25 DE MAIO DE 1995

719

8 — 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 that 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 the Convention.

Article 12 Branch tax

1 — A corporation that is, a resident of Portugal may be subject in the United States to a tax in addition to the tax allowable under the other provisions of this Convention. Such tax, however, may be imposed only on:

a) The portion of the business profits of the corporation attributable to a permanent establishment in the United States, or subject to tax in the United States under article 6, «income from immovable property (real property)*, or paragraph t of article 14, «Capital gains», that represents the «dividend equivalent amount», as defined in section 884 of the Internal Revenue Code, as it may be amended from the time to time without changing the general principle thereof; and

b) The excess, if any, of interest deductible in the United States in computing the business profits attributable to a permanent establishment in the United States or taxable in the United States under article 6, «lncome from immovable property (real property)*, or paragraph 1 of article 14, «Capital gains*, over the interest paid by the permanent establishment or trade or business in the United States.

2 — The rate of the tax referred to in paragraph. 1, a), shall not exceed the rate specified in paragraph 2 or, when applicable, paragraph 3 of article 10, «Dividends». The rate of the tax referred to in paragraph 1, b), shall not exceed 5 percent in the case of a bank that is a resident of Portugal and 10 percent in all other cases.

Article 13 Royalties

\ —Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2 — However, such royalties may 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 percent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation..

3 — The term «royalties», as. used in this Convention 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 cinematographic films, or films, tapes, and other means .of image or sound reproduction, any patent, trademark, design, or model, plan,; se^ cret formula, or process, or other like right or property, or

for the use of or the rjght to use, industrial, commercial, or scientific-equipment, or for infoimation concerning industrial, commercial, or scientific experience. It also includes payments for technical assistance performed in a Contracting State by a resident of the other State where such assistance is related to the application of any such right or property. The term «rpyalties» also includes gains derived from the use of .such right or property in the case pf an alienation of such right or property to the extent that such gains are contingent on the productivity, use, or disposition thereof.

4—-The provision of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on or has carried on business in the other Contracting State, in which the royalties arise, through a permanent establishment situated therein, or performs or has performed 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 establisment of fixed.base. In such case the provisions or article 7, «Business profits*, of article 15, «Independent personal services*, as. the case may be, shall apply.

5 — For purposes of this article, royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative subdivision, local authority, or resident of that State. Where, however, the person paying the royalties, whether a resident of one of the Contracting States or not, has in one of the Contracting States a permanent establishment or fixed base in connection with which the liability-to pay the royalties was incurred, and the royalties.are borne by die permanent establishment of fixed basei then the royalties shall be deemed to arise in the State in which' the permanent establishment or fixed base is situated. .Where the person paying the royalties is not a resident of either Contracting State, and the royalties are not borne by a permanent establisment or fixed base in either Contracting State, but the royalties relate to the use of, or the fight to use, in one of the Contracting States, any property or righ't described in paragraph 3, the royalties shall be treated as arising in that State.

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 the Convention.

' "■ Article 14

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, Capital gains '

,' 1 — Gains derived by a resident of a Contracting State from the alienation of immovable property (real property) situated in the other Contracting State may be taxed in that other Slate.

2 — For the purposes of paragraph 1, immovable property situated in Portugal includes stock, participations, or other rights in a company or other legal person the property of which consists, directly or indirectly, principally of immovable, property situated in Portugal; and real property situated in the United States includes a United States real property interest.