AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE PORTUGUESE REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE PORTUGUESE REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Whole document
The Government of the People's Republic of China and the Government
of the Portuguese Republic,
Desiring to conclude an Agreement for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on
income,
Have agreed as follows:
ARTICLE 1 PERSONAL SCOPE
This Agreement shall apply to persons who are residents of one or
both of the Contracting States.
ARTICLE 2 TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf
of a Contracting State or of its administrative subdivisions or local
authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on
total income, or on elements of income, including taxes on gains from
the alienation of movable or immovable property, as well as taxes on
capital appreciation.
3. The existing taxes to which this Agreement shall apply are:
a) in the case of China:
(i) the individual income tax;
(ii) the income tax for enterprises with foreign investment
and foreign enterprises; and
(iii) the local income tax;
(hereinafter referred to as "Chinese tax");
b) in the case of Portugal:
(i) Personal income tax (Imposto sobre o Rendimento das
Pessoas Singulares-IRS);
(ii) Corporate income tax (Imposto sobre o Rendimento
das Pessoas Colectivas-IRC); and
(iii) Local surtax on corporate income tax (Derrama);
(hereinafter referred to as "Portuguese tax").
4. The Agreement shall also apply to any identical or substantially
similar taxes which are imposed after the date of signature of the
Agreement in addition to, or in place of, the existing taxes referred to
in paragraph 3. The competent authorities of the Contracting States
shall notify each other of any substantial changes which have been made
in their respective taxation laws within a reasonable period of time
after such changes.
ARTICLE 3 GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise
requires:
a) the term "China" means the People's Republic of China; when used
in geographical sense, means all the territory of the People's Republic
of China, including its territorial sea, in which the Chinese laws
relating to taxation apply, and any area beyond its territorial sea,
within which the People's Republic of China has sovereign rights of
exploration for and exploitation of resources of the sea-bed and its
sub-soil and superjacent water resources in accordance with
international law;
b) the term "Portugal" means the Portuguese Republic; when used in a
geographical sense, means all the territory of the Portuguese Republic
situated in the European continent, the archipelagos of Azores and
Madeira, the respective territorial sea and any other zone in which, in
accordance with the laws of Portugal and international law, the
Portuguese Republic has its jurisdiction or sovereign rights with
respect to the exploration and exploitation of the natural resources of
the sea-bed and sub-soil, and of the superjacent waters;
c) the terms "a Contracting State" and "the other Contracting State"
mean China or Portugal, as the context requires;
d) the term "tax" means Chinese tax or Portuguese tax, as the
context requires;
e) the term "person" includes an individual, a company and any other
body of persons;
f) the term "company" means any body corporate or any entity which
is treated as a body corporate for tax purposes;
g) the terms "enterprise of a Contracting State" and "enterprise of
the other Contracting State" mean, respectively, and enterprise carried
on by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State;
h) the term "national" means:
(i) all individuals possessing the nationality of a Contracting
State;
(ii) all legal persons, partnerships and associations deriving
their status as such from the laws in force in a Contracting State;
i) the term "international traffic" means any transport by a ship or
aircraft operated by an enterprise of a Contracting State, except when
the ship or aircraft is operated solely between places in the other
Contracting State;
j) the term "competent authority" means:
i) in the case of China, the State Administration of Taxation or
its authorised representative;
ii) in the case of Portugal, the Minister of Finance, the
Director-General of Taxation (Director-Geral dos Impostos) or their
authorised representative.
2. As regards the application of the Agreement by a Contracting
State, any term not defined therein shall, unless the context otherwise
requires, have the meaning which it has under the law of that
Contracting State concerning the taxes to which the Agreement applies.
ARTICLE 4 RESIDENT
1. For the purposes of this Agreement, 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
head office, place of effective management or any other criterion of a
similar nature.
This term, however, does not include any person who is liable to tax
in that State in respect only of income from sources in that State.
