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II SÉRIE-A — NÚMERO 58

b) Studying at a university or other accredited educational institution in that other Contracting State;

shall be exempt from tax by that other Contracting State for a period of 12 consecutive months with respect to his income from personal services in an aggregate amount not in excess of 8,000 United States dollars or its equivalent in Portuguese escudos.

3 — This article shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons.

Article 24 Other income

1 — Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing articles of this Convention shall be taxable only in that State unless they arise in the other Contracting State, in which case they may also be taxed in that other State.

2 — The provisions of paragraph 1 shall not apply to income, other than income from immovable property (real property) as defined in paragraph 2 of article 6, «Income from immovable property (real property)», if the beneficial owner of the income, being a resident of a Contracting State, carries on or has carried on business in the other Contracting State 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 income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7, «Business profits», or article 15 «Independent personal services*, as the case may be, shall apply.

Article 25 Relief from double taxation

1 — In accordance with die provisions and subject to die limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), die United States shall allow to a resident or citizen of the United States as a credit against the United States 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 mis 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 other 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 the 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 cartying on the same activities. This provision shall not be construed as obb-ging 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, «Interesb>, or paragraph 6 of article 13, «Royalties», apply, inrerest, royalties, and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the 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.