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upen the following provisions which shall form an integral part of the said Convention:

1 — With reference to article 2:

Shold Portugal introduce a tax comparable to the German capital tax, the Contracting States shall consult each ather to reach an agreement on whether or not to extend the scope of the Convention to include this tax. If Portugal declares itself unable to include this tax in the scope of the Contention, the Federal Republic may, without delay and by may of a communication to be sent through diplomatic channels, terminate sub-paragraph 6) of paragraph 1 of article 2, stipulating that with effect from the date of introduction of the new Portuguese tax, the Convention shall cease to have effect in respect of the German capital tax and trade tax, levied on capital basis (Gewerbekapitailsteuer).

2 — With reference to article 3:

The term «archipelagoes» used in sub-paragraph b) of paragraph 1 of articule 3 is used on a purely geographical sense. It is not the intention of the contracting parties to attribute, with respect to islands or groups of islands, any rights going further than those rights existing under international law.

3 — With reference to article 10:

The term «dividends» used in paragraphe 3 of article 10 includes also, with regard to the Federal Republic of Germany, income derived by a deeping from his participation as such and, with regard' to Portugal, profits attributed under an arrangement for participation in profits (conta em participação).

4 — With reference to article 10 paragraph 2 and article 11 paragraph 2:

Notwithstanding these provisions the income may be taxed in the Contracting State in which it arises according to the laws of that State if it is derived from rights or debt-claims participating in the .profits (including in the Federal Republic of Germany income of a; sleeping partner from his participation as such or from «partiarischen Darlehen» and «Gewinnobligationen»), provided that such income is deductible in determining the profits of the debtor.

5 —With reference to article 10, 11 and 12:

As regards the application of articles 10, 1¡1 and' 12 in Portugal, it shall be immaterial whether the dividends, interest or royalties arising in that country were actually paid or are attributable under Portuguese law.

6 —With reference to article 13:

The provisions of article 13 shall not be construed as restricting the right of Portugal to .tax the gains derived from capital increase of companies having their head office or their effctive management in Portugal by the incorporation of reserves or by the issue of shares.

7 — With reference to article 14:

In the case of paragraph 1 6) of article 14, only so much of the income as is attributable to the

activity mentioned therein may be taxed in that other Contracting State.

8 — With reference to article 24:

a) Only the provisions of sub-paragraph b) of paragraph 2 of article 24 with the exclusions of sub-paragraph c) of paragraph 2 of that article, shall apply to the profits of, and to the capital represented by property forming part of the business property of, a permanent establishment; to dividends paid by, and to the shareholding in, a company; or to gains referred to in paragraph 1 and 2 of article 13 of the Agreement; unless the resident of the Federal Republic of Germany concerned proves that the receipts of the permanent establishment or company are exclusively or almost exclusively derived from producing, selling or letting goods and merchandise including cases where such goods or merchandise are eold or let ao customers outside Portugal), the exploration for or exploitation or treatment of minerals, quarrying, primary production, giving technical advice or rendering engineering or commercial services, or doing banking or insurance business, within Portugal, or from interest or royalties arising in Portugal and connected with the above-mentioned activities, or from interest paid by the Government of Portugal or a political subdivision thereof or from interest and dividends paid by a company being a resident of Portugal if such company derives its receipts exclusively or almost exclusively from the above-mentioned activities.

b) Where a company being a resident of the Federal Republic of Germany distributes income derived from sources within Portugal, paragraph 2 of article 23 of 'the Convention shall not preclude the compensatory imposition of corporation tax on such distributions in accordance with the provision of German tax law.

9 —With reference to article 30:

Notwithstanding the provisions of article 30, article 8, paragraph 3 of article 13 and paragraph 3 of article 23 shall have effect in both Contracting States with respect to the assessment periods beginning on or after January 1972.

For the Portuguese Republic, Diogo Pinto de Freitas do Amoral.

For the Federal Republic of Germany, (Assinatura ikgivel).

PROPOSTA DE LEI N. 40/II

PROPOSTA DE RESOLUÇÃO APROVANDO PARA RATIFICAÇÃO A CONVENÇÃO ENTRE A REPÚBLICA PORTUGUESA E A REPÚBLICA ITALIANA PARA EVITAR A DUPLA TRIBUTAÇÃO E PREVENIR A EVASÃO FISCAL EM MATÉRIA DE IMPOSTOS SOBRE O RENDIMENTO

A Assembleia da República resolve, nos termos dos artigos 164.°, alínea /), e 169.°, n.°' 4 e 5, da Constituição, aprovar para ratificação a Convenção entre a República Portuguesa e a República Italiana para