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Denmark 12.
Denmark - Agreement for
avoidance of double taxation and prevention of fiscal evasion with Denmark Whereas the annexed Convention between the Government of the Republic of
India and the Government of the Kingdom of Denmark for the avoidance of double
taxation and the prevention of fiscal evasion, with respect to taxes on income
and on capital has come into force on the 13th day of June, 1989, on the
notification by both the Contracting States to each other of the completion of
the constitutional requirements, as required by paragraph 1 of Article 30 of
the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the
Income-tax Act, 1961 (43 of 1961), section 24A of the Companies (Profits)
Surtax Act, 1964 (7 of 1964) and section 44A of the Wealth-tax Act, 1957 (27 of
1957), the Central Government hereby directs that all the provisions of the
said Convention shall be given effect to in the Union of India. Notification :
No. GSR 853(E), dated 25-9-1989.
ANNEXURE CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE
KINGDOM OF The Government of the Republic of India and the Government of the
Kingdom of Denmark; Desiring to conclude a Convention for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income and on
capital: Have agreed as follows : Article 1 : Personal scope - The Convention shall apply to persons who are
residents of one or both of the Contracting States. Article 2 : Taxes covered - 1. The taxes to which this Convention shall
apply are: (a) in India: (i) the income-tax including any surcharge
thereon imposed under the Income-tax Act, 1961 (43 of 1961); (ii) the surtax imposed under the Companies
(Profits) Surtax Act, 1964 (7 of 1964); (iii) the wealth-tax imposed under the Wealth-tax
Act, 1957 (24 of 1957); (hereinafter referred to as Indian tax). (b) in Denmark: (i) the income-tax to the State (ind-komotskatten
til staten); (ii) the municipal income-tax (den kormmunal
indkomstskat); (iii) the income-tax to the country municipalities
(den amtskommunale lndkomstskat); (iv) the old
age pension contribution (folkepensionsbidreget); (v) the
seamens tax (smandsskatten); (vi) the
special income-tax (den saerlige indkomstskat); (vii) the
church tax (kirkes katten); (viii) the tax on dividends (udbytteskatten); (ix) the
contribution to the sickness per diem fund (bidrag til dagpengefonden); (x) the
hydrocarbon tax (kulbrinteskatten); (xi) the
capital tax to the State (formueskatten til staten); (hereinafter
referred to as Danish tax). 2. The
Convention shall also apply to any identical or substantially similar taxes
which are imposed by either Contracting State after the date of signature of
the present Convention in addition to, or in place of, the taxes referred to in
paragraph 1. The competent authorities of the Contracting States shall notify
in each other of any substantial changes which are made in their respective
taxation laws. Article 3 : General
definitions - 1. In this Convention, unless the context otherwise
requires : (a) the term India means the territory of India
and includes territorial sea and the air space above it, as well as any other
maritime zone in which India has sovereign rights, other rights and
jurisdictions, according to the Indian law and in accordance with international
law. (b) the term Denmark means the territory of the
Kingdom of Denmark and including the territorial sea of Denmark and the air
space above it, as well as any other maritime area to the extent that that area
in accordance with international law has been or may hereafter be designated
under Danish laws as an area within which Denmark may exercise sovereign rights
for the purpose of exploring and exploiting the natural resources of the sea
bed or its Sub-soil and the superjacent waters and with regard to other
activities for the economic exploitation and exploration of the area; the term
does not comprise the Faroe Islands and Greenland; (c) the terms a Contracting State and the other
Contracting State mean India or Denmark as the context requires; (d) the term tax means Indian tax or Danish tax,
as the contex requires, but shall not include any amount which is payable in
respect of any default or omission in relation to the taxes to which this
Convention applies or which represents a penalty imposed relating to those
taxes; (e) the term person includes an individual, a
company and any other entity which is treated as a taxable unit under the
taxation laws in force in the respective Contracting States; (f) the term company means any body
corporate or any entity which is treated as a company or body corporate under
the taxation laws in force in the respective Contracting States; (g) the terms enterprise of a Contracting State
and enterprise of the other Contracting State mean respectively an enterprise
carried on by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State; (h) the term competent authority means in the
case of India, the Central Government in the Ministry of Finance, (Department
of Revenue) or their authorised representative; and in the case of Denmark, the
Minister for Inland Revenue, Customs and Excise or his authorised
representative; (i) the term national means any individual
possessing the nationality of a Contracting State and any legal person,
partnership or association deriving its status from the laws in force in a
Contracting State; (j) the term international traffic means any
transport by a ship or aircraft operated by an enterprise, of a Contracting
State, except when the ship or aircraft is operated solely between places in
the other Contracting State. 2. As
regards the application of the Convention by a Contracting State, any term not
defined therein shall, unless the context otherwise requires, have the meaning
which it has under the law of that State concerning the taxes to which the
Convention applies. ARTICLE
4 - Resident - 1. For the purposes of this Convention, the term
resident of a Contracting State means any person who, under the laws of that
State, is liable to tax therein by reason of his domicile, residence, place of
management or any other criterion of a similar nature. But this term does not include any person
who is liable to tax in that State in respect only of income from sources in
that State or capital situated therein. 2. Where
by reason of the provisions of paragraph 1 an individual is a resident of both
Contracting States, then his status shall be determined as follows : (a) he shall be deemed to be a resident of the
State in which he has a permanent home available to him, if he has a permanent
home available to him in both States, he shall be deemed to be a resident of
the State with which his personal and economic relations are closer (centre of
vital interests); (b) if the State in which he has his centre of
vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode; (c) if he has an habitual abode in both States or
in neither of them, he shall be deemed to be a resident of the State of which
he is a national; (d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement. 3. Where
by reason of the provisions of paragraph 1, a person other than an individual
is a resident of both Contracting States, then it shall be deemed to be a
resident of the State in which its place of effective management is situated. Article 5 : Permanent
establishment - 1. For the purposes of this Convention, the term permanent
establishment means a fixed place of business through which the business of
the enterprise is wholly or partly carried on. 2. The
term permanent establishment includes especially : (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any
other place of extraction of natural resources; (g) a warehouse in relation to a person providing
storage facilities for others; (h) a farm, plantation or other place where
agriculture, forestry, plantation or related activities are carried on; (i) a premises used as a sales outlet or for
receiving or soliciting orders; (j) an installation or structure used for the
exploration of natural resources provided that the activities are carried on
for a period or periods of 183 days or more in any twelve-month period; (k) a building site or construction, installation
or assembly project or supervisory activities in connection therewith, where
such site, project or activities (together with other such sites, projects or
activities, if any) continue for a period of 183 days or more. 3.
