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BULGARIA
7.
Agreement for avoidance of double taxation and prevention of fiscal
evasion with Bulgaria Whereas
the annexed Convention between the Government of the Republic of
India and the Government of the Republic of Bulgaria for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and on capital has come into force
on the 23rd June, 1995, after the notification by both the
Contracting States to each other of the completion of the procedures
required under their laws for the bringing into force of the said
Convention in accordance with Article 30 of the said Convention; Now,
therefore, in exercise of the powers conferred by section 90 of the
Income-tax Act, 1961 (43 of 1961), the Central Government hereby
directs that all the provisions of the said Convention shall be
given effect to in the Union of Notification
: No.
GSR 205(E), dated 9-5-1996. ANNEXURE CONVENTION
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT
OF THE REPUBLIC OF BULGARIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND
ON CAPITAL The
Government of the desiring
to further expand and facilitate mutual economic relations, have
resolved to conclude a Convention for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes
on income and on capital and 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 taxes to which the Convention shall apply are :—
(a)
In
(i)
the income-tax, including any surcharge thereon; and
(ii)
the wealth-tax;
(hereinafter
referred to as “Indian tax”);
(b)
In
(i)
the tax on total income;
(ii)
the tax on profits; and (iii)
the tax on buildings;
(hereinafter
referred to as “Bulgarian tax”). 2.
This Convention shall also apply to any identical or substantially
similar taxes which are imposed by either Article
3
: General
definitions - 1. In this Convention, unless the context
otherwise requires :
(a)
the term “India” means the territory of India and
includes the territorial sea and airspace above it, as well as any
other maritime zone in which India has sovereign rights, other
rights and jurisdiction, according to the Indian laws and in
accordance with International law;
(b)
the term “Bulgaria” means the Republic of Bulgaria, and,
when used in a geographical sense means the territory over which it
exercises its State sovereignty, as well as the continental shelf
and exclusive economic zone over which it exercises sovereign rights
and jurisdiction according to international law;
(c)
the terms “Contracting State” and “the other
Contracting State” mean India or Bulgaria, as the context
requires;
(d)
the term “tax” means Indian tax or Bulgarian tax, as the
context requires, but shall not include any amount which is payable
in respect of any default or omission in relation to the taxes to
which this Convention applies or which represents a penalty imposed
relating to those taxes;
(e)
the term “person” shall have the meaning assigned to it
in the taxation laws in force in the respective Contracting States;
(f)
the term “company” means any body corporate or any entity
which is treated as a company or a body corporate under the taxation
laws in force in the respective Contracting States;
(g)
the terms “enterprise of a Contracting State” and
“enterprise of the other Contracting State” mean respectively an
enterprise carried on by a resident of a Contracting State and an
enterprise carried on by a resident of the other Contracting State;
(h)
the term “competent authority” means in the case of
India, the Central Government in the Ministry of Finance (Department
of Revenue) or their authorized representative; and in the case of
Bulgaria - the Minister of Finance or his authorized representative;
(i)
the term “international traffic” means any transport by a
ship or aircraft operated by an enterprise of a Contracting State,
except when the ship or aircraft is operated solely between places
in the other Contracting State. 2.
As regards the application of this Convention by a Contracting
State, any term not defined herein shall, unless the context
otherwise requires, have the meaning which it has under the law of
that State concerning the taxes to which the Convention applies. Article
4
: Resident - 1.
For the purposes of this Convention, the term “resident of a
Contracting State” means :
(a)
in the case of India, any person who, under the laws of
India, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar
nature;
(b)
in the case of Bulgaria, any individual who is national of
Bulgaria, as well as any legal person which has its head office in
Bulgaria or is registered therein. 2.
(a) Where by reason of the provisions of paragraph 1 of this
Article, an individual is a resident of both Contracting States,
then he shall be deemed to be a resident of the State with which his
personal and economic relations are closer (centre of vital
interests); (b)
if the Contracting State in which he has his centre of vital
interests cannot be determined, the competent authorities of the
Contracting States shall settle the question by mutual agreement. 3.
Where by reason of the provisions of paragraph 1 of this Article, a
person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the State in
which its place of effective management is situated. Article
5
: Permanent
establishment - 1. For the purposes of this Convention,
the term “permanent establishment” means a fixed place of
business through which the business of the enterprise is wholly or
partly carried on separately or together with other persons. 2.
