment in connection with which the liability to pay the 1699 royalties was incurred, and such royalties are borne by such a permanent 1700 establishment, then such royalties shall be deemed to arise in the Contracting 1701 State in which the permanent establishment is situated. 1702 6. Where, by reason of a special relationship between the payer and the beneficial 1703 owner or between both of them and some other person, the amount of the 1704 royalties, having regard to the use, right or information for which they are paid, 1705 exceeds the amount which would have been agreed upon by the payer and the 1706 beneficial owner in the absence of such relationship, the provisions of this Article 1707 shall apply only to the last-mentioned amount. In such a case, the excess part of 1708 the payments shall remain taxable according to the laws of each Contracting 1709 State, due regard being had to the other provisions of this Convention.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 69 of 814
    • 1710 ARTICLE 13 1711 Capital gains 1712 1. Gains from the alienation of immovable property referred to in paragraph 2 of 1713 Article 6 may be taxed in the Contracting State in which it is situated. 1714 2. Gains from the alienation of movable property forming part of the business 1715 property of a permanent establishment which an enterprise of a Contracting State 1716 has in the other Contracting State, or of movable property pertaining to a fixed 1717 base available to a resident of a Contracting State in the other Contracting State 1718 for the purpose of peforming professional services, including such gains from the 1719 alienation of such a permanent establishment (alone or with the whole 1720 enterprise) or of such a fixed base, may be taxed in that other State. However, 1721 gains from the alienation of ships or aircraft operated in international traffic or 1722 movable property pertaining to the operation of such ships or aircraft shall be 1723 taxable only in the Contracting State in which the place of effective management 1724 of the enterprise is situated. 1725 3. Gains from the alienation of any property other than that referred to in 1726 paragraphs 1 and 2 of this Article and arising in the other Contracting State may 1727 be taxed in both Contracting States. 1728 ARTICLE 14 1729 Independent personal services 1730 1. Income derived by a resident of a Contracting State in respect of professional 1731 services or other independent activities of a similar character shall be taxable 1732 only in that State, unless the remuneration for such services or activities is paid 1733 by a company resident of the other Contracting State or is borne by a permanent 1734 establishment situated therein. In such a case, the income may be taxed in that 1735 other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 70 of 814
    • 1736 2. The term "professional services" includes especially independent scientific, 1737 technical, literary, artistic, educational or teaching activities as well as the 1738 independent activities of physicians, lawyers, engineers, architects, dentists and 1739 accountants. 1740 ARTICLE 15 1741 Dependent personal services 1742 1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and 1743 other similar remuneration derived by a resident of a Contracting State in respect 1744 of an employment shall be taxable only in that State unless the employment is 1745 exercised in the other Contracting State. If the employment is so exercised, such 1746 remuneration as is derived therefrom may be taxed in that other State. 1747 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 1748 resident of a Contracting State in respect of an employment exercised in the other 1749 Contracting State shall be taxable only in the first-mentioned State if: 1750 a) the recipient is present in the other State for a period or periods not exceeding 1751 in the aggregate 183 days in any twelve month period commencing or ending in 1752 the fiscal year concerned; 1753 b) the remuneration is paid by, or on behalf of, an employer who is not a resident 1754 of the other State; and 1755 c) the remuneration is not borne by a permanent establishment or fixed base 1756 which the employer has in the other State. 1757 3. Notwithstanding the preceding provisions of this Article, remuneration derived 1758 in respect of an employment exercised aboard a ship or aircraft operated in 1759 international traffic may be taxed in the Contracting State in which the place of 1760 effective management of the enterprise is situated. 1761 ARTICLE 16Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 71 of 814
    • 1762 Directors Fees, com c. 1763 1. Directors fees, and other similar payments derived by a resident of a 1764 Contracting State in his capacity as a member of the board of directors or 1765 supervisory board of a similar body of a company which is a resident of the other 1766 Contracting State may be taxed in that other State. The same applies also to the 1767 remuneration of an active partner of a partnership limited by shares resident in 1768 Belgium. 1769 2. However, the normal remuneration received by the persons referred to in the 1770 preceding paragraph for any other services may be taxable, depending on the 1771 case, under the conditions provided by Articles 14 and 15, paragraph 1, of this 1772 Convention. 1773 ARTICLE 17 1774 Artistes and sportsmen 1775 Notwithstanding the provisions of Articles 14 and 15, income derived by a 1776 resident of a Contracting State as an entertainer, such as a theatre, motion 1777 picture, radio or television artiste, or a musician, or as a sportsman, from his 1778 personal activities as such exercised in the other Contracting State, may be taxed 1779 in that other State. 1780 ARTICLE 18 1781 Pensions 1782 1. Subject to the provisions of Article 19, pensions, other similar remuneration in 1783 consideration of past employment, and annuities, arising in a Contracting State 1784 and paid to a resident of the other Contracting State, shall be taxed only in that 1785 State. 1786 2. As used in this Article, the term "annuities" means a stated sum payable 1787 periodically at stated times during life, or during a specified or ascertainableEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 72 of 814
    • 1788 period of time, under an obligation to make the payments in return for adequate 1789 and full consideration in money or moneys worth. 1790 3. The term "pensions", as used in this Article, means periodic payments made 1791 after retirement in consideration of past employment or by way of compensation 1792 for injuries received in connection with past employment. 1793 Article 19 1794 Public remuneration and pensions 1795 1. Remuneration, including pensions, paid by a Contracting State or a political 1796 subdivision or a local authority thereof, whether directly or through funds 1797 constituted by them, to an individual in respect of services rendered to that State 1798 or subdivision or local authority in respect of governmental functions shall be 1799 taxable only in that State. 1800 However, this provision shall not apply if the beneficial of such remuneration has 1801 the nationality of the other State without being, at the same time, a national of the 1802 first-mentioned State. 1803 2. The provisions of Articles 15, 16 and 18 shall apply to remuneration, and to 1804 pensions, in respect of services rendered in connection with a trade or business 1805 carried on by one of the Contracting State, a political subdivision or a local 1806 authority thereof. 1807 ARTICLE 20 1808 Teachers 1809 An individual who is a resident of a Contracting State at the beginning of his stay 1810 in the other Contracting State and who, upon an invitation from the Government 1811 of the other Contracting State or from a University or other officially recognized 1812 educational or research institution in that other Contracting State, and is present 1813 in the last-mentioned State mainly for the purpose of teaching or carrying outEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 73 of 814
    • 1814 research work, or both, shall be exempt from tax in that State for a period not 1815 exceeding two years as from the date of his arrival in that State, on the 1816 remuneration received for such teaching or research. 1817 ARTICLE 21 1818 Students and apprentices 1819 Payments which a student or apprentice who is or was a resident of the other 1820 Contracting State and who is present in the other Contracting State solely for the 1821 purpose of his education or training receives for the purpose of his maintenance, 1822 education or training shall not be taxed in that other Contracting State, provided 1823 that such payments are from sources outside that State. 1824 The same applies to remuneration received by a student or apprentice in 1825 consideration for employment exercised in the Contracting State where he carries 1826 on his studies or training, provided that such employment does not exceed a 1827 period of three years and the annual remuneration does not exceed 100,000 1828 Belgian francs or their equivalent in Brazilian currency. 1829 ARTICLE 22 1830 Income not expressly mentioned 1831 Items of income of a resident of a Contracting State which are not expressly 1832 mentioned in the foregoing Articles of this Convention may be taxed in both 1833 Contracting States. 1834 ARTICLE 23 1835 General rules of taxation 1836 1. In the case of Brazil double taxation shall be avoided as follows: 1837 Where a resident of Brazil derives income which, in accordance with the 1838 provisions of this Convention, may be taxed in Belgium, Brazil shall allow, as aEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 74 of 814
    • 1839 deduction from the tax on the income of that resident, an amount equal to the 1840 income tax paid in Belgium. 1841 However, the amount of that deduction shall not exceed that part of the Brazilian 1842 income tax, as computed before the deduction is given, which is attributable to 1843 the income which may be taxed in Brazil. 1844 2. In the case of Belgium double taxation shall be avoided as follows: 1845 I - Where a resident of Belgium receives income not dealt with in sub- 1846 paragraphs II, III and IV of this paragraph which may be taxed in Brazil in 1847 accordance with the provisions of the Convention, Belgium shall exempt such 1848 income from tax but in order to determine the amount of taxes on the remaining 1849 income of such a resident, it may apply the tax rate corresponding to the total 1850 income including the exempt income. 1851 II - a) In regard to dividends subject to tax in accordance of Article 10, paragraph 1852 2, and which are not indicated in sub-paragraph III below, to interest according 1853 to Article 11, paragraphs 2, 3b or 8 applies and to royalties to which Article 12, 1854 paragraphs 2 or 6, applies, Belgium shall grant a deduction of 20 percent of the 1855 gross amount of the mentioned income forming the base subject to tax in the 1856 name of such a resident, from the Belgian tax due by such a resident; 1857 b) in the event that Brazil reduces the normal taxes imposed on the above income 1858 attributed to non-residents to a rate below 14 percent of the gross amount of that 1859 income, Belgium shall reduce the rate of such deduction from 20 to 15 percent. 1860 In the event that Brazil eliminates this tax, Belgium shall limit the rate of such 1861 deduction to 5 percent; 1862 c) notwithstanding the provisions of its law, Belgium shall also grant the 1863 deduction of 20 percent provided for in item "a" above for the above mentioned 1864 income which may be taxed in Brazil pursuant to the Convention and to the 1865 general provisions of Brazilian law, where such income is temporarily exempt 1866 from Brazilian taxes in accordance with special legal provisions designed toEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 75 of 814
    • 1867 encourage the investments required for the development of Brazilian economy. 1868 The competent authorities of the Contracting States shall establish, by mutual 1869 agreement, which is the income that will qualify for this provision. 1870 III - a) Where a company resident in Belgium holds shares or parts of a share 1871 company resident in Brazil and subject to corporate income tax in Brazil, the 1872 dividends which are attributed to the first company by the latter company and 1873 which may be taxed in Brazil in accordance with Article 10, paragraph 2, shall 1874 be exempt from corporate tax in Belgium in the same proportion in which such 1875 exemption would be granted if both companies were residents in Belgium; this 1876 provision does not preclude the imposition of the "précompte mobilier" on such 1877 dividends in accordance with Belgian law; 1878 b) where a company resident in Belgium has had during an entire company year 1879 of a stock company in Brazil and subject to corporate income tax in Brazil the 1880 exclusive property of shares or parts of this latter company, the company resident 1881 in Belgium will be equally exempt from "précompte mobilier" which would be 1882 due under Belgian law on the dividends of such shares or parts, provided that the 1883 company resident in Belgium has made a written request to this effect before the 1884 expiration of the term provided for its annual declaration; on the occasion of 1885 redistributing these exempt dividends to its own shareholders, these exempt 1886 dividends may not be deducted from the amount of dividends distributed subject 1887 to précompte mobilier". This provision shall not apply when the first company 1888 has chosen to subject its profits to the individual income tax. In the event that the 1889 provisions of Belgian Law which grant an exemption of corporate income tax 1890 with respect to the net amount of the dividends which a company resident in 1891 Belgium receives from another company resident in Belgium are altered in order 1892 to limit the exemption granted to the dividends resulting from a certain 1893 shareholding in the capital of the second company, then the above-mentioned 1894 provision will apply only to the dividends distributed by companies resident in 1895 Brazil and relating to holdings of the same scope in the capital of the above 1896 companies. In this event, double taxation of the dividends resulting from such 1897 participations will be avoided in the manner described in sub-paragraph II.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 76 of 814
    • 1898 IV - Income which has been taxed in Brazil in accordance with Article 13, 1899 paragraph 3, or Article 22 and which is included in the income subject to Belgian 1900 tax will be subject to that tax in accordance with the conditions provided for by 1901 Belgian tax legislation with respect to professional income received and taxed 1902 abroad. 1903 V - Where in accordance with Belgian Law, losses sustained by a permanent 1904 establishment in Brazil of an enterprise resident in Belgium are effectively 1905 deducted from the profits of this enterprise for purposes of taxation in Belgium, 1906 then the exemption provided for in sub-paragraph I shall not apply in Belgium to 1907 profits realized in other tax periods which can be allocated to this establishment, 1908 to the extent that these profits have also been granted tax exemption in Brazil on 1909 account of a carryover of those losses. 1910 ARTICLE 24 1911 Non-discrimination 1912 1. Nationals of a Contracting State shall not be subjected in the other Contracting 1913 State to any taxation or any requirement connected therewith, which is other or 1914 more burdensome than the taxation and connnected requirements to which 1915 nationals of that other State in the same circumstances are or may be subjected. 1916 2. The term "national" means: 1917 I - any individual possessing the nationality of a Contracting State; 1918 II - any legal person, partnership or association deriving its status as such from 1919 the laws in force in a Contracting State; 1920 3. The taxation on a permanent establishment which an enterprise of a 1921 Contracting State has in the other Contracting State shall not be less favourably 1922 levied in that other Contracting State than the taxation levied on enterprises of 1923 that other State carrying on the same activities.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 77 of 814
    • 1924 This provision shall not be construed as obliging a Contracting State to grant to 1925 residents of the other Contracting State any personal allowances, relief and 1926 reductions for taxation purposes on account of civil status or family 1927 responsabilities which it grants to its own residents. 1928 4. Except where the provisions of Articles 9 and 11, paragraph 8, apply, interest 1929 paid by an enterprise of a Contracting State to a resident of the other Contracting 1930 State shall, for the purpose of determining the taxable profits of such enterprise, 1931 be deductible under the same conditions as if they had been paid to a resident of 1932 the first-mentioned State. 1933 5. Enterprises of a Contracting State, the capital of which is wholly or partly 1934 owned or controlled, directly or indirectly, by one or more residents of the other 1935 Contracting State, shall not be subjected in the first-mentioned State to any 1936 taxation or any requirement connected therewith which is other or more 1937 burdensome than the taxation and connected requirements to which other 1938 similar enterprises of the first-mentioned State, the capital of which is wholly or 1939 partly owned or controlled, directly or indirectly, by one or more residents of a 1940 third State, are or may be subjected. 1941 6. In this Article, the term "taxation" means taxes of every kind and description. 1942 ARTICLE 25 1943 Mutual agreement procedure 1944 1. Where a resident of a Contracting State considers that the actions of one or 1945 both of the Contracting States result or will result for him in taxation not in 1946 accordance with the provisions of this Convention, he may, irrespective of the 1947 remedies provided by the domestic law of those States, present his case to the 1948 competent authority of the Contracting State of which he is a resident. 1949 2. The competent authority referred to in paragraph 1 shall endeavour, if the 1950 objection appears to it to be justified and if it is not itself able to arrive at aEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 78 of 814
    • 1951 satisfactory solution, to resolve the case by mutual agreement with the competent 1952 authority of the other Contracting State, with a view to the avoidance of taxation 1953 which is not in accordance with the Convention. 1954 3. The competent authorities of the Contracting States shall endeavour to resolve 1955 by mutual agreement any difficulties or doubts arising as to the interpretation or 1956 application of the Convention. 1957 4. The competent authorities of the Contracting States may communicate with 1958 each other directly for the purpose of reaching an agreement in the sense of the 1959 preceding paragraphs. If, in order to facilitate such agreement, it seems advisable 1960 to have oral discussions, such discussions may take place through a Commission 1961 of representatives of the competent authorities of the Contracting States. 1962 5. The competent authorities of the Contracting States shall agree on the subject 1963 of the necessary administrative mesures to carry out the provisions of this 1964 Convention and, particularly, in the matter of proofs to be supplied by the 1965 residents of either State in order to benefit in the other State from the tax 1966 exemptions or reductions provided for in this Convention. 1967 ARTICLE 26 1968 Exchange of information 1969 1. The competent authorities of the Contracting States shall exchange such 1970 information as is necessary for carrying out the provisions of this Convention or 1971 of the domestic laws of the Contracting States concerning taxes covered by this 1972 Convention insofar as the taxation thereunder is in accordance with this 1973 Convention. Any information received by a Contracting State shall be treated as 1974 secret and shall be disclosed only to persons or authorities concerned with the 1975 assessment or collection of the taxes covered by the present Convention. 1976 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 1977 a Contracting State the obligation:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 79 of 814
    • 1978 a) to carry out administrative measures at variance with the laws and 1979 administrative practice of that or of the other Contracting State; 1980 b) to supply information which is not obtainable under the laws or in the normal 1981 course of the administration of that or of the other Contracting State; 1982 c) to supply information which would disclose any trade, business, industrial, 1983 commercial or professional secret or trade process, or information, the disclosure 1984 of which would be contrary to public policy. 1985 ARTICLE 27 1986 "Miscellaneous rules" 1987 1. Notwithstanding the application of Article 23, paragraph 2, sub-paragraph III 1988 "b", the provisions of this Convention shall not limit the advantages offered by the 1989 legislation of a Contracting State in respect of the taxes mentioned in Article 2. 1990 2. Nothing in this Convention shall have the effect of limiting the taxation of a 1991 company resident in Belgium in the event of redemption of stock or parts or in 1992 the event of the distribution of its assets. 1993 3. Nothing in this Convention shall affect the fiscal privileges of diplomatic 1994 missions or consular posts under the general rules of international law or under 1995 the provisions of special agreements. 1996 4. For the purposes of this Convention, diplomatic or consular officials of a 1997 Contracting State, who are accredited in the other Contracting State or in a third 1998 State and who have the nationality of the sending State, shall be considered as 1999 residents of that State if they are subject in that State to the same obligations in 2000 respect of income tax as the residents of that State. 2001 5. This Convention shall not apply to international organizations and to their 2002 organs and officials, nor to individuals who are members of diplomatic or 2003 consular missions of a third State and who stay in a Contracting State but are notEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 80 of 814
    • 2004 deemed to be residents of one or the other Contracting State with regard to taxes 2005 on income. 2006 6. The Finance Ministers of the Contracting States or their representatives shall 2007 communicate directly with each other for the carrying out of this Convention. 2008 ARTICLE 28 2009 Entry into force 2010 1. This Convention shall be ratified and the instruments of ratification shall be 2011 exchanged in Brussels as soon as possible. 2012 2. This Convention shall enter into force on the thirtieth day after the date of the 2013 exchange of instruments of ratification and its provisions shall apply for the first 2014 time: 2015 a) in respect of taxes withheld at source, the fact giving rise to them appearing on 2016 or after the first day of January of the calendar year immediately following that in 2017 which the Convention enters into force; 2018 b) in respect of other taxes on income arising on the first day of January of the 2019 year next following that in which this Convention enters into force. 2020 ARTICLE 29 2021 Termination 2022 This Convention shall remain in force indefinitely. However, either Contracting 2023 State may terminate this Convention by giving a previous written notice of 2024 termination and through diplomatic channels, six months before the end of the 2025 civil year, as of the third year after its entry into force. 2026 In such a case this Convention shall apply for the last time:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 81 of 814
    • 2027 a) in respect of taxes withheld at source, the fact giving rise to them appearing 2028 before the end of the calendar year during which the notice of termination is 2029 given; 2030 b) in respect of other taxes covered by the Convention, on income arising in the 2031 taxable year ending on or before the 31st day of December of the year during 2032 which the notice of termination is given. 2033 In witness whereof the Plenipotentiaries of the two Contracting States have signed 2034 this Convention and have affixed hereto their seals. 2035 Done in duplicate in Brasilia on June 23, 1972, in the Portuguese and in 2036 Portuguese, French and Dutch languages, each text being equally authentic. 2037 FINAL PROTOCOL 2038 At the moment of the signature of the Convention for the Avoidance of Double 2039 Taxation and the Settlement of Certain other Questions with respect to Taxes on 2040 Income between the Federative Republic of Brazil and the Kingdom of Belgium, 2041 concluded on this date, the undersigned Plenipotententiaries have agreed upon 2042 the following provisions which constitute an integral part of the Convention. 2043 1. Ad Article 10, paragraphs 2 and 5. 2044 Notwithstanding the application of Article 10, paragraphs 2 and 5, where a 2045 company resident in one Contracting State derives profits or income from the 2046 other Contracting State, that other State may not impose any tax on the dividends 2047 paid by that company to persons who are not residents of that other State, or 2048 subject the companys undistributed profits to a tax on undistributed profits, even 2049 if the dividends paid or the undistributed profits consist wholly or partly of 2050 income arising in that other State. 2051 2. Ad Article 13, paragraph 3 and Article 14, paragraph 1.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 82 of 814
    • 2052 In the event that, after the signature of the present Convention, Brazil concludes 2053 with a third State not situated in Latin America a Convention which limits - in 2054 respect of the income mentioned in Article 13, paragraph 3, and Article 14, 2055 paragraph 1 - the taxation right of the Contracting State other than the State in 2056 which the beneficial owner of the income is a resident, an identical limitation 2057 would automatically be applied to the relations between Brazil and Belgium. 2058 3. Ad Article 24, paragraph 4. 2059 In the event that, after the signature of the Convention, Brazil permits that 2060 royalties paid by a company resident in Brazil to a company resident in a third 2061 State not situated in Latin America which owns at least 50 percent of the capital 2062 of the referred company resident in Brazil, may be deducted in determining the 2063 amount of profits of that company subject to tax in Brazil, then an identical 2064 deduction will automatically be granted in the relations between a company 2065 resident in Brazil and a company resident in Belgium which companies are in the 2066 same situation. 2067 4. Ad Article 24 2068 These provisions shall not prevent Belgium from: 2069 a) taxing a resident of Brazil who disposes of a dwelling house in Belgium on a 2070 minimum income equal to two times the cadastral income of that house; 2071 b) globally taxing the profits attributed to the permanent establishment in 2072 Belgium of a company resident in Brazil or of a group of persons who have their 2073 office of effective management in that State, at the rate determined by Belgian 2074 law, provided that this rate does not exceed, in principle, the maximum rate 2075 applicable to the whole or a fraction of the profits of these companies residents in 2076 Belgium. 2077 Done, in duplicate, in Brasilia on June 23, 1972, in the Portuguese, French and 2078 Dutch languages, each text being equally authentic.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 83 of 814
    • 2079Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 84 of 814
    • 2080 2081 2082 Canada 2083Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 85 of 814
    • 2084 Date of Conclusion: 1 June 1984 2085 Effective Date: 1 January 1986 2086 BETWEEN THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL AND 2087 THE GOVERNMENT OF CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION 2088 WITH RESPECT TO TAXES ON INCOME 2089 The Government of the Federative Republic of Brazil 2090 And 2091 The Government of Canada, 2092 desiring to conclude a Convention for the avoidance of double taxation with 2093 respect to taxes on income, 2094 have agreed as follows: 2095 ARTICLE I 2096 Personal Scope 2097 This Convention shall apply to persons who are residents of one or both of the 2098 Contracting States. 2099 ARTICLE II 2100 Taxes Covered 2101 1. This Convention shall apply to taxes on income imposed on behalf of each 2102 Contracting State, irrespective of the manner in which they are levied. 2103 2. The existing taxes to which the Convention shall apply are: 2104 a) in the case of Brazil : 2105 - the federal income tax, excluding the tax on excessEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 86 of 814
    • 2106 remittances and on activities of minor importance; 2107 (hereinafter referred to as "Brazilian tax"); 2108 b) in the case of Canada: 2109 - the income taxes imposed by the Government of Canada. 2110 (hereinafter referred to as "Canadian tax"). 2111 3. This Convention shall apply also to any identical or substantially similar taxes 2112 on income which are imposed after the date of signature of this Convention in 2113 addition to, or in place of, the existing taxes. The Contracting States shall notify 2114 each other of changes which have been made in their respective taxation laws. 2115 ARTICLE III 2116 General definitions 2117 1. In this Convention, unless the context otherwise requires: 2118 a) the term "Brazil" means the territory of the Federative Republic of Brazil, that is, 2119 the continental and insular earth and its corresponding air space, as well as the 2120 territorial sea and its corresponding seabed and subsoil, within which, in 2121 accordance with international law and the Brazilian laws, the rights of Brazil 2122 may be exercised; 2123 b) the term "Canada" used in a geographical sense means the territory of Canada, 2124 including any area beyond the territorial seas of Canada which, under the laws of 2125 Canada, is an area within which Canada may exercise rights with respect to the 2126 seabed and subsoil and their natural resources; 2127 c) the terms "a Contracting State" and "the other Contracting State" mean Canada 2128 or Brazil as the context requires; 2129 d) the term "person" comprises an individual, a company and any other body of 2130 persons;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 87 of 814