Notwithstanding the preceding provisions of this Article, the term permanent
establishment shall be deemed not to include : (a) the use of facilities solely for the purpose
of storage or display of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display; (c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise; (d) the maintenance of a fixed place of business
solely for the purpose of purchasing goods or merchandise, or of collecting
information, for the enterprise; and (e) the maintenance of a fixed place of business
solely for the purpose of advertising; for the supply of information, for
scientific research, or for other activities which have a preparatory or
auxiliary character, for the enterprise. 4.
Notwithstanding the provisions of paragraphs 1 and 2, where a person other than
an agent of an independent status to whom paragraph 5 appliesis acting in a
Contracting State on behalf of an enterprise of the other Contracting State,
that enterprise shall be deemed to have a permanent establishment in the
first-mentioned State, if (a) he has and habitually exercises in that State
an authority to conclude contracts on behalf of the enterprise, unless his
activities are limited to the purchase of goods or merchandise for the enterprise; (b) he has no such authority, but habitually
maintains in the first-mentioned State a stock of goods or merchandise from
which he regularly delivers goods or merchandise on behalf of the enterprise;
or (c) he habitually secures orders in the first-mentioned
State wholly or almost wholly for the enterprise itself or for the enterprise
and other enterprises controlling, controlled by, or subject to the same common
control, as that enterprise. 5. An
enterprise of a Contracting State shall not be deemed to have a permanent
establishment in the other Contracting State merely because it carries on
business in that other State through a broker, general commission agent or any
other agent of an independent status, provided that such persons are acting in
the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or
almost wholly on behalf of that enterprise itself or on behalf of that
enterprise and other enterprises controlling, controlled by, or subject to the
same common control, as that enterprise, he will not be considered an agent of
an independent status within the meaning of this paragraph. 6. The
fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other Contracting State (whether through a
permanent establishment or otherwise), shall not of itself constitute either
company a permanent establishment of the other. Article 6 : Income
from immovable property - 1. Income derived by a resident of a Contracting
State from immovable property situated in the other Contracting State may be
taxed in that other State. 2. The
term immovable property shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated. The term
shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions
of general law respecting landed property apply, usufruct of immovable property
and right to variable or fixed payments as consideration for the working of, or
the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be
regarded as immovable property. 3. The
provisions of paragraph 1 shall also apply to income derived from the direct
use, letting, or use in any other form of immovable property. 4. The
provisions of paragraphs 1 and 3 shall also apply to the income from immovable
property of an enterprise and to income from immovable property used for the
performance of independent personal services. Article 7 : Business
profits - 1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business in the
other Contracting State through a permanent establishment situated
therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other
State but only so much of them as is attributable to (a) that permanent
establishment; (b) sales in that other State of goods or merchandise of
the same or similar kind as these sold through that permanent establishment; or
(c) other business activities carried on in that other State of the same
or similar kind as those effected through that permanent establishment. 2.
Subject to the provisions of paragraph 3, where an enterprise of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing
wholly independently with the enterprise of which it is a permanent
establishment. In any case where the
correct amount of profits attributable to a permanent establishment is
incapable of determination or the determination thereof presents exceptional
difficulties, the profits attributable to the permanent establishment may be
estimated on a reasonable basis. 3. In the
determination of the profits of a permanent establishment, there shall be
allowed as deductions expenses which are incurred for the purposes of the
business of the permanent establishment including executive and general
administrative expenses so incurred, whether in the State in which the
permanent establishment is situated or elsewhere, in accordance with the
provisions of and subject to the limitations of the taxation laws of that
State. However, no such deduction shall be allowed in respect of amounts, if
any, paid (otherwise than towards reimbursement of actual expenses) by the
permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return
for the use of patents, know-how or other rights, or by way of commission or other
charges, for specific services performed or for management, or, except in the
case of a banking enterprise, by way of interest on moneys lent to the
permanent establishment. Likewise, no
account shall be taken in the determination of the profits of a permanent
establishment, for amounts charged (otherwise than towards reimbursement of
actual expenses) by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents, know-how or other rights, or
by way of commission or other charges for specific services performed or for
management, or, except in the case of a banking enterprise, by way of interest
on moneys lent to the head office of the enterprise or any of its other
offices. 4.
