13 DE MAIO DE 1981

2543

capital of the Portuguese company is owned directly by the German company.

For the purposes of taxes on capital! there shall also be excluded from the basis upon wich German tax is imposed any participation, the dividends of which are excluded- or, if paid, would be excluded, according to the immediately foregoing sentence from the basis upon which German; tax is imposed1.

b) There shall be allowed as acredit against Ger-

man income and corporation tax, payable in respect of the following items of income arising in Portugal and against German capital tax payable in respect of capital situated in Portugal the appropriate Portuguese tax paid under the laws of the Portugal and in accordance with this Convention on:

aa) Dividends, not dealt with in sub-paragraph a), to which paragraph 2 of article 10 applies;

bb) Interest to which paragraph 2 of article 11 applies;

cc) Royalties to which paragraph 2 of articles 12 apples;

dd) Remuneration to which article 16 applies:

ee) Income to which aTticle 17 applies;

The credit shall not, however, exceed that part of the German tax, as computed before the credit is given, which is appropriate to such income or capital:

c) For the purpose of credit referred to in sub-

paragraph b), Portuguese tax to be credited under the provisions of respective heads aa), bb) and cc) shall in any case be deemed to be 15 per cent of the gross amount of such dividends, interests and royalties.

CHAPTER VI Special provisions ARTICLE 25

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 the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provwxn shall, notwithstanding the provisions of Article I also apply to persons who are not residents for one or both of the Contracting States.

2 — The taxation on a permanent establisment whish 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 entraprises of that other State earring on the same activities. This provision shall not be construed as obliging a Contracting Stale, vr> grant to residents of

the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3 — Except where the provisions of article 9, of paragraph 7 of article 11, or paragraph 6 of article 12, apply interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the pourpose of determining the taxable profits of such entreprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if had been contracted to a resident of the first-mentioned State.

4 — 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 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 the first-mentioned State are or may be subjected.

ARTICLE 26

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 Convection, 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, if this case comes under paragraph 1 of article 25, to that of the Contracting State of which he is a national. The case must be presented within two years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.

2 — The competent authority shall endeavour, if the objection appears to it to be justified and if it h 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 which is not in accordance with the Convention.

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.

4 — The competent authorities of the Contracting Slates 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.