The term “permanent establishment” includes especially :
(a)
a place of management;
(b)
a branch;
(c)
an office;
(d)
a factory;
(e)
a workshop;
(f)
a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources;
(g)
a warehouse in relation to a person providing storage
facilities for others;
(h)
an installation on structure used for the exploration or
exploitation of natural resources;
(i)
a building site or construction, installation or assembly
project or supervisory activities in connection therewith, where
such site, projects or activities (together with other such sites,
projects or activities, if any) continue for a period of more than
six months : Provided
that for the purpose of this paragraph an enterprise shall be deemed
to have a permanent establishment in a Contracting State and to
carry on business through that permanent establishment if it
provides services or facilities in connection with or supplies plant
and machinery on hire, used or to be used in the prospecting for, or
extraction or production of mineral oils in the State. 3.
Notwithstanding the preceding provisions of this Article, the term
“permanent establishment” shall not be deemed to include :
(a)
the use of facilities solely for the purpose of storage or
display of goods or merchandise belonging to the enterprise;
(b)
the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of storage or display;
(c)
the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of processing by another
enterprise;
(d)
the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or of collecting
information, for the enterprise;
(e)
the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for
scientific research, or for similar activities which have a
preparatory or auxiliary character, for the enterprise;
(f)
the selling of goods or merchandise belonging to the
enterprises displayed in an occasional temporary fair or exhibition
in the process of closing down of such fair or exhibition; and
(g)
the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs (a) to
(f), provided that overall activity of the fixed place of
business resulting from this combination is of a preparatory or
auxiliary character. However,
the provisions of sub-paragraphs (a) to (g) shall not
be applicable where the enterprise maintains any other fixed place
of business in the other Contracting State for any purposes other
than the purposes specified in the said sub-paragraphs. 4.
Notwithstanding the provisions of paragraphs 1 and 2, where a person
- other than an agent of an independent status to whom paragraph 5
applies - is acting in a Contracting State on behalf of an
enterprise of the other Contracting State, that enterprise shall be
deemed to have a permanent establishment in the first-mentioned
Contracting State, if,
(a)
he has, and habitually exercises in that State an authority
to conclude contracts on behalf of the enterprise, unless his
activities are limited to the purchase of goods or merchandise for
the enterprise;
(b)
he has no such authority, but habitually maintains in the
first-mentioned State a stock of goods or merchandise from which he
regularly delivers goods or merchandise on behalf of the enterprise;
(c)
he habitually secures orders in the first-mentioned State,
wholly or almost wholly for the enterprise itself or for the
enterprise and other enterprises in which the first-mentioned
enterprise has a majority participation, or for the enterprise and
other enterprises which have a majority participation in the
first-mentioned 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 carried on business in that other State through a broker,
a general commission agent or any other agent of an independent
status, provided that such persons are acting in the ordinary course
of their business. 6.
The fact that a company which is a resident of a Contracting State
controls or is controlled by a company, which is a resident of the
other Contracting State, or which carries on business in the 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, derived by a resident of
a Contracting State from immovable property (including income from
agriculture or forestry) situated in the other Contracting State may
be taxed in that other State. 2.
The term “immovable property” shall have the meaning which it
has under the laws of the Contracting State in which the property in
question is situated. The term shall in any case include property
accessory to immovable property, 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, boats and aircraft shall not be
regarded as immovable property. 3.
The provisions of paragraph 1 shall also apply to income derived
from the direct use, letting or use in any other form of immovable
property. 4.
The provisions of paragraphs 1 and 3 shall also apply to the income
from immovable property of an enterprise and to income from
immovable property used for the performance of independent personal
services. Article
7
: Business profits
- 1. The profits of an enterprise of a Contracting State
shall be taxable only in that State unless the enterprise carries on
business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in
the other State, as is attributable to that permanent establishment. 2.
Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, there shall in
each Contracting State be attribute 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 deduction expenses which are incurred for
the purposes of the business of the permanent establishment
including executive and general administrative expenses so incurred,
whether in the State in which the permanent establishment is
situated or elsewhere, in accordance with the provisions of and
subject to the limitation of the taxation laws of that State. 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.
For the purposes of the preceding paragraphs, the profits to be
attributed to the permanent establishment shall be determined by the
same method year by year unless there is good and sufficient reason
to the contrary. 6.
Where the 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. Article
8
: Air transport -
1. Profits derived by an enterprise of a Contracting State
from the operation of aircraft in international traffic shall be
taxable only in that State. 2.
The provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international
operating agency. 3.
The provisions of paragraphs 1 and 2 shall also apply where the
enterprise has an office or agency in the other State for the
transportation of goods or persons. However, this shall apply only
to activities directly connected with the business of the operation
of aircraft in inter-national traffic. 4.