    • 2131 e) the term "nationals" means: 2132 i) all individuals possessing the nationality of a Contracting State; 2133 ii) all legal persons, partnerships and associations deriving their status as such 2134 from the law in force in a Contracting State. 2135 f) the term "company" means any body corporate or any entity which is treated as 2136 a body corporate for tax purposes; 2137 g) the terms "enterprise of a Contracting State" and "enterprise of the other 2138 Contracting State" mean respectively an enterprise carried on by a resident of a 2139 Contracting State and an enterprise carried on by a resident of the other 2140 Contracting State; 2141 h) the term "international traffic" includes traffic between places in one country 2142 in the course of a journey which extends over more than one country; 2143 i) the term "tax" means Brazilian tax or Canadian tax, as the context requires; 2144 j) the term "competent authority" means : 2145 i) in Brazil : the Minister of Finance, the Secretary of Federal Revenue or their 2146 authorized representatives; 2147 ii) in Canada: the Minister of National Revenue or his authorized representative. 2148 2. As regards the application of this Convention by a Contracting State any term 2149 not otherwise defined shall, unless the context otherwise requires, have the 2150 meaning which it has under the laws of that Contracting State relating to the 2151 taxes which are the subject of this Convention. 2152 ARTICLE IV 2153 Fiscal domicileEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 88 of 814
    • 2154 1. For the purposes of this Convention, the term "resident of a Contracting State" 2155 means any person who, under the law of that State, is liable to taxation therein by 2156 reason of his domicile, residence, place of management or any other criterion of a 2157 similar nature. 2158 2. Where by reason of the provisions of paragraph 1 an individual is a resident of 2159 both Contracting States, then his status shall be determined as follows: 2160 a) he shall be deemed to be a resident of the Contracting State in which he has a 2161 permanent home available to him. If he has a permanent home available to him 2162 in both Contracting States, he shall be deemed to be a resident of the Contracting 2163 State with which his personal and economic relations are closest (centre of vital 2164 interests); 2165 b) if the Contracting State in which he has his centre of vital interests cannot be 2166 determined, or if he has not a permanent home available to him in either 2167 Contracting State, he shall be deemed to be a resident of the Contracting State in 2168 which he has an habitual abode; 2169 c) if he has an habitual abode in both Contracting States or in neither of them, he 2170 shall be deemed to be a resident of the Contracting State of which he is a national; 2171 d) of he is a national of both Contracting States or of neither of them, the 2172 competent authorities of the Contracting States shall settle the question by mutual 2173 agreement. 2174 3. Where by reason of the provisions of paragraph 1 a person other than an 2175 individual is a resident of both Contracting States, the competent authorities of 2176 the Contracting States shall by mutual agreement endeavour to settle the 2177 question. 2178 ARTICLE V 2179 Permanent EstablishmentEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 89 of 814
    • 2180 1. For the purposes of this Convention, the term "permanent establishment" means 2181 a fixed place of business in which the business of the enterprise is wholly or 2182 partly carried on. 2183 2. The term "permanent establishment" shall include especially: 2184 a) a place of management; 2185 b) a branch; 2186 c) an office; 2187 d) a factory; 2188 e) a workshop; 2189 f) a mine, quarry or other place of extraction of natural resources; 2190 g) a building site or construction or assembly project which exists for more than 2191 six months. 2192 3. The term "permanent establishment" shall not be deemed to include: 2193 a) the use of facilities solely for the purpose of storage, display or delivery of 2194 goods or merchandise belonging to the enterprise; 2195 b) the maintenance of a stock of goods or merchandise belonging to the 2196 enterprise solely for the purpose of storage, display or delivery; 2197 c) the maintenance of a stock of goods or merchandise belonging to the 2198 enterprise solely for the purpose of processing by another enterprise; 2199 d) the maintenance of a fixed place of business solely for the purpose of 2200 purchasing goods or merchandise or for collecting information, for the 2201 enterprise;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 90 of 814
    • 2202 e) the maintenance of a fixed place of business solely for the purpose of 2203 advertising, for the supply of information, for scientific research, or for similar 2204 activities which have a preparatory or auxiliary character, for the enterprise. 2205 4. A person acting in a Contracting State on behalf of an enterprise of the other 2206 Contracting State -other than an agent of independent status to whom paragraph 2207 5 applies -shall be deemed to be a permanent establishment in the first- 2208 mentioned State if he has, and habitually exercises in that State, an authority to 2209 conclude contracts in the name of the enterprise, unless his activities are limited 2210 to the purchase of goods or merchandise for the enterprise. 2211 However, an insurance company of a Contracting State shall be deemed to have a 2212 permanent establishment in the other Contracting State provided that, through a 2213 representative other than persons to whom paragraph 5 below applies, it receives 2214 premium or insures risks in that other State. 2215 5. An enterprise of a Contracting State shall not be deemed to have a permanent 2216 establishment in the other Contracting State merely because it carries on business 2217 in that other State through a broker, general commission agent or any other agent 2218 of independent status, where such persons are acting in the ordinary course of 2219 their business. 2220 6. The fact that a company which is a resident of a Contracting State controls or is 2221 controlled by a company which is a resident of the other Contracting State, or 2222 which carries on business in that other State (whether through a permanent 2223 establishment or otherwise), shall not of itself constitute either company a 2224 permanent establishment of the other. 2225 ARTICLE VI 2226 Income from Immovable Property 2227 1. Income from immovable property including income from agriculture or 2228 forestry may be taxed in the Contracting State in which such property is situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 91 of 814
    • 2229 2. a) Subject to the provisions of subparagraphs b) and c) the term 2230 "immovable property" shall be defined in accordance with the law of 2231 the Contracting State in which the property in question is situated; 2232 b) the term shall in any case include property accessory to immovable property, 2233 livestock and equipment used in agriculture and forestry, rights to which the 2234 provisions of general law respecting landed property apply, usufruct of 2235 immovable property, rights to explore for or to exploit mineral deposits, sources 2236 and other natural resources and rights to amounts computed by reference to the 2237 amount or value of production from such resources; 2238 c) ships and aircraft shall not be regarded as immovable property. 2239 3. The provisions of paragraph 1 shall apply to income derived from the direct 2240 use, letting, or use in any other form of immovable property. 2241 4. The provisions of paragraphs 1 and 3 shall also apply to the income from 2242 immovable property of an enterprise and to income from immovable property 2243 used for the performance of professional services. 2244 ARTICLE VII 2245 Business Profits 2246 1. The profits of an enterprise of a Contracting State shall be taxable only in that 2247 State unless the enterprise carries on business in the other Contracting State 2248 through a permanent establishment situated therein. If the enterprise carries on 2249 business as aforesaid, the profits of the enterprise may be taxed in the other State 2250 but only so much of them as is attributable to that permanent establishment. 2251 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting 2252 State carries on business in the other Contracting State through a permanent 2253 establishment situated therein, there shall in each Contracting State be attributed 2254 to that permanent establishment the profits which it might be expected to make if 2255 it were a distinct and separate enterprise engaged in the same or similar activitiesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 92 of 814
    • 2256 under the same or similar conditions and dealing wholly independently with the 2257 enterprise of which it is a permanent establishment. 2258 3. In the determination of the profits of a permanent establishment, there shall be 2259 allowed those deductible expenses which are incurred for the purposes of the 2260 permanent establishment including executive and general administrative 2261 expenses so incurred. 2262 4. No profits shall be attributed to a permanent establishment by reason of the 2263 mere purchase by that permanent establishment of goods or merchandise for the 2264 enterprise. 2265 5. Where profits include items of income which are dealt with separately in other 2266 Articles of this Convention, then the provisions of those Articles shall not be 2267 affected by the provisions of this Article. 2268 ARTICLE VIII 2269 Shipping and Air Transport 2270 1. Profits from the operation of ships or aircraft in international traffic shall be 2271 taxable only in the Contracting State in which the place of effective management 2272 of the enterprise is situated. 2273 2. Notwithstanding the provisions of paragraph 1 and Article VII, profits derived 2274 from the operation of ships or aircraft used principally to transport passengers or 2275 goods exclusively between places in a Contracting State may be taxed in that 2276 State. 2277 3. The provisions of paragraphs 1 and 2 shall also apply to profits derived from 2278 the participation in a pool. a joint business or in an international operating 2279 agency. 2280 ARTICLE IX 2281 Associated EnterprisesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 93 of 814
    • 2282 Where 2283 a) an enterprise of a Contracting State participates directly or indirectly in the 2284 management, control or capital of an enterprise or the other Contracting State, or 2285 b) the same persons participate directly or indirectly in the management, control 2286 or capital of an enterprise of a Contracting State and an enterprise of the other 2287 Contracting State, 2288 and in either case conditions are made or imposed between the two enterprises in 2289 their commercial or financial relations which differ from those which would be 2290 made between independent enterprises. Then any profits which would, but for 2291 those conditions, have accrued to one of the enterprises, but, by reason of those 2292 conditions, have not so accrued, may be included in the profits of that enterprise 2293 and taxed accordingly. 2294 ARTICLE X 2295 Dividends 2296 1. Dividends paid by a company which is a resident of a Contracting State to a 2297 resident of the other Contracting State may be taxed in that other State. 2298 2. However, such dividends may be taxed in the Contracting State of which the 2299 company paying the dividends is a resident, and according to the law of that 2300 State, but if the recipient is a company which is the beneficial owner of the 2301 dividends and which holds an equity percentage of at least 10 per cent in the 2302 company paying the dividends the tax so charged shall not exceed 15 per cent of 2303 the gross amount of the dividends. 2304 This paragraph shall not affect the taxation of the company in respect of the 2305 profits out of which the dividends are paid. 2306 3. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 2307 dividends, being a resident of a Contracting State, has in the other Contracting 2308 State, of which the company paying the dividends is a resident, a permanentEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 94 of 814
    • 2309 establishment with which the holding by virtue of which the dividends are paid is 2310 effectively connected. In such a case, the provisions of Article VII shall apply. 2311 4. The term "dividends" as used in this Article means income from shares, 2312 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 2313 rights, not being debt-claims, participating in profits, as well as income 2314 assimilated to income from shares by the taxation law of the State of which the 2315 company making the distribution is a resident. 2316 5. Notwithstanding any provision of this Convention: 2317 a) where a company which is a resident of Canada has a permanent 2318 establishment Brazil, this permanent establishment may be subject to a tax 2319 withheld at source in accordance with Brazilian law, but such a tax cannot 2320 exceed 15 per cent of the gross amount of the profits of that permanent 2321 establishment determined after the payment of the corporate tax related to such 2322 profits; 2323 b) a company which is a resident of Brazil and which has a permanent 2324 establishment in Canada shall, in accordance with the provisions of Canadian 2325 law, remain subject to the additional tax on companies other than Canadian 2326 corporations, but the rate of such tax shall no exceed 15 2327 6. Where a company is a resident of a Contracting State, the other Contracting 2328 State may not impose any tax on the dividends paid by the company, except 2329 insofar as such dividends are paid to a resident of that other State or insofar as the 2330 holding in respect of which the dividends are paid is effectively connected with a 2331 permanent establishment situated in that other State, nor subject the companys 2332 undistributed profits to any tax, even if the dividends paid or the undistributed 2333 profits consist wholly or partly of profits or income arising in such other State. 2334 7. The tax rate limitations referred to in paragraphs 2 and 5 b) of this Article shall 2335 not apply to dividends or profits paid before the end of the third calendar year 2336 following the year of signature of this Convention.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 95 of 814
    • 2337 ARTICLE XI 2338 Interest 2339 1. Interest arising in a Contracting State and paid to a resident of the other 2340 Contracting State may be taxed in that other State. 2341 2. However, such interest may be taxed in the Contracting State in which it arises, 2342 and according to the law of that State, but if the recipient is a company which is 2343 the beneficial owner of the interest, the tax so charged shall not exceed: 2344 a) 10 per cent of the gross amount of the interest arising in Brazil and paid to a 2345 resident of Canada in respect of a loan guaranteed or insured by the Export 2346 Development Corporation of Canada for a minimum period of 7 years; 2347 b) 15 per cent in all other cases. 2348 3. Notwithstanding the provisions of paragraph 2, interest arising in a 2349 Contracting State and paid to the Government of the other Contracting State, a 2350 political subdivision thereof or any agency (including a financial institution) 2351 wholly owned by that Government, or political subdivision shall be exempt from 2352 tax in the first-mentioned Contracting State. 2353 4. The term "interest" as used in this Article means income from debt-claims of 2354 every kind, whether or not secured by mortgage, and whether or not carrying a 2355 right to participate in the debtors profits, and in particular, income from 2356 government securities and income from bonds or debentures, including 2357 premiums and prizes attaching to such securities, bonds or debentures, as well as 2358 income assimilated to income from money lent by the taxation law of the State in 2359 which the income arises. However, the term "interest" does not include income 2360 dealt with in Article X such as income from debt-claims which corresponds to a 2361 participation in the debtors profits. 2362 5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 2363 interest, being a resident of a Contracting State, has in the other Contracting StateEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 96 of 814
    • 2364 in which the interest arises a permanent establishment with which the debt- 2365 claim from which the interest arises is effectively connected. In such a case, the 2366 provisions of Article VII shall apply. 2367 6. The limitation established in paragraph 2 shall not apply to interest arising in a 2368 Contracting State and paid to a permanent establishment of an enterprise of the 2369 other Contracting State which is situated in a third State. 2370 7. Interest shall be deemed to arise in a Contracting State when the payer is that 2371 Contracting State itself, a political subdivision, a local authority or a resident of 2372 that State. Where, however, the person paying the interest, whether he is a 2373 resident of a Contracting State or not, has in a Contracting State a permanent 2374 establishment in connection with which the indebtedness on which the interest is 2375 paid was incurred and such interest is borne by such a permanent establishment, 2376 then such interest shall be deemed to arise in the Contracting State in which the 2377 permanent establishment is situated. 2378 8. Where, owing to a special relationship between the payer and the recipient or 2379 between both of them and some other person, the amount of the interest paid, 2380 having regard to the debt-claim for which it is paid, exceeds the amount which 2381 would have been agreed upon by the payer and the recipient in the absence of 2382 such relationship, the provisions of this Article shall apply only to the last- 2383 mentioned amount. In that case, the excess part of the payments shall remain 2384 taxable according to the law of each Contracting State, due regard being had to 2385 the other provisions of this Convention. 2386 ARTICLE XII 2387 Royalties 2388 1. Royalties arising in a Contracting State and paid to a resident of the other 2389 Contracting State may be taxed in that other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 97 of 814
    • 2390 2. However, such royalties may be taxed in the Contracting State in which they 2391 arise, and according to the law of that State, but if the recipient is a company 2392 which is the beneficial owner of the royalties, the tax so charged shall not exceed: 2393 a) 25 per cent of the gross amount of royalties arising from the use of, or the right 2394 to use trade marks; 2395 b) 15 per cent in all other cases. 2396 3. The term "royalties" as used in this Article means payments of any kind 2397 received as a consideration for the use of, or the right to use, any copyright of 2398 literary, artistic or scientific work (including cinematograph films, films or tapes 2399 for television or radio broadcasting), any patent, trade mark, design or model, 2400 plan, secret formula or process, or for the use of, or the right to use, industrial, 2401 commercial or scientific equipment, or for information concerning industrial, 2402 commercial or scientific experience. 2403 4. Royalties shall be deemed to arise in a Contracting State when the payer is that 2404 State itself, a political subdivision, a local authority or a resident of that State. 2405 Where, however, the person paying the royalties, whether he is a resident of a 2406 Contracting State or not, has in a Contracting State a permanent establishment in 2407 connection with which the obligation to pay the royalties was incurred, and such 2408 royalties are borne by such a permanent establishment, then such royalties shall 2409 be deemed to arise in the Contracting State in which the permanent establishment 2410 is situated. 2411 5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 2412 royalties, being a resident of a Contracting State, has in the other Contracting 2413 State in which the royalties arise, a permanent establishment with which the right 2414 or property giving rise to the royalties is effectively connected. In such a case, the 2415 provisions of Article VII shall apply. 2416 6. Where, owing to a special relationship between the payer and the recipient or 2417 between both of them and some other person, the amount of the royalties paid,Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 98 of 814
    • 2418 having regard to the use, right or information for which they are paid, exceeds 2419 the amount which would have been agreed upon by the payer and the recipient 2420 in the absence of such relationship, the provisions of this Article shall apply only 2421 to the last-mentioned amount. In that case, the excess part of the payments shall 2422 remain taxable according to the law of each Contracting State, due regard being 2423 had to the other provisions of this Convention. 2424 7. The tax rate limitation referred to in paragraph 2 b) shall not apply to royalties 2425 paid before the end of the fourth calendar year following the calendar year in 2426 which this Convention enters into force where such royalties are paid to a 2427 resident of a Contracting State which holds, directly or indirectly, at least 50 per 2428 cent of the voting capital of the company paying the royalties. 2429 ARTICLE XIII 2430 Gains from the Alienation of Property 2431 1. Gains from the alienation of ships and aircraft operated in international traffic 2432 and movable property pertaining to the operation of such ships and aircraft shall 2433 be taxable only in the Contracting State in which the place of effective 2434 management is situated. 2435 2. Gains from the alienation of any property or right other than those mentioned 2436 in paragraph 1 may be taxed in both Contracting States. 2437 ARTICLE XIV 2438 Independent Personal Services 2439 1. Income derived by a resident of a Contracting State in respect of professional 2440 services or other independent activities of a similar nature shall be taxable only in 2441 that State, unless the payment of such activities and services is borne by a 2442 permanent establishment situated in the other Contracting State or a company 2443 resident therein. In such a case the income may be taxed in that other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 99 of 814
    • 2444 2. The term "professional services" includes especially independent scientific, 2445 technical, literary, artistic, educational or teaching activities as well as the 2446 independent activities of physicians, lawyers, engineers, architects, dentists and 2447 accountants. 2448 ARTICLE XV 2449 Dependent Personal Services 2450 1. Subject to the provisions of Articles XVI, XVIII, XIX and XX, salaries, wages and 2451 other similar remuneration derived by a resident of a Contracting State in respect 2452 of an employment shall be taxable only in that State unless the employment is 2453 exercised in the other Contracting State. If the employment is so exercised, such 2454 remuneration as is derived there from may be taxed in that other State. 2455 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 2456 resident of a Contracting State in respect of an employment exercised in the other 2457 Contracting State shall be taxable only in the first-mentioned State if: 2458 a) the recipient is present in the other State for a period or periods not exceeding 2459 in the aggregate 183 days in the fiscal year concerned, and 2460 b) the remuneration is paid by, or on behalf of, an employer who is not a resident 2461 of the other State, and 2462 c) the remuneration is not borne by a permanent establishment or a fixed base 2463 which the employer has in the other State. 2464 1. Notwithstanding the preceding provisions of this Article, remuneration in 2465 respect of an employment exercised aboard a ship or aircraft in international 2466 traffic may be taxed in the Contracting State in which the place of effective 2467 management of the enterprise is situated. 2468 ARTICLE XVI 2469 Directors FeesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 100 of 814
    • 2470 Directors fees and similar payments derived by a resident of a Contracting State 2471 in his capacity as a member of the board of directors or of a similar council of a 2472 company which is a resident of the other Contracting State may be taxed in that 2473 other State. 2474 ARTICLE XVII 2475 Artistes and Athletes 2476 1. Notwithstanding the provisions of Articles XIV and XV, income derived by 2477 entertainers, such as theatre, motion picture, radio or television artistes, and 2478 musicians, and by athletes, from their personal activities as such may be taxed in 2479 the Contracting State in which those activities are exercised. 2480 2. Where income in respect of personal activities as such of an entertainer or 2481 athlete accrues not to that entertainer or athlete himself but to another person, 2482 that income may, notwithstanding the provisions of Articles VII, XIV and XV, be 2483 taxed in the Contracting State in which the activities of the entertainer or athlete 2484 are exercised. 2485 3. The provisions of paragraphs 1 and 2 shall not apply to income derived by a 2486 non-profit organization the status of which is certified by the competent 2487 authority of the Contracting State in which it is resident. 2488 ARTICLE XVIII 2489 Pensions and Annuities 2490 1. Pensions, annuities and alimony arising in a Contracting State and paid to a 2491 resident of the other Contracting State shall be taxable only in that other State. 2492 2. Notwithstanding the provisions of paragraph 1, the amount of a pension, 2493 annuity or alimony which exceeds four thousand Canadian dollars ($4,000) in a 2494 calendar year may also be taxed in the Contracting State in which the pension, 2495 annuity or alimony arises. The competent authorities of the Contracting StatesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 101 of 814
    • 2496 may, if necessary, agree to modify the above-mentioned amount as a result of 2497 monetary or economic developments. 2498 3. As used in this Article: 2499 a) the term "pension" means payments made after retirement in consideration of 2500 past employment or by way of compensation for injuries received, in connection 2501 with past employment; 2502 b) the term "annuity" means a stated sum payable periodically at stated times 2503 during life, or during a specified or ascertainable period of time, under an 2504 obligation to make the payments in return for adequate and full consideration in 2505 money or moneys worth {other than services rendered). 2506 4. Notwithstanding the provisions of paragraphs 1 and 2: 2507 a) social security pensions arising in a Contracting State and paid to a resident of 2508 the other Contracting State shall be taxable only in the first-mentioned State. 2509 However, such pensions shall be taxable only in the other Contracting State if the 2510 recipient is a national of and a resident of that other State; 2511 b) war veterans pensions arising in Canada and paid to a resident of Brazil shall 2512 be exempt from Brazilian tax. 2513 ARTICLE XIX 2514 Governmental Payments 2515 1. Remuneration, not including pensions, paid by a Contracting State, a political 2516 subdivision or a local authority thereof to any individual in respect of services 2517 rendered to that State, to a political subdivision or local authority shall be taxable 2518 only in that State. 2519 However, such remuneration shall be taxable only in the Contracting State of 2520 which the recipient is a resident if the services are rendered in that State and if 2521 the recipientEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 102 of 814
    • 2522 a) is a national of that State, or 2523 b) did not become a resident of that State solely for the purpose of performing the 2524 services. 2525 2.The provisions of paragraph 1 shall not apply to remuneration in respect of 2526 services rendered in connection with any trade or business carried on by one of 2527 the Contracting States or a political subdivision or a local authority thereof. 2528 ARTICLE XX 2529 Students 2530 Payments which a student, apprentice or business trainee who is, or was 2531 immediately before visiting one of the Contracting States, a resident of the other 2532 Contracting State and who is present in the first-mentioned Contracting State 2533 solely for the purpose of his education or training receives for the purpose of his 2534 maintenance, education or training shall not be taxed in that first-mentioned 2535 State, provided that such payments are made to him from sources outside that 2536 State. 2537 ARTICLE XXI 2538 Other Income 2539 Items of income of a resident of a Contracting State, arising in the other 2540 Contracting State and not dealt with in the foregoing Articles of this Convention, 2541 may be taxed in that other State. 2542 ARTICLE XXII 2543 Methods for the Elimination of Double Taxation 2544 1. Where a resident of Brazil derives income which, in accordance with the 2545 provisions of this Convention, may be taxed in Canada, Brazil shall allow as a 2546 deduction from the tax on the income of that person, an amount equal to the 2547 income tax paid in Canada. The deduction shall not, however, exceed that part ofEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 103 of 814
