POLAND
38. Agreement for avoidance of
double taxation and prevention of fiscal evasion with Poland
Whereas the
annexed Agreement between the Government of the Republic of India and the
Government of the Polish People’s Republic for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income has come
into force on the 26th October, 1989, after the notification by both the Contracting
States and communication to each other of the completion of procedures required
under their laws for bringing into force of the said Agreement in accordance
with article 30 of the said Agreement ;
Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Agreement shall be given effect to in the Union of India.
Notification : No. GSR 72(E), dated 12-2-1990.
Annexure
Agreement between the Republic of India and the Government of the
Polish People’s Republic for the avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income
The Government
of the Republic of India and the Government of the Polish People’s Republic
desiring to further develop and facilitate the economic relationship between
the two countries, and having decided 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. The taxes
to which this Agreement shall apply are :
(a) in India :
(i) the income-tax including any surcharge thereon
imposed under the Income-tax Act, 1961 ;
(ii) the surtax imposed under the Companies
(Profits) Surtax Act, 1964 ;
(hereinafter referred to as
“Indian tax”)
(b) in Poland :
(i) the income-tax (podatek dechodowy) ;
(ii) the tax on wages and salaries (podatek od
wynagrodzen) ;
(iii) the equalisation tax (podatek wyrdwanawczy) ;
and
(iv) the agriculture tax (podatek rolny).
(hereinafter referred to as
“Polish tax”).
2. The Agreement 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 Agreement in
addition to, or in place of, the taxes referred to in paragraph 1. The
competent authorities of the Contracting States shall notify each other of any
substantial changes which are made in their respective taxation laws, which are
the subject of this Agreement.
ARTICLE 3 - General definitions - 1. In
this Agreement, unless the context otherwise requires :
(a) the term “India” means the Republic of India and, when used in a
geographical sense means the territory of the Republic of India and any
maritime area adjacent to the territorial waters of the Republic of India
within which, under the laws of India and in accordance with international law,
the Republic of India has sovereignty or sovereign and exclusive rights ;
(b) the term “Poland” means the Polish People’s Republic and when used
in a geographical sense means the territory of the Polish People’s Republic and
any maritime area adjacent to the territorial waters of the Polish People’s
Republic within which, under the laws of the Polish People’s Republic and in
accordance with international law, the Polish People’s Republic has sovereignty
or sovereign and exclusive rights ;
(c) the terms “a Contracting State” and “the other Contracting State”
mean India or Poland, as the context requires ;
(d) the term “tax” means Indian tax or Polish tax as the context
requires, but shall not include any amount which is payable in respect of any
default or omission in relation to the taxes to which this Agreement 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 Poland, the Minister of Finance
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 the status from the laws in force in the
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 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 State
concerning the taxes to which the Agreement applies.
ARTICLE 4 - Fiscal residence - 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 management or any other criterion of a
similar nature.
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 the question of residence cannot be determined according to the
provisions of sub-paragraphs (a) to (c), 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 Agreement, 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) premises used as sales outlet or for receiving
or soliciting orders ;
(j) an installation or structure used for the exploration of natural
resources ;
(k) a building site or construction, installation or assembly project
or supervisory activities in connection therewith, where such site, project or
activities continue for a period of more than six months.
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 ;
(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
similar activities which have a preparatory or auxiliary character, for the
enterprise.
However, the
provisions of sub-paragraphs (a) to (e) shall not be applicable
where the enterprise maintains any other fixed place of business in the other
Contracting State for any purposes other than the purposes specified in the
said sub-paragraphs.
4. Notwithstanding the provisions of paragraphs
1 and 2 where a person - other than an agent of an independent status to whom
paragraph 5 applies is acting in a Contracting State on behalf of an enterprise
of the other Contracting State, that enterprise shall be deemed to have a
permanent establishment in the first mentioned State, if—
(a) he has and habitually exercises in that State an authority to
conclude contracts on behalf of the enterprise, unless his activities are
limited to the purchase of goods or merchandise for the enterprise ; or
(b) he has no such authority, but habitually maintains in the
first-mentioned State a stock of goods or merchandise from which he regularly
delivers goods or merchandise on behalf of the enterprise.
