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The Government of Canada and the Government of the
Portuguese Republic, desiring to conclude a Convention
for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income, have agreed
as follows:
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This Convention shall apply to persons who are residents of
one or both of the Contracting States.
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1. The existing taxes to which the Convention shall apply are:
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(a) in the case of Canada, the income taxes imposed by the
Government of Canada under the Income Tax Act, (hereinafter
referred to as ``Canadian tax'');
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(b) in the case of Portugal:
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(i) the personal income tax (Imposto sobre o Rendimento
das Pessoas Singulares - IRS),
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(ii) the corporate income tax (Imposto sobre o Rendimento
das Pessoas Colectivas - IRC),
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(iii) the local surtax on the corporate income tax (Derrama),
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(hereinafter referred to as ``Portuguese tax'').
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2. The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of, the
existing taxes. The competent authorities of the Contracting
States shall notify each other of any significant changes which
have been made in their respective taxation laws.
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1. For the purposes of this Convention, unless the context
otherwise requires:
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(a) the terms ``a Contracting State'' and ``the other
Contracting State'' mean Canada or Portugal as the context
requires;
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(b) the term ``Canada'', used in a geographical sense, means
the territory of Canada, including:
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(i) any area beyond the territorial sea of Canada that, in
accordance with international law and the laws of Canada,
is an area in respect of which Canada may exercise rights
with respect to the seabed and subsoil and their natural
resources,
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(ii) the sea and airspace above every area referred to in
clause (i) in respect of any activity carried on in connection
with the exploration for or the exploitation of the natural
resources referred to therein;
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(c) the term ``Portugal'', used in a geographical sense, means
the territory of the Portuguese Republic situated in the
European Continent and the archipelagoes of Azores and
Madeira, the territorial sea as well as any other zone in which,
in accordance with the laws of Portugal and international law,
the Portuguese Republic has jurisdiction or sovereign rights
with respect to the exploration and exploitation of the natural
resources of the seabed and subsoil, and of the superjacent
waters;
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(d) the term ``person'' includes an individual, a trust, a
company and any other body of persons;
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(e) the term ``company'' means any body corporate or any
entity which is treated as a body corporate for tax purposes;
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(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;
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(g) the term ``competent authority'' means:
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(i) in the case of Canada, the Minister of National Revenue
or the Minister's authorized representative,
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(ii) in the case of Portugal, the Minister of Finance, the
Director General of Taxation or their authorized
representatives;
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(h) the term ``national'' means:
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(i) any individual possessing the nationality of a
Contracting State,
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(ii) any legal person, partnership or association deriving its
status as such from the laws in force in a Contracting State;
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(i) the term ``tax'' means, as the context requires, Canadian tax
or Portuguese tax;
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(j) the term ``international traffic'', with reference to an
enterprise of a Contracting State, means any voyage of a ship
or aircraft to transport passengers or property except where the
principal purpose of the voyage is to transport passengers or
property between places within the other Contracting State.
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2. As regards the application of the Convention at any time by
a Contracting State, any term not defined therein shall, unless the
context otherwise requires, have the meaning which it has at that
time under the law of that State for the purposes of the taxes to
which the Convention applies, any meaning under the applicable
tax laws of that State prevailing over a meaning given to the term
under other laws of that State.
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1. For the purposes of this Convention, the term ``resident of
a Contracting State'' means:
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(a) any person who, under the laws of that State, is liable to tax
therein by reason of the person's domicile, residence, place of
management or any other criterion of a similar nature;
however, this term does not include any person that is liable
to tax in that State in respect only of income from sources in
that State;
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(b) that State itself or a political or administrative subdivision
or local authority thereof or any agency or instrumentality of
any such government, subdivision or authority.