    • 2548 the income tax as computed before the deduction is given, which is appropriate 2549 to the income which may be taxed in Canada. 2550 2. Unless the provisions of paragraph 4 or 5 apply, where a resident of Canada 2551 derives income which, in accordance with the provisions of this Convention, may 2552 be taxed in Brazil, Canada shall allow as a deduction from the tax on the income 2553 of that person, an amount equal to the income tax paid in Brazil, including 2554 business-income tax and non-business-income tax. The deduction shall not, 2555 however, exceed that part of the income tax as computed before the deduction is 2556 given, which is appropriate to the income which may be taxed in Brazil. 2557 3. For the deduction indicated in paragraph 2, Brazilian tax shall always be 2558 considered as having been paid at the rate of 25 per cent of the gross amount of 2559 the profits to which paragraph 5 b) of Article X applies and at the rate of 20 per 2560 cent of the gross amount of the income paid in Brazil in the case of interest to 2561 which paragraph 2 of Article XI applies and royalties to which paragraph 2 b of 2562 Article XI I applies. 2563 4. Dividends received by a company which is a resident of Canada from a 2564 company which is a resident of Brazil shall be exempt from tax in Canada if the 2565 company receiving the dividends holds an equity percentage of at least 10 per 2566 cent in the company paying the dividends and if the profits out of which the 2567 dividends are paid are derived from carrying on an active business in Brazil or in 2568 a country with which Canada has concluded a double taxation convention; for 2569 the purposes of this provision, any income from sources in a country other than 2570 Canada which pertains to or is incident to an active business carried on in a 2571 country other than Canada, shall be deemed to be profits derived from carrying 2572 on an active business. 2573 5. Where a company which is a resident of Canada derives dividends, other than 2574 those mentioned in paragraph 4, from a company which is a resident of Brazil in 2575 which it holds an equity percentage of at least 10 per cent and those dividends 2576 may be taxed in Brazil, in accordance with this Convention, Canada shall allow asEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 104 of 814
    • 2577 a deduction from the tax on the income of the first-mentioned company an 2578 amount equal to the income tax paid in Brazil and shall allow relief in respect of 2579 the Brazilian corporation tax paid on the profits out of which the dividends are 2580 paid; the deduction shall not, however, exceed that part of the Canadian income 2581 tax as computed before the deduction is given, which is appropriate to the 2582 dividends. 2583 For the deduction mentioned in this paragraph, Brazilian tax on dividends shall 2584 always be considered as having been paid at the rate of 25 per cent of the gross 2585 amount of the dividends. 2586 6. The value of the shares issued by a corporation of a Contracting State, the 2587 capital of which is wholly or partly owned or controlled, directly or indirectly, by 2588 one or more residents of the other Contracting State, shall not be subject to 2589 income tax in the last-mentioned State. 2590 The provisions of paragraphs 2 and 3 shall apply for the determination of the 2591 profits of a permanent establishment situated in Canada of a bank which is a 2592 resident of Brazil. 2593 ARTICLE XXIII 2594 Non-Discrimination 2595 1. The nationals of a Contracting State shall not be subjected in the other 2596 Contracting State to any taxation or any requirement connected therewith which 2597 is other or more burdensome than the taxation and connected requirements to 2598 which nationals of that other State in the same circumstances are or may be 2599 subjected. 2600 2. The taxation on a permanent establishment which an enterprise of a 2601 Contracting State has in the other Contracting State shall not be less favorably 2602 levied in that other State than the taxation levied on enterprises of that other State 2603 carrying on the same activities.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 105 of 814
    • 2604 This provision shall not be construed as obliging a Contracting State to grant to 2605 residents of the other Contracting State any personal allowances, relief and 2606 reductions for taxation purposes on account of civil status or family 2607 responsibilities which it grants to its own residents. 2608 3. Enterprises of a Contracting State, the capital of which is wholly or partly 2609 owned or controlled, directly or indirectly, by one or more residents of the other 2610 Contracting State, shall not be subjected in the first-mentioned State to any 2611 taxation or any requirement connected therewith which is other or more 2612 burdensome than the taxation and connected requirements to which other 2613 similar enterprises of the first-mentioned State, the capital of which is wholly or 2614 partly owned or controlled, directly or indirectly, by one or more residents of a 2615 third State, are or may be subjected. 2616 In this Article, the term "taxation" means taxes which are the subject of this 2617 Convention. 2618 ARTICLE XXIV 2619 Mutual Agreement Procedure 2620 1. Where a resident of a Contracting State considers that the actions of one or 2621 both of the Contracting States result or will result for him in taxation not in 2622 accordance with this Convention, he may, notwithstanding the remedies provided 2623 by the national laws of those States, present his case to the competent authority of 2624 the Contracting State of which he is a resident. 2625 2. The competent authority shall endeavour, if the objection appears to it to be 2626 justified and if it is not itself able to arrive at an appropriate solution, to resolve 2627 the case by mutual agreement with the competent authority of the other 2628 Contracting State, with a view to the avoidance of taxation not in accordance 2629 with the Convention.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 106 of 814
    • 2630 3. The competent authorities of the Contracting States shall endeavour to resolve 2631 by mutual agreement any difficulties or doubts arising as to the interpretation or 2632 application of the Convention. 2633 4. The competent authorities of the Contracting States may consult together for 2634 the elimination of double taxation in cases not provided for in the Convention. 2635 5. The competent authorities of the Contracting States may communicate with 2636 each other directly for the purpose of reaching an agreement in the sense of the 2637 preceding paragraphs. The competent authorities of the Contracting States may 2638 also settle by mutual agreement the methods of application of this Convention. 2639 ARTICLE XXV 2640 Exchange of Information 2641 1. The competent authorities of the Contracting States shall exchange such 2642 information as is necessary for the carrying out of this Convention and of the 2643 domestic laws of the Contracting States concerning taxes covered by this 2644 Convention insofar as the taxation there under is in accordance with this 2645 Convention. Any information so exchanged shall be treated as secret and shall not 2646 be disclosed to any persons or authorities other than those concerned with the 2647 assessment or collection of the taxes which are the subject of the Convention. 2648 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 2649 one of the Contracting States the obligation: 2650 a) to carry out administrative measures at variance with the laws or the 2651 administrative practice of that or of the other Contracting State; 2652 b) to supply particulars which are not obtainable under the laws or in the normal 2653 course of the administration of that or of the other Contracting State; 2654 c) to supply information which would disclose any trade, business, industrial, 2655 commercial or professional secret or trade process, or information, the disclosure 2656 of which would be contrary to public policy (order public).Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 107 of 814
    • 2657 ARTICLE XXVI 2658 Diplomatic and Consular Officials 2659 1. Nothing in this Convention shall affect the fiscal privileges of diplomatic or 2660 consular officials under the general rules of international law or under the 2661 provisions of special agreements. 2662 2.This Convention shall not apply to international organizations, to organs or 2663 officials thereof and to persons who are members of a diplomatic, consular or 2664 permanent mission of a third State, being present in a Contracting State and not 2665 treated in either Contracting State as resident in respect of taxes on income. 2666 ARTICLE XXVII 2667 Entry into Force 2668 1. This Convention shall be ratified and the instruments of ratification shall be 2669 exchanged at Ottawa. 2670 2. The Convention shall enter into force upon the exchange of instruments of 2671 ratification and its provisions shal1 have effect for the first time: 2672 a) in respect of taxes withheld at source to amounts paid or remitted on or after 2673 January 1st of the calendar year immediately following that in which the 2674 Convention enters into force; 2675 b) in respect of other taxes covered by this Convention to taxable years beginning 2676 on or after January 1st of the calendar year immediately fol1owing that in which 2677 the Convention enters into force. 2678 ARTICLE XXVIII 2679 Termination 2680 Either Contracting State may terminate this Convention after a period of three 2681 years from the date on which this Convention enters into force by giving to the 2682 other Contracting State, through diplomatic channels, a written notice ofEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 108 of 814
    • 2683 termination, provided that any such notice shall be given only on or before the 2684 thirtieth day of June in any calendar year. 2685 In such a case this Convention shal1 apply for the last time: 2686 a) in respect of taxes withheld at source, to amounts paid or remitted before the 2687 expiration of the calendar year in which the notice of termination is given; 2688 b) in respect of other taxes covered by this Convention, to amounts received 2689 during the taxable year beginning in the calendar year in which the notice of 2690 termination is given. 2691 In witness whereof the undersigned, duly authorized to that effect, have signed 2692 this Convention. 2693 Done in duplicate at Brasilia, this June 4th, 1984 in the Portuguese, English and 2694 French languages, each version being equally authentic. 2695 P RO T O C O L 2696 At the moment of the signature of the Convention for the avoidance of double 2697 taxation with respect to taxes on income between Canada and the Federative 2698 Republic of Brazil, the undersigned, being duly authorized thereto, have agreed 2699 upon the following provisions which constitute an integral part of the present 2700 Convention. 2701 1. With reference to Article III, paragraph 1 d) 2702 It is understood that in Canada the term "person" also includes a partnership, an 2703 estate and a trust. 2704 2. With reference to Article II, paragraph 1 f) 2705 It is understood that in French the term "société" also means a "corporation" 2706 within the meaning of Canadian law.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 109 of 814
    • 2707 3. With reference to Article VI, Paragraph 1 2708 It is understood that in the case of Canada the provisions of Article VI, paragraph 2709 1, shall also apply to profits from the alienation of immovable property not taxed 2710 therein as capital gains. 2711 4. With reference to Article VII 2712 It is understood that where an enterprise of a Contracting State has carried on 2713 business in the other Contracting State through a permanent establishment 2714 situated therein, the profits of the enterprise which are attributable to that 2715 permanent establishment and which are received by the enterprise after it has 2716 ceased to carry on business as aforesaid, may be taxed in that other State in 2717 accordance with the principles laid down in Article VII. 2718 5. With reference to Article VII, paragraph 3 2719 It is understood that the provisions of this paragraph shall apply whether the 2720 expenses mentioned therein are incurred in the State in which the permanent 2721 establishment is situated or elsewhere. 2722 6. With reference to Article X. paragraph 4 2723 It is understood that in the case of Brazil the term "dividends" also includes any 2724 distribution in respect of certificates of an investment-trust which is a resident of 2725 Brazil. 2726 7. With reference to Article XI 2727 It is understood that the commissions arising in Brazil and paid to a Canadian 2728 company in connection with services rendered in respect of loans and financings 2729 are considered to be interest and subject to the provisions of paragraph 2 of 2730 Article XI. 2731 8. With reference to Article XII, paragraph 3Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 110 of 814
    • 2732 It is understood that the expression "for information concerning industrial, 2733 commercial or scientific experience" mentioned in paragraph 3 of Article XII 2734 includes income derived from the rendering of technical assistance and technical 2735 services. 2736 9. With reference to Article XIV 2737 It is understood that the provisions of Article XIV shall apply even if the activities 2738 are exercised by a partnership or a "Sociedade Civil" (Civil Company). 2739 10. With reference to Article XVI 2740 It is understood that, in the case of Brazil, the expression "similar council" 2741 includes the "conselho fiscal" (Statutory Audit Committee). 2742 11. It is understood that the relief to be granted by Canada in accordance with 2743 the provision of paragraph 5 of Article XXII in respect of the Brazilian 2744 corporation tax paid on the profits out of which dividends are paid, shall be 2745 determined in accordance with the provision of the Canadian Income Tax Act in 2746 force from time to time, provided that in no case dividends to which paragraph 5 2747 of Article XXII applies shall receive a tax treatment in Canada less favourable 2748 than that accorded under section 113 of the Canadian Income Tax Act, as in 2749 effect on the date of signature of this Convention. 2750 12. With reference to Article XXIII, paragraph 2 2751 It is understood that the provisions of paragraph 5 of Article X are not in conflict 2752 with the provisions of paragraph 2 of Article XXIII. 2753 13. With reference to Article XXIII, paragraph 3 2754 It is understood that: 2755 a) the provisions of the Brazilian law which do not allow that royalties as defined 2756 in paragraph 3 of Article XII, paid by a company resident of Brazil to a resident ofEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 111 of 814
    • 2757 Canada which holds at least 50 per cent of the voting capital of that company, be 2758 deductible in determining the taxable income of the company resident of Brazil, 2759 are not in conflict with the provisions of paragraph 3 of Article XXIII of the 2760 present Convention; 2761 b) in the event that Brazil, after the signature of the present Convention, would 2762 allow that royalties, paid by an enterprise which is a resident of Brazil to an 2763 enterprise which is a resident of a third State not located in Latin-America, and 2764 which holds at least 50 per cent of the capital of the enterprise which is a 2765 resident of Brazil, be deductible in determining the taxable income of this 2766 enterprise, an equal deduction will be automatically applicable, under similar 2767 conditions, to an enterprise which is a resident of Brazil paying royalties to an 2768 enterprise which is a resident of Canada; 2769 c) a more-favoured tax treatment granted by Brazil after the date of the signature 2770 of the present Convention, by virtue of an international Convention, to 2771 enterprises, the capital of which is wholly or partly owned or controlled, directly 2772 or indirectly, by residents of countries located in Latin-America shall not 2773 constitute, for the purposes of the provisions of paragraph 3 of Article XXIII, a 2774 discrimination against a Brazilian enterprise owned or controlled under the same 2775 conditions above-mentioned by a resident of Canada. 2776 14. It is understood that the provisions of this Convention shall not be construed 2777 to restrict in any manner any exclusion, exemption, deduction, credit, or other 2778 allowance now or hereafter accorded: 2779 a} by the laws of one of the Contracting States in the determination of the tax 2780 imposed by that Contracting State, or 2781 b) by any other agreement entered into by a Contracting State. 2782 15. It is understood that for the determination of the income tax payable by a 2783 resident of a Contracting State in respect of income derived from the other 2784 Contracting State, the first-mentioned State shall not consider in any event thatEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 112 of 814
    • 2785 such an income is higher than the gross amount of the income paid in the other 2786 Contracting State. 2787 16. Notwithstanding the provisions of paragraph 6 of Article X and of paragraph 2788 15 of this Protocol, where a resident of Canada controls, directly or indirectly, 2789 alone or together with members of a related group or together with not more 2790 than four other residents of Canada, a company which is a resident of Brazil and 2791 in which he holds an equity percentage of at least 10 per cent, such resident may 2792 be subject to tax in Canada on his proportionate share of the aggregate of the 2793 companys net income for any taxation year from property and businesses other 2794 than active businesses and the companys net taxable capital gains for any 2795 taxation year from the alienation of property other than property used for active 2796 business purposes; for the purposes of this provision, any income from a source 2797 in a country other than Canada which pertains to or is incident to an active 2798 business carried on in a country other than Canada shall be deemed to be income 2799 from an active business. 2800 In witness whereof the undersigned, duly authorized to that effect, have signed 2801 this Protocol. 2802 Done in duplicate at Brasilia, this June 4th,1984 in the Portuguese, English and 2803 French languages, each version being equally authentic. 2804Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 113 of 814
    • 2805 2806 2807 Chile 2808Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 114 of 814
    • 2809 Date of Conclusion: 3 April 2001. 2810 Effective Date: 1 January 2004. 2811 CONVENTION 2812 BETWEEN THE FEDERATIVE REPUBLIC OF BRAZIL AND THE REPUBLIC OF CHILE 2813 FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF 2814 FISCAL EVASION WITH RESPECT TO THE TAXE ON INCOME. 2815 The Government of the Federative Republic of Brazil 2816 and 2817 The Government of the Republic of Chile 2818 Desiring to conclude a Convention for the avoidance of double taxation and the 2819 prevention of fiscal evasion with respect to the taxe on income, 2820 Have agreed as follows: 2821 CHAPTER I 2822 Scope of the Convention 2823 Article 1 2824 PERSONS COVERED 2825 The Convention shall apply to persons who are residents of one or both of the 2826 Contracting States. 2827 Article 2 2828 TAXES COVERED 2829 1. The Convention shall apply to taxes on income imposed on behalf of each 2830 Contracting State. 2831 2. There shall be regarded as taxes on income the taxes imposed on total income 2832 or on any portion of it.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 115 of 814
    • 2833 3. The taxes to which this Convention shall apply are: 2834 a) in the Federative Republic of Brazil: 2835 o the federal income tax 2836 (hereinafter referred to as "Brazilian tax"); 2837 b) in the Republic of Chile: 2838 - the taxes levied under the Income Tax Law ("Ley 2839 sobre el Impuesto a la renta", Decree-Law nr. 824) 2840 (hereinafter referred to as "Chilean Tax"). 2841 4.The Convention shall also apply to any identical or substantially similar taxes 2842 that are imposed after the date of its signature in addition to, or in place of, the 2843 taxes mentioned in the previous paragraph.The competent authorities of the 2844 Contracting States shall notify each other yearly of any significant changes that 2845 have been made in their respective taxation laws. 2846 Article 3 2847 GENERAL DEFINITIONS 2848 1. For the purposes of the Convention, unless the context otherwise requires: 2849 a)the term "Brazil" means the Federative Republic of Brazil; 2850 b) the term "Chile" means the Republic of Chile: 2851 c) the terms "a Contracting State" and "the other Contracting State" mean Brazil or 2852 Chile, as the context requires; 2853 d)the term "person" includes an individual, a company and any other body of 2854 persons;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 116 of 814
    • 2855 e) the term "company" means any legal person or any entity that is treated as a 2856 legal person for tax purposes; 2857 f) the terms "enterprise of a Contracting State" and "enterprise of the other 2858 Contracting State" mean respectively an enterprise carried on by a resident of a 2859 Contracting State and an enterprise carried on by a resident of the other 2860 Contracting State; 2861 g) the term "international traffic" means any transport by a ship, aircraft or land 2862 transport vehicle operated by an enterprise of a Contracting State, except when 2863 such transport is carried on solely between places in the other Contracting State; 2864 h) the term "national" means: 2865 I - any individual possessing the nationality of a Contracting State; or 2866 II - any legal person, partnership or association deriving its status as such from 2867 the laws in force in a Contracting State; 2868 i) the term "competent authority" means: 2869 I - in the Federative Republic of Brazil: the Minister of Finance, the Secretary of 2870 Federal Revenue or their authorized representatives; 2871 II - in the republic of Chile, the Minister of Finance or his authorized 2872 representative; 2873 2. As regards the application of the Convention at any time by a Contracting State, 2874 any term not defined therein shall, unless the context otherwise requires, have 2875 the meaning that it has at that time under the law of that State for the purposes of 2876 the taxes to which the Convention applies, any meaning under the applicable tax 2877 laws of that State prevailing over a meaning given to the term under other laws of 2878 that State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 117 of 814
    • 2879 Article 4 2880 RESIDENT 2881 1. For the purposes of this Convention, the term "resident of a Contracting State" 2882 means any person who, under the laws of that State, is liable to tax therein by 2883 reason of his domicile, residence, place of management, place of incorporation or 2884 any other criterion of a similar nature, and also includes that State and any 2885 political subdivision thereof. 2886 2. Where by reason of the provisions of paragraph l an individual is a resident of 2887 both Contracting States, then his status shall be determined as follows: 2888 a) he shall be deemed to be a resident only of the Contracting State in which he 2889 has a permanent home available to him; if he has a permanent home available to 2890 him in both States, he shall be deemed to be a resident only of the State with 2891 which his personal and economic relations are closer (centre of vital interests); 2892 b) if the State in which he has his centre of vital interests cannot be determined, 2893 or if he has not a permanent home available to him in either State, he shall be 2894 deemed to be a resident only of the State in which he has an habitual abode; 2895 c) if he has an habitual abode in both States or in neither of them, he shall be 2896 deemed to be a resident only of the State of which he is a national; and 2897 d) if he is a national of both States or of neither of them, the competent authorities 2898 of the Contracting States shall settle the question by mutual agreement. 2899 3. Where by reason of the provisions of paragraph l a person other than an 2900 individual is a resident of both Contracting States, then the competent authorities 2901 of the Contracting States shall endeavour to resolve the case. In the absence of a 2902 mutual agreement, such a person will not be entitled to any tax benefits or 2903 exemptions provided for in this Convention. 2904 Article 5 2905 PERMANENT ESTABLISHMENTEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 118 of 814
    • 2906 1. For the purposes of this Convention, the term "permanent establishment" means 2907 a fixed place of business through which the business of an enterprise is wholly or 2908 partly carried on. 2909 2. The term "permanent establishment" includes especially: 2910 a) a place of management; 2911 b) a branch; 2912 c) an office; 2913 d) a factory; 2914 e) a workshop; 2915 f) a mine, an oil or gas well, a quarry or any other place of extraction or 2916 exploration or exploitation of natural resources. 2917 3. The term "permanent estabishment" also includes a building site or 2918 construction, installation or assembly project which exists for more than six 2919 months, including supervisory activities in connection therewith only for the 2920 purposes of calculating the period. 2921 For the purposes of calculating the time-limits referred to in this paragraph, the 2922 activities carried on by an enterprise associated with another enterprise within 2923 the meaning of Article 9 shall be aggregated with the period during which 2924 activities are carried on by the enterprise to which it is associated if the activities 2925 of both enterprises are identical or substantially similar. 2926 4. Notwithstanding the preceding provisions of this Article, the term "permanent 2927 establishment" shall be deemed not to include: 2928 a) the use of facilities solely for the purpose of storage, display or delivery of 2929 goods or merchandise belonging to the enterprise;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 119 of 814
    • 2930 b) the maintenance of a stock of goods or merchandise belonging to the 2931 enterprise solely for the purpose of storage, display or delivery; 2932 c) the maintenance of a stock of goods or merchandise belonging to the 2933 enterprise solely for the purpose of processing by another enterprise; 2934 d) the maintenance of a fixed place of business solely for the purpose of 2935 purchasing goods or merchandise or of collecting information, for the enterprise; 2936 e) the maintenance of a fixed place of business solely for the purpose of carrying 2937 on, for the enterprise, any other activity of a preparatory or auxiliary character. 2938 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other 2939 than an agent of an independent status to whom paragraph 6 applies - is acting 2940 on behalf of an enterprise and has, and habitually exercises, in a Contracting 2941 State an authority to conclude contracts in the name of the enterprise, that 2942 enterprise shall be deemed to have a permanent establishment in that State in 2943 respect of any activities which that person undertakes for the enterprise, unless 2944 the activities of such person are limited to those mentioned in paragraph 4 2945 which, if exercised through a fixed place of business, would not make this fixed 2946 place of business a permanent establishment under the provisions of that 2947 paragraph. 2948 6. An enterprise of a Contracting State shall not be deemed to have a permanent 2949 establishment in the other Contracting State merely because it carries on business 2950 in that other State through a broker, general commission agent or any other agent 2951 of an independent status, provided that such persons are acting in the ordinary 2952 course of their business and that the conditions that are made or imposed in their 2953 commercial or financial relations with such enterprise do not differ from those 2954 which would be generally made by independent agents 2955 7. The fact that a company which is a resident of a Contracting State controls or is 2956 controlled by a company which is a resident of the other Contracting State, or 2957 which carries on business in that other State (whether through a permanentEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 120 of 814
    • 2958 establishment or otherwise), shall not of itself constitute either company a 2959 permanent establishment of the other. 2960 Article 6 2961 INCOME FROM IMMOVABLE PROPERTY 2962 1. Income derived by a resident of a Contracting State from immovable property 2963 (including income from agriculture or forestry) situated in the other Contracting 2964 State may be taxed in that other State. 2965 2. For the purposes of this Convention, the term "immovable property" shall have 2966 the meaning which it has under the law of the Contracting State in which the 2967 property in question is situated. The term shall in any case include property 2968 accessory to immovable property, livestock and equipment used in agriculture 2969 and forestry, rights to which the provisions of general law respecting landed 2970 property apply, usufruct of immovable property and rights to variable or fixed 2971 payments as consideration for the working of, or the right to work, mineral 2972 deposits, sources and other natural resources; ships, boats, aircraft and land 2973 transport vehicles shall not be regarded as immovable property. 2974 3. The provisions of paragraph 1 shall apply to income derived from the direct 2975 use, letting or sharecropping, or use in any other form of immovable property. 2976 4.The provisions of paragraphs 1 and 3 shall also apply to the income from 2977 immovable property of an enterprise and from immovable property used for 2978 rendering independent personal services. 2979 Article 7 2980 BUSINESS PROFITS 2981 1. The profits of an enterprise of a Contracting State shall be taxable only in that 2982 State unless the enterprise carries on business in the other Contracting State 2983 through a permanent establishment situated therein. If the enterprise carries on 2984 or has carried on business as aforesaid, the profits of the enterprise may be taxedEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 121 of 814
