13 DE MAIO DE 1981

2539

3 — The term ((dividends)) as. used in th:s article means income from shares, «jc'uissance» shares or ((jcuisrance)) rights, mining shares, fouinders'shares or other rights, not being debt-claims, participating in profits, as well as income from other 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 and distributions on certificates of an investment-trust.

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 case, dividends may be taxed In that other State and according to its taxation law.

5 — Where a company which is a resident of a Contracting State derives profits or income from the other Ccnitacting State, that otntr State may not impose any tax on the dividends .paid by the corn-pay, 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, nor1 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 partiy of profiitis or kioomme arising in such oher State.

ARTICLE 11 Interest

I — Interest arising in a Contracting 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, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed:

a) 10 per cent of the gross amount of such interest if it is paid on any loan of whatever kind granted by a bank. In the case of interest arising in Portugal, the provision of this sub-paragraph shall only apply if the operation for which the loan is given, is considered to be of an economic or social interest for the country by the Portuguese Government, which condition is always considered to be fulfilled if it is comprised in development plans approved by this Government;

6) 15 per cent of the gross amount of such interest in all other cases.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

3 — Notwithstanding the provisions of paragraph 2, interest arising in the Federal Republic of Cermany and payed to the Banco de Portugal shall be exempt from German tax and interest arising in Portugal and paid to the Deutsche Bundesbank shall be exempt from. Portuguese tax.

The competent authorities may by mutual agreement extend the provisions of this paragraph to interest paid to other similar institutions.

4 — The term ((interests as used in this article means income from Governmnet securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, >and other debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises.

5 — The previsions 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 ir the other Contracting State in which he interest ariies, 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, interest may be taxed in that other State and according to i&t taxation law.

6 — Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sobdivirion, a local authority or ai 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 State in which the permanent .establishment or fixed base is situated.

7 — Where, by reason of a spec a! 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.

ARTICLE 12

Royalties

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