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2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then the
individual's status shall be determined as follows:
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(a) the individual shall be deemed to be a resident only of the
State in which the individual has a permanent home available;
if the individual has a permanent home available in both
States, the individual shall be deemed to be a resident only of
the State with which the individual's personal and economic
relations are closer (centre of vital interests);
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(b) if the State in which the individual's centre of vital interests
is situated cannot be determined, or if there is not a permanent
home available to the individual in either State, the individual
shall be deemed to be a resident only of the State in which the
individual has an habitual abode;
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(c) if the individual has an habitual abode in both States or in
neither of them, the individual shall be deemed to be a resident
only of the State of which the individual is a national;
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(d) if the individual is a national of both States or of neither of
them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
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3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting States,
the competent authorities of the Contracting States shall by
mutual agreement endeavour to settle the question and to
determine the mode of application of the Convention to such
person. In the absence of such agreement, such person shall be
considered not to be a resident of either Contracting State for the
purposes of enjoying benefits under the Convention.
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1. For the purposes of this Convention, the term ``permanent
establishment'' means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
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2. The term ``permanent establishment'' includes especially:
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(a) a place of management;
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(f) a mine, an oil or gas well, a quarry or any other place
relating to the exploration for or the exploitation of natural
resources.
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3. A building site or construction or installation project
constitutes a permanent establishment only if it lasts for more
than six months.
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4. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' shall be deemed not to
include:
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(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
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(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
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(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
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(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;
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(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of
a preparatory or auxiliary character;
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(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in subparagraphs (a) to
(e) provided that the overall activity of the fixed place of
business resulting from this combination is of a preparatory or
auxiliary character.
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5. Notwithstanding the provisions of paragraphs 1 and 2,
where a person - other than an agent of an independent status
to whom paragraph 7 applies - is acting on behalf of an
enterprise and has, and habitually exercises, in a Contracting
State an authority to conclude contracts in the name of the
enterprise, that enterprise shall be deemed to have a permanent
establishment in that State in respect of any activities which that
person undertakes for the enterprise unless the activities of such
person are limited to those mentioned in paragraph 4 which, if
exercised through a fixed place of business, would not make this
fixed place of business a permanent establishment under the
provisions of that paragraph.
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6. Subject to the provisions of paragraphs 4, 7 and 8, an
enterprise of a Contracting State that carries on business in the
other Contracting State through its own employees or any other
personnel rendering substantially similar services for a period or
periods amounting to or exceeding 120 days in any twelve month
period commencing or ending in the taxation year concerned
shall be deemed to have a permanent establishment in that other
State.
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7. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that 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.
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8. 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.
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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.
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2. For the purposes of this Convention, the term ``immovable
property'' shall have the meaning which it has under the law of
the Contracting State in which the property in question is
situated. The term shall in any case include property accessory to
immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general
law respecting landed property apply, usufruct of immovable
property and rights to variable or fixed payments as
consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
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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.
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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.
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1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on business as aforesaid,
the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent
establishment.
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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.
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3. In determining the profits of a permanent establishment,
there shall be allowed as deduction expenses which are incurred
for the purposes 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.
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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.
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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.
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6. 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.
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1. Profits derived by an enterprise of a Contracting State from
the operation of ships or aircraft in international traffic shall be
taxable only in that State.
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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.
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1. Where
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(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
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(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,
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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 income which would, but for those
conditions, have accrued to one of the enterprises, but, by reason
of those conditions, has not so accrued, may be included in the
income of that enterprise and taxed accordingly.
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2. Where a Contracting State includes in the income of an
enterprise of that State - and taxes accordingly - income on
which an enterprise of the other Contracting State has been
charged to tax in that other State and the income so included is
income which would have accrued to the enterprise of the
first-mentioned State if the conditions made between the two
enterprises had been those which would have been made
between independent enterprises, then that other State shall make
an appropriate adjustment to the amount of tax charged therein
on that income. In determining such adjustment, due regard shall
be had to the other provisions of this Convention and the
competent authorities of the Contracting States shall if necessary
consult each other.
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3. A Contracting State shall not change the income of an
enterprise in the circumstances referred to in paragraph 1 after the
expiry of the time limits provided in its domestic laws and, in any
case, after five years from the end of the year in which the income
which would be subject to such change would, but for the
conditions referred to in paragraph 1, have accrued to that
enterprise.