5. An enterprise of a Contracting State shall
not be deemed to have a permanent establishment in the other Contracting State
merely because it carries on business in that other State through a broker,
general commission agent or any other agent of an independent status provided
that such persons are acting in the ordinary course of their business. However,
when the activities of such an agent are devoted wholly or almost wholly on
behalf of that enterprise itself or on behalf of that enterprise and other
enterprises controlling, controlled by, or subject to the same common control,
as that enterprise, he will not be considered an agent of an independent status
within the meaning of this paragraph.
6. The fact that a company which is a resident
of a Contracting State controls or is controlled by a company which is a
resident of the other Contracting State or which carries on business in that
other 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
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 for immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources. Ships, boats and aircraft shall
not be regarded as immovable property.
3. The provisions of paragraph 1 shall also
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
4. The provisions of paragraphs 1 and 3 shall
also apply to the income from immovable property of an enterprise and to income
from immovable property used for the performance 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 those sold through that permanent
establishment; or (c) other business activities carried on in that other
State of the same or similar kind as those affected 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 a deduction expenses which are
incurred for the purpose 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 (other than towards reimbursement of actual
expenses) by the permanent establishment to the head office of the enterprise
or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents, know-how or other rights, or by way
of commission or other charges, for specific services performed or for
management, or except in the case of a banking enterprise, by way of interest
on moneys lent to the permanent establishment. Likewise, no account shall be
taken, in the determination of the profits of a permanent establishment, for
amounts charged (otherwise than towards reimbursement of actual expenses) by
the permanent establishment to the head office of the enterprise or any of its
other offices by way of royalties, fees or other similar payments in return for
the use of patents, know-how or other rights, or by way of commission or other
charges for specific services performed or for management, or except in the
case of a banking enterprise, by way of interest on moneys lent to the head
office of the enterprise or any of its other offices.
4. No profits shall be attributable to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
5. For the purposes of the preceding paragraphs,
the profits to be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and sufficient reason to
the contrary.
6. Where profits include items of income which
are dealt with separately in other Articles of this Agreement, then the
provisions of these 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. 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.
4. 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 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. If the place of effective management of an
enterprise carrying on shipping in international traffic 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 in which the operator of the ship is a resident.
3. The provisions of paragraph 1 shall also
apply to profits derived from the participation in a pool, a joint business or
in an international operating agency.
4. Notwithstanding anything contained in
paragraph 1 and article VIII of the Agreement dated 27 June, 1960 between the
Government of India and the Government of the Polish People’s Republic
regarding shipping cooperation, income derived by an enterprise of a
Contracting State from the operation of ships from the ports of the other
Contracting State to the ports of third countries and from the ports of third
countries to the ports of the other Contracting State may be taxed in the other
Contracting State, but the tax imposed in that other Contracting State shall be
reduced by an amount equal to 50 per cent thereof.
ARTICLE 10 - Associated enterprises - 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.
ARTICLE 11 - Dividends - 1. Dividends paid
by a company which is resident of a Contracting State to a resident of the
other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in
the Contracting State of which the company paying the dividends is a resident
and according to the laws of that State, but if the recipient is the beneficial
owner of the dividends, the tax so charged shall not exceed 15 per cent of the
gross amount of the dividends where such dividends relate to contributions made
after the entry into force of this Agreement.
The 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 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
so far as the holding in respect of which the dividends are paid is effectively
connected with a permanent establishment or a fixed base situated in that other
State, nor subject the company’s undistributed profits to a tax on the
company’s undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
ARTICLE 12 - Interest - 1. Interest arising
in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other State.
2. However, such interest may also be taxed in
the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 15 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph
2,—
(a) interest arising in a Contracting State shall be exempt from tax in
that State provided it is derived and beneficially owned by :
(i) the Government, a political sub-division or a
local authority of the other Contracting State ; or
(ii) the Central Bank of the other Contracting
State ;
(b) interest arising in a Contracting State shall be exempt from tax in
that State if it is beneficially owned by a resident of the other Contracting
State and is derived in connection with a loan or credit extended or endorsed
by :
(i) in the case of Poland, Bank Handlowy w
Warszawie SA to the extent such interest is attributable to financing of
exports and imports only ;
(ii) in the case of India, the Export-Import Bank
of India (Exim Bank) to the extent such interest is attributable to financing
of exports and imports only ;
(iii) any institution of a Contracting State in
charge of public financing of external trade ;
(iv) any other person provided that the loan or credit is approved by
the Government of the first-mentioned Contracting State.
