25 DE MAIO DE 1995

723

Article 25 Relief from double taxation

1 — In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident

or citizen of the United Stales as a credit against the United

Slates tax on income:

a) The income tax paid to Portugal by or on behalf of such citizen or resident; and

b) In the case of a United States company owning at least 10 percent of the voting stock of a company that is a resident of Portugal and from which the United States company receives dividends, the income tax paid to Portugal by or on behalf of the distributing company with respect to the profits out of which the dividends are paid.

2 — In the case of an individual who is a citizen of the United States and a resident of Portugal, income that may be taxed by the United States solely by reason of citizen ship shall be deemed to arise in Portugal to the extent necessary to avoid double taxation, provided that the tax paid to the United States will not be less than the tax that would be paid under the articles of this Convention if the individual were not a citizen of the United States.

3 — In the case of Portugal:

a) Where a resident of Portugal derives income that, in accordance with the provisions of this Convention may be taxed in the United States (other than solely by reason of citizenship), Portugal shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the United States. 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 the United States;

b) In the case of a Portuguese company that receives dividends from a United States company in the capital of which it holds directly a participation of at least 25 percent, Portugal shall allow a deduction for 95 percent of such dividends included in the tax base, provided that participation was held for the preceding 2 years, or from the date of the organization of the Portuguese company if that occurred later, but in either case only if the participation was held continuously throughout that period;

c) 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. .

Article 26 Non-discrimination

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 taxation and connected requirements to which nationals of that otheT State in the same circumstances are or may be subjected. This provision shall also

apply to persons who are not residents of one or both of the Contracting States. However, for the purposes of United States tax, and subject to article 25, «Relief from double taxation*, a United States national who is not a resident of

.trie, United States and a Portuguese national who is not a resident of the United States are not in the same circumstances.

, 2 — The taxation on a permanent establishment that an enterprise of a Contracting State has in the other Contracting State

. Shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the. other Contracting State any personal allowances, reliefs, and reductions for taxation purposes on account of civil status or family responsabilities that.it grants to its own residents.

3 — Nothing in this article shall be construed as preventing either Contracting State from imposing a tax as described in article 12, «Branch tax».

4 — Except where the provisions of paragraph 1 of article 9, «Associated enterprises*, paragraph 8 of article 11, «Interest», or paragraph 6 of article 13, «Royalties», apply, interest, royalties, and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for die purposes 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.

5 — Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirecdy, 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 that is other or more burdensome than the taxation and connected requirements to which other similarly situated enterprises of the first-mentioned State' are or may be subjected.

6 — The provisions of this article shall, notwithstanding the provisions of article 2, «Taxes covered*, apply to taxes of every kind and description imposed by a Contracting State or a political or- administrative subdivision or local authority thereof.

Article 27

Mutual agreement'procedure

1 — Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or national. The case must be presented within 5 years from the first notification of the action resulting in taxation not in accordance with the provisions of this Convention.

2 — The competent authority shall endeavor, if the objection appears to it to be justified and if 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 that is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits or other procedural limitations in the domestic law. of the Contracting States.

3 — The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or,doubts arising as to die interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the'Convention. In particular, the competent authorities of :the 'Contracting States may agree on the procedures for the