    • 2985 in the other State, but only so much of them as is attributable to that permanent 2986 establishment. 2987 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting 2988 State carries on or has carried on business in the other Contracting State through 2989 a permanent establishment situated therein, there shall in each Contracting State 2990 be attributed to that permanent establishment the profits which it might be 2991 expected to make if it were a distinct and separate enterprise engaged in the same 2992 or similar activities under the same or similar conditions and dealing wholly 2993 independently with the enterprise of which it is a permanent establishment. 2994 3. In determining the profits of a permanent establishment, there shall be allowed 2995 as deductions necessary expenses which are effectively incurred for the purposes 2996 of the permanent establishment, including executive and general administrative 2997 expenses so incurred. 2998 4. No profits shall be attributed to a permanent establishment by reason of the 2999 mere purchase by that permanent establishment of goods or merchandise for the 3000 enterprise. 3001 5. Where profits include items of income which are dealt with separately in other 3002 Articles of this Convention, then the provisions of those Articles shall not be 3003 affected by the provisions of this Article. 3004 Article 8 3005 SHIPPING AND AIR TRANSPORT 3006 1. Profits derived by an enterprise of a Contracting State from the operation of 3007 ships or aircraft in international traffic shall be taxable only in that Contracting 3008 State. 3009 2. For the purposes of this Article: 3010 a. the term "profits" includes gross income derived directly from the operation 3011 of ships, aircraft or land transport vehicles in international traffic;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 122 of 814
    • 3012 b. the espression "operation of ships, aircraft or land transport vehicles" by an 3013 enterprise also includes: 3014 i) the charter or rental of aircraft, land transport vehicles or chips on a bareboat 3015 basis; and 3016 ii) the rental of containers and related equipment, provided that such charter or 3017 rental is incidental to the operation, by that enterprise, of ships, aircraft or land 3018 transport vehicles is international traffic. 3019 3. The provisions of paragraph 1 shall also apply to profits from the participation 3020 in a pool, a joint business or an international operating agency. 3021 Article 9 3022 ASSOCIATED ENTERPRISES 3023 Where 3024 a) an enterprise of a Contracting State participates directly or indirectly in the 3025 management, control or capital of an enterprise of the other Contracting State; or 3026 c) the same persons participate directly or indirectly in the management, control 3027 or capital of an enterprise of a Contracting State and an enterprise of the other 3028 Contracting State; 3029 and in either case conditions are made or imposed between the two enterprises in 3030 their commercial or financial relations which differ from those which would be 3031 made between independent enterprises, then any profits which would, but for 3032 those conditions, have accrued to one of the enterprises, but, by reason of those 3033 conditions, have not so accrued, may be included in the profits of that enterprise 3034 and taxed accordingly. 3035 Article 10 3036 DIVIDENDSEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 123 of 814
    • 3037 1. Dividends paid by a company which is a resident of a Contracting State to a 3038 resident of the other Contracting State may be taxed in that other State. 3039 2. However, such dividends may also be taxed in the Contracting State of which 3040 the company paying the dividends is a resident and according to the laws of that 3041 State, but if the beneficial owner of the dividends is a resident of the other 3042 Contracting State, the tax so charged shall not exceed: 3043 a. 10 per cent of the gross amount of the dividends if the beneficial 3044 owner is a company which holds directly or indirectly at least 25 3045 per cent of the voting rights of the company paying the dividends; 3046 b. 15 per cent of the gross amount of the dividends in all other cases. 3047 This paragraph shall not affect the taxation of the company in respect of the 3048 profits out of which the dividends are paid. 3049 3. The term "dividends" as used in this Article means income from shares or other 3050 rights, not being debt-claims, participating in profits, as well as income from 3051 other corporate rights which is subjected to the same taxation treatment as 3052 income from shares by the laws of the Contracting State of which the company 3053 making the distribution is a resident. 3054 4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the 3055 beneficial owner of the dividends, being a resident of a Contracting State, carries 3056 on business in the other Contracting State of which the company paying the 3057 dividends is a resident through a permanent establishment situated therein, or 3058 performs in that other State independent personal services from a fixed base 3059 situated therein, and the holding by virtue of which the dividends are paid is 3060 effectively connected with such permanent establishment or ficed base. In such a 3061 case the provisions of Article 7 or Article 14, as the case may be, shall apply. 3062 5. Where a resident of a Contracting State has a permanent establishment in the 3063 other Contracting State, such a permanent establishment may be subject in that 3064 Contracting State to a tax other than the tax on the profits of the permanentEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 124 of 814
    • 3065 establishment in that other Contracting State and in accordance with the law of 3066 that other State. However, this tax other than the tax on the profits shall not 3067 exceed the limit provided for in subparagraph "a" 3068 of paragraph 2 of this Article. 3069 6. Where a company which is a resident of a Contracting State derives profits or 3070 income from the other Contracting State, that other State may not impose any tax 3071 on the dividends paid by the company, except insofar as such dividends are paid 3072 to a resident of that other State or insofar as the holding in respect of which the 3073 dividends are paid is effectively connected with a permanent establishment or a 3074 fixed base situated in that other State, nor subject the companys undistributed 3075 profits to a tax on the companys undistributed profits, even if the dividends paid 3076 or the undistributed profits consist wholly or partly of profits or income arising in 3077 that other State. 3078 Article 11 3079 INTEREST 3080 1. Interest arising in a Contracting State and paid to a resident of the other 3081 Contracting State may be taxed in that other State. 3082 2. However, such interest may also be taxed in the Contracting State in which it 3083 arises and according to the laws of that State, but, if the beneficial owner of the 3084 interest is a resident of the other Contracting State, the tax so charged shall not 3085 exceed 15 per cent of the gross amount of the interest. 3086 3. The term "interest" as used in this Article means income from debt-claims of 3087 every kind, whether or not secured by mortgage and, in particular, income from 3088 government securities, bonds or debentures, as well as other income assimilated 3089 to income from money lent by the tax law of the Contracting State in which the 3090 income arises.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 125 of 814
    • 3091 4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the 3092 beneficial owner of the interest, being a resident of a Contracting State, carries on 3093 business in the other Contracting State in which the interest arises through a 3094 permanent establishment situated therein, or performs in that other State 3095 independent personal services from a fixed base situated therein, and the debt- 3096 claim in respect of which the interest is paid is effectively connected with such 3097 permanent establishment or fixed base. In such a case, the provisions of Article 7 3098 or Article 14, as the case may be, shall apply. 3099 5. The tax rate limitation provided for in paragraph 2 of this Article shall not 3100 apply to interest arising in a Contracting State and paid to a permanent 3101 establishment of an enterprise of the other Contracting State which is situated in 3102 a third State. 3103 6. Interest shall be deemed to arise in a Contracting State when the payer is a 3104 resident of that State. Where, however, the person paying the interest, whether he 3105 is a resident of a Contracting State or not, has in a Contracting State a permanent 3106 establishment or a fixed base in connection with which the indebtedness on 3107 which the interest is paid was incurred, and such interest is borne by such 3108 permanent establishment or fixed base, then such interest shall be deemed to 3109 arise in the Contracting State in which the permanent establishment or the fixed 3110 base is situated. 3111 7. Where, by reason of a special relationship between the payer and the beneficial 3112 owner or between both of them and some other person, the amount of the 3113 interest, having regard to the debt-claim for which it is paid, exceeds the amount 3114 which would have been agreed upon by the payer and the beneficial owner in the 3115 absence of such relationship, the provisions of this Article shall apply only to the 3116 last-mentioned amount. In such a case, the excess part of the payments may be 3117 taxed according to the laws of each Contracting State, due regard being had to 3118 the other provisions of this Convention.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 126 of 814
    • 3119 8. The provisions of this Article shall not apply if it was the main purpose or one 3120 of the main purposes of any person concerned with the creation or assignment of 3121 the debt-claim in respect of which the interest is paid to take advantage of this 3122 Article by means of that creation or assignment. 3123 Article 12 3124 ROYALTIES 3125 1. Royalties arising in a Contracting State and paid to a resident of the other 3126 Contracting State may be taxed in that other State. 3127 2. However, such royalties may also be taxed in the Contracting State in which 3128 they arise and according to the laws of that State, but, if the beneficial owner of 3129 the royalties is a resident of the other Contracting State, the tax so charged shall 3130 not exceed 15 per cent of the gross amount of the royalties. 3131 3. The term "royalties" as used in this Article means payments of any kind 3132 received as a consideration for the use of, or the right to use, any copyright of 3133 literary, artistic or scientific work (including cinematograph films and films, 3134 tapes or other means of image and sound reproduction, for radio or television 3135 broadcasting), any patent, trade mark, design or model, plan, secret formula or 3136 process or other intangible property, or for the use of, or the right to use, 3137 industrial, commercial, or scientific equipment, or for information concerning 3138 industrial, commercial or scientific experience. 3139 4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the 3140 beneficial owner of the royalties, being a resident of a Contracting State, carries 3141 on business in the other Contracting State in which the royalties arise through a 3142 permanent establishment situated therein, or performs in that other State 3143 independent personal services from a fixed base situated therein, and the right or 3144 property in respect of which the royalties are paid is effectively connected with 3145 such permanent establishment or fixed base. In such a case, the provisions of 3146 Article 7 or Article 14, as the case may be, shall apply.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 127 of 814
    • 3147 5. Royalties shall be deemed to arise in a Contracting State when the payer is a 3148 resident of that State. Where, however, the person paying the royalties, whether 3149 he is a resident of a Contracting State or not, has in a Contracting State a 3150 permanent establishment or a fixed base in connection with which the obligation 3151 to pay the royalties was incurred, and such royalties are borne by such 3152 permanent establishment or fixed base, then such royalties shall be deemed to 3153 arise in the State in which the permanent establishment or fixed base is situated. 3154 6. Where, by reason of a special relationship between the payer and the beneficial 3155 owner or between both of them and some other person, the amount of the 3156 royalties, having regard to the use, right or information for which they are paid, 3157 exceeds the amount which would have been agreed upon by the payer and the 3158 beneficial owner in the absence of such relationship, the provisions of this Article 3159 shall apply only to the last-mentioned amount. In such a case, the excess part of 3160 the payments may be taxade according to the laws of each Contracting State, due 3161 regard being had to the other provisions of this Convention. 3162 7. The provisions of this Article shall not apply if it was the main purpose or one 3163 of the main purposes of any person concerned with the creation or assignment of 3164 the rights in respect of which the royalties are paid to take advantage of this 3165 Article by means of that creation or assignment. 3166 Article 13 3167 CAPITAL GAINS 3168 1. Gains derived by a resident of a Contracting State from the alienation of 3169 immovable property situated in the other Contracting State may be taxed in that 3170 other State. 3171 2. Gains from the alienation of movable property forming part of the business 3172 property of a permanent establishment which an enterprise of a Contracting State 3173 has in the other Contracting State, or of movable property pertaining to a fixed 3174 base available to a resident of a Contracting State in the other Contracting State 3175 for the purpose of performing independent personal services, including suchEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 128 of 814
    • 3176 gains from the alienation of such a permanent establishment (alone or with the 3177 whole enterprise), or of such fixed base, may be taxed in that other State. 3178 3. However, gains from the alienation of land transport vehicles, ships or aircraft 3179 operated in international traffic or movable property pertaining to the operation 3180 of such land transport vehicles, ships or aircraft shall be taxable only in the 3181 Contracting State in which, according to Article 8, is entitled to tax the profits of 3182 the enterprise. 3183 4. Gains from the alienation of any property or right other than that referred to in 3184 the foregoing paragraphs may be taxed in both Contracting States. 3185 Article 14 3186 INDEPENDENT PERSONAL SERVICES 3187 1. Income derived by a resident of a Contracting State in respect of professional 3188 services or other activities of an independent character shall be taxable only in 3189 that State, unless: 3190 a. the remuneration for such services or activities is paid by a resident of the 3191 other Contracting State or is borne by a permanent establishment or a fixed 3192 base situated in that other State; or 3193 b. such individual, his employees or any other person on his behalf are 3194 present or the activities continue in the other Contracting State for a period 3195 or periods exceeding in the aggregate 183 days in any twelve month 3196 period; in such a case, only so much of the income as is derived from the 3197 activities performed in that other State may be taxed in that other State; or 3198 c. the services or activities are performed in the other Contracting State 3199 through a fixed base regularly available to the recipient in that other State 3200 for the purpose of performing his activities, but only so much of the 3201 income as is attributable to that fixed base. 3202 2. The expression "professional services" includes especially independent 3203 scientific, technical, literary, artistic, educational or teaching activities, as well asEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 129 of 814
    • 3204 the independent activities of physicians, lawyers, engineers, architects, dentists 3205 and accountants. 3206 Article 15 3207 DEPENDENT PERSONAL SERVICES 3208 1. Subject to the provisions of Articles 16, 18, and 19, salaries, wages and other 3209 remuneration derived by a resident of a Contracting State in respect of an 3210 employment shall be taxable only in that State unless the employment is exercised 3211 in the other Contracting State. If the employment is so exercised, such 3212 remuneration as is derived therefrom may be taxed in that other State. 3213 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 3214 resident of a Contracting State in respect of an employment exercised in the other 3215 Contracting State shall be taxable only in the first-mentioned State if: 3216 a) the recipient is present in the other State for a period or periods not exceeding 3217 in the aggregate 183 days in any twelve month period commencing or ending in 3218 the fiscal year concerned, and 3219 b) the remuneration is paid by, or on behalf of, an employer who is not a resident 3220 of the other State, and 3221 c) the remuneration is not borne by a permanent establishment or a fixed base 3222 which the employer has in the other State. 3223 3. Notwithstanding the preceding provisions of this Article, remuneration derived 3224 by a resident of a Contracting State in respect of an employment exercised aboard 3225 a land transport vehicle, ship or aircraft operated in international traffic shall be 3226 taxed only in that Contracting State. 3227 Article 16 3228 DIRECTORS FEESEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 130 of 814
    • 3229 Directors fees and other similar payments derived by a resident of a Contracting 3230 State in his capacity as a member of the board of directors or any other 3231 management or auditing board of a company which is a resident of the other 3232 Contracting State may be taxed in that other State. 3233 Article 17 3234 ARTISTES AND SPORTSMEN 3235 1. Notwithstanding the provisions of Articles 14 and 15, income derived by a 3236 resident of a Contracting State as an entertainer, such as a theatre, motion 3237 picture, radio or television artiste, or a musician, or as a sportsman, from his 3238 personal activities as such exercised in the other Contracting State, may be 3239 taxable in that other State. 3240 2. Where income in respect of personal activities exercised by an entertainer or a 3241 sportsman in his capacity as such accrues not to the entertainer or sportsman 3242 himself but to another person, that income may, notwithstanding the provisions 3243 of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities 3244 of the entertainer or sportsman are exercised. 3245 Article 18 3246 PENSIONS 3247 1. Pensions and other similar remuneration arising in a Contracting State and 3248 paid to a resident of the other Contracting State shall be taxed only in the State in 3249 which they arise. 3250 In this paragraph the term "pensions and other similar remuneration" means 3251 periodic payments made after retirement in consideration of past employment or 3252 by way of compensation for injuries received in connection with past 3253 employment and payments made by, or out of, a pension fund which is part of the 3254 social security system of a Contracting State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 131 of 814
    • 3255 2. Alimony and other support payments made to a resident of a Contracting State 3256 shall be taxable only in that State if they are deductible for the payer. If they are 3257 not deductible, such payments shall be taxable only in the State of residence of 3258 the payer. 3259 Article 19 3260 GOVERNMENT SERVICE 3261 1. a) Salaries, wages and other remuneration, other than a pension, paid by a 3262 Contracting State or a political subdivision or a local authority thereof to an 3263 individual in respect of services rendered to that State or political subdivision or 3264 local authority shall be taxable only in that State. 3265 b) However, such salaries, wages and other remuneration shall be taxable only in 3266 the other Contracting State if the services are rendered in that State and the 3267 individual is a resident of that State who: 3268 I - is a national of that State; or 3269 II - did not become a resident of that State solely for the purpose of rendering the 3270 services. 3271 2. The provisions of Articles 15, 16, 17 and 18 shall apply to the remuneration 3272 and the pensions paid in respect of services rendered in connection with a 3273 business carried on by a Contracting State or a political subdivision or a local 3274 authority thereof. 3275 Article 20 3276 STUDENTS AND APPRENTICES 3277 1. Payments which a student or business apprentice who is or was immediately 3278 before visiting a Contracting State a resident of the other Contracting State and 3279 who is present in the first-mentioned State solely for the purpose of his education 3280 or training receives for the purpose of his maintenance, education or trainingEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 132 of 814
    • 3281 shall not be taxed in that State, provided that such payments arise from sources 3282 outside that State. 3283 2. In respect of grants, scholarships and remuneration from employment not 3284 covered by paragraph 1, a student or business apprentice referred to in 3285 paragraph 1 shall, in addition, be entitled during the period of such education or 3286 training to the same exemptions, reductions or allowances in respect of taxes 3287 which are available to residents of the State which he is visiting. 3288 Article 21 3289 OTHER INCOME 3290 Items of income of a resident of a Contracting State, arising in the other 3291 Contracting State and not dealt with in the foregoing Articles of this Convention, 3292 may be taxed in that other Contracting State. 3293 CHAPTER IV 3294 METHODS FOR THE ELIMINATION OF 3295 DOUBLE TAXATION 3296 Article 22 3297 CREDIT METHOD 3298 1. In the case of Chile, double taxation shall be avoided as follows: 3299 Where a resident of Chile derives income which, in accordance with the 3300 provisions of this Convention, may be taxed in Brazil, he may credit the tax paid 3301 in Brazil aginst any Chilean tax payable in respect of such income, according to 3302 applicable provisions of the Chilean legislation. This paragraph shall apply to any 3303 income referred to in the Convention. 3304 2. In the case of Brazil, double taxation shall be avoided as follows: 3305 Where a resident of Brazil derives income which, in accordance with the 3306 provisions of this Convention, may be taxed in Chile, Brazil shall allow, as aEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 133 of 814
    • 3307 deduction from the tax on the income of that resident, an amount equal to the 3308 income tax paid in Chile, according to the applicable provisions of the Brazilian 3309 legislation. Such deduction shall not, however, exceed that part of the income tax 3310 as computed before the deduction is given, which is attributable to the income 3311 which may be taxed in Chile. 3312 3. Where in accordance with any provision of the Convention, income derived by 3313 a resident of a Contracting State is exempt from tax in that State, such State may, 3314 nevertheless, in calculating the amount of tax on the remaining income of such 3315 resident, take into account the exempted income. 3316 CHAPTER V 3317 Special Provisions 3318 Article 23 3319 Non-discrimination 3320 1. Nationals of a Contracting State shall not be subjected in the other Contracting 3321 State to any taxation or any requirement connected therewith, which is other or 3322 more burdensome than the taxation and connnected requirements to which 3323 nationals of that other State in the same circumstances are or may be subjected. 3324 2. The taxation on a permanent establishment which an enterprise of a 3325 Contracting State has in the other Contracting State shall not be less favourably 3326 levied in that other State than the taxation levied on enterprises of that other State 3327 carrying on the same activities. 3328 3. This Article shall not be construed as obliging a Contracting State to grant to 3329 residents of the other Contracting State any personal allowances, reliefs and 3330 reductions for taxation purposes on account of civil status or family 3331 responsabilities which it grants to its own residents. 3332 4. Except where the provisions of Article 9, of paragraph 7 of Article 11, or of 3333 paragraph 6 of Article 12 apply, interest, royalties and other disbursements paidEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 134 of 814
    • 3334 by an enterprise of a Contracting State to a resident of the other Contracting State 3335 shall, for the purpose of determining the taxable profits of such enterprise, be 3336 deductible under the same conditions as if they had been paid to a resident of the 3337 first-mentioned State. 3338 5. Enterprises of a Contracting State, the capital of which is wholly or partly 3339 owned or controlled, directly or indirectly, by one or more residents of the other 3340 Contracting State, shall not be subjected in the first-mentioned State to any 3341 taxation or any requirement connected therewith which is other or more 3342 burdensome than the taxation and connected requirements to which other 3343 similar enterprises of the first-mentioned State, the capital of which is wholly or 3344 partly owned or controlled, directly or indirectly, by one or more residents of a 3345 third State, are or may be subjected. 3346 6. In this Article, the term "taxation" means taxes to which this Convention 3347 applies. 3348 Article 24 3349 MUTUAL AGREEMENT PROCEDURE 3350 1. Where a resident of a Contracting State considers that the actions of one or 3351 both of the Contracting States result or will result for him in taxation not in 3352 accordance with the provisions of this Convention, he may, irrespective of the 3353 remedies provided by the domestic law of those States, present his case to the 3354 competent authority of the Contracting State of which he is a resident or, if his 3355 case comes under paragraph 1 of Article 23, to that of the Contracting State of 3356 which he is a national. 3357 2. The competent authority shall endeavour, if the objection appears to it to be 3358 justified and if it is not itself able to arrive at a satisfactory solution, to resolve the 3359 case by mutual agreement with the competent authority of the other Contracting 3360 State, with a view to the avoidance of taxation which is not in accordance with 3361 this Convention.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 135 of 814
    • 3362 3. The competent authorities of the Contracting States shall endeavour to resolve 3363 by mutual agreement any difficulties or doubts arising as to the interpretation or 3364 application of the Convention. 3365 4. The competent authorities of the Contracting States may communicate with 3366 each other directly for the purpose of reaching an agreement in the sense of the 3367 preceding paragraphs. 3368 Article 25 3369 EXCHANGE OF INFORMATION 3370 1. The competent authorities of the Contracting States shall exchange such 3371 information as is necessary for carrying out the provisions of this Convention or 3372 of the domestic laws of the Contracting States concerning taxes covered by the 3373 Convention insofar as the taxation thereunder is not contrary to the Convention. 3374 The exchange of information is not restricted by Article 1. Any information 3375 received by a Contracting State shall be treated as secret in the same manner as 3376 information obtained under the domestic laws of that State and shall be disclosed 3377 only to persons or authorities (including courts and administrative bodies) 3378 concerned with the assessment or collection of, or the prosecution in respect of, 3379 or the determination of appeals in relation to, the taxes covered by this 3380 Convention. Such persons or authorities shall use the information only for such 3381 purposes. 3382 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 3383 a Contracting State the obligation: 3384 a) to carry out administrative measures at variance with the laws and 3385 administrative practice of that or of the other Contracting State; 3386 b) to supply information which is not obtainable under the laws or in the normal 3387 course of the administration of that or of the other Contracting State;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 136 of 814
    • 3388 c) to supply information which would disclose any trade, business, industrial, 3389 commercial or professional secret or trade process, or information, the disclosure 3390 of which would be contrary to public policy (ordre public). 3391 Article 27 3392 MEMBERS OF DIPLOMATIC MISSIONS 3393 AND CONSULAR POSTS 3394 Nothing in this Convention shall affect the fiscal privileges of members of 3395 diplomatic missions or consular posts under the general rules of international law 3396 or under the provisions of special agreements. 3397 Article 28 3398 ENTRY INTO FORCE 3399 1. Each Contracting State may notify the other in writing, through diplomatic 3400 channels, of the completion of the procedures required by its law for the bringing 3401 into force of this Convention. This Convention shall enter into force on the date of 3402 the receipt of the later notification. 3403 2. The provisions of this Convention shall apply: 3404 a) in Brazil: 3405 I) in respect of taxes withheld at source, to amounts paid, remitted or credited on 3406 or after the first day of January of the calendar year immediately following that in 3407 which the Convention enters into force; 3408 II) in respect of other taxes covered by the Convention, to income arising in the 3409 taxable year beginning on or after the first day of January of the calendar year 3410 immediately following that in which the Convention enters into force. 3411 3412 b) in Chile:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 137 of 814