Insofar as it has been customary in a Contracting State to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts,
nothing in paragraph 2 shall preclude that Contracting State from determining
the profits to be taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that the result shall
be in accordance with the principles contained in this Article. 5. No
profits shall be attributed to a permanent establishment by reason of the mere
purchase by that permanent establishment of goods or merchandise for the
enterprise. 6. For
the purpose of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which are
dealt with separately in other Articles of this Convention, then the provisions
of those Articles shall not be affected by the provisions of this Article. Article 8 : Air
transport - 1. Profits derived by an enterprise of a Contracting State from
the operation of aircraft in international traffic shall be taxable only in
that State. 2. The
provisions of paragraph 1 shall also apply to profits from the participation in
a pool, a joint business or an international operating agency. 3. The
provisions of paragraphs 1 and 2 shall apply to profits derived by the Danish,
Norwegian and Swedish air transport consortium, known as the Scandinavian
Airlines System (SAS), but only to such part of the profit as corresponds to
the shareholding in the consortium held by Det Danske Luftfartsselskab (DDL),
the Danish partner of Scandinavian Airlines System (SAS). 4. For
the purposes of this Article, interest on funds connected with the operation of
aircraft in international traffic shall be regarded as profits derived from the
operation of such aircraft, and the provisions of Article 12 shall not apply in
relation to such interest. 5. The
term operation of aircraft shall mean business of transportation by air of
passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the sale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation. Article 9 : Shipping
- 1. Profits derived from the operation of ships in international traffic
shall be taxable only in the Contracting State in which the place of effective
management of the enterprise is situated. 2.
Notwithstanding the provisions of paragraph 1, such profits may be taxed in the
other Contracting State from which they are derived provided that the tax so
charged shall not exceed : (a) during the first five fiscal years after the
entry into force of this Convention, 50 per cent, and (b) during the subsequent five fiscal years, 25
per cent, of the
tax otherwise imposed by the internal law of that State. Subsequently, only the provisions of
paragraph 1 shall be applicable. 3. The
provisions of paragraph 1 shall also apply to profits from the participation in
a pool, a joint business or an international operating agency engaged in the
operation of ships. 4. For
the purposes of this Article : (a) interest on funds connected with the operation
of ships in international traffic shall be regarded as income from the
operation of such ships and the provisions of Article 12 shall not apply in
relation to such interest ; and (b) profits from the operation of ships includes
profits derived from the use, maintenance or rental of containers (including
trailers and related equipment for the transport of containers) in connection
with the transport of goods or merchandise in international traffic. ARTICLE
10 - Associated enterprises - 1. Where : (a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or (b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State, and in
either case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly. 2. Where
a Contracting State includes in the profits of an enterprise of that State and
taxes accordingly profits on which an
enterprise of the other Contracting State has been charged to tax in
that other State and the profits so included are profits which would have
accrued to the enterprise of the first-mentioned State if the conditions made
between the two enterprises had been those which would have been made between
independent enterprises, then that other State shall make an appropriate
adjustment to the amount of the tax charged therein on those profits. In determining such adjustment due regard
shall be had to the other provisions of this Convention and the competent
authorities of the Contracting States shall, if necessary, consult each other. ARTICLE
11 - Dividends - 1. Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State. 2.
However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident, and according to the laws of that
State, but if the recipient is the beneficial owner of the dividends, the tax
so charged shall not exceed : (a) 15 per cent of the gross amount of the
dividends if the beneficial owner is a company which owns at least 25 per cent
of the shares of the company paying the dividends; (b) 25 per cent of the gross amount of the
dividends in all other cases. The
competent authorities of the Contracting States shall by mutual agreement
settle the mode of application of these limitations. This
paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid. 3. The
term dividends as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident. 4. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
dividends, being a resident of a Contracting State, carries on business in the
other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in
that other State independent personal services from a fixed base situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or
Article 15, as the case may be, shall apply. 5. Where
a company which is a resident of a Contracting State derives profits or income
from the other Contracting State, that other State may not impose any tax on
the dividends paid by the company, except insofar as such dividends are paid to
a resident of that other State or insofar as the holding in respect of which
the dividends are paid is effectively connected with a permanent establishment
or a fixed base situated in that other State, nor subject the companys
undistributed profits to tax on the companys undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in such other State. ARTICLE
12 - Interest - 1. Subject to the provisions of paragraph 4
of Article 8 and paragraph 4(a) of Article 9 interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State. 2.
