Double Tax Treaty Brazil X Austria

Date of Conclusion: 24 May 1975

Effective Date: 1 January 1977

 

CONVENTION Between the Republic of Austria and the Federative Republic of Brazil for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital

 

The Republic of Austria and the Federative Republic of Brazil, desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income and capital, have agreed as follows:

Article 1
Personal scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2
Taxes covered

1. The existing taxes to which the Convention shall apply are:

a.       In the case of Brazil:

– the income tax, excluding the tax on excess remittances and on activities of minor importance (hereinafter referred to as ” Brazilian tax”).

b.      In the case of Austria:

– 1. the income tax (die Einkommensteuer);

– 2. the corporation tax (die Körperschaftsteuer );

– 3. the contribution from income for the promotion of residential building and for the equalisation of family burdens ( der Beitrag von Einkommen zur Förderung des Wohnbaues and für Zwecke des

Familienlastenausgleiches );

– 4. the contribution from income to the emergency (der Katastrophenfondsbeitrag von Einkommen);

– 5. the special tax on income (die Sonderabgabe von Einkommen)

– 6. the directors’ tax (die Aufsichtsratsabgabe );

– 7. the capital tax (die Vermögensteuer );

– 8. the contribution from capital to the emergency fund (der Katastrophenfondsbeitrag von Vermögen);

– 9. the special tax on capital (die Sonderabgabe vom Vermögen);

-10. the tax on property eluding death duties (die Abgabe vom Vermögen, die der Erbschaft ssteuer entzogen sind);

– 11. the tax on commercial and industrial enterprises, including the tax levied on the sum of wages

(die Gewerbesteuer einschliesslich der Lohnsummensteuer);

– 12. the land tax (die Grundsteuer );

– 13. the tax on agricultural and forestry enterprises (die Abgabe von land und forstwirtschaftlichen Betrieben);

– 14. the contributions from agricultural and forestry enterprises, to the fund for the equalisation of family burdens (die Beiträge von land- und forstwirtschaftlichen Betrieben zum Ausgleichs fonds für Familienbeihilfen);

-15. the tax on the value of vacant plots (die Abgabe von Bodenwert bei unbebauten Grundstücken).

2. The Convention shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation laws, especially as far as Article 23, paragraph 7, is concerned.

Article 3
General definitions

1. In this Convention, unless the context otherwise requires:

a) the term “Brazil” means the Federative Republic of Brazil;

b) the term “Austria” means the Republic of Austria;

c) the terms “a Contracting State” and “the other Contracting State” mean Brazil or Austria as the context requires;

d) the term “person” comprises an individual, a company and any other body of persons;

e) the term “company” means any body Corporate or any entity which is treated as a body Corporate for tax purposes;

f) 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;

g) the term “competent authority” means:

i) In Brazil: the Minister of Finance, the Secretary of Federal Revenue or their authorized representative;

ii) In Austria: the Federal Minister of Finance.

2.      As regards the application of the Convention by a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the law of that Contracting State relating to the taxes which are the subject of the Convention.

Article 4
Fiscal domicile

1. For the purposes of this Convention, the term “resident of a Contracting States” means any person who, under the law of that State, is liable to taxation 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 this case shall be determined in accordance with the following rules;

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 closest (center of vital interests).

b) If the Contracting State in which he has his center 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 Contracting 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 proceed according to Article 25.

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 Contracting State in which its place of effective management is situated.

Article 5
Permanent establishment

1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

2. The term “permanent establishment” shall include especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) a workshop;

f) a mine, quarry or other place of extraction of natural resources;

g) a building site or construction or assembly project which exists for more than six months.

3. The term “permanent establishment” shall not be deemed 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 for 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, the scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

4. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State – other than an agent of an independent status to whom paragraph 5 applies – shall be deemed to be a permanent establishment in the first-mentioned Contracting State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for 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, where such persons are acting in the ordinary course of their business.

6. An insurance company of a Contracting State shall furthermore be deemed to have a permanent establishment in the other State provided that, through a representative, it receives premiums or secures risks in that other State.

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 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 from immovable property may be taxed in the Contracting State in which such property is situated.

2.  a) The term “immovable property” shall, subject to the provisions of sub-paragraphs b) and c) below, be defined in accordance with the law of the Contracting State in which the property in question is situated.

b) The term “immovable property” 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 immovable 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.

c) 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 professional 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 are attributable to that permanent establishment.