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4. The provisions of paragraphs 2 and 3 shall not apply in the
case of fraud, wilful default or neglect.
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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.
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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
beneficial owner of the dividends is a resident of the other
Contracting State, the tax so charged shall not exceed:
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(a) (i) in the case of dividends paid by a
company that is a resident of Canada, except in the case of
dividends paid by a non-resident-owned investment
corporation, 10 per cent of the gross amount of the
dividends if the beneficial owner is a company that is a
resident of Portugal and that controls directly or indirectly
at least 25 per cent of the voting power in the company
paying the dividends;
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(ii) in the case of dividends paid by a company that is a
resident of Portugal, 10 per cent of the gross amount of the
dividends if the beneficial owner is a company that is a
resident of Canada and that, for an uninterrupted period of
2 years prior to the payment of the dividends owns at least
25 per cent of the capital (capital social) of the company
paying the dividends;
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(b) 15 per cent of the gross amount of the dividends in all other
cases.
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The provisions of this paragraph shall not affect the taxation of
the company in respect of the profits out of which the dividends
are paid.
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3. 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 which is subjected to
the same taxation treatment as income from shares by the laws of
the State of which the company making the distribution is a
resident.
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4. The provisions of paragraph 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed
base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
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5. Where a company which is a resident of a Contracting State
derives profits or income from the other Contracting State, that
other State may not impose any tax on the dividends paid by the
company, except insofar as such dividends are paid to a resident
of that other State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent
establishment or a fixed base situated in that other State, nor
subject the company's undistributed profits to a tax on
undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
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6. Notwithstanding any provision in this Convention, a
Contracting State may impose on the earnings of a company
attributable to permanent establishments situated in that State, or
on the alienation of immovable property situated in that State by
a company carrying on a trade in immovable property, tax in
addition to the tax which would be chargeable on the earnings of
a company that is a resident of that State, provided that the rate
of such additional tax so imposed shall not exceed the 10 per cent
of the amount of such earnings which have not been subjected to
such additional tax in previous taxation years. For the purpose of
this provision, the term ``earnings'' means:
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(a) the earnings attributable to the alienation of such
immovable property situated in a Contracting State as may be
taxed by that State under the provisions of Article 6 or of
paragraph 1 of Article 13; and
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(b) the profits attributable to such permanent establishments
in that State (including gains from the alienation of property
forming part of the business property, referred to in paragraph
2 of Article 13, of such permanent establishments) in
accordance with Article 7 in a year and previous years after
deducting therefrom:
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(i) business losses attributable to such permanent
establishments (including losses from the alienation of
property forming part of the business property of such
permanent establishments) in such year and previous years,
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(ii) all taxes chargeable in that State on such profits, other
than the additional tax referred to herein,
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(iii) the profits reinvested in that State, provided that the
amount of such deduction shall be determined in
accordance with the provisions of the law of that State, as
they be amended from time to time without changing the
general principle hereof, regarding the computation of the
allowance in respect of investment in property in that State,
and
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(iv) five hundred thousand Canadian dollars ($500,000) or
its equivalent in the currency of Portugal, less any amount
deducted
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(B) by a person related thereto from the same or a similar
business as that carried on by the company
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under this clause; for the purposes of this clause, a company
is related to another company if one company directly or
indirectly controls the other, or both companies are directly
or indirectly controlled by the same person or persons, or
if the two companies deal with each other not at arm's
length.
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1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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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 beneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 10 per cent
of the gross amount of the interest.
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3. Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State shall be exempt from tax in that
State if:
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(a) the debtor of such interest is the Government of that State
or a political or administrative subdivision or a local authority
thereof; or
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(b) the interest is paid to the Government of the other
Contracting State or to a political or administrative
subdivision or local authority thereof, or to an institution or
organization (including a financial institution) with respect to
a financing between the Governments of the Contracting
States; or
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(c) the interest is paid in respect of a loan made or a credit
extended by:
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(i) in the case of Canada, the Export Development
Corporation, and
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(ii) in the case of Portugal, the Companhia de Seguro de
Créditos (COSEC).