However, such interest may also be taxed in the Contracting State in which it
arises and according to the laws of that State. But the tax so charged on interest payable in respect of a loan
given or debt created after the date of entry into force of this Convention,
shall not exceed : (a) 10 per cent of the gross amount, if such
interest is paid on any loan of whatever kind granted by a bank, and (b) 15 per cent of the gross amount in all other
cases. 3.
Notwithstanding the provisions of paragraph 2 of this Article, interest arising
in a Contracting State and derived by the Government of the other Contracting
State, a political sub-division or local authority thereof, the Central Bank of
that other Contracting State or any agency of that Government, or by any other
resident of that other Contracting State with respect to debt-claims of that
resident which are financed, guaranteed or insured by the Government of that
other Contracting State, a political sub-division or local authority thereof,
the Central Bank of that other Contracting State or any agency of that
Government, shall be exempt from tax in the first-mentioned Contracting State. 4. The
term interest as used in this Article means income from debt-claims of every
kind, whether or not secured by mortgage, and whether or not carrying a right
to participate in the debtors profits, and in particular, income from
Government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not
be regarded as interest for the purpose of this Article. 5. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the
other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in respect
of which the interest is paid is effectively connected with such permanent
establishment or fixed base. In such
case, the provisions of Article 7 or Article 15, as the case may be, shall
apply. 6.
Interest shall be deemed to arise in a Contracting State when the payer is that
Contracting State itself, a political sub-division, a local authority or a
resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated. 7. Where,
by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the interest,
having regard to the debt-claim for which it is paid, exceeds the amount which
would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In such
case, the excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other provisions of
this Convention. ARTICLE
13 - Royalties and fees for technical services - 1. Royalties
and fees for technical services arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State. 2.
However, such royalties and fees for technical services may also be taxed in
the Contracting State in which they arise and according to the laws of that
State, but if the recipient is the beneficial owner of the royalties or fees
for technical services the tax so charged shall not exceed 20 per cent of the
gross amount of the royalties or fees for technical services. 3. The
term royalties as used in this Article means payments of any kind received as
a consideration for the use of, or the right to use, any copyright of literary,
artistic or scientific work including cinematograph film or films or tapes used
for radio or television broadcasting, any patent, trade mark, design or model,
plan, secret formula or process or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for information concerning
industrial, commercial or scientific experience. 4. The
term fees for technical services as used in this Article means payments of
any amount to any person other than payments to an employee of the person
making payments, in consideration for the services of a managerial, technical
or consultancy nature, including the provision of services of technical or
other personnel. 5. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
royalties or fees for technical services, being a resident of a Contracting
State, carries on business in the other Contracting State in which the
royalties or fees for technical services arise, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right, property
or contract in respect of which the royalties or fees for technical services
are paid is effectively connected with such permanent establishment or fixed
base. In such case the provisions of
Article 7 or Article 15, as the case may be, shall apply. 6.
Royalties and fees for technical services shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however, the person paying their
royalties or fees for the technical services, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the liability to pay the royalties or
fees for technical services was incurred, and such royalties or fees for
technical services are borne by such permanent establishment or fixed base,
then such royalties or fees for technical services shall be deemed to arise in
the State in which the permanent establishment or fixed base is situated. 7. Where,
by reason of special relationship between the payer and the beneficial owner or
between both of them and some other person, the amount of royalties or fees for
technical services paid exceeds, the amount which would have been paid in the
absence of such relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In such
case, the excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other provisions of
this Convention. ARTICLE
14 - Capital gains - 1. Gains derived by a resident of a
Contracting State from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may be taxed in that
other State. 2. Gains
from the alienation of movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in
the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services; including such
gains from the alienation of such a permanent establishment (alone or together
with the whole enterprise) or of such fixed base, may be taxed in that other
State. 3.
Gains from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to
the operation of such ships or aircraft shall be taxable only in the
Contracting State of which the alienator is a resident. With
respect to gains derived by the Danish, Swedish and Norwegian air transport
consortium Scandinavian Airlines System (SAS), the provisions of this paragraph
shall apply only to such proportion of the gains as corresponds to the
participation held in that consortium by Det Danske Luftfartsselskab (DDL), the
Danish partner of Scandinavian Airlines System (SAS). 4. Gains
from the alienation of shares of the capital stock of a company the property of
which consists directly or indirectly principally of immovable property
situated in a Contracting State may be taxed in that State. 5. Gains
from the alienation of shares other than those mentioned in paragraph 4 in a
company which is a resident of a Contracting State may be taxed in that State
provided that such shares represent at least 10 per cent of the share capital
of that company. 6. Gains
from the alienation of any property other than that mentioned in paragraphs 1,
2, 3, 4 and 5 shall be taxable only in the Contracting State of which the
alienator is a resident. article 15 - Independent personal
services - 1. Income derived by an individual who is a resident of a
Contracting State from the performance of professional services or other
independent activities of a similar character shall be taxable only in that
State except in the following circumstances, when such income may also be taxed
in the other Contracting State : (a) if he has a fixed based regularly available to
him in the other Contracting State for the purpose of performing his
activities, in that case, only so much of the income as is attributable to that
fixed base may be taxed in that other State ; or (b) if his stay in the other Contracting State is
for a period or periods amounting to or exceeding in the aggregate 183 days in
the fiscal year of that other State, only so much of the income as is derived
from his activities performed in that other State may be taxed in that other
State. 2. The
term professional services includes especially independent, scientific,
literary, artistic, educational or teaching activities, as well as the
independent activities of physicians, surgeons, lawyers, engineers, architects,
dentists and accountants. ARTICLE
16 - Dependent personal services - 1. Subject to the
provisions of Articles 17, 18, 19 and 20 salaries, wages and other similar
remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State, unless the employment is
exercised in the other Contracting State.