2. 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 the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred.

4. 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.

5. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

6. The provisions of paragraphs 1 to 5 shall also apply to income derived by the “Stille

Gesellschafter” of a “Stille Gesellschaft” of the Austrian law.

Article 8
Shipping and air transport

Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

Article 9
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 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, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case, the provisions of Article 7 shall apply.

4. The term “dividends” as used in this Article means, income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other Corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident.

5. Where a company which is a resident of Austria has a permanent establishment in Brazil that permanent establishment may be subject to a tax withheld at source in accordance with Brazilian law. However such a tax cannot exceed 15 per cent of the gross amount of the profits of that permanent establishment determined after the payment of the Corporate tax related to such profits.

6. The tax rate limitation foreseen in paragraphs 2 and 5 shall not apply to dividends or profits paid or remitted from Brazil before the 1st of January, 1976.

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 State .

2. However, such interest may be taxed in the Contracting State in which it arises but the tax so charged shall not exceed l5 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraphs 1 and 2:

a) Interest arising in a Contracting State and paid to the Government. of the other Contracting State, a political subdivision or a public community thereof, or any agency (including a financial institution) wholly owned by that Government, political subdivision or public community, shall be exempt from tax in the first-mentioned Contracting State.

b) Interest arising from securities, bonds or debentures issued by the Government of a Contracting State or any agency (including a financial institution) owned by that Government, and paid to a resident of the other Contracting State shall be taxable only in the first mentioned State.

4. The term “interest” as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as other income assimilated to income from money lent by the taxation 1aw of the Contracting State, in which the income arises.

5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectively connected. In such a case the provisions of Article 7 shall apply.

6. The limitation established in paragraph 2 shall not apply to interest arising in a Contracting State and paid to a permanent establishment of an enterprise of the other Contracting State which is situated in a third State.

7. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political subdivision, a public community 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such a permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

8. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, 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 recipient in the absence of such relationship, the provisions of this Article shall apply to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

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 State.

2. However, such royalties may be taxed in the Contracting State in which they arise, but the tax so charged shall not exceed:

a) 10 per cent of the gross amount of royalties arising from the use of, or the right to use, any copyright of literary, artistic or scientific work, but not including cinematograph films, films or tapes for television or radio broadcasting;

b) 25 per cent of the gross amount of royalties arising from the use or the right to use trade marks;

c)15 per cent in all other cases.

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, films or tapes for television or radio broadcasting), any patent, trade marks, design or model, plan, secret formula or process, as well as for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

4. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a public community or a resident of that State. However, where the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the royalties was incurred, and such royalties are borne by such a permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of a Contracting State, has in the other Contracting State in which the royalties arise, a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case, the provisions of Article 7 shall apply.

6. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, 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 recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall be taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

Article 13
Capital gains

1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which the immovable property is situated.

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 professional services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in the other State. However, 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 in which the place of effective management of the enterprise is situated.

3. Gains from the alienation of any property or right other than those mentioned in paragraphs l and 2 may be taxed in both Contracting States.

Article 14
Independent personal services

1. Income derived by a resident of a contracting State in respect of professional services or other independent activities of a similar nature shall be taxable only in that State, unless the payment of such services and activities is borne by a permanent establishment situated on the other Contracting State or a company resident therein. In such a case that income may be taxed in the other State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational, technical or teaching activities, as well as independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15
Dependent personal services

1. Subject to the provisions of Articles 16, 18 and 19, 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 fiscal year concerned, 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.

2.      Notwithstanding the preceding provisions of this article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

Article 16
Directors’ fees

Directors’ fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of any council of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17
Artistes and athletes

1.    Notwithstanding the provisions of articles 14 and 15, income derived by public entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their personal activities as such, may be taxed in the Contracting State in which these activities are exercised.

2.    Notwithstanding the other provisions of this Convention, income derived by an enterprise of a Contracting State from the activity of providing the services within the other Contracting State of a person referred to in paragraph 1, whether this person is a resident of a Contracting State or not, may be taxed in the Contracting State in which these services are performed.

Article 18
Pensions

Subject to the provisions of Article 19, pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State in consideration of past employment shall be taxable only in the first-mentioned State.

