1868-(40)

II SÉRIE-A — NÚMERO 66

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

3 — Whenever companies from different countries have agreed to carry on an air transportation business

together in the form of a consortium, the provisions

of paragraph 1 shall apply to such part of the profits

of the consortium as corresponds to the participation held in that consortium by a company that is a resident of a Contracting State.

4 — For the purposes of this article, profits from the operation of ships or aircraft in international traffic shall mean profits derived from the transportation by sea or

air of passengers, mail, livestock or goods carried on by the owner or lessees or charterers of the ships or aircraft, including profits from:

/) The sale of tickets for such transportation on behalf of other enterprises;

ii) The incidental lease of ships or aircraft used in such transportation; and

Hi) The use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) by the enterprise engaged in international traffic in connection with such transportation.

5 — Interest on funds generated by the operation of ships, or aircraft and arising directly to a permanent

establishment of an enterprise of one Contracting Sta;e in the otherContracting State, shall be regarded as profits derived from the operation of ships or aircraft :n international traffic. It is clarified that such interest shc.ll not refer to interest on funds representing investments.

Article 9

Associated enterprises

1 — Where:

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

b) The same 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.

2 — Where a Contracting State includes in the profits of an enterprise of that State — and taxes accordingly — profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such

adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

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 be taxed in the Contracting State of which the company paying the

dividends is a resident and according to the laws of

that State, but:

a) Where the dividends are paid by a company which is a resident of Portugal to a resident of India who is the beneficial owner thereof, the Portuguese tax so charged shall not exceed:

i) 15 per cent of the gross amount of the dividends; or

ii) 10 per cent of the gross amount of the dividends 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;

b) Where the dividends are paid by a company which is a resident of India to a resident of Portugal who is the beneficial owner thereof, the Indian tax so charged shall not exceed:

i) 15 per cent of the gross amount of the dividends; or

ii) 10 per cent of the gross amount of the dividends if the beneficial owner is a company that, for an uninterrupted period of two fiscal years prior to the payment of the dividend, owns directly at least 25 per cent of the capital stock of the company paying 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 — The term «dividends» as used in this article means income from shares, «jouissance» shares or «jouissance» rights, mining shares, founder's shares or other rights, not being debt-claims, participating in prof-its, as well as income 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. The term also includes profits attributed under an arrangement for participation in profits (associação em participação).

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 persona\ 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,