If the employment is so exercised, such remuneration as is derived
therefrom may be taxed in that other State. 2.
Notwithstanding the provision of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the
other Contracting State shall be taxable only in the first-mentioned State if : (a) the recipient is present in the other State
for a period or periods not exceeding in the aggregate 183 days in the fiscal
year of that other State; (b) the remuneration is paid by or on behalf of,
an employer who is not a resident of the other State ; and (c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State. 3.
Notwithstanding the preceding provisions of this Article, remuneration derived
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by an enterprise of a Contracting State may be taxed in
that State. 4. Where
a resident of Denmark derives remuneration in respect of an employment
exercised aboard an aircraft operated in international traffic by the Scandinavian
Airlines System (SAS) consortium, such remuneration shall be taxable only in
Denmark. ARTICLE
17 - Directors fees and remuneration of top level managerial officials
-1. Directors fees and similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in that
other State. 2.
Salaries, wages and other similar remuneration derived by a resident of a
Contracting State in his capacity as an official in a top-level managerial
position of a company which is a resident of the other Contracting State may be
taxed in that other State. ARTICLE
18 - Entertainers and athletes - 1. Notwithstanding the
provisions of Articles 15 and 16, income derived by a resident of a Contracting
State as an entertainer, such as a theatre, motion picture, radio or television
artiste or a musician, or as an athlete, from his personal activities as such
exercised in the other Contracting State may be taxed in that other State. 2. Where
income in respect of personal activities exercised by entertainer or athlete in
his capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles
7,15 and 16, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised. 3.
Notwithstanding the provisions of paragraph 1, income derived by an entertainer
or an athlete who is a resident of a Contracting State from his personal
activities, as such exercised in the other Contracting State, shall be taxable
only in the first-mentioned Contracting State, if the activities in the other
Contracting State are supported wholly or substantially from the public funds
of the first-mentioned Contracting State, including any of its political
sub-divisions or local authorities. 4.
Notwithstanding the provisions of paragraph 2, and Articles 7, 15 and 16, where
income in respect of personal activities exercised by an entertainer or an
athlete in his capacity as such in a Contracting State accrues not to the
entertainer or athlete himself but to another person, that income shall be
taxable only in the other Contracting State, if that other person is supported
wholly or substantially from the public funds of that other State, including
any of its political sub-divisions or local authorities. ARTICLE
19 - Remuneration and pensions in respect of Government service - 1. (a) Remuneration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State. (b) However, such remuneration shall be taxable
only in the other Contracting State if the services are rendered in that other
State and the individual is a resident of that State who : (i) is a national of that State ; or (ii) did not become a resident of that State
solely for the purpose of rendering the services. 2. Any
pension paid by, or out of funds created by a Contracting State or a political
sub-division or a local authority thereof to an individual in respect of
services rendered to that State or sub-division or authority shall be taxable
only in that State. 3. The
provisions of Articles 16 and 17 shall apply to remuneration in respect of
services rendered in connection with a business carried on by a Contracting
State or a political sub-division or local authority thereof. ARTICLE
20 - Students and apprentices - 1. A student or business
apprentice who is or was a resident of one of the Contracting States
immediately before visiting the other Contracting State and who is present in
that other State solely for the purpose of his education or training, shall be
exempt from tax in that other State on : (a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training ; and (b) remuneration from employment in that other
State not exceeding 20,000 Danish Crowns or its equivalent in Indian currency
during any fiscal year of that other State provided that such employment is
directly related to his studies or is necessary for the purpose of his
maintenance. 2. The
benefits of this Article shall extend only for such period of time as may be
reasonable or customarily required to complete the eduction or training
undertaken but in no event shall any individual have the benefits of this
Article, for more than five consecutive years from the date of his first
arrival in that other Contracting State. ARTICLE
21 - Other income - 1.
Subject to the provisions of paragraph 2, items of income of a resident of a
Contracting State, wherever arising, which are not expressly dealt with in the
foregoing articles of this Convention, shall be taxable only in that
Contracting State. 2. The
provisions of paragraph 1 shall not apply to income, other than income from
immovable property as defined in paragraph 2 of Article 6, if the recipient of
such income, being a resident of a Contracting State, carries on business in
the other Contracting State through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed
base. In such case, the provisions of
Article 7 or Article 15, as the case may be, shall apply. 3.