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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, as well as income which is subjected to the same
taxation treatment as income from money lent by the laws of the
State in which the income arises. However, the term ``interest''
does not include income dealt with in Article 10.
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5. The provisions of paragraph 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 14, as the case may be, shall
apply.
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6. Interest shall be deemed to arise in a Contracting State when
the payer is a resident of that State. Where, however, the person
paying the interest, whether the person is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated.
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7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other
provisions of this Convention.
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1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
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2. However, such royalties may also be taxed in the
Contracting State in which they arise and according to the laws
of that State, but if the beneficial owner of the royalties is a
resident of the other Contracting State, the tax so charged shall
not exceed 10 per cent of the gross amount of the royalties.
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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, any
patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial,
commercial or scientific equipment, and for information
concerning industrial, commercial or scientific experience, and
includes payments of any kind in respect of motion picture films
and works on film, videotape or other means of reproduction for
use in connection with television.
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4. The provisions of paragraph 2 shall not apply if the
beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are paid
is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
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5. Royalties shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the royalties, whether the person 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
obligation to pay the royalties was incurred, and such royalties
are borne by such permanent establishment or fixed base, then
such royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
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6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the
use, right or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
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1. Gains derived by a resident of a Contracting State from the
alienation of immovable property situated in the other
Contracting State may be taxed in that other State.
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2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such a
fixed base may be taxed in that other State.
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3. Gains from the alienation of ships or aircraft operated in
international traffic by an enterprise of a Contracting State or
movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that State.
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4. Gains derived by a resident of a Contracting State from the
alienation of:
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(a) shares, the value of which is derived principally from
immovable property situated in the other State,
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(b) an interest in a partnership or trust, the value of which is
derived principally from immovable property situated in that
other State,
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may be taxed in that other State.
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5. Gains from the alienation of any property, other than that
referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the
Contracting State of which the alienator is a resident.
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6. The provisions of paragraph 5 shall not affect the right of a
Contracting State to levy, according to its law, a tax on gains from
the alienation of any property derived by an individual who is a
resident of the other Contracting State if the alienator:
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(a) is a national of the first-mentioned Contracting State or has
been a resident of that State for fifteen years or more prior to
the alienation of the property; and
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(b) was a resident of that first-mentioned State at any time
during the five years immediately preceding such the
alienation.
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1. Income derived by a resident of a Contracting State in
respect of professional services or other activities of an
independent character shall be taxable only in that State.
However, such income may also be taxed in the other
Contracting State in the following cases:
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(a) if a fixed base is regularly available to the resident in that
other State for the purpose of performing the 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
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(b) if the resident's stay in that other State is for a period or
periods amounting to or exceeding in the aggregate 183 days
in any twelve month period commencing or ending in the
calendar year concerned.
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2. The term ``professional services'' includes especially
independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
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1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other 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.
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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:
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(a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in any twelve
month period commencing or ending in the calendar year
concerned; and
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(b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of the other State; and
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(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the
other State.
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3. Notwithstanding the preceding provisions of this Article,
remuneration 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.
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Directors' fees and other similar payments derived by a
resident of a Contracting State in the capacity as a member of the
board of directors or supervisory board (in Portugal, conselho
fiscal) or a similar organ of a company which is a resident of the
other Contracting State, may be taxed in that other State.
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1. Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsperson, from that resident's
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
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2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson in that individual's capacity as
such accrues not to the entertainer or sportsperson personally but
to another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in the Contracting
State in which the activities of the entertainer or sportsperson are
exercised.
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3. The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities performed in a Contracting State
by a resident of the other Contracting State in the context of a visit
in the first-mentioned State of a non-profit organization of the
other State, provided the visit is principally supported by public
funds.
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1. Pensions and annuities arising in a Contracting State and
paid to a resident of the other Contracting State may be taxed in
that other State.