    • 3413 - in respect of taxes on income derived and amounts paid, credited to an account, 3414 made available or computed as an expense, as from the first day of January in the 3415 calendar year next following that in which the Convention enters into force. 3416 3417 3. The agreement between Brazil and Chile for the avoidance of double taxation 3418 of income from shipping and air transport, concluded through an exchange of 3419 notes at Santiago on 17 and 18 June 1976, shall cease to have effect as from the 3420 date on which this Convention enters into force in respect of taxes which are the 3421 subject of the Convention, in accordance with paragraph 1 of this Article. 3422 Article 29 3423 TERMINATION 3424 1. Either Contracting State may terminate this Convention after a period of three 3425 years from the date on which the Convention enters into force by giving to the 3426 other Contracting State, through diplomatic channels, a written notice of 3427 termination, not later than the thirtieth day of June in any calendar year. 3428 2. In such a case the Convention shall cease to have effect: 3429 a) in Brazil : 3430 I) in respect of taxes withheld at source, to amounts paid, remitted or credited on 3431 or after the first day of January of the calendar year immediately following that in 3432 which the notice of termination is given; 3433 II) in respect of other taxes covered by the Convention, as to income arising in the 3434 taxable year beginning on or after the first day of January of the calendar year 3435 immediately following that in which the notice of termination is given. 3436 b) in Chile:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 138 of 814
    • 3437 in respect of taxes on income derived and amounts paid, credited to an account, 3438 made available or computed as an expense, as from the first day of January in 3439 next following the calendar year. 3440 In witness whereof the undersigned, duly authorized thereto, have signed this 3441 Convention. 3442 Done at Santiago on 3 April 2001, in duplicate, in the Portuguese and in the 3443 Spanish languages, both texts being equally authentic. For the Government of For the Government of the Federative Republic of Brazil the Republic of Chile 3444 PROTOCOL 3445 At the moment of signing of the Convention between the Federative Republic of 3446 Brazil and the Republic of Chile for the Avoidance of Double Taxation and the 3447 Prevention of Fiscal Evasion with respect to the Tax on Income, the undersigned, 3448 duly authorized thereto, have agreed upon the following provisions which 3449 constitute an integral part of the Convention. 3450 1. With reference to Article 1 3451 a) Any question arising as to the interpretation or application of this Convention 3452 and, in particular, whether a tax measure is included in the scope of this 3453 Convention, shall be exclusively resolved in accordance with the provisions of 3454 Article 24 of this Convention; and 3455 b) The provisions of Article II and Article XVII of the General Agreement on Trade 3456 in Services shall not apply in respect of a tax measure unless the competent 3457 authorities agree that such a measure that such a measure is not within the scope 3458 of Article 23 of this Convention. 3459 2. With reference to Article 7Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 139 of 814
    • 3460 It is understood that the provisions of paragraph 3 of Article 7 shall apply to 3461 expenses incurred in the State in which the permanent establisment is situated or 3462 elsewhere. 3463 3. With reference to Article 10, paragraphs 2 and 5 3464 In the case of Chile: 3465 a. The provisions of paragraphs 2 and 5 of Article 10 of this 3466 Convention shall not limit the application of the Additional Tax 3467 ("Impuesto Adicional") whenever: 3468 I) the First Category Tax is fully creditable against the Additional Tax to be paid, 3469 and 3470 II) the Additional Tax rate does not exceed 42%. 3471 In addition, where any of the conditions under (I) or (II) is not met, the provisions 3472 of paragraphs 2 and 5 of Article 10 shall not limit the taxation in either of the 3473 Contracting States. In such a case the Contracting States shall consult each other 3474 for the amendment of the present Convention with a view to restoring the 3475 benefits of the Convention. 3476 b) Likewise the provisions of paragraphs 2 and 5 of Article 10 of this Convention 3477 shall not limit the application of the Additional Tax in case of withdrawals or 3478 remittances of profits or dividends paid by an enterprise where the investment is 3479 subject to a foreign investment contract covered by the Foreign Investment 3480 Statute (Decree-Law 600) whenever the overall effective tax burden on the 3481 income does not exceed 42%. 3482 4. With reference to Article 11, paragraph 4 3483 Interest paid as "remuneration on the companys equity" ("remuneração sobre o 3484 capital próprio") in accordance with Article 9 of Law 9.249/95 of Brazil shall, forEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 140 of 814
    • 3485 the purposes of paragraph 3 of Article 11, be regarded as interest as long as they 3486 are deductible in determining the income of the legal person. 3487 It is also understood that the term "interest", as defined for the purposes of 3488 paragraph 4 of Article 11, includes commissions and similar fees paid by a 3489 resident of a Contracting State for services rendered by a bank or other financial 3490 institution. 3491 5. With reference to Article 12, paragraph 3 3492 The provisions of paragraph 3 of Article 12 shall apply to payments of any kind 3493 received as a consideration for the rendering of technical assistance and technical 3494 services. 3495 6. With reference to Article 14 3496 In the event that Brazil, after the date of signature of this Convention, concludes 3497 with a third state a convention including a rule which in any way means a 3498 renouncement of the application of the principle laid down in subparagraph "a" 3499 of paragraph 1 of Article 14 of this Convention, for the determination of the right 3500 to tax of a Contracting State with respect to income derived in respect of the 3501 rendering of professional services or other activities of an independent character, 3502 then the rule laid down in subparagraph "a" of paragraph 1 of Article 14 of this 3503 Convention shall cease to have effect from the date of the entry into force of the 3504 convention with the third state. 3505 With reference to Article 23 3506 a) The provisions of paragraph 5 of Article 10 of this Convention and paragraph 3507 3 of the Protocol are not considered discriminatory as to the provisions of 3508 paragraph 2 of Article 23. 3509 b) The provisions of the laws of the Contracting States that do not allow that 3510 royalties as defined in paragraph 3 of Article 12, paid by a permanent 3511 establishment situated in a Contracting State to a resident of the otherEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 141 of 814
    • 3512 Contracting State that carries on business in the first-mentioned Contracting 3513 State through a permanent establishment, be deductible at the moment of the 3514 determination of the taxable income of the above referred permanent 3515 establishment, are not considered discriminatory as to the provisions of Article 3516 23. 3517 c) Nothing in Article 23 of this Convention shall affect the application of the 3518 existing provisions of paragraph 12 of Article 31 of the Income Tax Law of Chile, 3519 even if it is eventually amended without changing the general principle thereof. 3520 However, the 30% rate referred to in such rule shall be replaced by the rate of 3521 15% for the beneficial owners of royalty payments who are residents of Brazil. 3522 d) For more certainty, it is understood that the provisions of Article 23 of this 3523 Convention shall not prevent the application by a Contracting State of its 3524 domestic rules dealing with thin capitalization. 3525 8. General provisions 3526 a. Distributions by a foreign investment fund, set up or organised in 3527 order to operate as such in a Contracting State, shall be subject to 3528 taxation according to the laws of that Contracting State. 3529 b. Whereas the main aim of this Convention is the avoidance of 3530 international double taxation and the prevention of fiscal evasion, 3531 the Contracting States agree that, in the event that the provisions of 3532 the Convention are used in such a manner as to provide benefits not 3533 referred to or intended therein, the competent authorities of the 3534 Contracting States shall recommend, in accordance with the mutual 3535 agreement procedure of Article 24, specific amendments to the 3536 Convention. The Contracting States further agree that any such 3537 recommendations will be taken into consideration and discussed in 3538 an expeditious manner with a view to the amendment of the 3539 Convention, where necessary,.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 142 of 814
    • 3540 c. In the event that a Contracting State introduces at a later date a tax 3541 on capital, the Contracting States shall consult each other with a 3542 view to negotiating provisions concerning the treatment thereof. 3543 In witness whereof the undersigned, duly authorized thereto, have signed this 3544 Protocol. 3545 Done at Santiago on 3 April 2001 in the Portuguese and Spanish languages, both 3546 texts being equally authentic. 3547Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 143 of 814
    • 3548 3549 3550 China 3551Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 144 of 814
    • 3552 Date of Conclusion: 5 August 1991 3553 Effective Date: 1 January 1994 3554 AGREEMENT BETWEEN 3555 THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL AND THE 3556 GOVERNMENT OF THE PEOPLES REPUBLIC OF CHINA FOR THE AVOIDANCE OF 3557 DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH 3558 RESPECT TO TAXES ON INCOME 3559 The Government of the Federative Republic of Brazil 3560 and 3561 The Government of the Peoples Republic of China, 3562 Desiring to conclude an Agreement for the avoidance of double taxation and the 3563 prevention of fiscal evasion with respect to taxes on income, 3564 Have agreed as follows: 3565 ARTICLE 1 3566 Personal Scope 3567 This Agreement shall apply to persons who are residents of one or both of the 3568 Contracting States. 3569 ARTICLE 2 3570 Taxes Covered 3571 1. The existing taxes to which the Agreement shall apply are: 3572 a. in the case of the Federative Republic of Brazil:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 145 of 814
    • 3573 - the federal income tax, excluding the supplementary income tax and the 3574 tax on activities of minor importance. 3575 (hereinafter referred to as "Brazilian tax"); 3576 b. in the case of the Peoples Republic of China: 3577 (i) the individual income tax; 3578 (ii) the income tax concerning joint ventures with Chinese and 3579 foreign investment; 3580 (iii) the income tax concerning foreign enterprises; and 3581 (iv) the local income tax 3582 (hereinafter referred to as "Chinese tax"). 3583 2. The Agreement shall also apply to any identical or substantially similar taxes 3584 which are imposed after the date of signature of the Agreement in addition to, or 3585 in place of, the above-mentioned existing taxes. The competent authorities of the 3586 Contracting States shall notify each other of any substantial changes which have 3587 been made in their respective taxation laws. 3588 ARTICLE 3 3589 General Definitions 3590 1. For the purposes of this Agreement, unless the context otherwise requires: 3591 (a) the term "Brazil" means the Federative Republic of Brazil; 3592 (b) the term "China" means the Peoples Republic of China; when used in 3593 geographical sense, means all the territory of the Peoples Republic of China, 3594 including its territorial sea, in which the Chinese laws relating to taxation apply, 3595 and any area beyond its territorial sea, within which the Peoples Republic ofEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 146 of 814
    • 3596 China has sovereign rights of exploration for and exploitation of resources of the 3597 seabed and its subsoil and superjacent water resources in accordance with 3598 international law; 3599 (c) the terms "a Contracting State" and "the other Contracting State" mean Brazil 3600 or China as the context requires; 3601 (d) the term "tax" means Brazilian tax or Chinese tax, as the context requires; 3602 (e) the term "person" includes an individual, a company and any other body of 3603 persons; 3604 (f) the term "company" means any body corporate or any entity which is treated 3605 as a body corporate for tax purposes; 3606 (g) the terms "enterprise of a Contracting State" and "enterprise of the other 3607 Contracting State" mean respectively an enterprise carried on by a resident of a 3608 Contracting State and an enterprise carried on by a resident of the other 3609 Contracting State; 3610 (h) the term "nationals" means all individuals possessing the nationality of a 3611 Contracting State and all juridical persons created or organized under the laws of 3612 that Contracting State, as well as any organizations without juridical personality 3613 treated for tax purposes as juridical persons created or organized under the laws 3614 of that Contracting State; 3615 (i) the term "international traffic" means any transport by a ship or aircraft 3616 operated by an enterprise which has its head office (i.e. effective management) in 3617 a Contracting State, except when the ship or aircraft is operated solely between 3618 places in the other Contracting State; 3619 (j) the term "competent authority" means: 3620 (i) in the case of Brazil, the Minister of Economy, Finance and Planning, the 3621 Department of Federal Revenue or their authorized representatives;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 147 of 814
    • 3622 (ii) in the case of China, the State Tax Bureau or its authorized representative. 3623 2. As regards the application of this Agreement by a Contracting State, any term 3624 not defined therein shall, unless the context otherwise requires, have the meaning 3625 which it has under the laws of that Contracting State concerning the taxes to 3626 which this Agreement applies. 3627 ARTICLE 4 3628 Resident 3629 1. For the purposes of this Agreement, the term "resident of a Contracting State" 3630 means any person who, under the laws of that Contracting State, is liable to tax 3631 therein by reason of his domicile, residence, place of head office (i.e. effective 3632 management) or any other criterion of a similar nature. 3633 2. Where by reason of the provisions of paragraph 1, an individual is a resident 3634 of both Contracting States, then his status shall be determined as follows: 3635 (a) he shall be deemed to be a resident of the Contracting State in which he has a 3636 permanent home available to him; if he has a permanent home available to him 3637 in both Contracting States, he shall be deemed to be a resident of the Contracting 3638 State with which his personal and economic relations are closer (centre of vital 3639 interests); 3640 (b) if the State in which he has centre of vital interests cannot be determined, or if 3641 he has not a permanent home available to him in either Contracting State. He 3642 shall be deemed to be a resident of the State in which he has a habitual abode; 3643 (c) if he has a habitual abode in both Contracting States or in neither of them, he 3644 shall be deemed to be a resident of the Contracting State of which he is a national; 3645 (d) if he is a national of both Contracting States or of neither of them, the 3646 competent authorities of the Contracting States shall settle the question by mutual 3647 agreement.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 148 of 814
    • 3648 3. Where by reason of the provisions of paragraph 1, a person other than an 3649 individual is a resident of both Contracting States, then it shall be deemed to be a 3650 resident of the Contracting State in which its place of head office (i.e. effective 3651 management) is situated. 3652 ARTICLE 5 3653 Permanent Establishment 3654 1. For the purposes of this Agreement, the term "permanent establishment" means 3655 a fixed place of business through which the business of an enterprise is wholly or 3656 partly carried on. 3657 2. The term "permanent establishment" includes especially: 3658 (a) a place of management; 3659 (b) a branch; 3660 (c) an office; 3661 (d) a factory; 3662 (e) a workshop; and 3663 (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural 3664 resources. 3665 3. The term "permanent establishment" likewise encompasses: 3666 (a) a building site, a construction, assembly or installation project or supervisory 3667 activities in connection therewith, but only where such site, project or activities 3668 continue for a period of more than six months; 3669 (b) the furnishing of services, including consultancy services, by an enterprise of 3670 a Contracting State through employees or other engaged personnel in the otherEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 149 of 814
    • 3671 Contracting State, provided that such activities continue for the same project or a 3672 connected project for a period or periods aggregating more than six months 3673 within any twelve-month period. 3674 4. Notwithstanding the provisions of paragraphs 1 to 3, the term "permanent 3675 establishment" shall be deemed not to include: 3676 (a) the use of facilities solely for the purpose of storage, display or 3677 delivery of goods or merchandise belonging to the enterprise; 3678 (b) the maintenance of a stock of goods or merchandise belonging to 3679 the enterprise solely for the purpose of storage, display or delivery; 3680 (c) the maintenance of a stock of goods or merchandise belonging to 3681 the enterprise solely for the purpose of processing by another 3682 enterprise; 3683 (d) the maintenance of a fixed place of business solely for the 3684 purpose of purchasing goods or merchandise or of collecting 3685 information, for the enterprise; 3686 (e) the maintenance of a fixed place of business solely for the 3687 purpose of carrying on, for the enterprise, any other activity of a 3688 preparatory or of auxiliary character. 3689 5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -other 3690 than an agent of an independent status to whom the provisions of paragraph 6 3691 apply -, acting in a Contracting State on behalf of an enterprise of the other 3692 Contracting State, has and habitually exercises an authority to conclude contracts 3693 in the name of the enterprise, that enterprise shall be deemed to have a 3694 permanent establishment in the first-mentioned Contracting State in respect of 3695 any activities which that person undertakes for the enterprise, unless the 3696 activities of such person are limited to those mentioned in paragraph 4 which, ifEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 150 of 814
    • 3697 exercised through a fixed place of business, would not make this fixed place of 3698 business a permanent establishment under the provisions of that paragraph. 3699 6. An enterprise of a Contracting State shall not be deemed to have a permanent 3700 establishment in the other Contracting State merely because it carries on business 3701 in that Contracting State through a broker, general commission agent or any 3702 other agent of an independent status, provided that such persons are acting in the 3703 ordinary course of their business. However, when the activities of such an agent 3704 are devoted wholly or almost wholly on behalf of that enterprise, he will not be 3705 considered an agent of an independent status within the meaning of this 3706 paragraph. 3707 7. The fact that a company which is a resident of a Contracting State controls or is 3708 controlled by a company which is a resident of the other Contracting State, or 3709 which carries on business in that other State ( whether through a permanent 3710 estab1ishment or otherwise), shall not of itself constitute either company a 3711 permanent establishment of the other. 3712 ARTICLE 6 3713 Income from Immovable Property 3714 1. Income derived by a resident of a Contracting State from immovable property 3715 (including income from agricultureture or forestry) situated in the other 3716 Contracting State may be taxed in that other Contracting State. 3717 2. The term "immovable property" shall have the meaning which it has under the 3718 law of the Contracting State in which the property in question is situated. The 3719 term shall in any case include property accessory to immovable property, 3720 livestock and equipment used in agriculture and forestry, rights to which the 3721 provisions of general law respecting landed property apply, usufruct of 3722 immovable property and rights to variable or fixed payments as consideration for 3723 the working of, or the right to work, mineral deposits, sources and other natural 3724 resources. Ships and aircraft shall not be regarded as immovable property.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 151 of 814
    • 3725 3. The provisions of paragraph 1 shall apply to income derived from the direct 3726 use, letting, or use in any other form of immovable property. 3727 4. The provisions of paragraphs 1 and 3 shall also apply to the income from 3728 immovable property of an enterprise and to income from immovable property 3729 used for the performance of Independent personal services. 3730 ARTICLE 7 3731 Business Profits 3732 1. The profits of an enterprise of a Contracting State shall be taxable only in that 3733 Contracting State unless the enterprise carries on business in the other 3734 Contracting State, trough a permanent establishment situated therein. If the 3735 enterprise carries on business as aforesaid, the profits of the enterprise may be 3736 taxed In the other Contracting State but only so much of them as is attributable to 3737 that permanent establishment. 3738 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting 3739 State carries on business in the other Contracting State through a permanent 3740 establishment situated therein, there shall in each Contracting State be attributed 3741 to that pertnanent establishment the profits which it might be expected to make if 3742 it were a distinct and separate enterprise engaged in the same or similar activities 3743 under the same or similar conditions and dealing wholly independently with the 3744 enterprise of which it is a permanent establishment. 3745 3. In determining the profits of a permanent establishment, there shall be allowed 3746 as deductions expenses which are incurred for the purposes of the permanent 3747 establishment, including executive and genera1 administrative expenses so 3748 incurred. 3749 4. Insofar as it has been customary in a Contracting State to detennine the profits 3750 to be attributed to a permanent establishment on the basis of an apportionment of 3751 the tota1 profits of the enterprise to its various parts, nothing in paragraph 2Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 152 of 814
    • 3752 shall preclude that Contracting State from determining the profits to be taxed by 3753 such an apportionment as may be customary. The method of apportionment 3754 adopted shall, however, be such that the result shall be in accordance with the 3755 principles contained in this Article. 3756 5. No profits shall be attributed to a permanent establishment by reason of the 3757 mere purchase by that permanent establishment of goods or merchandise for the 3758 enterprise. 3759 6. For the purposes of paragraphs 1 to 5, the profits to be attributed to the 3760 permanent establishment shall be determined by the same method year by year 3761 unless there is good and sufficient reason to the contrary. 3762 7. Where profits include items of income which are dealt with separately in other 3763 Articles of this Agreement, then the provisions of those Articles shall not be 3764 affected by the) provisions of this Article. 3765 ARTICLE 8 3766 Shipping and Air Transport 3767 1. Profits from the operation of ships or aircraft in international traffic shall be 3768 taxable only in the Contracting state in which the place of head office (i.e. 3769 effective management) of the enterprise is situated. 3770 2. If the place of head office of a shipping enterprise is aboard a ship, then it shall 3771 be deemed to be situated in the Contracting State in which the home harbour of 3772 the ship is situated, or if there is no such home harbour, in the Contracting State 3773 of which the operator of the ship is a resident. 3774 3. The provisions of paragraph 1 shall also apply to profits from the participation 3775 in a pool, a joint business or an international operating agency. 3776 ARTICLE 9Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 153 of 814
    • 3777 Associated Enterprises 3778 Where 3779 a) an enterprise of a Contracting State participates 3780 directly or indirectly in the management, control or 3781 capital of an enterprise of the other Contracting State, 3782 or 3783 b) the same persons participate directly or indirectly in 3784 the management, control or capita1 of an enterprise of 3785 a Contracting State and an enterprise of the other 3786 Contracting State, 3787 and in either case conditions are made or imposed between the two enterprises in 3788 their commercial or financial relations which differ from those which would be 3789 made between independent enterprises, then any profits which would, but for 3790 those conditions, have accrued to one of the enterprises, but, by reason of those 3791 conditions, have not so accrued, may be included in the profits of that enterprise 3792 and taxed accordingly. 3793 ARTICLE 10 3794 Dividends 3795 1. Dividends paid by a company which is a resident of a Contracting State to a 3796 resident of the other Contracting State may be taxed in that other Contracting 3797 State. 3798 2. However, such dividends may also be taxed in the Contracting State of which 3799 the company paying the dividends is a resident and according to the laws of that 3800 Contracting State, but if the recipient is the beneficial owner of the dividends the 3801 tax so charged shall not exceed 15 per cent of the gross amount of the dividends. 3802 The provisions of this paragraph shall not affect the taxation of the company in 3803 respect of the profits out of which the dividends are paid.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 154 of 814
    • 3804 3. The term "dividends" as used in this Article means income from shares, 3805 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 3806 rights, not being debt-claims, participating in profits, as well as income from 3807 other corporate rights which is subjected to the same taxation treatment as 3808 income from shares by the laws of the State of which the company making the 3809 distribution is a resident. 3810 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 3811 the dividends, being a resident of a Contracting State, carries on business in the 3812 other Contracting State of which the company paying the dividends is a resident, 3813 through a permanent establishment situated therein, or performs in that 3814 Contracting State independent personal services from a fixed base situated 3815 therein, and the holding in respect of which the dividends are paid is effectively 3816 connected with such a permanent establishment or fixed base. In such a case the 3817 provisions of Article 7 or Article 14, as the case may be, shall apply. 3818 5. Where a resident of a Contracting State has a permanent establishment in the 3819 other Contracting State, this permanent establishment may be subject to a tax 3820 withheld at source in accordance with the law of that other Contracting State. 3821 However, such tax cannot exceed 15 per cent of gross amount of the profits of 3822 that permanent establishment determined after the payment of the corporate tax 3823 related to such profits. 3824 6. Where a company which is a resident of a Contracting State derives profits or 3825 income from the other Contracting State, that other Contracting State may not 3826 impose any tax on the dividends paid by the company, except insofar as such 3827 dividends are paid to a resident of that other Contracting State or insofar as the 3828 holding in respect of which the dividends are paid is effectively connected with a 3829 permanent establishment or a fixed base situated in that other Contracting State, 3830 nor subject the companys undistributed profits to a tax on the companys 3831 undistributed profits, even if the dividends paid or the undistributed profits 3832 consist wholly or partly of profits or income arising in such other Contracting 3833 State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 155 of 814
    • 3834 ARTICLE 11 3835 Interest 3836 1. Interest arising in a Contracting State and paid to a resident of the other 3837 Contracting State may be taxed in that other Contracting State. 3838 2. However, such interest may also be taxed in the Contracting State in which it 3839 arises and according to the laws of that Contracting State, but if the recipient is 3840 the beneficial owner of the interest the tax so charged shall not exceed 15 per 3841 cent of the gross amount of the interest. 3842 3. Notwithstanding the provisions of paragraphs 1 and 2, interest arising in a 3843 Contracting State and derived by the Government of the other Contracting State, 3844 a political subdivision, a local authority and the Central Bank thereof or any 3845 financial institution wholly owned by that Government, including interest from 3846 securities, bonds or debentures issued by them, shall be exempt from tax in the 3847 first-mentioned Contracting State. 3848 4. The term "interest" as used in this Article means income from debt-claims of 3849 every kind, whether or not secured by mortgage and whether or not carrying a 3850 right to participate in the debtors profits, and in particular, income from 3851 government securities and income from bonds or debentures, including 3852 premiums and prizes attaching to such securities, bonds or debentures. Penalty 3853 charges for late payment shall not be regarded as interest for the purpose of this 3854 Article. 3855 5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner 3856 of the interest, being a resident of a Contracting State, carries on business in the 3857 other Contracting State in which the interest arises, through a permanent 3858 establishment situated therein, or performs in that other Contracting State 3859 independent personal services from a fixed base situated therein, and the debt- 3860 claim in respect of which the interest is paid is effectively connected which suchEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 156 of 814