For the purposes of this Article, interest on funds connected with
the operation of aircraft in international traffic shall be regarded
as profits derived from the operation of such aircraft, and the
provisions of Article 12 shall not apply in relation to such
interest. 5.
The term “operation of aircraft” shall mean business of
transportation by air of passengers, mail, livestock or goods
carried on by the owners or lessees or charterers of aircraft,
including the sale of tickets for such transportation on behalf of
other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation. Article
9
: Shipping - 1.
Income derived by an enterprise of a Contracting State from the
operation of ships in international traffic shall be taxable only in
that State. 2.
Notwithstanding anything contained in paragraph 1 of this Article
and paragraph 2 of Article 10 of the Agreement on merchant shipping
dated 18-11-1976, between the Government of the Republic of India
and the Government of the People’s Republic of Bulgaria, income
derived by an enterprise of a Contracting State from the operation
of ships in international traffic from the ports of the other
Contracting State to the ports of third countries and from the ports
of third countries to the ports of the other Contracting State may
be taxed in the other Contracting State, but the tax imposed in that
other Contracting State shall not exceed :
(a)
50 per cent of the tax otherwise imposed by the taxation law
of that other Contracting State, or
(b)
2.50 per cent of the gross amount payable in respect of such
operation of ships, whichever is lower. 3.
For the purposes of clause (b) of paragraph 2 of this
Article, the gross amount payable in respect of the operation of
ships shall mean the aggregate of the following amounts, namely :
(a)
the gross amount paid or payable on account of the carriage
of passengers, livestock, mail or goods shipped at a port or ports
in the other Contracting State;
(b)
the gross amount received in the other Contracting State on
account of carriage of passengers, livestock, mail or goods shipped
at a port of the third country;
(c)
interest arising in the other Contracting State on funds
connected with the operation of ships in international traffic;
(d)
the gross amount payable on account of the use, maintenance
or rent of containers (including trailers and related equipment for
the transport of containers) in connection with the transport of
goods or merchandise in international traffic. 4.
The provisions of paragraphs 1 and 2 shall also apply to profits
from the participation in a pool, a joint business or an
international operating agency engaged in the operation of ships. 5.
For the purposes of this Article,
(a)
interest on funds connected with the operation of ships in
international traffic shall be regarded as income from the operation
of such ships and the provisions of Article 12 shall not apply in
relation to such interest; and
(b)
income from the operation of ships includes income derived
from the use, maintenance or rental of containers (including
trailers and related equipment for the transport of containers) in
connection with the transport of goods or merchandise in
international traffic. Article
10
: Associated
enterprises - 1. Where—
(a)
an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise of
other Contracting State, or
(b)
the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State, and
in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations which differ
from those which would be made between independent enterprises, then
any profits which would, but for those conditions, have accrued to
one of the enterprises, but by reason of those conditions, have not
so accrued, may be included in the profits of that enterprise and
taxed accordingly. Article
11
: Dividends - 1.
Dividends paid by a company which is resident of a Contracting State
to a resident of the other Contracting State may be taxed in that
other State. 2.
However, such dividends may also be taxed in the Contracting State
of which the company paying the dividends is a resident and
according to the laws of that State, but if the recipient is the
beneficial owner of the dividends, the tax so charged shall not
exceed 15 per cent of the gross amount of the dividends. This
paragraph shall not affect the taxation of the company in respect of
the profits out of which the dividends are paid. 3.
The term “dividends” as used in this Article means income from
shares or other rights, not being debt-claims, participating in
profits, as well as income from corporate rights which is subjected
to the same taxation treatment as income from shares by the laws of
the State of which the company making the distribution is a
resident. 4.
The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the dividends, being a resident of a Contracting
State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein or performs in that other State
independent personal services from a fixed base situated therein,
and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed
base. In such a case the provisions of Article 7, or Article 15, as
the case may be, shall apply. 5.
Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State
may not impose any tax on the dividends paid by the company, except
insofar as such dividends are paid to a resident of that other State
or in so far as the holding in respect of which the dividends are
paid is effectively connected with a permanent establishment or a
fixed base situated in that other State, nor subject the company’s
undistributed profits to a tax on the company’s undistributed
profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other
State. Article
12
: Interest - 1.
Interest arising in a Contracting State and paid to a resident of
the other Contracting State may be taxed in that other State. 2.