Notwithstanding the provisions of paragraphs 1 and 2, items of income of a
resident of a Contracting State not dealt with in the foregoing Articles of
this Convention, and arising in the other Contracting State may be taxed in
that other State. ARTICLE
22 - Capital - 1. Capital represented by immovable property
referred to in Article 6, owned by a resident of a Contracting State and
situated in the other Contracting State, may be taxed in that other State. 2.
Capital represented by movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in
the other Contracting State or by movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services may be taxed in
that other State. 3.
Capital represented by ships and aircraft operated in international traffic and
by boats engaged in inland waterways transport, and by movable property
pertaining to the operation of such ships, aircraft and boats, shall be taxable
only in the Contracting State in which the enterprise is a resident. 4. All
other elements of capital of a resident of a Contracting State shall be taxable
only in that State. ARTICLE
23 - Avoidance of double taxation - 1. The laws in force in
either of the Contracting State shall continue to govern the taxation of income
and capital in the respective Contracting States except where express provision
to the contrary is made in this Convention. 2. Double
taxation shall be avoided in the case of India as follows : (a) Where a resident of India derives income or
owns capital which, in accordance with the provisions of this Convention, may
be taxed in Denmark, India shall allow as a deduction from the tax on the
income of that resident an amount equal to the income-tax paid in Denmark,
whether directly or by deduction; and as a deduction from the tax on the
capital of that resident an amount equal to the capital tax paid in Denmark. Such deduction in either case shall not,
however, exceed that part of the income-tax or capital tax (as computed before
the deduction is given) which is attributable, as the case may be, to the
income or the capital which may be taxed in Denmark. Further, where such resident is a company by which surtax is
payable in India, the deduction in respect of income-tax paid in Denmark shall
be allowed in the first instance from income-tax payable by the company in
India and as to the balance, if any, from surtax payable by it in India ; (b) Where a resident of India derives income or
owns capital which, in accordance with the provisions of this Convention, shall
be taxable only in Denmark, India may include this income or capital in the tax
base but shall allow as a deduction from the income-tax or capital tax that
part of the income-tax or capital tax which is attributable, as the case may
be, to the income derived from or the capital owned in Denmark. 3. Double
taxation shall be avoided in the case of Denmark as follows : (a) subject to the provisions of sub-paragraph (c),
where a resident of Denmark derives income or owns capital which, in accordance
with the provisions of this Convention, may be taxed in India, Denmark shall
allow : (i) as a deduction from the tax on the income of
that resident, an amount equal to the income-tax paid in India ; (ii) as a deduction from the tax on the capital of
that resident, an amount equal to the capital tax paid in India ; (b) such deduction in either case shall not,
however exceed that part of the income-tax or capital tax, as computed before
the deduction is given, which is attributable, as the case may be, to the
income or the capital which may be taxed in India ; (c) where a resident of Denmark derives income or
owns capital which, in accordance with the provisions of this Convention shall
be taxable only in India, Denmark may include this income or capital in the tax
base, but shall allow as a deduction from the income-tax or capital tax that
part of the income-tax or capital tax which is attributable, as the case may
be, to the income derived from or the capital owned in India ; (d) for the purposes of the deduction referred to
in sub-paragraph (a), the term income-tax paid in India shall be
deemed to include any amount which would have been payable as Indian tax under
the laws of India and in accordance with this Convention for any year but for
an exemption from, or reduction of, tax granted for that year under : (i) Sections 10(4),10(4A), 10(4B),
10(6)(viia), 10(15)(iv), 10A, 32A, 80HH, 80-I, 80J
and 80L of the Income-tax Act, 1961 (43 of 1961), so far as they were in force
on, and have not been modified since, the date of the signature of this
Convention or have been modified only in minor respects so as not to affect its
general character ; or (ii) any other provisions which may be enacted
hereafter granting a deduction in computing the taxable income or an exemption
or reduction from tax which the competent authorities of the Contracting States
agree to be for the purposes of the economic development of India, if it has
not been modified thereafter or has been modified only in minor respects so as
not to affect its general character ; (e) for the purposes of deduction referred to in
sub-paragraph (a), Indian tax on interest and royalties and fees for
technical services shall in no case be considered as having been paid at a rate
of less than, (i) in the case of interest (a) 10 per cent in the case of banks ; and (b) 15 per cent in other cases ; and (ii) 20 per cent in the case of royalties and fees
for technical services. ARTICLE
24 - Non-discrimination - 1. The nationals of a Contracting
State shall not be subjected in the other Contracting State to any taxation or
any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances and under the same conditions are or may be subjected. 2. The
taxation of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State shall not be less favourably levied in
that other State than the taxation levied on enterprises of that other State
carrying on the same activities in the same circumstances and under the same
conditions. 3. Nothing
contained in this Article shall be construed as obliging a Contracting State to
grant to persons not resident in that State any personal allowances, reliefs,
reductions and deductions for taxation purposes which are by law available only
to persons who are so resident. 4. Except
where the provisions of paragraph 1 of Article 10, paragraph 7 of Article 12,
or paragraph 7 of Article 13, apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the
other Contracting State shall, for the purpose of determining the taxable
profits of such enterprise, be deductible under the same conditions as if they
had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting
State to a resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible under the
same conditions as if they had been contracted to a resident of the
first-mentioned State. 5.