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 Contracting State in
which he has a permanent home available to him; if he has a permanent
home available to him in both Contracting States, he shall be deemed to
be a resident of the Contracting State with which his personal and
economic relations are closer (centre of vital interests);
b) if the State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in
either Contracting State, he shall be deemed to be a resident of the
State in which he has an habitual abode;
c) if he has an habitual abode in both Contracting States or in
neither of them, he shall be deemed to be a resident of the Contracting
State of which he is a national;
d) if he is a national of both Contracting States or of neither of
them, the competent authorities of the Contracting States shall settle
the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1, a person other
than an individual is a resident of both Contracting States, then is
shall be deemed to be a resident of the State in which the place of
effective management of its business is situated. However, where such a
person has the place of effective management of its business in one of
the Contracting States and the place of head office of its business in
the other Contracting State, then the competent authorities of the
Contracting States shall determine by mutual agreement the State of
which the person shall be deemed to be resident for the purposes of this
Agreement.
ARTICLE 5 PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent
establishment" means a fixed place of business through which the
business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop, and
f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources.
3. The term "permanent establishment" likewise encompasses:
a) a building site, a construction, assembly or installation
project or supervisory activities in connection therewith, but only
where such site, project or activities continue for a period of more
than 6 months;
b) the furnishing of services, including consultancy services,
by an enterprise of a Contracting State through employees or other
engaged personnel in the other Contracting State, provided that such
activities continue for the same project or a connected project for a
period or periods aggregating more than 6 months within any 12-month
period.
4. Notwithstanding the provisions of paragraphs 1 to 3, the term
"permanent establishment" shall be deemed not to include:
a) the use of facilities solely for the purpose of storage,
display or delivery 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, display or
delivery;
c) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of processing by another
enterprise;
d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting information,
for the enterprise;
e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of a
preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs a) to e), provided
that the overall activity of the fixed place of business resulting from
this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a
person-other than an agent of an independent status to whom the
provisions of paragraph 6 apply-is acting in a Contracting State on
behalf of an enterprise of the other Contracting State, has and
habitually exercises an authority to conclude contracts in the name of
the enterprise, that enterprise shall be deemed to have a permanent
establishment in the first-mentioned Contracting State in respect of any
activities which that person undertakes for the enterprise, unless the
activities of such person are limited to those mentioned in
paragraph 4 which, if exercised through a fixed place of business,
would not make this fixed place of business a permanent establishment
under the provisions of that paragraph.
6. 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.
7. 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 (including income from agriculture or forestry)
situated in the other Contracting State may be taxed in that other
Contracting 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 rights to
variable or fixed payments as consideration for the working of, or the
right to work, mineral deposits, sources and other natural resources.
Ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from
the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income from
immovable property used for the performance of 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 that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of
a Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, there shall in each
Contracting State be attributed to that permanent establishment the
profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the
same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
3. In determining 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.
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 purposes of paragraphs 1 to 5, 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 Agreement, then the provisions of
those Articles shall not be affected by the provisions of this Article.
ARTICLE 8 SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in international
traffic by an enterprise of a Contracting State shall be taxable only in
that Contracting State.
2. If the place of head office or the place of effective management
of a shipping enterprise is aboard a ship, then it shall be deemed to be
situated in the Contracting State in which the home harbour of the ship
is situated, or, if there is no such home harbour, in the Contracting
State of which the operator of the ship is a resident.
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.
ARTICLE 9 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 Contracting State-and taxes accordingly-profits on
which an enterprise of the other Contracting State has been charged to
tax in that other Contracting 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 Contracting State shall make an appropriate
adjustment to the amount of the tax charged therein on those profits,
where that other Contracting State considers such adjustment justified.
In determining such adjustment, due regard shall be had to the other
provisions of this Agreement and the competent authorities of the
Contracting States shall, if necessary, consult each other.
