6 DE SETEMBRO DE 1996

1460-(39)

then the provisions of those articles shall not be affected by the provisions of this article.

Article 8 Shipping and air transport

1 — Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2 — The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or an international operating agency.

Article 9 Associated enterprises

Where:

a) An enterprise of aContracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

b) The samé persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

Article 10 Dividends

1 — Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2 — However, such dividends may also bé taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3 — Notwithstanding the provisions of paragraph 2, if the beneficial owner is a company that, for an uninterrupted period of two years prior to the payment of the dividend, owns directly at least 25 per cent of the capital stock (capital social) of the company paying the dividends, the tax so charged shall not exceed with respect to dividends paid after December 31,1996, 10 per cent of the gross amount of such dividends.

4 — The term «dividends» as used in this article means income from shares, «jouissance» shares or «jouissance» rights, mining snares, founders' 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 com-

pany making the distribution is a resident. The provisions of this article shall also apply to profits attributed or paid to a person associated to a business activity carried out by another person under an arranjement for participation in profits as laid down by the law of each Contracting State (in case of Portugal, associação em participação).

5 — The provisions of paragraphs 1, 2 and 3 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, ór 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 the provisions of article 7 or article 14, as the case may be, shall apply.

6 — Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, 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, nor 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 partly of profits or income arising in such other State.

Article 11 Interest

1 — Interest arising in a Contracting State 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 the State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 15 per cent of the gross amount of the interest.

3 — Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempted from tax in that State:

a) If the debtor of such interest is the Government of that State, a political or administrative subdivision or a local authority thereof; or

b) If interest is paid to the Government of the other Contracting State, a political or administrative subdivision or a local authority thereof or an institution or body (including a financial institution) in connection with any financing granted by them under an agreement between the Governments of the Contracting States; or

c) In respect of loans or credit made by:

i) In the case of Korea, the Bank of Korea, the Korean Export-Import Bank and the Korea Development Bank; and

ii) In the case of Portugal, the Bank of Portugal, the Caixa Geral de Depósitos, the Banco Nacional Ultramarino (BNU), the Bank for External Development (BFE),