However, such interest may also be taxed in the Contracting State in
which it arises and according to the laws of that State, if the
recipient is the beneficial owner of the interest, the tax so
charged shall not exceed 15 per cent of the gross amount of the
interest. 3.
Notwithstanding the provisions of paragraph 2,—
(a)
interest arising in a Contracting State shall be exempt from
tax in that State provided it is derived and beneficially owned by :
(i)
the Government, a political sub-division or a local authority
of the other Contracting State; or
(ii)
the Central Bank of the other Contracting State;
(b)
interest arising in a Contracting State shall be exempt from
tax in that State if it is beneficially owned by a resident of the
other Contracting State and it is derived in connection with a loan
or credit extended or endorsed by :
(i)
in the case of Bulgaria, the Foreign Trade Bank to the extent
such interest is attributable to financing of exports and imports
only;
(ii)
in the case of India, the Export-Import Bank of India (Exim
Bank), to the extent such interest is attributable to financing of
exports and imports only; (iii)
any institution of a Contracting State incharge of public
financing of external trade; (iv)
any other person provided that the loan or credit is approved
by the Government of the first-mentioned Contracting State. 4.
The term “interest” as used in this Article means income from
debt-claims of every kind, whether or not secured by mortgage and
whether or not carrying a right to participate in the debtor’s
profits, and in particular, income from Government securities and
income from bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures. Penalty charges
for late payments shall not be regarded as interest for the purpose
of this Article. 5.
The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the interest, being a resident of a Contracting
State, carries on business in the other Contracting State, in which
the interest arises, through a permanent establishment situated
therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with
such permanent establishment or fixed base. In such a case the
provisions of Article 7 or Article 15, as the case may be, shall
apply. 6.
Interest shall be deemed to arise in a Contracting State when the
payer is that Contracting State itself, a political sub-division, a
local authority thereof or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the Contracting State
in which the permanent establishment or fixed base is situated. 7.
Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the
amount of the interest, having regard to the debt-claim for which it
is paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship,
the provisions of this Article shall apply to the last-mentioned
amount. In such a 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. Article
13
: Royalties and
fees for technical services - 1. Royalties and fees for
technical services arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State. 2.
However, such royalties and fees for technical services may also be
taxed in the Contracting State in which they arise, and according to
the laws of that State, but if the recipient is the beneficial owner
of the royalties, or fees for technical services, the tax so charged
shall not exceed :
(a)
15 per cent of the gross amount of the royalties relating to
copyrights of literary, artistic or scientific works, other than
cinematograph films or films or tapes used for radio or television
broadcasting; and
(b)
20 per cent of the gross amount of the royalties in all other
cases or fees for technical services. 3.
The term “royalties” as used in this Article means payments of
any kind received as a consideration for the use of, or the right to
use, any copyright of literary, artistic or scientific work
including cinematograph films, or films, or tapes used for radio or
television broadcasting, any patent, trade mark, design or model,
plan, secret formula or process, or for the use of, or the right to
use, industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientific
experience. 4.
The term “fees for technical services” as used in this Article
means payments of any amount to any person other than payments to an
employee of the person making payments, in consideration for the
services of a managerial, technical or consultancy nature, including
the provision of services of technical or other personnel. 5.
The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the royalties or fees for technical services,
being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical
services arise, through a permanent establishment situated therein,
or performs in that other State independent personal services from a
fixed base situated therein, and the right, property or contract in
respect of which the royalties or fees for technical services are
paid is effectively connected with such permanent establishment or
fixed base. In such a case the provisions of Article 7 or Article
15, as the case may be, shall apply. 6.
Royalties and fees for technical services shall be deemed to arise
in a Contracting State when the payer is that State itself, a
political sub-division, a local authority thereof, or a resident of
that State. Where, however, the person paying the royalties or fees
for technical services, whether he is a resident of a Contracting
State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the liability to pay the
royalties or fees for technical services was incurred, and such
royalties or fees for technical services are borne by such permanent
establishment or fixed base, then such royalties or fees for
technical services shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated. Article
14
: Capital gains -
1. Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article 6 and
situated in the other Contracting State may be taxed in that other
State. 2.
Gains from the alienation of movable property forming part of the
business property of a permanent establishment which an enterprise
of a Contracting State has in the other Contracting State or of
movable property pertaining to a fixed base available to a resident
of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone
or together with the whole enterprise) or of such fixed base, may be
taxed in that other State. 3.
Gains from the alienation of ships or aircraft operated in
international traffic, or movable property pertaining to the
operation of such ships or aircraft, shall be taxable only in the
Contracting State of which the alienator is resident. 4.