    • 3861 a permanent establishment or fixed base. In such a case the provisions of Article 7 3862 or Article 14, as the case may be, shall apply. 3863 6. Interest shall be deemed to arise in a Contracting State when the payer is the 3864 Government of that Contracting State, a political subdivision, a local authority 3865 thereof or a resident of that State. Where, however, the person paying the interest, 3866 whether he is a resident of a Contracting State or not, has in a Contracting State a 3867 permanent establishment or a fixed base in connection with which the 3868 indebtedness on which the interest is paid was incurred, and such interest is 3869 borne by such a permanent establishment or fixed base, then such interest shall 3870 be deemed to arise in the Contracting State in which the permanent establishment 3871 or fixed base is situated. 3872 7. Where, by reason of a specia1 relationship between the payer and the 3873 beneficial owner or between both of them and some other person, the amount of 3874 the interest, having regard to the debt-claim for which it is paid, exceeds the 3875 amount which would have been agreed upon by the payer and the beneficial 3876 owner in the absence of such relationship, the provisions of this Article shall 3877 apply only to the last-mentioned amount. In such case, the excess part of the 3878 payments shall remain taxable according to the laws of each Contracting State, 3879 due regard being had to the other provisions of this Agreement. 3880 8. The tax rate limitation provided for in paragraph 2 shall not apply to interest 3881 arising in a Contracting State and paid to a permanent establishment of an 3882 enterprise of the other Contracting State which is situated in a third State. 3883 ARTICLE 12 3884 Royalties 3885 l. Royalties arising in a Contracting State and paid to a resident of the other 3886 Contracting State may be taxed in that other Contracting State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 157 of 814
    • 3887 2. However, such royalties may also be taxed in the Contracting State in which 3888 they arise and according to the laws of that Contracting State, but if the recipient 3889 is the beneficial owner of the royalties the tax so charged shall not exceed: 3890 (a) 25 per cent of the gross amount of the royalties arising from the 3891 use or the right to use trade marks; 3892 (b) 15 per cent of the gross amount of the royalties in all other cases. 3893 3. The term "royalties" as used in this Article means payments of any kind 3894 received as a consideration for the use of, or the right to use, any copyright of 3895 literary, artistic or scientific work including cinematograph films and films or 3896 tapes for radio or television broadcasting, any patent, know-how, trade mark, 3897 design or model, plan, secret formula or process, or for the use of, or the right to 3898 use, industrial, commercial or scientific equipment, or for information 3899 concerning industria1, commercial or scientific experience. 3900 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficia1 owner of 3901 the roya1ties, being a resident of a Contracting State, carries on business in the 3902 other Contracting State in which the royalties arise, through a permanent 3903 establishment situated therein, or performs in that other Contracting State 3904 independent personal services from a fixed base situated therein, and the right or 3905 property in respect of which the royalties are paid is effectively connected with 3906 such a permanent establishment or fixed base. In such a case the provisions of 3907 Article 7 or Article 14, as the case may be, shall apply. 3908 5. Royalties shall be deemed to arise in a Contracting State when the payer is the 3909 Govemment of that Contracting State, a political subdivision, a local authority 3910 thereof or a resident of that Contracting State. Where, however, the person 3911 paying the royalties, whether he is a resident of a Contracting State or not, has in 3912 a Contracting State a permanent establishment or a fixed base in connection with 3913 which the liability to pay the royalties was incurred, and such roya1ties are borne 3914 by such a permanent establishment or fixed base, then such royalties shall beEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 158 of 814
    • 3915 deemed to arise in the Contracting State in which the permanent establishment or 3916 fixed base is situated. 3917 6. Where, by reason of a special relationship between the payer and the beneficial 3918 owner or between both of them and some other person, the amount of the 3919 royalties, having regard to the use, right or information for which they are paid, 3920 exceeds the amount which would have been agreed upon by the payer and the 3921 beneficial owner in the absence of such relationship, the provisions of this Article 3922 shall apply only to the last-mentioned amount. In such a case, the excess part of 3923 the payments shall remain taxable according to the laws of each Contracting 3924 State, due regard being had to the other provisions of this Agreement. 3925 ARTICLE 13 3926 Capital Gains 3927 1. Gains derived by a resident of a Contracting State from the alienation of 3928 immovable property referred to in Article 6 and situated in the other Contracting 3929 State may be taxed in that other Contracting State. 3930 2. Gains from the alienation of movable property forming part of the business 3931 property of a permanent establishment which an enterprise of a Contracting State 3932 has in the other Contracting State or of movable property pertaining to a fixed 3933 base available to a resident of a Contracting State in the other Contracting State 3934 for the purpose of performing independent personal services, including such 3935 gains from the alienation of such a permanent establishment (alone or together 3936 with the whole enterprise) or of such a fixed base, may be taxed in that other 3937 Contracting State. 3938 3. Gains from the alienation of ships or aircraft operated in international traffic 3939 or movable property pertaining to the operation of such ships or aircraft shall be 3940 taxable only in the Contracting State in which the place of head office (i.e. 3941 effective management) of the enterprise is situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 159 of 814
    • 3942 4. Gains from the alienation of any property other than that referred to in 3943 paragraphs 1,2 and 3, may be taxed in both Contracting States. 3944 ARTICLE 14 3945 Independent Personal Services 3946 1. Income derived by a resident of a Contracting State in respect of professional 3947 services or other activities of an independent character shall be taxable only in 3948 that Contracting State except in one of the following circumstances, when such 3949 income may also be taxed in the other Contracting State: 3950 a) if he has a fixed base regularly available to him in the other 3951 Contracting State for the purpose of performing his activities; in that 3952 case, only so much of the income as is attributable to that fixed base 3953 may be taxed in that other Contracting State; 3954 b) if the remuneration for his activities in the other Contracting State is paid by a 3955 resident of that other Contracting State or is borne by a permanent establishment 3956 or fixed base situated in that other Contracting State; in that case, only so much of 3957 the remuneration as derived therefrom may be taxed in that other Contracting 3958 State. 3959 2. The term "professional services" includes especially independent scientific, 3960 literary, artistic, educational or teaching activities as well as the independent 3961 activities of physicians, lawyers, engineers, architects, dentists and accountants. 3962 ARTICLE 15 3963 Dependent Personal Services 3964 1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and 3965 other similar remuneration derived by a resident of a Contracting State in respect 3966 of an employment shall be taxable only in that Contracting State unless the 3967 employment is exercised in the other Contracting State. If the employment is soEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 160 of 814
    • 3968 exercised, such remuneration as is derived therefrom may be taxed in that other 3969 Contracting State. 3970 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 3971 resident of a Contracting State in respect of an employment exercised in the other 3972 Contracting State shall be taxable only in the first-mentioned State if: 3973 a) the recipient is present in the other Contracting State for a period 3974 or periods not exceeding in the aggregate 183 days in the calendar 3975 year concerned; and 3976 (b) the remuneration is paid by, or on behalf of, an employer who is 3977 not a resident of the other Contracting State; and 3978 (c) the remuneration is not borne by a permanent establishment or a 3979 fixed base which the employer has in the other Contracting State. 3980 3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, 3981 remuneration derived in respect of an employment exercised aboard a ship or 3982 aircraft operated by an enterprise of a Contracting State in international traffic, 3983 shall be taxable only in the Contracting State in which the place of head office 3984 (i.e. effective management) of the enterprise is situated. 3985 ARTICLE 16 3986 Directors Fees 3987 Directors fees and other similar payments derived by a resident of a Contracting 3988 State in his capacity as a member of the board of directors or similar council of a 3989 company which is a resident of the other Contracting State may be taxed in that 3990 other Contracting State. 3991 ARTICLE 17 3992 Artistes and AthletesEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 161 of 814
    • 3993 1. Notwithstanding the provisions of Articles 14 and 15, income derived by a 3994 resident of a Contracting State as an entertainer, such as a theatre, motion 3995 picture, radio or television artiste, or a musician, or as an athlete, from his 3996 personal activities as such exercised in the other Contracting State, may be taxed 3997 in that other Contracting State. 3998 2. Where income in respect of personal activities exercised by an entenainer or 3999 an athlete in his capacity as such accrues not to the entertainer or athlete himself 4000 but to another person, that income may, notwithstanding the provisions of 4001 Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of 4002 the entertainer or athlete are exercised. 4003 3.Notwithstanding the provisions of paragraphs 1 and 2, income derived by 4004 entertainers or athletes who are residents of a Contracting State from the 4005 activities exercised in the other Contracting State under a plan of cultural 4006 exchange between the Governments of both Contracting States shall be exempt 4007 from tax in that other Contracting State. 4008 ARTICLE 18 4009 Pensions 4010 1. Subject to the provisions of paragraph 2 of Article 19, pensions and other 4011 similar remuneration paid to a resident of a Contracting State in consideration of 4012 past employment shall be taxable only in that Contracting State. 4013 2. Notwithstanding the provisions of paragraph 1, pensions paid and other 4014 similar payments made by the Government of a Contracting State, a political 4015 subdivision or a local authority thereof under a public welfare scheme of the 4016 social security system of that Contracting State shall be taxable only in that 4017 Contracting State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 162 of 814
    • 4018 3. However, such pensions and other similar remuneration may also be taxed in 4019 the other Contracting State if the payment is made by a resident of that other 4020 Contracting State or a permanent establishment situated therein. 4021 ARTICLE 19 4022 Government Service 4023 1. a) Remuneration, other than a pension, paid by the Government of a 4024 Contracting State, a political subdivision or a local authority thereof to an 4025 individual in respect of services rendered to the Government of that Contracting 4026 State, a political subdivision or a local authority thereof, shall be taxable only in 4027 that Contracting State. 4028 b) However, such remuneration shall be taxable only in the other Contracting 4029 State if the services are rendered in that other Contracting State and the 4030 individual is a resident of that other Contracting State who: 4031 (i) is a nationa1 of that other Contracting State; or 4032 (ii) did not become a resident of that other Contracting State solely for the 4033 purpose of rendering the services. 4034 2. (a) Any pension paid by, or out of funds to which contributions are made by, 4035 the Government of a Contracting State, a political subdivision or a local authority 4036 thereof to an individua1 in respect of services rendered to the Government of that 4037 Contracting State, a political subdivision or a local authority thereof shall be 4038 taxable only in that Contracting State. 4039 b) However, such pension shall be taxable only in the other Contracting State if 4040 the individua1 is a resident of, and a national of, that other Contracting State. 4041 3. The provisions of Articles 15, 16, 17 and 18 sha1l apply to remuneration and 4042 pensions in respect of services rendered in connection with a business carried onEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 163 of 814
    • 4043 by the Government of a Contracting State, a political subdivision or a local 4044 authority thereof. 4045 ARTICLE 20 4046 Teachers and Researchers 4047 An individua1 who is, or was immediately before visiting a Contracting State, a 4048 resident of the other Contracting State and who, at the invitation of the first- 4049 mentioned Contracting State or of a university, college, school, museum or other 4050 cultural institution in that first-mentioned Contracting State or under an official 4051 program of cultural exchange, is present in that Contracting State for a period 4052 not exceeding two years solely for the purpose of teaching, giving lectures or 4053 carrying out research at such institution shall be exempt from tax in that 4054 Contracting State on his remuneration for such activity, provided he is subject to 4055 tax thereon in the other Contracting State. 4056 ARTICLE 21 4057 Students and Trainees 4058 1. Payments which a student or business apprentice who is or was immediately 4059 before visiting a Contracting State a resident of the other Contracting State and 4060 who is present in the first-mentioned Contracting State solely for the purpose of 4061 his education or training receives for the purpose of his maintenance, education 4062 or training shall not be taxed in that Contracting State, provided that such 4063 payments arise from sources outside that Contracting State. 4064 2. In respect of grants, scholarships and remuneration from employment not 4065 covered by paragraph 1, a student or business apprentice described in paragraph 4066 1 shall, in addition, be entitled during such education or training to the same 4067 exemptions, relief or reductions in respect to taxes available to residents of the 4068 Contracting State which he is visiting. 4069 ARTICLE 22Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 164 of 814
    • 4070 Other income 4071 Items of income of a resident of a Contracting State, arising in the other 4072 Contracting State and not dealt with in the foregoing Articles of this Agreement, 4073 may be taxed in that other Contracting State. 4074 ARTICLE 23 4075 Methods for the Elimination of Double Taxation 4076 l. In Brazil, double taxation shall be eliminated as follows: 4077 Where a resident of Brazil derives income from China, the amount 4078 of tax on that income payable in China in accordance with the 4079 provisions of this Agreement, shall be credited against the Brazilian 4080 tax imposed on that resident. The amount of credit, however, shall 4081 not exceed the amount of the Brazilian tax on that income computed 4082 in accordance with the taxation laws and regulations of Brazil. 4083 2. In China, double taxation shall be eliminated as follows: 4084 a) where a resident of China derives income from Brazil, the amount 4085 of tax on that income payable in Brazil in accordance with the 4086 provisions of this Agreement, shall be credited against the Chinese 4087 tax imposed on that resident. The amount of credit, however, sha1l 4088 not exceed the amount of the Chinese tax on that income computed 4089 in accordance with the taxation laws and regulations of China. 4090 b) in addition to the provisions of subparagraph a), where the 4091 income derived from Brazil is a dividend paid by a company which 4092 is a resident of Brazil to a company which is a resident of China and 4093 which owns not less than 10 per cent of the shares of the company 4094 paying the dividend, the credit shall take into account the tax paid in 4095 Brazil by the company paying the dividend in respect of its income.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 165 of 814
    • 4096 ARTICLE 24 4097 Non-Discrimination 4098 1. Nationals of a Contracting State shall not be subjected in the other Contracting 4099 State to any taxation or any requirement connected therewith, which is other or 4100 more burdensome than the taxation and connected requirements to which 4101 nationals of that other Contracting State in the same circumstances are or may be 4102 subjected. 4103 2. The taxation on a permanent establishment which an enterprise of a 4104 Contracting State has in the other Contracting State shall not be less favorably 4105 levied in that other Contracting State than the taxation levied on enterprises of 4106 that other Contracting State carrying on the same activities. The provisions of this 4107 paragraph shall not be construed as obliging a Contracting State to grant to 4108 residents of the other Contracting State any personal allowances, relief and 4109 reductions for taxation purposes on account of civil status or family 4110 responsibilities which it grants to its own residents. 4111 3. Except where the provisions of Article 9, paragraph 7 of Article 11, or 4112 paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid 4113 by an enterprise of a Contracting State to a resident of the other Contracting State 4114 shall, for the purpose of determining the taxable profits of such enterprise, be 4115 deductible under the same conditions as if they had been paid to a resident of the 4116 first-mentioned State. 4117 4. Enterprises of a Contracting State, the capital of which s wholly or partly 4118 owned or controlled, directly or indirectly, by one or more residents of the other 4119 Contracting State, shall not be subjected in the first-mentioned State to any 4120 taxation or any requirement connected therewith which is other or more 4121 burdensome than the taxation and connected requirements to which other 4122 similar enterprises of the first-mentioned State are or may be subjected. 4123 5. In this Article, the term "taxation" means taxes to which this Agreement applies.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 166 of 814
    • 4124 ARTICLE 25 4125 Mutual Agreement Procedure 4126 1. Where a resident considers that the actions of one or both of the Contracting 4127 States result or will result for him in taxation not in accordance with the 4128 provisions of this Agreement, he may, irrespective of the remedies provided by the 4129 domestic law of those States, present his case to the competent authority of the 4130 Contracting State of which he is a resident. The case must be presented within 3 4131 years from the first notification of the action resulting in taxation not in 4132 accordance with the provisions of the Agreement. 4133 2. The competent authority shall endeavour, if the objection appears to it to be 4134 justified and if it is not itself able to arrive at a satisfactory solution, to resolve the 4135 case by mutual agreement with the competent authority of the other Contracting 4136 State, with a view to the avoidance of taxation which is not in accordance with 4137 the provisions of the Agreement. 4138 3. The competent authorities of the Contracting States shall endeavour to resolve 4139 by mutual agreement any difficulties or doubts arising as to the interpretation or 4140 application of the Agreement. They may also consult together for the elimination 4141 of double taxation in cases not provided for in this Agreement. 4142 4. The competent authorities of the Contracting States may communicate with 4143 each other directly for the purpose of reaching an agreement in the sense of 4144 paragraphs 2 and 3. 4145 ARTICLE 26 4146 Exchange of Information 4147 l. The competent authorities of the Contracting States shall exchange such 4148 information as is necessary for carrying out the provisions of this Agreement or of 4149 the domestic laws of the Contracting States concerning taxes covered by the 4150 Agreement, insofar as the taxation thereunder is not contrary to this Agreement,Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 167 of 814
    • 4151 in particular for the prevention of evasion of such taxes. The exchange of 4152 information is not restricted by Article 1. Any information received by a 4153 Contracting State shall be treated as secret and shall be disclosed only to persons 4154 or authorities (including courts and administrative bodies) involved in the 4155 assessment or collection of, the enforcement or prosecution in respect of, or the 4156 determination of appeals in relation to, the taxes covered by the Agreement. Such 4157 persons or authorities shall use the information only for such purposes. They may 4158 disclose the information in public court proceedings or in judicial decisions. 4159 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 4160 a Contracting State the obligation: 4161 (a) to carry out administrative measures at variance with the laws and the 4162 administrative practice of that or of the other Contracting State; 4163 (b) to supply information which is not obtainable under the laws or in the normal 4164 course of the administration of that or of the other Contracting State; 4165 (c) to supply information which would disclose any trade, business, industrial, 4166 commercial or professional secret or trade process, or information, the disclosure 4167 of which would be contrary to public policy (ordre public). 4168 ARTICLE 27 4169 Diplomatic Agents and Consular Officers 4170 Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or 4171 consular officers under the general rules of international law or under the 4172 provisions of special agreements. 4173 ARTICLE 28 4174 Entry into forceEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 168 of 814
    • 4175 1. Each Contracting State shall notify the other, through diplomatic channels, of 4176 the fulfillment of all internal legal procedures necessary for the entry into force of 4177 this Agreement. This Agreement shall enter into force on the thirtieth day after 4178 the date of the second notification. 4179 2. This Agreement shall take effect as follows: 4180 a) in respect of taxes withheld at source to payments received on or after the first 4181 day of January of the calendar year immediately following that in which the 4182 Agreement enters into force ; 4183 b) in respect of other taxes covered by the Agreement for taxable years beginning 4184 on or after the first day of January of the calendar year immediately following 4185 that in which the Agreement enters into force. 4186 ARTICLE 29 4187 Termination 4188 This Agreement shall continue in effect indefinitely but either of the Contracting 4189 States may, on or before the thirtieth day of June in any calendar year beginning 4190 after the expiration of a period of five years from the date of its entry into force, 4191 give written notice of termination to the other Contracting State through the 4192 diplomatic channels. In such event this Agreement shall cease to have effect: 4193 (a) in respect of taxes withheld at source to payments received on or after the first 4194 day of January of the calendar year immediately following that in which the 4195 notice of termination is given; 4196 (b) in respect of other taxes covered by the Agreement, for taxable years 4197 beginning on or after the first day of January of the calendar year immediately 4198 following that in which the notice of termination is given.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 169 of 814
    • 4199 Done at Beijing this 5th day of August 1991, in duplicate, in the Portuguese, 4200 Chinese and English languages, all three texts being equally authentic. In case of 4201 any divergence of interpretation, the English text shall prevail. 4202 PROTOCOL 4203 At the moment of the signature of the Agreement between the Government of the 4204 Federative Republic of Brazil and le Government of the People’s Republic of China 4205 for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With 4206 Respect to Taxes on Income (hereinafter referred to as the "Agreement") the 4207 undersigned have agreed upon the following provisions which constitute an 4208 integral part of the Agreement. 4209 1. With reference to Article 8 4210 Nothing in the Agreement shall affect the application of article 11 of the 4211 Agreement on Maritime Transport signed between the Government of the 4212 Federative Republic of Brazil and the Government of the Peoples Republic of 4213 China on May 23, 1979. 4214 2. With reference to Article 10, paragraphs 2 and 5 4215 It is understood that dividends mentioned in paragraphs 2 and 5 of Article 10, as 4216 drafted in this Agreement, in accordance with Brazilian domestic law, fully cover 4217 any business profits as well as business profits made by a permanent 4218 establishment. 4219 3. With reference to Article 12, paragraph 3 4220 It is understood that the provisions of paragraph 3 of Article 2 shall apply to 4221 payments of any kind received as a consideration for the rendering of technical 4222 assistance and technical services. 4223 4. With reference to Article 24, paragraph 2Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 170 of 814
    • 4224 It is understood that the provisions of paragraph 5 of Article 10 are not in 4225 conflict with the provisions of paragraph 2 of Article 24. 4226 Done at Beijing this 5th day of August 1991, in duplicate, in the Portuguese, 4227 Chinese and English languages, all three texts being equally authentic. In case of 4228 any divergence of interpretation, the English text shall prevail. 4229Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 171 of 814
    • 4230 4231 4232 Czech Republic and Slovakia 4233Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 172 of 814
    • 4234 Date of Conclusion: 26 August 1986 4235 Effective Date: 1 January 1991 4236 4237 CONVENTION BETWEEN 4238 THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL AND 4239 THE GOVERNEMENT OF THE CZECHOSLOVAK SOCIALIST REPUBLIC 4240 FOR THE AVOIDANCE OF DOUBLE TAXATION AND 4241 THE PREVENTION OF FISCAL EVASION 4242 WITH RESPECT TO TAXES ON INCOME 4243 The Government of the Federative Republic of Brazil 4244 and 4245 The Government of the Czechoslovak Socialist Republic, 4246 Desiring to conclude a Convention for the avoidance of double taxation and the 4247 prevention of fiscal evasion with respect to taxes on income, 4248 Have agreed as follows: 4249 ARTICLE 1 4250 Personal scope 4251 This Convention shall apply to persons who are residents of one or both the 4252 Contracting States. 4253 ARTICLE 2 4254 Taxes covered 4255 1. This Convention shall apply to taxes on income imposed on behalf of each 4256 Contracting State, irrespective of the manner in which they are levied.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 173 of 814
    • 4257 2. The existing taxes to which the Convention shall apply are: 4258 a) in the case of Brazil: 4259 - the federal income tax, excluding the supplementary income tax and the tax on 4260 activities of minor importance; 4261 (hereinafter referred to as "Brazilian tax"); 4262 b) in the case of Czechoslovakia: 4263 - the taxes on profits; 4264 - the wages tax; . 4265 - the tax on income from literary and artistic activities; 4266 - the agricultural tax; 4267 - the tax on population income; and 4268 - the house tax 4269 (hereinafter referred to as "Czechoslovak tax"). 4270 3. This Convention shall also apply to any identical or substantially similar taxes 4271 which are subsequently imposed in addition to, or in place of, the above- 4272 mentioned taxes. The competent authorities of the Contracting States shall notify 4273 to each other any substantial changes which have been made in their respective 4274 taxation laws. 4275 ARTICLE 3 4276 General definitions 4277 1. In this Convention, unless the context otherwise requires:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 174 of 814
    • 4278 a) the term "Brazil" means the territory of the Federative Republic of Brazil, that is, 4279 the continental and insular earth and its corresponding air space, as well as the 4280 territorial sea and its corresponding sea-bed and sub-soil, including the air space 4281 above the territorial sea, within which, in accordance with international law and 4282 the Brazilian laws, the rights of Brazil may be exercised; 4283 b) the term "Czechoslovakia" means the Czechoslovak Socialist Republic; 4284 c) the term "nationals" means: 4285 I - all individuals possessing the nationality of a Contracting State; 4286 II - all legal persons, partnerships and associations deriving their status as such 4287 from the law in force in a Contracting State; 4288 d) the terms "a Contracting State" and "the other Contracting State" mean Brazil or 4289 Czechoslovakia as the context requires; 4290 e) the term "person" comprises an individual, a company and any other body of 4291 persons; 4292 f) the term "company" means any body corporate or any entity which is treated as 4293 a body corporate for tax purposes; 4294 g) the terms "enterprise of a Contracting State" and "enterprise of the other 4295 Contracting State" mean respectively an enterprise carried on by a resident of a 4296 Contracting State and an enterprise carried on by a resident or the other 4297 Contracting State; 4298 h) the term "international traffic" means any transport by a ship or aircraft 4299 operated by an enterprise which has its place of effective management in a 4300 Contracting State, except when the ship or aircraft is operated solely between 4301 places in the other Contracting State; 4302 i) the term "tax" means Brazilian tax or Czechoslovak tax, as the context requires;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 175 of 814