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2. Pensions arising in a Contracting State and paid to a resident
of the other Contracting State may also be taxed in the State in
which they arise and according to the law of that State, but in the
case of periodic pension payments, the tax so charged shall not
exceed the lesser of:
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(a) 15 per cent of the gross amount of such periodic pension
payments paid to the recipient in the calendar year concerned
that exceeds twelve thousand Canadian dollars or its
equivalent in Portuguese currency; and
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(b) the rate determined by reference to the amount of tax that
the recipient of the payment would otherwise be required to
pay for the year on the total amount of the periodic pension
payments received by the individual in the year, if the
individual were a resident of the Contracting State in which
the payment arises.
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3. Annuities arising in a Contracting State and paid to a
resident of the other Contracting State may also be taxed in the
State in which they arise and according to the laws of that State,
but the tax so charged shall not exceed 15 per cent of the portion
thereof that is subject to tax in that State. However, this limitation
does not apply to lump-sum payments arising on the surrender,
cancellation, redemption, sale or other alienation of an annuity,
or to payments of any kind under an annuity contract the cost of
which was deductible, in whole or in part, in computing the
income of any person who acquired the contract.
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4. Notwithstanding anything in this Convention:
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(a) war pensions and allowances (including pensions and
allowances paid to war veterans or paid as a consequence of
damages or injuries suffered as a consequence of a war) arising
in a Contracting State and paid to a resident of the other
Contracting State shall be exempt from tax in that other State
to the extent that they would be exempt from tax if received
by a resident of the first-mentioned State;
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(b) alimony and other similar payments arising in a
Contracting State and paid to a resident of the other
Contracting State who is subject to tax therein in respect
thereof, shall be taxable only in that other State.
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1. (a) Salaries, wages and other similar remuneration, other
than a pension, paid by a Contracting State or a political or
administrative subdivision or a local authority thereof to an
individual in respect of services rendered to that State or
subdivision or authority shall be taxable only in that State.
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(b) However, such salaries, wages and other similar
remuneration shall be taxable only in the other Contracting
State if the services are rendered in that State and the
individual is a resident of that State who:
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(i) is a national of that State, or
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(ii) did not become a resident of that State solely for the
purpose of rendering the services.
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2. The provisions of Articles 15, 16 and 17 shall apply to
salaries, wages and other similar remuneration in respect of
services rendered in connection with a business carried on by a
Contracting State or a political or administrative subdivision or
a local authority thereof.
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Payments which a student, apprentice or business trainee who
is, or was immediately before visiting a Contracting State, a
resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of that individual's
education or training receives for the purpose of that individual's
maintenance, education or training shall not be taxed in that
State, provided that such payments arise from sources outside
that State.
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1. Subject to the provisions of paragraph 2, items of income
of a resident of a Contracting State, wherever arising, not dealt
with in the foregoing Articles of this Convention shall be taxable
only in that State.
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2. However, if such income is derived by a resident of a
Contracting State from sources in the other Contracting State,
such income may also be taxed in the State in which it arises, and
according to the law of that State. Where such income is income
from a trust, other than a trust to which contributions were
deductible, the tax so charged shall, provided that the income is
taxable in the Contracting State in which the beneficial owner is
a resident, not exceed 15 per cent of the gross amount of the
income.
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1. In the case of Canada, double taxation shall be avoided as
follows:
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(a) subject to the existing provisions of the law of Canada
regarding the deduction from tax payable in Canada of tax
paid in a territory outside Canada and to any subsequent
modification of those provisions - which shall not affect the
general principle hereof - and unless a greater deduction or
relief is provided under the laws of Canada, tax payable in
Portugal on profits, income or gains arising in Portugal shall
be deducted from any Canadian tax payable in respect of such
profits, income or gains;
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(b) where in accordance with any provision of the Convention
income derived by a resident of Canada is exempt from tax in
Canada, Canada may nevertheless, in calculating the amount
of tax on other income, take into account the exempted
income.