Article 19
Governmental and other public functions

1. Remuneration, including pensions, paid by, or out of funds created by, a Contracting State or a political subdivision thereof to any individual in respect of services rendered to that State or to a political subdivision thereof in the discharge of functions of a governmental or other public nature shall be taxable only in that State.

2. Pensions paid from Social Security funds of a Contracting State shall be taxable only in that State.

3. The provisions of paragraph 1 shall apply to remuneration, received by the members of the staff of the Austrian Delegation of Commerce in Brazil, if the recipient is not a national of Brazil.

4.    The provisions of Articles 15, 16 and 18 shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a political subdivision thereof.

Article 20
Students

1. Payments which a student or business apprentice who is or was formerly a resident of a Contracting State and who is present an the other Contracting 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 other State, provided that such payments are made to him from sources outside that other State.

2. Remuneration which a student or business apprentice who is or was formerly a resident of a Contracting State derives from an employment which he exercises in the other Contracting State for the purpose of practical training for a period or periods not exceeding in the aggregate 183 days in the year concerned shall not be taxed in that other State.

Article 21
Income not expressly mentioned

Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention shall be taxable only in that State. Such income may, however, be taxed in the other Contracting State, if it is paid by a resident of that other State or a permanent establishment situated in that other State.

Article 22
Capital

1. Capital represented by immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated.

2. Capital represented by movable property forming part of the business property of a permanent establishment of an enterprise, or by movable property pertaining to a fixed base used for the performance of professional services, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.

3. Ships and aircraft operated in international traffic and movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

4. All other elements of capita1 of a resident of a Contracting State shall be taxable only in that State.

Article 23
Methods for the elimination of double taxation

1. Subject to the provisions of Article 11, paragraph 3b, and Articles 18 and 19, where a resident of Brazil derives income which, in accordance with the provisions of this Convention, may be taxed in Austria, Brazil shall allow as a deduction from the tax on the income of that person, an amount equal to the income tax paid in Austria.

The deduction shall not, however, exceed that part of the income tax as computed before the deduction is given which is appropriate to the income which may be taxed in Austria.

2. Dividends paid by a company which is a resident of Austria to a company which is a resident of Brazil which owns at least 25 per cent of the share capital of the paying company shall be exempt from corporation tax in Brazil.

3. Where a resident of Austria derives income which, in accordance with the provisions of this Convention, may be taxed in Brazil, Austria shall, subject to the provisions of paragraphs 2 till 5 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 had not been so exempted.

4. Subject to the provisions of Article 11, paragraph 3b, where a resident of Austria derives income which, in accordance with the provisions of Articles 10, 11, 12 and 13 paragraph 3, may be taxed in Brazil, Austria shall allow as a deduction from the tax on the income of that person amount equal to the tax paid in Brazil. Such a deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income .derived from Brazil.

5. For the application of paragraph 4 the tax which has been paid on dividends, interest or royalties derived from Brazil is to be considered to have been paid at a rate of 25 percent of the gross amount of the income.

6. Dividends paid by a company which is a resident of Brazil to a company which is a resident of Austria which owns at least 25 per cent of the share capital of the paying company shall be exempt from the corporation tax, and the tax on commercial and industrial enterprises in Austria.

7. As long as royalties which are paid from a company resident in Brazil to a company resident of Austria which owns more than 50 per cent of the voting capital of the company paying the royalties are not deductible for tax purposes in Brazil such royalties will be exempt from tax in Austria.

8. Where a resident of Austria owns capital which in accordance with the provisions of this convention may be taxed in Brazil, Austria will exempt such capital from tax.

Where a company which, is a resident of Austria owns at least 25 per cent of the share capital of a company which is a resident of Brazil, such participation will be exempt from taxes on capital in Austria.

Article 24
Non-discrimination

1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected.

The term “nationals” means:

a) all individuals possessing the nationality of a Contracting State;

b) all legal persons, partnerships and associations deriving their status as such from the law in force in a Contracting State.

3. 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, relief and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

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, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State, are or may be subjected.

5. In this article the term “taxation” means taxes of every kind and description.

Article 25
Mutual agreement procedure

1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, 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.