4. The term “interest” as used in this article
means income from debt-claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the debtor’s profits, and
in particular, income from Government securities and income from bonds or
debentures, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as
interest for the purpose of this article.
5. The provisions of paragraphs 1 and 2 shall not
apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In
such case, the provisions of article 7 or article 15, as the case may be, shall
apply.
6. Interest shall be deemed to arise in a
Contracting State when the payer is that 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 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 - 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 22.5 per cent of the gross amount of the royalties or
fees for technical services.
3. The term “royalties” as used in this article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work, including
cinematograph films or tapes used for radio or television broadcasting, any
patent, trade mark, design or model, plant, 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 a person making payments, in consideration for the
services of a managerial, technical or consultancy nature, including the
provision of services of technical or other personnel.
5. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case, the provisions of article 7 or
article 15, as the case may be, shall apply.
6. Royalties and fees for technical services
shall be deemed to arise in a Contracting State when the payer is that State itself,
a political sub-division, a local authority or a resident of that State. Where,
however, the person paying the royalties or fees for technical services,
whether he is a resident of a Contracting State or not, has in a Contracting
State a permanent establishment or a fixed base in connection with which the
liability to pay the royalties or fees for technical services was incurred, and
such royalties or fees for technical services are borne by such permanent
establishment or fixed base, then such royalties or fees for technical services
shall be deemed to arise in the State in which the permanent establishment or
fixed base is situated.
7. Where, by reason of special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of royalties or fees for technical services paid
exceeds the amount which would have been paid in the absence of such
relationship, the provisions of this article shall apply only to the
last-mentioned amount, and 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 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.
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.
6. Gains from the alienation of any property
other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only
in the Contracting State of which the alienator is a resident.
ARTICLE 15 - Independent personal services - 1.
Income derived by an individual who is a resident of a Contracting State from
the performance of professional services or other independent activities of a
similar character shall be taxable only in that State except in the following
circumstances when such income may also be taxed in the other Contracting
State :
(a) if he has a fixed base regularly available to him in the other
Contracting State for the purpose of performing his activities; in that case,
only so much of the income as is attributable to that fixed base may be taxed
in that other State ; or
(b) if his stay in the other Contracting State is for a period or
periods amounting to or exceeding in the aggregate 183 days in the relevant
“previous year” or “year of income”, as the case may be; in that case, only so
much of the income as is derived from his activities performed in that other
State may be taxed in that other State.
2. The term “professional services” includes
independent scientific, literary, artistic, educational, or teaching
activities, as well as the independent activities of physicians, surgeons,
lawyers, engineers, architects, dentists and accountants.
ARTICLE 16 - Dependent personal services - 1.
Subject to the provisions of Articles 17, 18, 19, 20, 21 and 22, salaries,
wages and other similar remuneration derived by a resident of a Contracting
State in respect of an employment shall be taxable only in that State unless
the employment is exercised in the other Contracting State. If the employment
is so exercised, such remuneration as is derived therefrom may be taxed in that
other State.
2. Notwithstanding the provisions of paragraph
1, remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if :
(a) the recipient is present in the other State for a period or periods
not exceeding in the aggregate 183 days in the relevant “previous year” or
“year of income”, as the case may be ; and
(b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other State ; and
(c) the remuneration is not borne by a permanent establishment or a
fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of
this article, remuneration derived in respect of an employment exercised aboard
a ship or aircraft operated in international traffic by an enterprise of a
Contracting State may be taxed in that State.
ARTICLE 17 - Directors’ fees 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 - Income earned by entertainers and
athletes - 1. Notwithstanding the provisions of Articles 15 and 16,
income derived by a resident of a Contracting State as an entertainer such as a
theatre, motion picture, radio or television artiste or a musician or as an
athlete, from his personal activities as such exercised in the other
Contracting State may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or athlete in his capacity as such
accrues not to the entertainer or athlete himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed
in the Contracting State in which the activities of the entertainer or athlete
are exercised.