Gains from the alienation of shares of the capital stock of a
company the property of which consists directly or indirectly
principally of immovable property situated in a Contracting State
may be taxed in that State. 5.
Gains from the alienation of shares, other than those mentioned in
paragraph 4 of a company which is a resident of a Contracting State
may be taxed in that State. 6.
Gains from the alienation of any property other than that mentioned
in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the
Contracting State of which the alienator is a resident. Article
15
: Independent
personal services - 1. Income derived by an individual,
who is a resident of a Contracting State from the performance of
professional services or other independent activities of a similar
character shall be taxable only in that State except in the
following circumstances when such income may also be taxed in the
other Contracting State :
(a)
if he has a fixed base regularly available to him in the
other Contracting State for the purpose of performing his
activities; in that case only so much of the income as is
attributable to that fixed base may be taxed in that other State; or
(b)
if his stay in the other Contracting State is for a period or
periods amounting to or exceeding in the aggregate 183 days in the
relevant “previous year” or “year of income”, as the case
may be; in that case, only so much of the income as is derived from
his activities performed in that other State may be taxed in that
other State. 2.
The term “professional services” includes independent,
scientific, literary, artistic, educational or teaching activities,
as well as the independent activities of physicians, surgeons,
lawyers, engineers, architects, dentists and accountants. Article
16
: Dependent
personal services - 1. Subject to the provisions of
Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that State unless
the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived
therefrom may be taxed in that other State. 2.
Notwithstanding the provisions of paragraph 1, remuneration derived
by a resident of a Contracting State in respect of an employment
exercised in the other Contracting State shall be taxable only in
the first-mentioned State if :
(a)
the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in the relevant
“previous year” or “year of income”, as the case may be ;
(b)
the remuneration is paid by, or on behalf of, an employer who
is not a resident of the other State; and
(c)
the remuneration is not borne by a permanent establishment or
a fixed base which the employer has in the other State. 3.
Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised aboard a
ship or aircraft operated in international traffic by an enterprise
of a Contracting State may be taxed in that State. Article
17
: Directors’
fees - Directors’ fees and similar payments derived by a
resident of a Contracting State in his capacity as a member of the
Board of Directors of a company which is a resident of the other
Contracting State may be taxed in that other State. Article
18
: Income earned by
entertainers and athletes - 1. Notwithstanding the
provisions of Articles 15 and 16, income derived by a resident of a
Contracting State as an entertainer, such as a theatre, motion
picture, radio or television artiste, or a musician, or as an
athlete, from his personal activities as such exercised in the other
Contracting State may be taxed in that other State. 2.
Where income in respect of personal activities exercised by an
entertainer or athlete in his capacity as such accrues not to the
entertainer or athlete himself but to another person, that income
may, notwithstanding the provisions of Articles 7, 15 and 16, be
taxed in the Contracting State, in which the activities of the
entertainer or athlete are exercised. 3.
Notwithstanding the provisions of paragraph 1, income derived by an
entertainer or an athlete who is a resident of a Contracting State,
from his personal activities as such, exercised in the other
Contracting State, shall be taxable only in the first-mentioned
Contracting State, if the activities in the other Contracting State
are performed within the framework of cultural exchange between the
two Contracting States, or are supported wholly or substantially,
from the public funds of the first-mentioned Contracting State,
including any of its political sub-divisions or local authorities. 4.
Notwithstanding the provisions of paragraph 2 and Articles 7, 15 and
16, where income in respect of personal activities exercised by an
entertainer or an athlete in his capacity as such in a Contracting
State accrues not to the entertainer or athlete himself but to
another person, that income shall be taxable only in the other
Contracting State, if that other person is supported wholly or
substantially from the public funds of that other State, including
any of its political sub-divisions or local authorities. Article
19
: Remuneration and
pensions in respect of Government service - 1. (a)
Remuneration, other than a pension, paid by a Contracting State or a
political sub-division or a local authority thereof to an individual
in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State. (b)
However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that other State
and the individual is a resident of that State, who :
(i)
is a national of that State; or
(ii)
did not become a resident of that State solely for the
purpose of rendering the services. 2.
(a) Any pension paid by, or out of funds, created by a
Contracting State or a political sub-division or a Contracting State
or a political sub-division or a local authority thereof to an
individual in respect of services rendered to that State or
sub-division or authority shall be taxable only in that State. (b)
However, such pension shall be taxable only in the other Contracting
State if the individual is a resident of, and a national of that
other State. 3.