Enterprises of a Contracting State the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the
other Contracting State, shall not be subjected in the first-mentioned
Contracting State to any taxation or any requirement connected therewith which
is other or more burdensome than the taxation and connected requirements to
which other similar enterprises of that first-mentioned State are or may be
subjected in the same circumstances and under the same conditions. 6. In
this Article, the term taxation means taxes which are the subject of this
Convention. ARTICLE
25 - Mutual agreement procedure - 1. Where a resident of a
Contracting State considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with this
Convention, he may, notwithstanding the remedies provided by the domestic laws
of those States, present his case to the competent authority of the Contracting
State of which he is a resident. This
case must be presented within three years of the date of receipt of notice of
the action which gives rise to taxation not in accordance with the Convention. 2. The
competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at an appropriate solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to avoidance of taxation which is not in
accordance with the Convention. Any
agreement reached shall be implemented notwithstanding any time limits in the
domestic laws of the Contracting States. 3. The
competent authorities of the Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or
application of the Convention. They may
also consult together for the elimination of double taxation in cases not
provided for in the convention. 4. The
competent authorities of the Contracting States may communicate with each other
directly for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in
order to reach an agreement to have an oral exchange of opinions, such exchange
may take place through a Commission consisting of representatives of the
competent authorities of the Contracting States. ARTICLE
26 - Exchange of information - 1. The competent authorities
of the Contracting States shall exchange such information (including documents)
as necessary for carrying out the provisions of this Convention or of the
domestic laws of the Contracting States concerning taxes covered by the
Convention, insofar as the taxation thereunder is not contrary to the Convention,
in particular for the prevention of fraud or evasion of such taxes. Any
information received by a Contracting State shall be treated as secret in the
same manner as information obtained under the domestic laws of that State. However, if the information is originally
regarded as secret in the transmitting State, it shall be disclosed only to
persons or authorities (including courts and administrative bodies) involved in
the assessment or collection of, the enforcement or prosecution in respect of,
or the determination of appeals in relation to, the taxes which are the subject
of the Convention. Such persons or
authorities shall use the information only for such purposes but may disclose
the information in public court proceedings or in judicial decisions. The competent authorities shall, through
consultation, develop appropriate conditions, methods and techniques concerning
the matters in respect of which such exchange of information shall be made,
including, where appropriate, exchange of information regarding tax avoidance. 2. The
exchange of information or documents shall be either on a routine basis or on
request with reference to particular cases or both. The competent authorities of the Contracting States shall agree
from time to time on the list of the information or documents which shall be
furnished on a routine basis. 3. In no
case shall the provisions of paragraph (1) be construed so as to impose on a
Contracting State the obligation, (a) to carry out administrative measures at
variance with the laws or administrative practice of that or of the other
Contracting State ; (b) to supply information or documents which are
not obtainable under the laws or in the normal course of the administration of
that or of the other Contracting State ; and (c) to supply information or documents which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would be contrary to
public policy. ARTICLE
27 - Assistance in collection - 1. The Contracting States
undertake to lend assistance and support to each other, in the collection of
the taxes to which this Convention relates, in the cases where the taxes are
definitely due according to the laws of the State making the request. 2. In the
case of a request for enforcement or collection, tax claims of either of the
Contracting States which have been finally determined will be accepted for
enforcement by the other Contracting State to which the request is made and
collected in that State in accordance with the laws applicable to the
enforcement and collection of its taxes. 3. In the
case of Indian tax, the request will be sent by the Central Board of Direct
Taxes to the Danish Tax Directorate, Statshattedirektoratet, Post Box 100,
DK-3460 Birkarod, Denmark, and will be accompanied by such certificate as is
required by the laws of India to establish that the taxes have been finally
determined and are due from the taxpayer. 4. In the
case of Danish tax, the request will be sent by the Danish Tax Directorate, to
the Central Board of Direct Taxes, (FTD),
Department of Revenue, Ministry of Finance, North Block, New Delhi - 110
001, India and will be accompanied by such certificate as is required by the
laws of Denmark to establish that the taxes have been finally determined and
are due from the taxpayer. 5. Where
the tax claim has not become final by reason of its being subject to appeal or
any other proceeding, a Contracting State may, in order to protect its
revenues, request the other Contracting State to take such interim measures in
this behalf as are lawful under the laws of that other Contracting State. 6. A
request for assistance in collection of taxes due from a taxpayer shall be made
only if adequate assets of that taxpayer are not available for recovering the
taxes from him in the Contracting State making the request. 7. The
Contracting State in which tax is recovered in pursuance of paragraphs 1, 2 and
5 of this Article shall immediately thereafter remit the amount so recovered to
the Contracting State which made the request but it shall be entitled to
reimbursement of costs, if any, incurred in the course of rendering such
assistance to the extent mutually agreed between the competent authorities of
the two States. ARTICLE
28 - Diplomatic agents and consular officers - Nothing in this
Convention shall affect the fiscal privileges of diplomatic agents or consular
officers under the general rules of international law or under the provisions
of special agreements. ARTICLE
29 - Territorial extension - 1. This Convention may be
extended by common agreement either in its entirety or with such modifications
as are agreed upon to any part of the territory of Demnark which is
specifically excluded from the application of the Convention and which imposes
taxes substantially similar in character to those to which the Convention
applies. Any such extension shall take
effect from such date and subject to such modifications and conditions,
including conditions as to termination, as may be specified and agreed between
the Contracting States in notes to be exchanged through diplomatic channels or
in any other manner in accordance with their constitutional procedures. 2. Unless
otherwise agreed by both Contracting States, the termination of the Convention
by one of them under Article 31 shall also terminate, in the manner provided
for in that Article, the application of the Convention to any part of the
territory of Denmark to which it has been extended under this Article. ARTICLE
30 - Entry into force - 1. The Governments of the Contracting
States shall notify to each other that the constitutional requirements for the
entry into force of this Convention have been complied with. 2. This
Convention shall enter into force on the date of the latter of the
notifications referred to in paragraph 1 and its provisions shall have effect
in respect of tax or the income year beginning on or after 1st January in the
calendar year next following the year in which the latter of the notifications
referred to in paragraph 1 is given, and subsequent income years. 3. The
Agreement between the Governments of India and Denmark for the Avoidance of
Double Taxation of Income, signed at Copenhagen on the 16th September, 1959,
shall cease to have effect at the time when the provisions of this Convention
shall be effective in accordance with the provisions of paragraphs 1 and 2. ARTICLE
31 - Termination - This Convention shall remain in force until
terminated by a Contracting State.