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2. In the case of Portugal, double taxation shall be avoided as
follows:
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(a) where a resident of Portugal derives income that, in
accordance with the provisions of this Convention, may be
taxed in Canada, Portugal shall allow as a deduction from the
tax on the income of that resident an amount equal to the
income tax paid in Canada; such deduction shall not, however,
exceed that part of the income tax, as computed before the
deduction is given, that is attributable to the income that may
be taxed in Canada;
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(b) where in accordance with any provision of the Convention
income derived by a resident of Portugal is exempt from tax
in Portugal, Portugal may nevertheless, in calculating the
amount of tax on the remaining income of such resident, take
into account the exempted income.
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3. For the purposes of this Article, profits, income or gains of
a resident of a Contracting State which may be taxed in the other
Contracting State in accordance with this Convention shall be
deemed to arise from sources in that other State.
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1. Nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement
connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that
other State in the same circumstances, in particular with respect
to residence, are or may be subjected. This provision shall,
notwithstanding the provisions of Article 1, also apply to persons
who are not residents of one or both of the Contracting States.
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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. This provision shall not be construed as
obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs and
reductions for taxation purposes on account of civil status or
family responsibilities which it grants to its own residents.
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3. Except where the provisions of paragraph 1 of Article 9,
paragraph 7 of Article 11, or paragraph 6 of Article 12, apply,
interest, royalties or 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.
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4. The provisions of paragraph 3 shall not affect the operation
of any provision of the taxation laws of a Contracting State:
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(a) relating to the deductibility of interest and which is in force
on the date of signature of this Convention (including any
subsequent modification of such provisions that does not
change the general nature thereof); or
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(b) adopted after such date by a Contracting State and which
is designed to ensure that a person who is not a resident of that
State does not enjoy, under the laws of that State, a tax
treatment that is more favourable than that enjoyed by
residents of that State.
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5. Enterprises of a Contracting State, the capital of which is
wholly or partly owned or controlled, directly or indirectly, by
one or more residents of the other Contracting State, shall not be
subjected in the first-mentioned 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.
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6. In this Article, the term ``taxation'' means taxes which are
the subject of this Convention.
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1. Where a person considers that the actions of one or both of
the Contracting States result or will result for that person in
taxation not in accordance with the provisions of this
Convention, that person may, irrespective of the remedies
provided by the domestic law of those States, address to the
competent authority of the Contracting State of which that
person is a resident or, if that person's case comes under
paragraph 1 of Article 23, to that of the Contracting State of
which that person is a national, an application in writing stating
the grounds for claiming the revision of such taxation. To be
admissible, the said application must be submitted within two
years from the first notification of the action which gives rise to
taxation not in accordance with the provisions of the
Convention.
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2. The competent authority referred to in paragraph 1 shall
endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the
other Contracting State, with a view to the avoidance of taxation
not in accordance with the Convention.
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3. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention.
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4. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of
applying the Convention.
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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 the Convention
insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by
Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only
to persons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of
appeals in relation to, taxes. Such persons or authorities shall use
the information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions.
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2. In no case shall the provisions of paragraph 1 be construed
so as to impose on a Contracting State the obligation:
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(a) to carry out administrative measures at variance with the
laws and the administrative practice of that or of the other
Contracting State;
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(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;
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(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which would be
contrary to public policy (ordre public).
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1. Nothing in this Convention shall affect the fiscal privileges
of members of diplomatic missions or consular posts under the
general rules of international law or under the provisions of
special agreements.
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2. Notwithstanding Article 4, an individual who is a member
of a diplomatic mission, consular post or permanent mission of
a Contracting State which is situated in the other Contracting
State or in a third State shall be deemed for the purposes of the
Convention to be a resident of the sending State if that individual
is liable in the sending State to the same obligations in relation to
tax on total income as are residents of that sending State.
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3. The Convention shall not apply to international
organizations, to organs or officials thereof and to persons who
are members of a diplomatic mission, consular post or permanent
mission of a third State or group of States, being present in a
Contracting State and who are not liable in either Contracting
State to the same obligations in relation to tax on their total
income as are residents thereof.