3. Notwithstanding the provisions of paragraph
1, income derived by an entertainer or an athlete who is a resident of a
Contracting State from his personal activities as such exercised in the other
Contracting State, shall be taxable only in the first-mentioned Contracting
State, if the activities in the other Contracting State are within the
framework of cultural or sports exchange programme agreed to by both
Contracting States and 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 the activities
of that other person are within the framework of cultural or sports exchange
programme agreed to by both Contracting States and are 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 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 Contracting
State or a political sub-division or local authority thereof in discharge of
functions of a governmental nature, shall be taxable only in that Contracting
State.
(b)
However, such remuneration shall be taxable only in the other Contracting State
if the services are rendered in that other State and the individual is a
resident of that State who :
(i) is a national of that State; or
(ii) did not become a resident of that State solely
for the purpose of rendering the services.
2. (a) Any pension paid by, or out of
funds created by a Contracting State or a political sub-division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-division or authority shall be taxable only in that State.
(b)
However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that other State.
3. The provisions of Articles 16, 17 and 18
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
sub-division or local authority thereof.
Article 20 - Non-governmental
pensions and annuities - 1. Any pension, other than a pension referred to
in Article 19, or any annuity derived by a resident of a Contracting State from
sources within the other Contracting State may be taxed only in the
first-mentioned Contracting State.
2. The term “pension” means a periodic payment
made in consideration of past services or by way of compensation for injuries
received in the course of performance of services.
3. The term “annuity” means a stated sum payable
periodically at stated times during life or during a specified or ascertainable
period of time, under an obligation to make the payments in return for adequate
and full consideration in money or money’s worth.
Article 21 - Payments
received by students and apprentices - 1. Payments which a student or
business apprentice who is or was immediately before visiting a Contracting State
a resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or training
receives for the purpose of his maintenance, education or training shall not be
taxed in that State, provided that such payments arise from sources outside
that State.
2. Income derived by a student or business
apprentice in respect of activities exercised in a Contracting State in which
he is present solely for the purpose of his education or training, shall not be
taxable in that State, unless it exceeds the amount necessary for his
maintenance, education or training.
3. The benefits of this Article shall extend
only for such period of time as may be reasonable or customarily required to
complete the education or training undertaken, but in no event shall any
individual have the benefits of this Article, for more than five consecutive
years from the date of his first arrival in that other Contracting State.
(4) For
the purposes of this Article and Article 22, an individual shall be deemed to
be a resident of a Contracting State if he is resident in that Contracting
State in the “previous year” or the “year of income”, as the case may be, in
which he visits the other Contracting State or in the immediately preceding
“previous year” or “year of income”.
Article 22 - Payments
received by professors, teachers and research scholars - 1. A professor or
teacher who is or was a resident of one of the Contracting States immediately
before visiting the other Contracting State for the purpose of teaching or
engaging in research, or both, at a university, college, school or other
approved institution in that other Contracting State shall be exempt from tax
in that other State or any remuneration for such teaching or research for a
period not exceeding two years from the date of his arrival in that other
State.
2. This Article shall not apply to income from
research if such research is not in public interest but is undertaken primarily
for the private benefit of a specific person or persons.
3. For the purposes of paragraph 1, “approved
institution” means an institution which has been approved in this regard by the
competent authority of the concerned Contracting State.
Article 23 - Other
income - 1. Subject to the provisions of paragraph 2, items of income of a
resident of Contracting State, wherever arising which are not expressly 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
in 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
of property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such cases, 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 Agreement, and arising in the other Contracting
State may be taxed in that other State.
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. The competent authorities
shall through consultations develop appropriate bilateral procedures,
conditions, methods and techniques for the implementation of the mutual
agreement procedure provided for in this Article.
Article 24 - Elimination
of double taxation - 1. The laws in force in either of the Contracting
States will continue to govern the taxation of income in the respective
Contracting States except where provisions to the contrary are made in this
Agreement.
2. In both the Contracting States, double
taxation will be avoided in the following manner :
(a) Where a resident of a Contracting State derives income which, in
accordance with the provisions of this agreement, may be taxed in the other
Contracting State, the first-mentioned State shall, subject to the provisions
of sub-paragraph (b) of this paragraph, exempt such income from tax but
may, in calculating tax on the remaining income of that person, apply the rate
of tax which would have been applicable if the exempted income has not been so
exempted.