Either Contracting State may terminate the Convention, through
diplo-matic channels, by giving written notification of termination on or
before the thirtieth day of June of any calendar year following after the
period of five years from the year in which the Convention enters into force. In such event, the Convention shall cease to
have effect, in respect of tax for the income year beginning on or after 1st
January in the Calendar year next following the year in which the notification
is given and subsequent income years. IN
WITNESS WHEREOF the undersigned, being duly authorised thereto, have
signed the present Convention. DONE in
duplicate at COPENHAGEN this 8th day of March, one
thousand nine hundred and eighty-nine in the Hindi, Danish and English
languages, all the texts being equally authentic. In case of divergence between any of the texts, the English text
shall be the operative one. PROTOCOL The
Government of India and the Government of the Kingdom of Denmark : Having
entered into a Convention for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and Capital : Have
agreed, at the time of signing the said Convention, on the following provisions
which shall constitute an integral part thereof : (1) For
the purposes of paragraph 3(e) of Article 23, it is understood that the
rates of tax specified therein shall in no case exceed the rate of withholding
tax applicable to such categories of income under the Indian tax laws. (2) For
the purposes of Article 27, a request for assistance in collection of taxes due
from a taxpayer shall not be made unless such taxes aggregate to 2000 Danish
Crowns or its equivalent in Indian currency or more. IN
WITNESS WHEREOF the undersigned, duly authorised thereto, have signed
the present Protocol. DONE in
duplicate at COPENHAGEN this 8th day of March, one
thousand nine hundred eighty-nine in Hindi, Danish and English languages, all
the texts being equally authentic. In
case of divergence between the three texts, English text shall be the operative
one. PROTOCOL At the
moment of signing the Convention for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and Capital
between the Government of the Republic of India and the Government of the
Kingdom of Denmark the signatories have agreed that the following provisions
shall form an integral part of the Convention : 1. The Convention has been extended to apply in
its entirety to the territory of the Faroe Islands. 2. In the Convention the terms the Kingdom of
Denmark and Denmark shall also apply to the Faroe Islands unless the context
otherwise requires. 3. The taxes which in pursuance of the present
protocol are the subject of the Convention shall include the following taxes
which are levied on the Faroe Islands : (a) Skat til landskassen (the provincial
income-tax) ; (b) Kommunalindkomstaskat (the communal
income-tax) ; (c) Kirkeskat (the Church tax) ; (d) Udbytteskat (tax on dividends) ; (e) Ejendomsavanceafgift (tax on profit from real
estate) ; (f) Royaltyafgift (tax on royalty). 4. The
term competent authorities means in the case of the Faroe Islands the Faroe
Local Government or the authority which on behalf of the Local Government has
been authorized to handle questions with reference to the Convention. 5. This
protocol shall enter into force on and have effect from the same date as the
Convention. IN witness WHEREOF the undersigned, duly
authorised thereto, have signed the present Protocol. 6. Done
in duplicate at Copenhagen this 8th day of March, one thousand nine hundred and
eighty-nine in Hindi, Danish and English languages, all the texts being equally
authentic. In case of divergence
between any of the texts, the English text shall be the operative one. Judicial analysis n Where assessee, a Danish company, had undertaken to provide specific
management services relating to construction which had been made part of the
contract and which activity had been made inseparable from its contract of designing
engineering erection and commissioning of Chemical Fertiliser Complex
consisting of Ammonia Plant and Urea Plants, it could not be concluded that
services rendered by assessee were purely technical in nature, enabling
assessee to claim exemption under DTAA in respect of payments received by it
for such servicesHaldor Topsoe v. Dy. CIT [1996] 59 ITD 313
(Mum. - Trib.).
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