    • 4303 j) the term "competent authority" means: 4304 I - in Brazil: the Minister of Finance, the Secretary of Federal Revenue or 4305 their authorized representatives; 4306 II - in Czechoslovakia: the Minister of Finance of the Czechoslovak Socialist 4307 Republic or his authorized representative. 4308 2. As regards the application of this Convention by a Contracting State any term 4309 not otherwise defined shall, unless the context otherwise requires, have the 4310 meaning which it has under the laws of that Contracting State relating to the 4311 taxes which are the subject of this Convention. 4312 ARTICLE 4 4313 Fiscal domicile 4314 1. For the purposes of this Convention, the term "resident of a Contracting State" 4315 means any person who, under the law of that State, is liable to taxation therein by 4316 reason of his domicile, residence, place of management or any other criterion of a 4317 similar nature. 4318 1. Where by reason of the provisions of paragraph 1 an individual is a 4319 resident of both Contracting States then this case shall be determined in 4320 accordance with the following rules: 4321 a) he shall be deemed to be a resident of the Contracting State in which he 4322 has a permanent home available to him; if he has a permanent home in 4323 both Contracting States, he shall be deemed to be a resident of the 4324 Contracting State with his personal and economic relations are closer 4325 (centre of vital interests); 4326 b) if the Contracting State in which he has his centre or vital interests 4327 cannot be determined, or if he has not a permanent home available to him 4328 in either Contracting State, he shall be deemed to be a resident of the 4329 Contracting State in which he has an habitual abode;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 176 of 814
    • 4330 c) if he has an habitual abode in both Contracting States or in neither of 4331 them, he shall be deemed to be a resident of the Contracting State of which 4332 he is a national; 4333 d) if he is a national of both Contracting States or of neither of them, the 4334 competent authorities of the Contracting States shall settle the question by 4335 mutual agreement. 4336 2. Where by reason of the provisions of paragraph 1 a person other than an 4337 individual is a resident of both Contracting States, then it shall be deemed 4338 to be a resident of the Contracting State in which its place of effective 4339 management is situated. 4340 ARTICLE 5 4341 Permanent establishment 4342 1. For the purpose of this Convention, the term "permanent establishment" means 4343 a fixed place of business in which the business of the enterprise is wholly or 4344 partly carried on. 4345 2. The term "permanent establishment" shall include especially: 4346 a) a place of management; 4347 b) a branch; 4348 c) an office; 4349 d) a factory; 4350 e) a workshop; 4351 f) a mine, quarry or other place of extraction of natural resources; 4352 g) a building site or construction or assembly project, which exists for more than 4353 six months.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 177 of 814
    • 4354 3. The term "permanent establishment" shall not be deemed to include: 4355 a) the use of facilities solely for the purpose of storage, display or delivery of 4356 goods or merchandise belonging to the enterprise; 4357 b) the maintenance of a stock of goods or merchandise belonging to the 4358 enterprise solely for the purpose of storage, display or delivery; 4359 c) the maintenance of a stock of goods or merchandise belonging to the 4360 enterprise solely for the purpose of processing by another enterprise; 4361 d) the maintenance of a fixed place of business solely for the purpose of 4362 purchasing goods or merchandise, or for collecting information, for the 4363 enterprise; 4364 e) the maintenance of a fixed place of business solely for the purpose of 4365 advertising, for the supply of information, for scientific research or for similar 4366 activities which have a preparatory or auxiliary character, for the enterprise. 4367 4. A person acting in a Contracting State on behalf of an enterprise of the other 4368 Contracting State - other than an agent of independent status to whom 4369 paragraph 5 applies - shall be deemed to be a permanent establishment in the 4370 first-mentioned State if he has, and habitually exercises in that State, an authority 4371 to conclude contracts in the name of the enterprise, unless his activities are 4372 limited to the purchase of goods or merchandise for the enterprise. 4373 5. An enterprise of a Contracting State shall not be deemed to have a permanent 4374 establishment in the other Contracting State merely because it carries on business 4375 in that other State through a broker, general commission agent or any other agent 4376 of independent status, where such persons are acting in the ordinary course of 4377 their business. 4378 6. The fact that a company which is a resident of a Contracting State controls or is 4379 controlled by a company which is a resident of the other Contracting State, or 4380 which carries on business in that other State (whether through a permanentEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 178 of 814
    • 4381 establishment or otherwise), shall not of itself constitute either company a 4382 permanent establishment of the other. 4383 ARTICLE 6 4384 Income from immovable property 4385 1. Income from immovable property including income from agriculture or 4386 forestry may be taxed in the Contracting State in which such property is situated. 4387 2. a) Subject to the provisions of sub-paragraphs b) and c) the term "immovable 4388 property" shall be defined in accordance with the law of the Contracting State in 4389 which the property in question is situated; 4390 b) the term shall in any case include property accessory to immovable property, 4391 livestock and equipment used in agriculture and forestry, rights to which the 4392 provisions of general law respecting landed property apply, usufruct of 4393 immovable property and rights to variable or fixed payments as consideration for 4394 the working of, or the right to work, mineral deposits, sources and other natural 4395 resources; 4396 c) ships, boats and aircraft shall not be regarded as immovable property. 4397 3. The provisions of paragraph 1 shall apply to income derived from the direct 4398 use, letting, or use in any other form of immovable property. 4399 4. The provisions of paragraphs 1 and 3 shall also apply to the income from 4400 immovable property of an enterprise and to income from immovable property 4401 used for the performance of professional services. 4402 ARTICLE 7 4403 Business profits 4404 1. The profits of an enterprise of a Contracting State shall be taxable only in that 4405 State unless the enterprise carries on business in the other Contracting State 4406 through a permanent establishment situated therein. If the enterprise carries onEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 179 of 814
    • 4407 business as aforesaid, the profits of the enterprise may be taxed in the other State 4408 but only so much of them as is attributable to that permanent establishment. 4409 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting 4410 State carries on business in the other Contracting State through a permanent 4411 establishment situated therein, there shall in each Contracting State be attributed 4412 to that permanent establishment the profits which it might be expected to make if 4413 it were a distinct and separate enterprise engaged in the same or similar activities 4414 under the same or similar conditions and dealing wholly independently with the 4415 enterprise of which it is a permanent establishment. 4416 3. In the determination of the profits of a permanent establishment, there shall be 4417 allowed as deductions expenses which are incurred for the purposes of the 4418 permanent establishment, including executive and general administrative 4419 expenses so incurred. 4420 4. No profits shall be attributed to a permanent establishment by reason of the 4421 mere purchase by that permanent establishment of goods or merchandise for the 4422 enterprise. 4423 5. Where profits include items of income which are dealt with separately in other 4424 Articles of this Convention, then the provisions of those Articles shall not be 4425 affected by the provisions of this Article. 4426 ARTICLE 8 4427 Shipping and air transport 4428 1. Profits from the operation of ships or aircraft in international traffic shall be 4429 taxable only in the Contracting State in which the place of effective management 4430 of the enterprise is situated. 4431 2. If the place of effective management of a shipping enterprise is aboard a ship, 4432 then it shall be deemed to be situated in the Contracting State in which the homeEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 180 of 814
    • 4433 harbour of the ship is situated, or, if there is no such home harbour, in the 4434 Contracting State of which the operator of the ship is a resident. 4435 3. The provisions of paragraph 1 shall also apply to profits derived from the 4436 participation in a pool, a joint business or an international operating agency. 4437 ARTICLE 9 4438 Associated enterprises 4439 Where 4440 a) an enterprise of a Contracting State participates directly or indirectly in the 4441 management, control or capital of an enterprise of the other Contracting State, or 4442 b) the same persons participate directly or indirectly in the management, control 4443 or capital of an enterprise of a Contracting State and an enterprise of the other 4444 Contracting State, and in either case conditions are made or imposed between the 4445 two enterprises in their commercial or financial relations which differ from those 4446 which would be made between independent enterprises, then any profits which 4447 would, but for those conditions, have accrued to one of the enterprises, but, by 4448 reason of those conditions, have not so accrued, may be included in the profits of 4449 that enterprise and taxed accordingly. 4450 ARTICLE 10 4451 Dividends 4452 1. Dividends paid by a company which is a resident of a Contrasting State to a 4453 resident of the other Contracting State may be taxed in that other State. 4454 2. However, such dividends may be taxed in the Contracting State of which the 4455 company paying the dividends is a resident, and according to the law of that 4456 State, but if the recipient is the beneficial owner of the dividends the tax so 4457 charged shall not exceed 15 per cent of the gross amount of the dividends.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 181 of 814
    • 4458 This paragraph shall not affect the taxation of the company in respect of the 4459 profits out of which the dividends are paid. 4460 3. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 4461 the dividends, being a resident of a Contracting State, carries on business in the 4462 other Contracting State of which the company paying the dividends is a resident, 4463 through a permanent establishment situated therein, or performs in that other 4464 State, independent personal services from a fixed base situated therein, and the 4465 holding in respect of which the dividends are paid is effectively connected with 4466 such permanent establishment or fixed base. In such a case the provisions of 4467 Article 7 or Article 14, as the case may be, shall apply. 4468 4. The term "dividends" as used in this Article means income from shares, 4469 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 4470 rights not being debt-claims, participating in profits, as well as income from 4471 other corporate rights assimilated to income from shares by the taxation law of 4472 the State of which the company making the distribution is a resident. 4473 5. Where a resident of Czechoslovakia has a permanent establishment in Brazil, 4474 this permanent establishment may be subject to a tax withheld at source in 4475 accordance with Brazilian law. However, such a tax cannot exceed 15 per cent of 4476 the gross amount of the profits of that permanent establishment determined after 4477 the payment of the corporate tax related to such profits. 4478 6. Where a company which is a resident of a Contracting State derives profits or 4479 income from the other Contracting State, that other Contracting State may not 4480 impose any tax on the dividends paid by the company, except insofar as such 4481 dividends are paid to a resident of that other State or insofar as the holding in 4482 respect of which the dividends are paid is effectively connected with a permanent 4483 establishment or a fixed base situated in that other State, nor subject the 4484 companys undistributed profits to any tax on undistributed profits, even if the 4485 dividends paid or the undistributed profits consist wholly or partly of profits or 4486 income arising in such other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 182 of 814
    • 4487 7. The tax rate limitations provided for in paragraphs 2 and 5 shall not apply to 4488 dividends or profits paid or remitted before the expiration of the third calendar 4489 year following the year in which the Convention enters into force. 4490 ARTICLE 11 4491 Interest 4492 1. Interest arising in a Contracting State and paid to a resident of the other 4493 Contracting State may be taxed in that other State. 4494 2. However, such interest may also be taxed in the Contracting State in which it 4495 arises, and according to the laws of that State, but if the recipient is the beneficial 4496 owner of the interest the tax so charged shall not exceed: 4497 a) 10 per cent in respect of interest from loans and credits granted by a bank for 4498 a period of at least 10 years in connection with the selling of industrial 4499 equipment or with the study, the installation or the furnishing of industrial or 4500 scientific units, as well as with public works; 4501 b) 15 per cent of the gross amount of interest in all other cases. 4502 3. Notwithstanding the provisions of paragraphs 1 and 2: 4503 a) interest arising in a Contracting State and paid to the Government of the other 4504 Contracting State, a political subdivision thereof or any agency (including a 4505 financial institution) owned by that Government or political subdivision shall be 4506 exempt from tax in the first-mentioned State, unless subparagraph "b" applies; 4507 b) interest arising from securities, bonds or debentures issued by the Government 4508 of a Contracting State, a political subdivision thereof or by any agency (including 4509 a financial institution) owned by that Government or political subdivision shall 4510 be taxable only in that State. 4511 4. The term "interest" as used in this Article means income from Government 4512 securities, bonds or debentures, whether or not secured by mortgage and whetherEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 183 of 814
    • 4513 or not carrying a right to participate in profits, and debt-claims of every kind as 4514 well as all other income assimilated to income from money lent by the taxation 4515 law of the Contracting State in which the income arises. 4516 5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner 4517 of the interest, being a resident of a Contracting State, carries on business in the 4518 other Contracting State in which the interest arises, through a permanent 4519 establishment situated therein, or performs in that other State independent 4520 personal services from a fixed base situated therein, and the debt-claim in respect 4521 of which the interest is paid is effectively connected with such permanent 4522 establishment or fixed base. In such a case the provisions of Article 7 or Article 4523 14, as the case may be, shall apply. 4524 6. The limitation established in paragraph 2 shall not apply to interest arising in a 4525 Contracting State and paid to a permanent establishment of an enterprise of the 4526 other Contracting State which is situated in a third State. 4527 7. Interest shall be deemed to arise in a Contracting State when the payer is that 4528 Contracting State itself, a political subdivision or a resident of that State. Where, 4529 however, the person paying the interest, whether he is a resident of a Contracting 4530 State or not, has in a Contracting State a permanent establishment in connection 4531 with which the indebtedness on which the interest is paid was incurred and such 4532 interest is borne by such permanent establishment, then such interest shall be 4533 deemed to arise in the Contracting State in which the permanent establishment is 4534 situated. 4535 8. Where, owing to a special relationship between the payer and the recipient or 4536 between both of them and some other person, the amount of the interest paid, 4537 having regard to the debt-claim for which it is paid, exceeds the amount which 4538 would have been agreed upon by the payer and the recipient in the absence of 4539 such relationship, the provisions of this Article shall apply only to the last- 4540 mentioned amount. In that case, the excess part of the payments shall remainEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 184 of 814
    • 4541 taxable according to the law of each Contracting State, due regard being had to 4542 the other provisions of this Convention. 4543 ARTICLE 12 4544 Royalties 4545 1. Royalties arising in a Contracting State and paid to a resident of the other 4546 Contracting State may be taxed in that other State. 4547 2. However, such royalties may be taxed in the Contracting State in which they 4548 arise, and according to the law of that State, but if the recipient is the beneficial 4549 owner of the royalties, the tax so charged shall not exceed: 4550 (a) 25 per cent of the gross amount of royalties arising from the use of, or the 4551 right to use, trade marks; 4552 (b) 15 per cent of the gross amount of royalties in all other cases. 4553 3. The term "royalties" as used in this Article means payments of any kind 4554 received as a consideration for the use of, or the right to use, any copyright of 4555 literary , artistic or scientific work (including cinematograph films, films or tapes 4556 for television or radio broadcasting), any patent, trade mark, design or model, 4557 plan, secret formula or process for the use of, or the right to use, industrial, 4558 commercial or scientific equipment, or for information concerning industrial, 4559 commercial or scientific experience. 4560 4. Royalties shall be deemed to arise in a Contracting State when the payer is that 4561 State itself, a political subdivision, a local authority or a resident of that State. 4562 Where, however, the person paying the royalties, whether he is a resident of a 4563 Contracting State or not, has in a Contracting State a permanent establishment in 4564 connection with which the obligation to pay the royalties was incurred, and such 4565 royalties are borne by the permanent establishment, then such royalties shall be 4566 deemed to arise in the Contracting State in which the permanent establishment is 4567 situated.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 185 of 814
    • 4568 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of 4569 the royalties, being a resident of a Contracting State, carries on business in the 4570 other Contracting State in which the royalties arise, through a permanent 4571 establishment situated therein, or performs in that other State independent 4572 personal services from a fixed base situated therein, and the right or property in 4573 respect of which the royalties are paid is effectively connected with such 4574 permanent establishment or fixed base. In such a case the provisions of Article 7 4575 or Article 14, as the case may be, shall apply. 4576 6. Where, owing to a special relationship between the payer and the recipient or 4577 between both of them and some other person, the amount of the royalties paid, 4578 having regard to the use, the right or information for which they are paid, 4579 exceeds the amount which would have been agreed upon by the payer and the 4580 recipient in the absence of such relationship, the provisions of this Article shall 4581 apply only to the last-mentioned amount. In that case, the excess part of the 4582 payments shall remain taxable according to the law of each Contracting State, 4583 due regard being had to the other provisions of this Convention. 4584 7. The tax rate limitation referred to in paragraph 2 "b" of this Article shall not 4585 apply to royalties paid before the end of the fifth calendar year following the 4586 calendar year in which this Convention enters into force where such royalties are 4587 paid to a resident of a Contracting State which holds, directly or indirectly, at 4588 least 50 per cent of the voting capital of the company paying the royalties. 4589 ARTICLE 13 4590 Capital gains 4591 1. Gains from the alienation of immovable property, as defined in paragraph 2 of 4592 Article 6, may be taxed in the Contracting State in which the immovable property 4593 is situated. 4594 2. Gains from the alienation of movable property forming part of the business 4595 property of a permanent establishment which an enterprise of a Contracting State 4596 has in the other Contracting State or of movable property pertaining to a fixedEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 186 of 814
    • 4597 base available to a resident of a Contracting State in the other Contracting State 4598 for the purpose of performing professional services, including such gains from 4599 the alienation of such a permanent establishment (alone or together with the 4600 whole enterprise) or of such a fixed ease, may be taxed in the other State. 4601 However, gains from the alienation of ships and aircraft operated in international 4602 traffic and movable property pertaining to the operation of such ships and 4603 aircraft shall be taxable only in the Contracting State in which the place of 4604 effective management of the enterprise is situated. 4605 3. Gains from the alienation of any property or right other than those mentioned 4606 in paragraphs 1 and 2 may be taxed in both Contracting States. 4607 ARTICLE 14 4608 Independent personal service 4609 1. Income derived by a resident of a Contracting State in respect of professional 4610 services or other independent activities of a similar nature shall be taxable only in 4611 that State, unless the payment of such activities and services is borne by a 4612 permanent establishment situated in the other Contracting State or a company 4613 resident therein. In such a case, the income may be taxed in that other State. 4614 2. The term "professional services" includes, especially, independent scientific, 4615 technical, literary, artistic, educational or teaching activities as well as the 4616 independent activities of physicians, lawyers, engineers, architects, dentists and 4617 accountants. 4618 ARTICLE 15 4619 Dependent personal services 4620 1. Subject to the provisions of Articles 16, 18, 19 salaries, wages and other similar 4621 remuneration derived by a resident of a Contracting State in respect of an 4622 employment shall be taxable only in that State unless the employment is exercised 4623 in the other Contracting State. If the employment is so exercised, such 4624 remuneration as is derived therefrom may be taxed in that other State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 187 of 814
    • 4625 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a 4626 resident of a Contracting State in respect of an employment exercised in the other 4627 Contracting State shall be taxable only in the first-mentioned State if: 4628 a) the recipient is present in the other State for a period or periods not exceeding 4629 in the aggregate 183 days in the fiscal year concerned, and 4630 b) the remuneration is paid by, or on behalf of , an employer who is not a resident 4631 of the other Sate, and 4632 c) the remuneration is not borne by a permanent establishment or a fixed base 4633 which the employer has in the other State. 4634 3. Notwithstanding the preceding provisions of this Article, remuneration in 4635 respect of an employment exercised aboard a ship or aircraft in international 4636 traffic may be taxed in the Contracting State in which the place of effective 4637 management of the enterprise is situated. 4638 ARTICLE 16 4639 Directors fees 4640 Directors fees and similar payments derived by a resident of a Contracting State 4641 in his capacity as a member of the board of directors or of any council of a 4642 company which is a resident of the other Contracting State may be taxed in that 4643 other State. 4644 ARTICLE 17 4645 Artistes and athletes 4646 1. Notwithstanding the provisions of Articles 14 and 15, income derived by 4647 entertainers, such as theatre, motion picture, radio or television artistes, and 4648 musicians, and by athletes, from their personal activities as such may be taxed in 4649 the Contracting State in which those activities are exercised.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 188 of 814
    • 4650 2. Where the services mentioned in paragraph 1 of this Article are provided in a 4651 Contracting State by an enterprise of the other Contracting State, then the income 4652 derived from providing those services by such an enterprise may, 4653 notwithstanding any other provision of this Convention, be taxed in the first- 4654 mentioned Contracting State. 4655 The income derived from providing those services by such enterprise shall be 4656 exempt from tax in the first-mentioned Contracting State, if the enterprise is 4657 directly or indirectly supported, wholly or substantially, from public funds of the 4658 Government of that other Contracting State. 4659 3. Notwithstanding the provisions of paragraphs 1 and 2, the income derived 4660 from such activities, as defined in paragraph 1, performed within the framework 4661 of cultural exchange between the Contracting States, shall be exempt from tax in 4662 the Contracting State in which those activities are exercised. 4663 ARTICLE 18 4664 Pensions and annuities 4665 1. Subject to the provisions of Article 19, pensions and other similar 4666 remuneration not exceeding an amount equivalent to US$ 3,000 in a calendar 4667 year, alimony not exceeding US$ 3,000 in a calendar year, and annuities not 4668 exceeding US$ 3,000 in a calendar year paid to a resident of a Contracting State 4669 shall be taxable only in that State 4670 The amount which exceeds the above-mentioned limits may be taxed in both 4671 Contracting States. 4672 2. As used in this Article: 4673 a) the term "pensions and other similar remuneration" means periodic payments 4674 made after retirement in consideration of past employment or by way of 4675 compensation for injuries received, in connection with past employment;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 189 of 814
    • 4676 b) the term "annuities" means stated sums payable periodically at stated times 4677 during life, or during a specified or ascertainable period of time, under an 4678 obligation to make the payments in return for adequate and full consideration in 4679 money or moneys worth (other than services rendered). 4680 ARTICLE 19 4681 Government service 4682 1. Remuneration, other than a pension, paid by a Contracting State or a political 4683 subdivision or a local authority thereof to an individual in respect of services 4684 rendered to that State or subdivision or authority shall be taxable only in that 4685 State. 4686 However, such remuneration shall be taxable only in the other Contracting State 4687 if the services are rendered in that State and the individual is a resident of that 4688 State who: 4689 a) is a national of that State; or 4690 b) did not become a resident of that State solely for the purpose of rendering the 4691 services. 4692 2. Any pension paid by, or out of funds created by, a Contracting State or a 4693 political subdivision or a local authority thereof to an individual in respect of 4694 services rendered to that State or subdivision or authority shall be taxable only in 4695 that State. 4696 However, such pension shall be taxable only in the other Contracting State if the 4697 individual is a resident of, and a national of, that State. 4698 3. Any pension paid out under the Social Security Scheme of a Contracting State 4699 to a resident of the other Contracting State shall be taxable only in the first- 4700 mentioned State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 190 of 814
    • 4701 4. The provisions of Articles 15, 16 and 18 shall apply to remuneration and 4702 pensions in respect of services rendered in connection with a business carried on 4703 by a Contracting State or a political subdivision or a local authority thereof. 4704 ARTICLE 20 4705 Teachers or researchers 4706 An individual who is, or was immediately before visiting a Contracting State, a 4707 resident of the other Contracting State and who, at the invitation of the first- 4708 mentioned Contracting State or of a university, college, school, museum or other 4709 cultural institution in that first-mentioned Contracting State or under an official 4710 program of cultural exchange, is present in that State for a period not exceeding 4711 two years solely for the purpose of teaching, giving lectures or carrying out 4712 research at such institution shall be exempt from tax in that State on his 4713 remuneration for such activity, provided that the payment of such remuneration 4714 is derived by him from outside that State. 4715 ARTICLE 21 4716 Students and business apprentices 4717 An individual who is, or was immediately before visiting a Contracting State, a 4718 resident of the other Contracting State and who is present in the first-mentioned 4719 State solely 4720 a) as a student at a university, college or school in that first-mentioned State; 4721 b) as the recipient of a grant, allowance or award for the primary purpose of 4722 study or research from a religious, charitable, scientific or educational 4723 organization; 4724 c) as a member of a technical cooperation program entered into by the 4725 Government of the other Contracting State, or;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 191 of 814