The provisions of Articles 16, 17 and 20 shall apply to remuneration
and pensions in respect of services rendered in connection with a
business carried on by a Contracting State or a political
sub-division or local authority thereof. Article
20
: Non-Government
pensions and annuities - 1. Any pension, other than a
pension referred to in Article 19, or any annuity derived by a
resident of a Contracting State from sources within the other
Contracting State may be taxed only in the first-mentioned
Contracting State. 2.
The term “pension” means a periodic payment made in
consideration of past services or by way of compensation for
injuries received in the course of performance of services. 3.
The term “annuity” means a stated sum payable periodically at
stated time during life or during a specified or ascertainable
period of time, under an obligation to make the payments in return
for adequate and full consideration in money or money’s worth. Article
21
: Payments
received by students and apprentices - 1. A student or
business apprentice who is or was a resident of one of the
Contracting States immediately before visiting the other Contracting
State and who is present in that State solely for the purpose of his
education or training, shall be exempt from tax in that other State
on :—
(a)
payments made to him by persons residing outside that other
State for the purposes of his maintenance, education or training;
and
(b)
remuneration from employment in that other State, in an
amount not exceeding Lev. 1500 or its equivalent in Indian currency
during any “previous year” or “year of income”, as the case
may be, provided that such employment is directly related to his
studies or is undertaken for the purposes of his maintenance. 2.
The benefits of this Article shall extend only for such period of
time as may be reasonable or customarily required to complete the
education or training undertaken, but in no event shall any
individual have the benefits of this Article, for more than five
consecutive years from the date of his first arrival in that other
Contracting State. Article
22
: Payments
received by professors, teachers and research scholars - 1.
A professor or teacher who is or was a resident of one of the
Contracting States immediately before visiting the other Contracting
State for the purpose of teaching or engaging in research, or both,
at a university, college, school or other approved institution in
that other Contracting State shall be exempt from tax in that other
State on any remuneration for such teaching or research for a period
not exceeding two years from the date of his arrival in that other
State. 2.
This paragraph shall not apply to income from research if such
research is undertaken primarily for the private benefit of a
specific person or persons. 3.
For the purpose of this Article and Article 21, an individual shall
be deemed to be a resident of a Contracting State if he is resident
in that Contracting State in the “previous year” or the “year
of income”, as the case may be, in which he visits the other
Contracting State or in the immediately preceding “previous
year” or “year of income”. 4.
For the purposes of paragraph 1, “approved institution” means an
institution which has been approved or established by the competent
authority of the concerned Contracting State. Article
23
: Other income -
1. Subject to the provisions of paragraphs 2 and 3, items of
income of a resident of a Contracting State, wherever arising, which
are not expressly dealt with in the foregoing Articles of this
Convention, shall be taxable only in that Contracting State. 2.
The provisions of paragraph 1 shall not apply to income, other than
income from immovable property as defined in paragraph 2 of Article
6, if the recipient of such income, being a resident of a
Contracting State, carries on business in the other Contracting
State through a permanent establishment situated therein, or
performs in that other State independent personal services from a
fixed base situated therein, and the right or property in respect of
which the income is paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions
of Article 7 or Article 15, as the case may be, shall apply. 3.
Notwithstanding the provisions of paragraphs 1 and 2, items of
income of a resident of a Contracting State not dealt with in the
foregoing Articles of this Convention and arising in the other
Contracting State may be taxed in that other State. Article
24
: Capital - 1.
Capital represented by immovable property referred to in Article 6,
owned by a resident of a Contracting State and situated in the other
Contracting State, may be taxed in that other State. 2.
Capital represented by 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 by 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, may be taxed in that other
State. 3.
Capital represented by ships or aircraft operated in international
traffic and by movable property pertaining to the operation of such
ships or aircraft, shall be taxable only in the Contracting State of
which the enterprise owning such property is a resident. 4.
All other elements of capital of a resident of a Contracting State
may be taxed in the Contracting State in which such elements of
capital are situated. Article
25
: Elimination of
double taxation - 1. The laws in force in either of the
Contracting States shall continue to govern the taxation of income
or capital in the respective Contracting States except where
provisions to the contrary are made in this Convention. 2.
