To the Agreement between the Republic of India and the Swiss Confederation for the avoidance of double taxation with respect to taxes on income.
At the signing of the Agreement concluded today between the Government of the Republic of India and the Swiss Federal Council for the avoidance of double taxation with respect to taxes on income, the undersigned have agreed upon the following additional provisions which shall form an integral part of the said Agreement.
1[1. With reference to Article 4
It is understood that paragraph 1 of Article 4, the term "resident of a Contracting State" includes a recognized pension fund or pension scheme in that Contracting State. It is further understood that a recognized pension fund or pension scheme of a Contracting State shall be regarded as any pension fund or pension scheme recognized and controlled according to statutory provisions of that State, which is generally exempt from income taxation in that State and which is operated principally to administer or provide pension or retirement benefits.]
With reference to Article 5
2[2.] It is understood that the remuneration for furnishing of services covered by sub-paragraph (1) of paragraph 2 shall be taxed according to Article 7 or, on request of the enterprise, according to the rates provided for....., 3[in paragraph 2 of Article 12].
With respect to paragraph 3 of Article 5, it is understood that the maintenance of a stock of goods or merchandise for the purpose of delivery, or facilities used for delivery of goods and merchandise do not constitute a permanent establishment as long as the conditions of paragraph 2 or 4 of the same Article are not fulfilled.
4[With respect to paragraph 5] of Article 5, it is understood that a person who habitually secures orders in a Contracting State wholly or almost wholly for the enterprise itself, shall be deemed to be a permanent establishment of that enterprise only if such person habitually represents to persons offering to buy goods or merchandise that acceptance of an order by such person constitutes that agreement of the enterprise to supply goods or merchandise under the terms and conditions specified in the order.
With reference to Article 7
6[3.] In the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, which are carried out by an enterprise having a permanent establishment, in a Contracting State the business profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the State where the permanent establishment is situated; the profits related to that part of the contract which is carried out outside that Contracting State by the head office of the enterprise shall be taxable only in the State of which the enterprise is a resident, provided that the amount payable is not covered under the provisions of Article 12.
7[With reference to paragraph 2 of Article 9
8[4.] It is understood that Switzerland shall only make an appropriate adjustment after consultation with the competent authority of India and after reaching an agreement on the adjustments of profits in both Contracting States.]
9[With reference to Articles 10, 11 and 12
10[5. With reference to Articles 10, 11, 12 and 22
The provisions of Articles 10, 11, 12 and 22 shall not apply in respect to any dividend, interest, royalty, fees for technical services or other income paid under, or as part of a conduit arrangement. The term "conduit arrangement" means a transaction or series of transactions which is structured in such a way that a resident of a Contracting State entitled to the benefits of the Agreement receives an item of income arising in the other Contracting State but that resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting State and who, if it received that item of income directly from the other Contracting State, would not be entitled under a Convention of Agreement for the avoidance of double taxation between the State in which that other person is resident and the Contracting State in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under this Agreement to a resident of a Contracting State; and the main purpose of such structuring is obtaining benefits under this Agreement.
In respect of Articles 10 (Dividends), 11 (Interest) and 12 (Royalties and fees for technical services), if under any Convention, Agreement or Protocol between India and a third State which is a member of the OECD signed after the signature of this Amending Protocol, India limits its taxation at source on dividends, interest, royalties or fees for technical services to a rate lower than the rate provided for in this Agreement on the said items of income, the same rate as provided for in that Convention, Agreement or Protocol on the said items of income shall also apply between both Contracting States under this Agreement as from the date on which such Convention, Agreement or Protocol enters into force.
If after the date of signature this Amending Protocol, India under any Convention, Agreement or Protocol with a third State which is a member of the OECD, restricts the scope in respect of royalties or fees for technical services than the scope for these items of income provided for in Article 12 of this Agreement, then Switzerland and India shall enter into negotiations without undue delay in order to provide the same treatment to Switzerland as that provided to the third State.]
11[With reference to sub-paragraph (b) of paragraph 5 of Article 13
12[6.] It is understood that if at a later stage Switzerland shall introduce a capital gains tax on the alienation of shares of a Swiss company other than shares of a company mentioned in paragraph 4, paragraph 5 of Article 13 shall be replaced by the following :
"5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State."
In this case sub-paragraph (b) of paragraph 1 of Article 23 of the Agreement shall be deleted.]
With reference to Article 12
13[7.] It is understood that gains derived from the alienation of a right or a property mentioned in paragraph 3 of Article 12 may be taxed according to Article 7 or Article 13. However, gains derived from the alienation of any such right or property which are contingent on the profits, productivity or use thereof may be taxed according to Article 12.
14[8. With reference to paragraph 2 of Article 24
It is understood that the provisions of paragraph 2 of Article 24 shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7. However the difference in tax rate shall not exceed 10 percentage points.]
15[With reference to Article 25]
16[9.] With respect to paragraph 2 it is understood that if the mutual agreement procedure has been introduced within five years from the moment when the tax assessment became final, then any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
17[10. With reference to Article 26
|(a)||It is understood that an exchange of information will only be requested once the requesting Contracting State has exhausted all normal procedures under its domestic laws to obtain that information.|
|(b)||It is understood that the competent authority of the requesting State shall provide the following information to the competent authority of the requested State when making a request for information under Article 26 of the Agreement:|
|(i)||the name of the person(s) under examination or investigation and, if available, other particulars facilities that person's identification such as address, date of birth, marital status, tax identification number;|
|(ii)||the period of time for which the information is requested;|
|(iii)||a statement of the information sought including its nature and the form in which the requesting State wishes to receive the information from the requested State;|
|(iv)||the tax purpose for which the information is sought;|
|(v)||the name and, if available, address of any person believed to be in possession of the requested information.|
|(c)||If specifically requested by the competent authority of the requesting Contracting State, the competent authority of the requested Contracting State shall provide information in the form of authenticated copies of documents.|
|(d)||The purpose of referring to information that may be foreseeably relevant is intended to provide for exchange of information in tax matters to the widest possible extent without allowing the Contracting States to engage in "fishing expeditions" or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer. While clause (b) of paragraph 10 contains important procedural requirements that are intended to ensure that fishing expeditions do not occur, sub-clause (i) through (v) nevertheless need to be interpreted in order not to frustrate effective exchange of information.|
|(e)||It is further understood that Article 26 of the Agreement shall not commit the Contracting States to exchange information on an automatic or a spontaneous basis.|
|(f)||It is understood that in case of an exchange of information, the administrative procedural rules regarding taxpayers' rights provided for in the requested Contracting State remain applicable before the information is transmitted to the requesting Contracting State. It is further understood that this provision aims at guaranteeing the taxpayer a fair procedure and not at preventing or unduly delaying the exchange of information process.]|
IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed the present Protocol.
DONE in duplicate at New Delhi this 2nd day of November, one thousand nine hundred and ninety four in the Hindi, German and English languages, all the texts being equally authentic, except in the case of doubt when the English tax shall prevail.