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1. The provisions of this Convention shall not be construed to
restrict in any manner any exemption, allowance, credit or other
deduction accorded:
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(a) by the laws of a Contracting State in the determination of
the tax imposed by that State; or
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(b) by any other agreement entered into by a Contracting
State.
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2. Nothing in the Convention shall be construed as preventing
a Contracting State from imposing a tax on amounts included in
the income of a resident of that State with respect to a partnership,
trust, or controlled foreign affiliate, in which that resident has an
interest.
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3. Notwithstanding the provisions of Article 4, a company or
other entity that is entitled to income tax benefits under the
legislation and other measures relating to the tax-free zones of a
Contracting State, or to benefits similar to those provided with
respect to such tax-free zones that are made available under any
legislation or other measure adopted after the date of signature of
the Convention, shall be deemed not to be a resident of that State
for the purposes of the Convention. However, this paragraph
shall not apply to a company or other entity deriving income
from:
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(a) an active trade or business in that State, the selling of goods
or merchandise in that State or the rendering of services, other
than services referred to in subparagraph (b), in that State; or
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(b) the rendering of services offered in the ordinary course of
business by a bank, an insurance company, a registered
securities dealer or a deposit-taking financial institution, if at
least 75 per cent of its income from all sources is taxed under
the ordinary rules of the tax law of that State.
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4. For the purposes of paragraph 3 of Article XXII
(Consultation) of the General Agreement on Trade in Services,
the Contracting States agree that, notwithstanding that
paragraph, any dispute between them as to whether a measure
falls within the scope of this Convention may be brought before
the Council for Trade in Services, as provided by that paragraph,
only with the consent of both Contracting States. Any doubt as
to the interpretation of this paragraph shall be resolved under
paragraph 3 of Article 24 or, failing agreement under that
procedure, pursuant to any other procedure agreed to by both
Contracting States.
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1. This Convention shall be ratified and the instruments of
ratification shall be exchanged as soon as possible.
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2. The Convention shall enter into force 30 days after the
exchange of instruments of ratification and its provisions shall
have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents, on or after the first day of
January in the calendar year next following that in which
the Convention enters into force,
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(ii) in respect of other Canadian tax, for taxation years
beginning on or after the first day of January in the calendar
year next following that in which the Convention enters
into force;
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(i) in respect of taxes withheld at source, the fact given rise
to them appearing on or after the first day of January in the
calendar year next following that in which the Convention
enters into force,
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(ii) in respect of other taxes, to income derived during any
taxable period beginning on or after the first day of January
in the calendar year next following that in which the
Convention enters into force.
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3. Notwithstanding the provisions of paragraph 2, the
provisions of Article 8 and of paragraph 3 of Article 13 shall have
effect in respect of taxes on income arising during the 1994
taxation year and subsequent taxation years.
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This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the
Convention in writing and through the diplomatic channel, by
giving at least six months notice before the end of any calendar
year beginning from the second year following that in which the
instruments of ratification are exchanged. In such event, the
Convention shall cease to have effect:
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(i) in respect of tax withheld at the source on amounts paid
or credited to non-residents, on or after the first day of
January of the calendar year next following that mentioned
in the notice of termination,
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(ii) in respect of other Canadian tax, for taxation years
beginning on or after the first day of January of the calendar
year next following that mentioned in the notice of
termination;
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(i) in respect of taxes withheld at source, the fact given rise
to them appearing on or after the first day of January of the
calendar year next following that mentioned in the notice
of termination,
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(ii) in respect of other taxes, to income derived during any
taxable period beginning on or after the first day of January
of the calendar year next following that mentioned in the
notice of termination.
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IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Convention.
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DONE in duplicate at Ottawa, this 14th day of June 1999, in
the English, French and Portuguese languages, each version
being equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE
PORTUGUESE REPUBLIC: Lloyd Axworthy Jai
me Gama
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At the moment of signing the Convention this day concluded
between Canada and the Portuguese Republic for the avoidance
of double taxation and the prevention of fiscal evasion with
respect to taxes on income, the undersigned have agreed upon the
following provisions which shall be an integral part of the
Convention.