(b) Either of the Contracting States when imposing taxes on its
residents may include in the tax base upon which such taxes are imposed the
items of income which according to the provisions of articles 11, 12 and 13 of
this Agreement may also be taxed in the other State but shall allow as a
deduction from the amount of tax computed on such a base an amount equal to the
tax paid in other Contracting State. Such deduction shall not, however, exceed
that part of tax leviable by the first-mentioned State, as computed before the
deduction is given, which is appropriate to the income which, in accordance
with the provisions of Articles 11, 12 and 13 of this Agreement, may be taxed
in the other State.
3. For the purpose of sub-paragraph (b)
of paragraph 2 the term “tax paid in the other Contracting State” shall be
deemed to include any amount which would have been payable as tax but for any
relief by way of a deduction allowed in computing the taxable income or an
exemption or a reduction of tax or otherwise under the laws relating to
taxation of income in force in that other Contracting State.
Article 25 - Non-discrimination
- 1. The nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation, and connected requirements
to which nationals of that other State in the same circumstances and under the
same conditions are or may be subjected.
2. The taxation on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other State than the taxation
levied on enterprises of that other State carrying on the same activities in
the same circumstances or under the same conditions.
3. 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. 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.
5. In this Article, the term “taxation” means
taxes which are the subject of this Agreement.
6. Except where the provisions of Article 11, paragraph
7 of Article 12, or paragraph 7 of Article 13 of this Agreement 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.
7. The exemptions, reliefs, reductions,
deductions and allowances for taxation purposes available under the domestic
laws of the two Contracting States shall not be adversely affected by any
provision of this Agreement.
Article 26 - 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 Agreement, he may,
notwithstanding the remedies provided by the national laws of those States,
present his case to the competent authority of the Contracting State of which
he is a resident. 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 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 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 not in accordance with the Agreement. Any agreement
reached shall be implemented notwithstanding any time limits in the national
laws of the Contracting States.
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the 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 the preceding paragraphs. When it seems advisable in
order to reach agreement to have an oral exchange of opinions, such exchange
may take place through a Commission consisting of representatives of the
competent authorities of the Contracting States.
Article 27 - Exchange
of information - 1. The competent authorities of the Contracting States
shall exchange such information (including documents) as is necessary for
carrying out the provisions of the 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 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 Agreement. 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;
(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 28 - 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 agreement
relates, in the cases where the taxes are definitely due according to the laws
of the States making the request.
2. In the case of a request for enforcement of
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, Department of Revenue, Ministry
of Finance, India to Minister of Finance, Poland or his authorised
representative 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 Poland tax, the request will
be sent by the Minister of Finance, Poland or his authorised representative to
the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance,
India and will be accompanied by such certificate as is required by the laws of
Poland 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.
Article 29 - Diplomatic
and Consular Activities - Nothing in this Agreement shall affect the fiscal
privileges of diplomatic or consular officials under the general rules of
international law or under the provisions of special agreements.
Article 30 - Entry
into force - Each of the Contracting States shall notify to the other the
completion of the procedures required by its law for the bringing into force of
this Agreement. This Agreement shall enter into force on the date of the later
of these notifications and shall thereupon have effect:
(a) in India, in respect of income arising in any previous year
beginning on or after the first day of April next following the calendar year
in which the later of the notifications is given ;
(b) in Poland, in respect of income arising in any year of income
beginning on or after the first day of January next following the calendar year
in which the later of the notifications is given.
Article 31 - Termination
- This Agreement shall remain in force indefinitely but either of the
Contracting States may, on or before the thirtieth day of June in any calendar
year beginning after the expiration of a period of five years from the date of
its entry into force, give the other Contracting State through diplomatic
channels, written notice of termination and, in such event, this Agreement
shall cease to have effect :
(a) in India, in respect of income arising in any previous year
beginning on or after the 1st day of April next following the calendar year in
which the notice is given ;
(b) in Poland, in respect of income arising in any year of income
beginning on or after the 1st day of January next following the calendar year
in which the notice of termination is given.
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Agreement.
Done in duplicate at WARSAW this twenty-first day
of June, one thousand nine hundred and eighty-nine in the Hindi, Polish and
English languages, all the texts being equally authentic. In case of divergence
between the Hindi and Polish texts the English text shall prevail.