ARTICLE 10 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 10
per cent of the gross amount of the dividends. The provisions of 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 14, 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
Contracting 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 Contracting 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 Contracting State,
nor subject the company's undistributed profits to a tax on the
company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other Contracting State.
ARTICLE 11 INTEREST
1. Interest arising in a Contracting State and paid to a resident of
the other Contracting State may be taxed in that other Contracting
State.
2. However, such interest may also be taxed in the Contracting State
in which it arises and according to the laws of that Contracting State,
but if the recipient is the beneficial owner of the interest, the tax so
charged shall not exceed 10 per cent of the gross amount of the
interest.
3. Notwithstanding the provisions of paragraph 2, interest arising
in a Contracting State shall be exempt from tax in that Contracting
State, where the interest is paid to:
a) in China:
(i) the Government of the People's Republic of China, an
administrative subdivision or a local authority thereof;
(ii) the People's Bank of China;
(iii) the State Development Bank;
(iv) the Import and Export Bank of China;
(v) the Agriculture Development Bank of China;
(vi) any other institution wholly owned by the Government of
China or an administrative subdivision or a local authority thereof as
may be agreed from time to time between the competent authorities of the
Contracting States;
b) in Portugal:
(i) the Government of the Portuguese Republic, an
administrative subdivision or a local authority thereof;
(ii) the General Deposits Bank (Caixa Geral de
Depositos-CGD);
(iii) the National Overseas Bank (Banco Nacional
Ultramarino-BNU);
(iv) Investment, Trade and Tourism of Portugal
(ICEP-Investimentos, Com¨¦rcio e Turismo de Portugal);
(v) any other institution wholly owned by the Government of
Portugal or an administrative subdivision or a local authority thereof
as may be agreed from time to time between the competent authorities of
the Contracting States.
4. The term "interest" as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage and
whether or not carrying a right to participate in the debtor's profits,
and in particular, income from government securities and income from
bonds or debentures, including premiums and prizes attaching to such
securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1, 2 and 3 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 Contracting 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 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the
payer is that State, an administrative subdivision or a local authority
thereof or a resident of that Contracting 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 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 Agreement.
ARTICLE 12 ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other Contracting
State.
2. However, such royalties 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 the tax so
charged shall not exceed 10 per cent of the gross amount of the
royalties.
3. The term "royalties" as used in this Article means payments of
any kind received as a consideration for the use of, or the right to
use, any copyright of literary, artistic or scientific work including
cinematographic films, or films or tapes 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 provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the royalties, being a resident of a Contracting
State, carries on business in the other Contracting State in which the
royalties 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 or property in respect of which the
royalties are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when
the payer is that Contracting State, an administrative subdivision or a
local authority thereof or a resident of that Contracting State. Where,
however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in
connection with which the liability to pay the royalties was incurred,
and such royalties are borne by such permanent establishment or fixed
base, then such royalties shall be deemed to arise in the Contracting
State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and
the beneficial owner or between both of them and some other person, the
amount of the royalties, having regard to the use, right or information
for which they are 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 Agreement.
ARTICLE 13 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 Contracting
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 with the whole
enterprise) or of such fixed base, may be taxed in that other State.
3. Gains of an enterprise of a Contracting State 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 that Contracting State.
4. Gains from the alienation of shares of the capital stock of a
company the property of which consists principally of immovable property
situated in a Contracting State may be taxed in that Contracting State.
5. Gains from the alienation of any property other than that
referred to in paragraphs 1 to 4, shall be taxable only in the
Contracting State of which the alienator is a resident.
ARTICLE 14 INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of
professional services or other activities of an independent character
shall be taxable only in that State except in one of the following
circumstances, when such income may also be taxed in the other
Contracting State:
a) if he has a fixed base regularly available to him in the
other Contracting State for the purpose of performing his activities; in
that case, only so much of the income as is attributable to that fixed
base may be taxed in that other State;
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
calendar year concerned; in that case, only so much of the income as is
derived from his activities performed in that other State may be taxed
in that other State.