2. The competent authority shall endeavor, 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 Convention.

3. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the convention.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article 26
Exchange of information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons or authorities concerned with the assessment or collection of the taxes which are the subject of the Convention.

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 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
Diplomatic and consular officials

Nothing in this Convention shall affect the fiscal privileges of diplomatic missions or consular officials under the general rules of international law or under the provisions of special agreements.

Article 28
Entry into force

1. This Convention shall be ratified and the instruments of ratification shall be exchanged at Brasilia.

2. The Convention shall enter into force upon the exchange of instruments of ratification and ifs provisions shall have effect for the first time:

a) In Brazil:

I – as respects taxes withheld at source to amounts paid or remitted on or after January 1 of the calendar year immediately following the year in which the Convention enters into force;

II – as respects other taxes covered by this Convention to taxable year beginning on or after January 1 of the calendar year immediately following the year in which the Convention enters into force.

b) In Austria:

1. for any taxes levied for the calendar year immediately following the year in which the Convention enters into force.

2. Notwithstanding the provisions of paragraph 2, Article 8 of this Convention shall have effect, except for the Austrian tax on the sum of wages, for taxes levied after the first day of January of 1968.

Article 29
Termination

Either Contracting State may terminate this Convention after a period of three years from the date on which this Convention enters into force by giving to the other Contracting State, through diplomatic channels, a written notice of termination, provided that any such notice shall be given only on or before the thirtieth day of June in any calendar year.

In such a case this Convention shall apply for the last time:

a) In Brazil:

I- as respects taxes withheld at source, to amounts paid or remitted before the expiration of the calendar year in which the notice of termination calendar year in which the notice of termination is given;

II – as respects other taxes covered by this Convention, to the taxable year beginning in the calendar year in which the notice of termination is given.

b) In Austria:

– for any taxes levied in the calendar year in which the notice of termination is given.

In witness whereof the Plenipotentiaries of the two Contracting States have signed the present Convention and affixed thereto their seals.

Done in duplicate at Viena on 24th May of 1975, in Portuguese and German languages, each text being equally authentic.

 

P R O T O C O L

 

At the moment of the signature of the Convention for the avoidance of double taxation with respect to taxes on income and capital, between the Federative Republic of Brazil and the Republic of Austria, the undersigned, being duly authorized thereto, have agreed upon the following provisions which constitute an integral part of the present Convention.

1. It is understood that the provisions of Article 10, paragraph 5, are not in conflict with the provisions of Article 24, paragraph 3.

2. Loans and credits granted by the Osterreichischen Kontrollbank Aktiengesellschaft and by the Bank of Brazil in the quality of a public financial organization shall be treated as loans and credits granted by the Austrian or Brazilian Governments. Interest derived from such loans or credits shall be taxed according to the provisions of Article 11, paragraph 3 a. Relief from double taxation, shall, in the case of Austria, be given by applying Article 23, paragraphs, 4 and 5. –

3. In the event that Brazil, after the . signature of the present Convention, would allow that royalties, referred to in Article 12, paragraph 3, paid by a company which is a resident of Brazil to a resident of a third

State not located in Latin-America and which holds at least 50 per cent of the voting capital of the company which is a resident of Brazil, be deductible at the moment of the determination of the profits of this company, an equal deduction will be automatically applicable, under similar conditions, to a company which is a resident of Brazil paying royalties to a resident of Austria.

It is understood that the present disposition of the Brazilian law regarding the non-deductibility of royalties as indicated above is not in conflict with Article 24, paragraph 4, of the Convention.

4. Concerning Article 13, paragraph 3, it is understood that a Contracting State does not have the right of taxing gains derived by a resident of the other Contracting State, if such gains are obtained from the selling of

shares or quotas of a company which is not a resident of the first-mentioned State.

5. The Brazilian tax on excess remittances shall not apply to income remitted which does not exceed 12 per cent of the capital registered in the Central Bank of Brazil.

In order to determine the amount subject to the Brazilian excess remittances tax, the Brazilian tax on dividends and royalties, after the beginning of the fifth year of the entry into force of this Convention, shall be considered as having been paid at a rate of 25 per cent.

6. Whenever Brazil establishes a tax on capital both Contracting States will renegotiate all the dispositions related to the taxation of capital.

Done in duplicate at Viena on 24th May of 1975, in Portuguese and German languages, each text being equally authentic.

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