In both the Contracting States, double taxation shall be avoided in
the following manner :
(a)
where a resident of a Contracting State derives income or
owns capital which, in accordance with the provisions of this
Convention, may be taxed in the other Contracting State, the
first-mentioned State shall, subject to the provisions of
sub-paragraph (b) of this paragraph, exempt such income or
capital from tax but may, in calculating tax on the remaining income
or capital of that person, apply the rate of tax which would have
been applicable if the exempted income or capital had not been so
exempted ;
(b)
either of the Contracting States when imposing taxes on its
residents may include in the tax base upon which such taxes are
imposed the items of income which according to the provisions of
Articles 9, 11, 12 and 13 of this Convention may also be taxed in
the other State but shall allow as a deduction from the amount of
tax computed on such a base an amount equal to the tax paid in the
other Contracting State. Such deduction shall not, however, exceed
that part of tax, leviable by the first-mentioned State, as computed
before the deduction is given, which is appropriate to the income
which, in accordance with the provisions of Articles 9, 11, 12 and
13 of this Convention may be taxed in the other State. 3.
For the purposes of sub-paragraph (b) of paragraph 2, the
term “tax paid in the other Contracting State” shall be deemed
to include any amount which would have been payable as tax but for
any relief by way of deduction allowed in computing the taxable
income or an exemption or a reduction of tax or otherwise under the
laws relating to taxation of income in force in that other
Contracting State. Article
26
: Non-discrimination
- 1. The nationals of a Contracting State shall not be
subjected in the other Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome
than the taxation and connected requirements to which nationals of
that other State in the same circumstances and under the same
conditions are or may be subjected. 2.
The 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 laws 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 favourably levied in that other State than the taxation levied
on enterprises of that other State carrying on the same activities
in the same circumstances or under the same conditions. This
provision shall not be construed as preventing a Contracting State
from charging the profits of a permanent establishment which an
enterprise 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 enterprise of the first-mentioned Contracting
State, nor as being not in accordance with the provisions of
paragraph 3 of Article 7 of this Convention. 4.
Nothing in this Article shall be construed as obliging a Contracting
State to grant to non-residents of that State any personal
allowances, reliefs, reductions and deductions for taxation purposes
which are by law available only to persons who are so resident. 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 Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome
than the taxation and connected requirements to which other similar
enterprises of that first-mentioned State are or may be subjected in
the same circumstances and under the same conditions. 6.
In this Article, the term “taxation” means taxes which are the
subject of this Convention. Article
27
: 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
Convention, he may, notwithstanding the remedies provided by the
national laws of these States, present his case to the competent
authority of the Contracting State of which he is a resident. This
case must be presented within three years of the date of receipt of
notice of the action which gives rise to taxation, not in accordance
with the Convention. 2.
The competent authority shall endeavour, if the objection appears to
it to be justified and if it is not itself able to arrive at an
appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State with a view
to the avoidance of taxation not in accordance with the Convention.
Any agreement reached shall be implemented notwithstanding any time
limits in the national laws of the Contracting States. 3.
The competent authorities of the Contracting States shall endeavour
to resolve by mutual agreement any difficulties or doubts arising as
to the interpretation or application of the Convention. They may
also consult together for the elimination of double taxation in
cases not provided for in this 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
28
: Exchange of
information - 1. The competent authorities of the
Contracting States shall exchange such information (including
documents) as is necessary for carrying out the provisions of the
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, in particular for the
prevention of fraud or evasion of such taxes. Any information
received by a Contracting State shall be treated as secret in the
same manner as information obtained under the domestic laws of that
State. However, if the information is originally regarded as secret
in the transmitting State, it shall be disclosed only to persons or
authorities (including courts and administrative bodies) involved in
the assessment or collection of, the enforcement or prosecution in
respect of, or the determination of appeals in relation to, the
taxes which are subject of the Convention. Such persons or
authorities shall use the information only for such purposes but may
disclose the information in public court proceedings or in judicial
decisions. The competent authorities shall, through consultation,
develop appropriate conditions, methods and techniques concerning
the matters in respect of which such exchange of information shall
be made, including, where appropriate, exchange of information
regarding tax avoidance. 2.
The exchange of information or documents shall be either on a
routine basis or on request with reference to particular case or
both. The competent authorities of the Contracting States shall
agree from time to time on the list of the information or documents
which shall be furnished on a routine basis. 3.