2. The term "professional services" includes especially independent
scientific, literary, artistic, educational or teaching activities as
well as the independent activities of physicians, lawyers, engineers,
architects, dentists and accountants.
ARTICLE 15 DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 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 Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration
derived by a resident of a Contracting State in respect of an employment
exercised in the other Contracting State shall be taxable only in the
first-mentioned State if:
a) the recipient is present in the other Contracting State for a
period or periods not exceeding in the aggregate 183 days in the
calendar year concerned; and
b) the remuneration is paid by, or on behalf of, an employer who
is not a resident of the other Contracting State; and
c) the remuneration is not borne by a permanent establishment or
a fixed base which the employer has in the other Contracting 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 Contracting State.
Article 16 DIRECTORS' FEES
1. Directors' fees and other 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 Contracting 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 Contracting State.
ARTICLE 17 ARTISTS AND SPORTSMEN
1. Notwithstanding the provisions of Articles 14 and 15, income
derived by a resident of a Contracting State as an entertainer, such as
a theatre, motion picture, radio or television artist, or a musician, or
as a sportsman, from his personal activities as such exercised in the
other Contracting State, may be taxed in that other Contracting State.
2. Where income in respect of personal activities exercised by an
entertainer or a sportsman in his capacity as such accrues not to the
entertainer or sportsman himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or
sportsman are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2 of this
Article, income mentioned in this Article shall be exempt from tax in
the Contracting State in which the activity of the entertainer or
sportsman is exercised provided that this activity is mainly supported
by this Contracting State or by the other Contracting State or the
activity is exercised under a cultural agreement or arrangement between
the Contracting States.
ARTICLE 18 PENSIONS
Subject to the provisions of paragraph 2 of Article 19, pensions and
other similar remuneration paid to a resident of a Contracting State in
consideration of past employment shall be taxable only in that
Contracting State.
ARTICLE 19 GOVERNMENT SERVICE
1. a) Salaries, wages and other similar remuneration, other than a
pension, paid by the Government of a Contracting State or an
administrative subdivision or a local authority thereof to an individual
in respect of services rendered to that Contracting State or subdivision
or authority thereof shall be taxable only in that Contracting State.
b) However, such salaries, wages and other similar remuneration
shall be taxable only in the other Contracting State if the services are
rendered in that other Contracting State and the individual is a
resident of that other Contracting State who:
(i) is a national of that Contracting State; or
(ii) did not become a resident of that Contracting State
solely for the purpose of rendering the services.
2. a) Any pension paid by, or out of funds created by the Government
of a Contracting State or an administrative subdivision or a local
authority thereof to an individual in respect of services rendered to
that Contracting State or subdivision or authority thereof shall be
taxable only in that Contracting State.
b) However, such pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a national of,
that other Contracting State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to
salaries, wages and other similar remuneration, and to pensions, in
respect of services rendered in connection with a business carried on by
the Government of a Contracting State or an administrative subdivision
or a local authority thereof.
ARTICLE 20 TEACHERS AND RESEARCHERS
1. An individual who is, or immediately before visiting a
Contracting State, was a resident of the other Contracting State and who
is present in the first-mentioned State solely for the purpose of
teaching, giving lectures or conducting research at a university,
college, school or other similar educational institution or scientific
research institution accredited by the Government of the first-mentioned
Contracting State and is recognised as non-profitable by that Government
of the first-mentioned Contracting State or under an official programme
of cultural exchange shall be exempt from tax in the first-mentioned
Contracting State, for a period of three years from the date of his
first arrival in the first-mentioned Contracting State, in respect of
remuneration for such teaching, lectures or research.
2. The exemption granted under paragraph 1 shall not apply to income
from research if such research is undertaken not in the public interest
but primarily for the private benefit of a specific person or persons.