    • 4726 d) as a business apprentice, shall be exempt from tax in the first-mentioned State 4727 in respect of remittances from abroad for the purpose of his maintenance, 4728 education or training. 4729 ARTICLE 22 4730 Other income 4731 Items of income of a resident of a Contracting State, arising in the other 4732 Contracting State and not dealt with in the foregoing Articles of this Convention, 4733 may be taxed in that other State. 4734 ARTICLE 23 4735 Methods for the elimination of double taxation 4736 1. Where a resident of Brazil derives income which, in accordance with the 4737 provisions of this Convention, may be taxed in Czechoslovakia, Brazil shall allow 4738 as a deduction from the tax on the income of that resident, an amount equal to 4739 the income tax paid in Czechoslovakia. 4740 The deduction shall not, however, exceed that part of the income tax as computed 4741 before the deduction is given, which is appropriate to the income which may be 4742 taxed in Czechoslovakia. 4743 2. Where a resident of Czechoslovakia derives income not mentioned in 4744 paragraph 3 which, in accordance with the provisions of this Convention, may be 4745 taxed in Brazil, the first-mentioned State shall exempt such income from tax. 4746 3. Where a resident of Czechoslovakia derives income which, in accordance with 4747 the provisions of Articles 11, 12, 16 and 17 may be taxed in Brazil, 4748 Czechoslovakia shall allow as a deduction from the tax on the income of that 4749 person an amount equal to the tax paid in Brazil. 4750 Such deduction shall not, however, exceed that part of the income tax, as 4751 computed before the deduction is given, which is appropriate to the income 4752 derived from Brazil.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 192 of 814
    • 4753 4. For the deduction indicated in paragraph 3 made in connection with the 4754 taxation of interest and royalties, Brazilian tax shall always be considered as 4755 having been paid at a rate of 25 per cent. 4756 5. Non-distributed profits of a company of a Contracting State, the capital of 4757 which is wholly or partly owned or controlled, directly or indirectly, by one or 4758 more residents of the other Contracting State, shall not be taxable in the last- 4759 mentioned State. 4760 6. The value of the shares issued by a company of a Contracting State, the capital 4761 of which is wholly or partly owned or controlled, directly or indirectly, by one or 4762 more residents of the other Contracting State, shall not be subject to income tax in 4763 the last-mentioned State. 4764 ARTICLE 24 4765 Non-discrimination 4766 1. The nationals of a Contracting State shall not be subject in the other 4767 Contracting State to any taxation or any requirement connected therewith which 4768 is other or more burdensome than the taxation and connected requirements to 4769 which nationals of that other State in the same circumstances are or may be 4770 subjected. 4771 2. The taxation on a permanent establishment which an enterprise of a 4772 Contracting State has in the other Contracting State shall not be less favorably 4773 levied in that other State than the taxation levied on enterprises of that other State 4774 carrying on the same activities. 4775 This provision shall not be construed as obliging a Contracting State to grant to 4776 residents of the other Contracting State any personal allowances, relief and 4777 reductions for taxation purposes on account of civil status or family 4778 responsibilities which it grants to its own residents.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 193 of 814
    • 4779 3. Enterprises of a Contracting State, the capital of which is wholly or partly 4780 owned or controlled, directly or indirectly, by one or more residents of the other 4781 Contracting State, shall not be subjected in the first-mentioned State to any 4782 taxation or any requirement connected therewith which is other or more 4783 burdensome than the taxation and connected requirements to which other 4784 similar enterprises of the first-mentioned State are or may be subjected. 4785 4. In this Article, the term "taxation" means taxes which are the subject of this 4786 Convention. 4787 ARTICLE 25 4788 Mutual agreement procedure 4789 1. Where a resident of a Contracting State considers that the actions of one or 4790 both of the Contracting States result or will result for him in taxation not in 4791 accordance with this Convention, he may, notwithstanding the remedies provided 4792 by the national laws of those States, present his case to the competent authority of 4793 the Contracting State of which he is a resident. 4794 2. The competent authority shall endeavor, if the objection appears to it to be 4795 justified and if it is not itself able to arrive at an appropriate solution, to resolve 4796 the case by mutual agreement with the competent authority of the other 4797 Contracting State, with a view to the avoidance of taxation not in accordance 4798 with the Convention. 4799 3. The competent authorities of the Contracting States shall endeavor to resolve 4800 by mutual agreement any difficulties or doubts arising as to the interpretation or 4801 application of the Convention. 4802 4. The competent authorities of the Contracting States may communicate with 4803 each other directly for the purposes of reaching an agreement in the sense of the 4804 preceding paragraphs.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 194 of 814
    • 4805 ARTICLE 26 4806 Exchange of information 4807 1. The competent authorities of the Contracting States shall exchange such 4808 information as is necessary for the carrying out of this Convention. Any 4809 information so exchanged shall be treated as secret and shall not be disclosed to 4810 any persons, authorities or courts other than those concerned with the assessment 4811 or collection of the taxes which are the subject of this Convention or the 4812 determination of appeals or the prosecution of offences in relation thereto. 4813 2. In no case shall the provisions of paragraph 1 be construed so as to impose on 4814 one of the Contracting States the obligation: 4815 a) to carry out administrative measures at variance with the laws or the 4816 administrative practice of that or of the other Contracting State; 4817 b) to supply particulars which are not obtainable under the laws or in the normal 4818 course of the administration of that or of the other Contracting State; 4819 c) to supply information which would disclose any trade, business, industrial, 4820 commercial or professional secret or trade process, or information, the disclosure 4821 of which would be contrary to public policy. 4822 ARTICLE 27 4823 Diplomatic and consular officials 4824 Nothing in this Convention shall affect the fiscal privileges of diplomatic or 4825 consular officials under the general rules of international law or under the 4826 provisions of special agreements. 4827 ARTICLE 28 4828 Entry into force 4829 1. This Convention shall be ratified and the instruments of ratification shall be 4830 exchanged at Prague, as soon as possible.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 195 of 814
    • 4831 2. The Convection shall enter into force upon the exchange of instruments of 4832 ratification and its provisions shall have effect: 4833 a) as respects taxes withheld at source, to amounts paid or credited on or after 4834 January 1st of the calendar year immediately following that in which the 4835 Convention enters into force; 4836 b) as respects other taxes covered by this Convention, for any taxable year 4837 beginning on or after January 1st of the calendar year immediately following that 4838 in which the Convention enters into force. 4839 ARTICLE 29 4840 Termination 4841 Either Contracting State may terminate this Convention after a period of three 4842 years from the date on which this Convention enters into force by giving to the 4843 other Contracting State, through diplomatic channels, a written notice of 4844 termination, provided that any such notice shall be given only on or before the 4845 thirtieth day of June in any calendar year. 4846 In such a case this Convention shall apply for the last time: 4847 a) as respects taxes withheld at source, to amounts paid or credited before the 4848 expiration of the calendar year in which the notice of termination is given; 4849 b) as respects other taxes covered by this Convention, to amounts received during 4850 the taxable year beginning in the calendar year in which the notice of 4851 termination is given. 4852 Done in the city of Brasilia, this 26 of August 1986, in duplicate, each one in the 4853 Portuguese, Czech and English languages, all three texts being equally authentic. 4854 In case of any divergence of interpretation the English text shall prevail. 4855 PROTOCOLEstablish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 196 of 814
    • 4856 At the moment of the signature of the Convention between the Government of the 4857 Federative Republic of Brazil and the Government of the Czechoslovak Socialist 4858 Republic for the avoidance of double taxation and the prevention of fiscal evasion 4859 with respect to taxes on income the undersigned, being duly authorized thereto, 4860 have agreed upon the following provisions which constitute an integral part of 4861 the present Convention. 4862 1. With reference to Article 7, paragraph 3 4863 It is understood that the provisions of paragraph 3 of Article 7 shall be construed 4864 to mean that expenses incurred for the purpose of the permanent establishment 4865 including those for executive and general administrative expenses shall be 4866 allowed as a deduction whether incurred in the State where the permanent 4867 establishment is situated or elsewhere. 4868 2. With reference to _Article 11,_paragraph 3 "a" 4869 It is understood that the term "agency owned by the Government" means: 4870 a) in the case of Brazil, the Central Bank of Brazil ("Banco Central do Brasil) and 4871 the Bank of Brazil ("Banco do Brasil"); 4872 b) in the case of Czechoslovakia, Czechoslovak Commercial Bank 4873 ("Ceskoslovenska Obchodni Banka"). 4874 3. With reference to Article 12, paragraph 3 4875 It is understood that the provisions of paragraph 3 of Article 12 shall apply to 4876 income derived from the rendering of technical assistance and technical services. 4877 4. With reference to Article 14 4878 It is understood that the provisions of Article 14 shall apply even if the activities 4879 are exercised by a Civil Company ("Sociedade Civil"). 4880 5. With reference to Article 24, paragraph 2Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 197 of 814
    • 4881 It is understood that the provisions of paragraph 5 of Article 10 are not in 4882 conflict with the provisions of paragraph 5 of Article 24. 4883 6. With reference to Article 24, paragraph 3 4884 The provisions of the Brazilian law which do not allow royalties as defined in 4885 paragraph 3 of Article 12, paid by a company resident of Brazil to a resident of 4886 the Czechoslovak Socialist Republic which holds at least 50 per cent of the voting 4887 capital of that company, be deductible at the moment of the determination of the 4888 taxable income of the company resident of Brazil, are not in conflict with the 4889 provisions of paragraph 3 of Article 24 of the present Convention. 4890 Done in the city of Brasilia, this 26 of August 1986, in duplicate, each one in the 4891 Portuguese, Czech and English languages, all three texts being equally authentic. 4892 In case of any divergence of interpretation the English text shall prevail. 4893 (*) Nota: The original convention entered into with the Czechoslovak Socialist 4894 Republic applies currently to the Czech Republic and the Slovak Republic. 4895Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 198 of 814
    • 4896 4897 4898 Denmark 4899Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 199 of 814
    • 4900 Date of Conclusion: 27 August 1974 4901 Effective Date: 1January 1975 4902 CONVENTION 4903 Between the Government of the Federative Republic of Brazil and the 4904 Government of the Kingdom of Denmark for the Avoidance of Double Taxation 4905 and the Prevention of Fiscal Evasion with Respect to Taxes on Income. 4906 The Government of the Federative Republic of Brazil and the Government of the 4907 Kingdom of Denmark; 4908 Desiring to conclude a Convention for the avoidance of double taxation and the 4909 prevention of fiscal evasion with respect to taxes on income; 4910 Have agreed as follows: 4911 ARTICLE 1 4912 Personal scope 4913 This Convention shall apply to persons who are residents of one or both of the 4914 Contracting States. 4915 ARTICLE 2 4916 Taxes covered 4917 1. The existing taxes to which the Convention shall apply are: 4918 a) in the case of Brazil: 4919 - the federal income tax excluding the tax on excess remittances and on 4920 activities of minor importance; 4921 ( hereinafter referred to as "Brazilian tax" ) 4922 b) in the case of Denmark:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 200 of 814
    • 4923 I - the income taxes to the State and 4924 II -the communal income taxes; 4925 ( hereinafter referred to as "Danish tax") . 4926 2. The Convention shall also apply to any identical or substantially similar 4927 taxes which are subsequently imposed in addition to, or in place of the 4928 above-mentioned taxes. The competent authorities of the Contracting 4929 States shall notify to each other any substantial changes which have been 4930 made in their respective taxation laws. 4931 ARTICLE 3 4932 General definitions 4933 1. In this Convention, unless the context otherwise requires: 4934 a) the term "Brazil" means the Federative Republic of Brazil; 4935 b) the term "Denmark" means the Kingdom of Denmark, including any 4936 area within which, under the laws of Denmark and in accordance with 4937 international law, the sovereign rights of Denmark with respect to the 4938 exploration and exploitation of the natural resources of the continental 4939 shelf may be exercised; the term does not comprise the Faeroe Islands and 4940 Greenland; 4941 c) the terms "a Contracting State" and "the other Contracting State" mean 4942 Brazil or Denmark as the context requires; 4943 d) the term "person" comprises an individual, a company and any other 4944 body of persons; 4945 e) the term "company" means any body corporate or any entity which is 4946 treated as a body corporate for tax purposes;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 201 of 814
    • 4947 f) the terms "enterprise of a Contracting State" and "enterprise of the other 4948 Contracting State" mean respectively an enterprise carried on by a resident 4949 of a Contracting State and an enterprise carried on by a resident of the 4950 other Contracting State; 4951 g) the term "nationals" means: 4952 I - all individuals possessing the nationality of a Contracting State; 4953 II - all legal persons, partnerships and associations deriving their status as 4954 such from the law in force in a Contracting State; 4955 h) the term "international traffic" includes traffic between places in one 4956 country in the course of a journey which extends over more than one 4957 country; 4958 i) the term "competent authority" means: 4959 I - In Brazil: the Minister of Finance, the Secretary of the Federal Revenue 4960 or their authorised representatives; 4961 II - In Denmark: the Minister of Finance or his authorised representative. 4962 2. As regards the application of the Convention by a Contracting State any 4963 term not otherwise defined shall, unless the context otherwise requires 4964 have the meaning which it has under the laws of that Contracting State 4965 relating to the taxes which are the subject of the Convention. 4966 ARTICLE 4 4967 Fiscal domicile 4968 1. For the purposes of this Convention, the term "resident of a Contracting 4969 State" means any person who, under the law of that State, is liable to 4970 taxation therein by reason of his domicile, residence, place of management 4971 or any other criterion of a similar nature.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 202 of 814
    • 4972 2. Where by reason of the provisions of paragraph 1 an individual is a 4973 resident of both Contracting States, then his status shall be determined in 4974 accordance with the following rules: 4975 a) he shall be deemed to be a resident of the Contracting State in which he 4976 has a permanent home available to him. If he has a permanent home 4977 available to him in both Contracting States, he shall be deemed to be a 4978 resident of the Contracting State with which his personal and economic 4979 relations are closest (centre of vital interests); 4980 b) if the Contracting State in which he has his centre of vital interests 4981 cannot be determined, or if he has not a permanent home available to him 4982 in either Contracting State, he shall be deemed to be a resident of the 4983 Contracting State in which he has an abode; 4984 c) if he has an habitual abode in both Contracting States or in neither of 4985 them, he shall be deemed to be a resident of the Contracting State of which 4986 he is a national; 4987 d) if he is a national of both Contracting States or of neither of them, the 4988 competent authorities of the Contracting States shall settle the question by 4989 mutual agreement. 4990 3. Where by reason of the provisions of paragraph 1 a person other than an 4991 individual is a resident of both Contracting States, then it shall be deemed 4992 to be a resident of the Contracting State in which its place of effective 4993 management is situated. 4994 ARTICLE 5 4995 Permanent establishment 4996 1. For the purposes of this Convention, the term "permanent establishment" means 4997 a fixed place of business in which the business of the enterprise is wholly or 4998 partly carried on.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 203 of 814
    • 4999 2. The term "permanent establishment" shall include especially: 5000 a) a place of management; 5001 b) a branch; 5002 c) an office; 5003 d) a factory; 5004 e) a workshop; 5005 f) a mine, quarry or other place of extraction of natural resources; 5006 g. a building site or construction or assembly project which exists for more 5007 than six months. 5008 3. The term "permanent establishment" shall not be deemed to include: 5009 a) the use of facilities solely for the purpose of storage, display or delivery of 5010 goods or merchandise belonging to the enterprise; 5011 b) the maintenance of a stock of goods or merchandise belonging to the 5012 enterprise solely for the purpose of storage, display or delivery; 5013 c) the maintenance of a stock of goods or merchandise belonging to the 5014 enterprise solely for the purpose of processing by another enterprise; 5015 d) the maintenance of a fixed place of business solely for the purpose of 5016 purchasing goods or merchandise, or for collecting information, for the 5017 enterprise; 5018 e) the maintenance of a fixed place of business solely for the purpose of 5019 advertising, for the supply of information, for scientific research or for similar 5020 activities which have a preparatory or auxiliary character for the enterprise.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 204 of 814
    • 5021 1. A person acting in a Contracting State on behalf of an enterprise of the 5022 other Contracting State- other than an agent of independent status to 5023 whom paragraph 6 applies – shall be deemed to be a permanent 5024 establishment in the first-mentioned State if he has, and habitually 5025 exercises in that State, an authority to conclude contracts in the name of 5026 the enterprise, unless his activities are limited to the purchase of goods or 5027 merchandise for the enterprise. 5028 2. An insurance company of a Contracting State shall furthermore be deemed 5029 to have a permanent establishment in the other State provided that, 5030 through a representative, it receives premiums or secures risks in that 5031 other State. 5032 3. An enterprise of a Contracting State shall not be deemed to have a 5033 permanent establishment in the other Contracting State merely because it 5034 carries on business in that other State through a broker, general 5035 commission agent or any other agent of independent status, where such 5036 persons are acting in the ordinary course of their business. 5037 4. The fact that a company which is a resident of a Contracting State controls 5038 or is controlled by a company which is a resident of the other Contracting 5039 State, or which carries on business in that other State (whether through a 5040 permanent establishment or otherwise), shall not of itself constitute either 5041 company a permanent establishment of the other. 5042 ARTICLE 6 5043 Income from immovable property 5044 1. Income from immovable property may be taxed in the Contracting State in 5045 which such property is situated. 5046 2. a) Subject to the provisions of sub-paragraphs b and c the term "immovable 5047 property" shall be defined in accordance with the law of the Contracting State in 5048 which the property is question is situated;Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 205 of 814
    • 5049 b)the term shall, however, in any case include property accessory to immovable 5050 property, livestock and equipment used in agriculture and forestry, rights to 5051 which the provisions of general law respecting immovable property apply, 5052 usufruct of immovable property and rights to variable or fixed payments as 5053 consideration for the working of, or the right to work, mineral deposits, sources 5054 and other natural resources; 5055 c) ships, boats and aircraft shall not be regarded as immovable property. 5056 3. The provisions of paragraph 1 shall apply to income derived from the direct 5057 use, letting, or use in any other form of immovable property. 5058 4. The provisions of paragraphs 1 and 3 shall also apply to the income from 5059 immovable property of an enterprise and to income from immovable property 5060 used for the performance of professional services. 5061 ARTICLE 7 5062 Business profits 5063 1. The profits of an enterprise of a Contracting State shall be taxable only in 5064 that State unless the enterprise carries on business in the other Contracting 5065 State through a permanent establishment situated therein. If the enterprise 5066 carries on business as aforesaid, the profits of the enterprise may be taxed 5067 in the other State, but only so much of them as is attributable to that 5068 permanent establishment. 5069 2. Where an enterprise of a Contracting State carries on business in the other 5070 Contracting State through a permanent establishment situated therein, there shall 5071 in each Contracting State be attributed to that permanent establishment the 5072 profits which it might be expected to make if it were a distinct and separate 5073 enterprise engaged in the same or similar activities under the same or similar 5074 conditions and dealing wholly independently with the enterprise of which it is a 5075 permanent establishment.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 206 of 814
    • 5076 3. In the determination of the profits of a permanent establishment, there shall be 5077 allowed as deductions expenses which are incurred for the purposes of the 5078 permanent establishment including executive and general administrative 5079 expenses so incurred. 5080 4. No profits shall be attributed to a permanent establishment by reason of the 5081 mere purchase by that permanent establishment of goods or merchandise for the 5082 enterprise 5083 5. Where profits include items of income which are dealt with separately in 5084 other Articles of this Convention, then the provisions of those Articles shall 5085 not be affected by the provisions of this Article. 5086 ARTICLE 8 5087 Shipping and air transport 5088 1. Profits from the operation of ships or aircraft in international traffic shall 5089 be taxable only in the Contracting State in which the place of effective 5090 management of the enterprise is situated. 5091 2. If the place of effective management of a shipping enterprise is aboard a ship, 5092 then it shall be deemed to be situated in the Contracting State in which the home 5093 harbour of the ship is situated, or, if there is no such home harbour, in the 5094 Contracting State of which the operator of the ship is a resident. 5095 3. Profits from the operation of ships or aircraft in international traffic made by 5096 an enterprise of a Contracting State and obtained through the participation in a 5097 pool or in a joint business shall be taxable only in the Contracting State in which 5098 the place of effective management of the enterprise is situated. 5099 ARTICLE 9 5100 Associated enterprises 5101 Where:Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 207 of 814
    • 5102 a) an enterprise of a Contracting State participates directly or indirectly in the 5103 management, control or capital of an enterprise of the other Contracting State, or 5104 b) the same persons participate directly or indirectly in the management, control 5105 or capital of an enterprise of a Contracting State and an enterprise of the other 5106 Contracting State , 5107 and in either case conditions are made or imposed between the two enterprises in 5108 their commercial or financial relations which differ from those which would be 5109 made between independent enterprises, then any profits which would, but for 5110 those conditions, have accrued to one of the enterprises, but, by reason of those 5111 conditions, have not accrued, may be included in the profits of that enterprise 5112 and taxed accordingly. 5113 ARTICLE 10 5114 Dividends 5115 1. Dividends paid by a company which is a resident of a Contracting State to a 5116 resident of the other Contracting State may be taxed in that other State. 5117 2. However, such dividends may also be taxed in the Contracting State of which 5118 the company paying the dividends is a resident, and according to the law of that 5119 State, but the tax so charged shall not exceed 25 per cent of the gross amount of 5120 the dividends. 5121 This paragraph shall not affect the taxation of the company in respect of the 5122 profits out of which the dividends are paid. 5123 3. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 5124 dividends, being a resident of a Contracting State, has in the other Contracting 5125 State, of which the company paying the dividends is a resident, a permanent 5126 establishment with which the holding by virtue of which the dividends are paid is 5127 effectively connected. In such a case, the provisions of Article 7 shall apply.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 208 of 814
    • 5128 4. The term "dividends" as used in this Article means income from shares, 5129 "jouissance" shares or "jouissance" rights, mining shares, founders shares or other 5130 rights, not being debt claims, participating in profits, as well as income from 5131 other corporate rights assimilated to income from shares by the taxation law of 5132 the State of which the company making the distribution is a resident. 5133 5. Where a company resident of Denmark has a permanent establishment in 5134 Brazil, that permanent establishment may be subject to a tax withheld at 5135 source in accordance with Brazilian law. However, such a tax shall not 5136 exceed 25 per cent of the gross amount of the profits of that permanent 5137 establishment determined after the payment of the corporation tax related 5138 to such profits. 5139 ARTICLE 11 5140 Interest 5141 1. Interest arising in a Contracting State and paid to a resident of the other 5142 Contracting State may be taxed in that other State. 5143 2. However, such interest may be taxed in the Contracting State in which it arises 5144 and according to the law of that State, but the tax so charged shall not exceed 15 5145 per cent of the gross amount of the interest. 5146 3. Notwithstanding the provisions of paragraphs 1 and 2: 5147 a) interest arising in a Contracting State and paid to the Government of the other 5148 Contracting State, a political subdivision thereof or any agency (including a 5149 financial institution) wholly owned by that Government or political subdivision, 5150 shall be exempt from tax in the first-mentioned Contracting State; 5151 b) interest arising from securities, bonds or debentures issued by the Government 5152 of a Contracting State, a political subdivision thereof or by any agency (including 5153 a financial institution) owned by that Government shall be taxable only in that 5154 State.Establish Brazil | R. Peixoto Gomide, 445 - Jardim Paulista, São Paulo, CEP 01409-001- Brazil Page 209 of 814
    • 5155 4. The term "interest" as used in this Article means income from Government 5156 securities, bonds or debentures, whether or not secured by mortgage and whether 5157 or not carrying a right to participate in profits, and debt claims of every kind as 5158 well as other income assimilated to income from money lent by the taxation law 5159 of the Contracting State in which the income arises. 5160 5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the 5161 interest, being a resident of a Contracting State, has in the other Contracting State 5162 in which the interest arises a permanent establishment with which the debt claim 5163 from which the interest arises is effectively connected. In such a case, the 5164 provisions of Article 7 shall apply. 5165 6. The limitation established in paragraph 2 shall not app1y to interest arising in 5166 a Contracting State and paid to a permanent establishment of an enterprise of the 5167 other Contracting State which is situated in a third State. 5168 7. Interest shall be deemed to arise in a Contracting State when the payer is that 5169 State itself, a political subdivision, a local authority or a resident of that State. 5170 Where, however, the person paying the interest, whether he is a resident of a 5171 Contracting State or not, has in a Contracting State a permanent establishment in 5172 connection with which the indebtedness on which the interest is paid was 5173 incurred, and such interest is borne by such permanent establishment, then such 5174 interest shall be deemed to arise in the Co