In no case shall the provisions of paragraph 1 be construed so as to
impose on a Contracting State the obligation :
(a)
to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other
Contracting State ;
(b)
to supply information or documents which are not obtainable
under the laws or in the normal course of the administration of that
or of the other Contracting State ;
(c)
to supply information or documents which would disclose any
trade, business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would be
contrary to public policy (ordre public). Article
29
: Diplomatic and
consular officials - Nothing in this Convention shall affect the
fiscal privileges of diplomatic or consular officials under the
general rules of international law or under the provisions of
special agreements. Article
30
: Entry into force
- Each of the Contracting States shall notify to the other the
completion of the procedures required by its law for the bringing
into force of this Convention. This Convention shall enter into
force on the date of the latter of these notifications and shall
thereupon have effect :
(a)
in India :
(i)
in respect of income arising in any “previous year”
beginning on or after the first day of April next following the
calendar year in which the Convention enters into force; and
(ii)
in respect of capital which is held on the last day of any
previous year beginning on or after the first day of April next
following the calendar year in which the Convention enters into
force; and
(b)
in Bulgaria :
(i)
in respect of income arising in any year of income beginning
on or after the first day of January, next following the calendar
year in which the Convention enters into force; and
(ii)
in respect of capital which is held on the last day of any
year of income beginning on or after the first day of January next
following the calendar year in which the Convention enters into
force. Article
31
: Termination -
This Convention shall remain in force indefinitely, but either of
the Contracting States may, on or before the thirtieth day of June,
in any calendar year beginning after the expiration of a period of
five years from the date of its entry into force, give to the other
Contracting State through diplomatic channels, written notice of
termination. In such event, the Convention shall cease to have
effect :
(a)
in India :
(i)
in respect of income arising in any “previous year”
beginning on or after the first day of April, next following the
calendar year in which the notice of termination is given; and
(ii)
in respect of capital which is held on the last day of any
previous year beginning on or after the first day of April next
following the calendar year in which the notice of termination is
given.
(b)
In Bulgaria :
(i)
in respect of income arising in any year of income beginning
on or after the first day of January, next following the calendar
year in which the notice of termination is given; and
(ii)
in respect of capital which is held on the last day of any
year of income beginning on or after the first day of January, next
following the calendar year in which the notice of termination is
given. IN
WITNESS WHEREOF
the undersigned, being duly authorised thereto have signed the
present Convention. Done
in duplicate at Sofia on this 26th day of May of one thousand nine
hundred and ninety-four in Hindi, Bulgarian and English languages,
all the texts being equally authentic. In case of divergence between
any of the two texts, the English text shall prevail. PROTOCOL At
the signing today of the Convention between the Government of the
Republic of India and the Government of the Republic of Bulgaria for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and on capital, the
undersigned have agreed upon the following provisions which shall
form an integral part of the Convention : 1.
To Article 7 (Business Profits) :
(a)
In respect of paragraph 1, the profits attributable to a
permanent establishment which an enterprise of a Contracting State
has in the other Contracting State shall include profits directly or
indirectly attributable to the permanent establishment and in
parti-cular shall include profits of the enterprise from the sales
in that other State of goods or merchandise of the same or similar
kind as those sold through the permanent establishment.
(b)
In respect of paragraph 3, it is agreed that while
determining the profits of a permanent establishment, no deduction
shall be allowed in respect of amounts, if any, paid (otherwise than
towards reimbursement of actual expenses) by the permanent
establishment to the head of the enterprise or any of its other
offices, by way of royalties, fees or other similar payments in
return for the use of patents, know-how or other rights, or by way
of commission or other charges, for specific services performed or
for management or, except in the case of a banking enterprise, by
way of interest on money lent to the permanent establishment.
Likewise, no account shall be taken in the determination of the
profits of a permanent establishment, for amounts charged (otherwise
than towards reimbursement of actual expenses), by the permanent
establishment to the head office of the enterprise or any other of
its offices, by way of royalties, fees or other similar payments in
return for the use of patents, know-how or other rights, or by way
of commission or other charges, for specific services performed or
for the management or, except in the case of a banking enterprise,
by way of interest on money lent to the head office of the
enterprise or any of its other offices. 2.
To Article 12 (Interest) : In
respect of paragraph 3(a)(ii), it is understood that
the Central Bank in the case of India means the Reserve Bank of
India. 3.
To Article 26 (Non-discrimination) : In
respect of paragraph 3, it is understood that a Contracting State
may not exercise in respect of a resident of the other Contracting
State a higher or more burdensome taxation than the taxation which
that State would exercise in respect of a resident of a third State. IN
WITNESS WHEREOF the
undersigned, being duly authorized thereto, have signed the present
Protocol. DONE
in duplicate at Sofia on this 26th day of May of one thousand nine
hundred and ninety-four in the Hindi, Bulgarian and English
languages, all the texts being equally authentic. In case of
divergence between any of the two texts, the English text shall
prevail. |
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