ARTICLE 21 STUDENTS AND TRAINEES
A student, business apprentice or trainee who is or was immediately
before visiting a Contracting State a resident of the other Contracting
State and who is present in the first-mentioned State solely for the
purpose of his education or training shall be exempt from tax in that
first-mentioned State on the following payments or income received or
derived by him for the purpose of his maintenance, education or
training:
a) payments derived from sources outside that Contracting State
for the purpose of his maintenance, education, study, research or
training;
b) grants, scholarship or awards supplied by the Government, or
a scientific, educational, cultural or other tax-exempt organization.
ARTICLE 22 OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Agreement
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 14, as the case may
be, shall apply.
ARTICLE 23 METHODS FOR THE ELIMINATION OF DOUBLE TAXATION
1. In China, double taxation shall be eliminated as follows:
a) Where a resident of China derives income from Portugal, the
amount of tax on that income payable in Portugal in accordance with the
provisions of this Agreement, may be credited against the Chinese tax
imposed on that resident. The amount of the credit, however, shall not
exceed the amount of the Chinese tax on that income computed in
accordance with the taxation laws and regulations of China.
b) Where the income derived from Portugal is a dividend paid by
a company which is a resident of Portugal to a company which is a
resident of China and which owns not less than 10 per cent of the shares
of the company paying the dividend, the credit shall take into account
the tax paid to Portugal by the company paying the dividend in respect
of its income.
2. In Portugal, double taxation shall be eliminated as follows:
a) Where a resident of Portugal derives income which, in
accordance with the provisions of this Agreement, may be taxed in China,
Portugal shall allow as a deduction from the tax on the income of that
resident an amount equal to the income tax paid in China; such deduction
shall not, however, exceed that part of the income tax as computed
before the deduction is given, which is attributable to the income which
may be taxed in China; and
b) Where in accordance with any provision of this Agreement
income derived by a resident of Portugal is exempt from tax in this
State, Portugal may nevertheless, in calculating the amount of tax on
the remaining income of such resident, take into account the exempted
income.
3. The tax paid in a Contracting State mentioned in paragraphs 1 and
2 shall be deemed to include the tax which would have been payable but
for the legal provisions concerning tax reduction, exemption or other
tax incentives for a limited period of time in accordance with the laws
of that State for the promotion of economic development.
The provisions of this paragraph shall apply only to the income
foreseen in Articles 7, 10, 11 and 12 and for the period of the first
ten years during which this Agreement is effective. This period may be
extended by mutual agreement between the competent authorities of the
Contracting States.
ARTICLE 24 NON-DISCRIMINATION
1. 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, in particular with respect to residence, are or may
be subjected. This provision shall, notwithstanding the provisions of
Article 1, also apply to persons who are not residents of one or both of
the Contracting States.
2. The taxation on a permanent establishment which an enterprise of
a Contracting State has in the other Contracting State shall not be less
favorably levied in that other State than the taxation levied on
enterprises of that other State carrying on the same activities. This
provision shall not be construed as obliging a Contracting State to
grant to residents of the other Contracting State any personal
allowances, relieves and reductions for taxation purposes on account of
civil status or family responsibilities which it grants to its own
residents.
3. Except where the provisions of paragraph 1 of Article 9,
paragraph 7 of Article 11, or paragraph 6 of Article 12, 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.
4. 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 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 the
first-mentioned State are or may be subjected.
5. The provisions of this Article shall, notwithstanding the
provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 25 MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in
accordance with the provisions of this Agreement, he may, irrespective
of the remedies provided by the domestic law of those States, present
his case to the competent authority of the Contracting State of which he
is a resident or, if his case comes under paragraph 1 of Article 24, to
that of the Contracting State of which he is a national. The case must
be presented within three years from the first notification of the
action resulting in taxation not in accordance with the provisions of
the Agreement.
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 a
satisfactory solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Agreement. Any
agreement reached shall be implemented notwithstanding any time limits
in the domestic law 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 Agreement. They
may also consult together for the elimination of double taxation in
cases not provided for in the Agreement.