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1. With reference to Article 3, paragraph 1(j), and Articles 5
and 8, ferry-boats, deep-sea ferry-boats or other vessels devoted
principally to the transportation of passengers or goods
exclusively between places in a Contracting State shall, when so
operated, be deemed not to be operated in international traffic;
the landing site or sites situated in a Contracting State and used
regularly in such operation by such boats or vessels shall
constitute a permanent establishment in that State of the
enterprise operating such boats or vessels.
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2. With reference to Article 6, it is understood that its
provisions shall also apply to income from immovable property
and services which, according to the tax legislation of the
Contracting State in which the property in question is situated, is
assimilated to income from immovable property.
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3. With reference to Article 6, paragraph 3, it is understood that
its provisions shall also apply to income from the alienation of
property referred to therein.
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4.With reference to Article 7, paragraph 1, it is understood that
the profits attributable to a permanent establishment in a
Contracting State may be taxed in that State even though the
permanent establishment has ceased to exist.
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5. With reference to Article 7, paragraph 3, the term ``expenses
which are incurred for the purposes of the permanent
establishment'' refers to expenses directly related to the activity
of the permanent establishment which are deductible under the
laws of the Contracting State in which the permanent
establishment is situated.
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6. With reference to Article 9, paragraph 2, it is understood that
the State being asked to make the adjustment to income is
required to do it only if it considers that the adjustment made in
the other Contracting State is justified in principle and in its
amount.
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7. With reference to Article 10, paragraph 3, the term
``dividends'' also means, in the case of Portugal, profits
attributable or paid under an arrangement for participation in
profits (associaçao em participaçao).
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8. With reference to Article 12, it is understood that its
provisions shall also apply to remuneration for technical
assistance where such assistance is related to the use of, or the
right to use, rights, property or information referred to in
paragraph 3 of that Article.
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9. With reference to paragraph 6 of Article 13, it is agreed that,
if the Canadian legislation concerning the taxation of former
residents is amended in the sense of the Canadian announcement
of December 23, 1998 (Communique no. 98-134), the
provisions of paragraph 6 of Article 13 will automatically be
replaced by the following:
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``6. Where an individual who ceases to be a resident of a
Contracting State, and immediately thereafter becomes a resident
of the other Contracting State, is treated for the purposes of
taxation in the first-mentioned State as having alienated a
property and is taxed in that State by reason thereof, the
individual may elect to be treated for purposes of taxation in the
other State as if the individual had, immediately before becoming
a resident of that State, sold and repurchased the property for an
amount equal to its fair market value at that time. However, this
provision shall not apply to property any gain from which,
arising immediately before the individual became a resident of
that other State, may be taxed in that other State nor to immovable
property situated in a third State.''
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10. With reference to Article 14, paragraph 1, it is understood
that the profits attributable to a fixed base in a Contracting State
may be taxed in that State even though the fixed base has ceased
to exist.
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11. With reference to Article 16, it is understood that
remuneration paid by a company to a member of its boards in
respect of the exercise of a continuous activity may be taxed in
accordance with the provisions of Article 15.
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12. With reference to Article 17, paragraph 2, it is understood
that its provisions shall not apply if it is established that neither
the entertainer or the sportsperson nor persons related thereto,
participate directly or indirectly in the profits of the person
referred to in that paragraph.
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13. With reference to subparagraph (a) of paragraph 1 of
Article 22, it is understood that the existing provisions of the law
of Canada regarding the taxation of income from a foreign
affiliate in force at the time of signature of the Convention shall
continue to apply as long as they are not amended or terminated.
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IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Protocol.
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DONE in duplicate at Ottawa, this 14th day of June 1999, in
the English, French and Portuguese languages, each version
being equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE
PORTUGUESE REPUBLIC: Lloyd Axworthy Jai
me Gama
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