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 paragraphs 2 and 3. When it seems advisable
for reaching agreement, representatives of the competent authorities of
the Contracting States may meet together for an oral exchange of
opinions.
ARTICLE 26 EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall
exchange such information as is necessary for carrying out the
provisions of this Agreement or of the domestic laws of the Contracting
States concerning taxes covered by the Agreement, insofar as the
taxation thereunder is not contrary to the Agreement, in particular for
the prevention of evasion or avoidance of such taxes. The exchange of
information is not restricted by Article 1. Any information received by
a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that Contracting State
and shall be disclosed only to persons or authorities (including courts
and administrative bodies) concerned with the assessment or collection
of, the enforcement or prosecution in respect of, or the determination
of appeals in relation to, the taxes covered by the Agreement. Such
persons or authorities shall use the information only for such purposes.
They may disclose the information in public court proceedings or in
judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as
to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws
and administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or
in the normal course of the administration of that or of the other
Contracting State;
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy
(public order).
ARTICLE 27 MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of
members of diplomatic missions or consular posts under the general rules
of international law or under the provisions of special agreements.
ARTICLE 28 ENTRY INTO FORCE
This Agreement shall enter into force on the thirtieth day after the
date on which diplomatic notes indicating the completion of internal
legal procedures necessary in each country for the entry into force of
this Agreement have been exchanged. This Agreement shall have effect:
a) in China:
in respect of income derived during the taxable years beginning on
or after the first day of January in the calendar year next following
that in which this Agreement enters into force;
b) in Portugal:
(i) in respect of taxes withheld at source, the fact giving rise
to them appearing on or after the first day of January in the calendar
year next following that in which this Agreement enters into force; and
(ii) in respect of other taxes, as to income arising in any
fiscal year beginning on or after the first day of January in the
calendar year next following that in which this Agreement enters into
force.
ARTICLE 29 TERMINATION
This Agreement shall continue in effect indefinitely but either of
the Contracting States may, on or before the thirtieth day of June in
any calendar year beginning after the expiration of a period of five
years from the date of its entry into force, give written notice of
termination to the other Contracting State through the diplomatic
channels. In such event, this Agreement shall cease to have effect:
a) in China:
in respect of income derived during the taxable years beginning on
or after the first day of January in the calendar year next following
that in which the notice of termination is given;
b) in Portugal:
(i) in respect of taxes withheld at source, the fact giving rise
to them appearing on or after the first day of January in the calendar
year next following that in which the notice of termination is given;
(ii) in respect of other taxes, as to income arising in the
fiscal year beginning on or after the first day of January in the
calendar year next following that in which the notice of termination is
given. DONE in duplicate at .... this .... day of .... of the year
........ in the Chinese, Portuguese and English languages, all texts
being equally authentic. In case of divergency of interpretation, the
English text shall prevail.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
THE PEOPLE'S REPUBLIC OF CHINA THE PORTUGUESE REPUBLIC
PROTOCOL
At the signature of the Agreement between the Government of the
People's Republic of China and the Government of the Portuguese Republic
for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income, the undersigned have agreed
upon the following provisions which shall form an integral part of the
Agreement:
With reference to Article 24
a) The provisions of Article 24 do not preclude the application of
any provisions of the tax law of the Contracting States dealing with
thin capitalization problems.
b) The provisions of Article 24 shall be construed in the sense that
insofar as the deductibility of the incurred disbursement is incurred,
each Contracting State may apply its own procedure regarding the burden
of proof.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by
their respective Governments, have signed this Protocol.
DONE in duplicate at ..... this .... day of .... of the year
........ in the Chinese, Portuguese and English languages, all texts
being equally authentic. In case of divergency of interpretation, the
English text shall prevail.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
THE PEOPLE'S REPUBLIC OF CHINA THE PORTUGUESE REPUBLIC
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