IT Notification

Agreement for Avoidance of Double taxation with foreign Republic of Croatia

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NOTIFICATION NO. 24/2015

New Del­hi, the 17th March, 2015

S.O.  (E). — Where­as, an Agree­ment and Pro­to­col (here­inafter referred to as the said Agree­ment and the Pro­to­col) as set out in the Annex­ure to this noti­fi­ca­tion, was entered into between the Gov­ern­ment of the Repub­lic of India and the Gov­ern­ment of the Repub­lic of Croa­t­ia for the avoid­ance of dou­ble tax­a­tion and for the pre­ven­tion of fis­cal eva­sion with respect to tax­es on income that was signed on the 12th Feb­ru­ary, 2014;

2.  And where­as, the date of entry into force of the said Agree­ment and Pro­to­col is the 6th Feb­ru­ary, 2015, being the date thir­ty days after the date of the lat­ter of the noti­fi­ca­tions of com­ple­tion of the pro­ce­dures as required by the respec­tive laws for entry into force of the said Agree­ment and Pro­to­col, in accor­dance with para­graph 1 of arti­cle 29 of the said Agreement;

3. And where­as, clause (b) of para­graph 3 of arti­cle 29 of the said Agree­ment pro­vides that the pro­vi­sions of the said Agree­ment shall have effect in India in respect of income aris­ing in any fis­cal year begin­ning on or after the first day of April next fol­low­ing the cal­en­dar year in which the Agree­ment enters into force.

4. Now, there­fore, in exer­cise of the pow­ers con­ferred by sec­tion 90 of the Income-tax Act, 1961 (43 of 1961), the Cen­tral Gov­ern­ment here­by directs that all the pro­vi­sions of the  said Agree­ment and Pro­to­col between the Gov­ern­ment of the Repub­lic of India and the Gov­ern­ment of the Repub­lic of Croa­t­ia for the avoid­ance of dou­ble tax­a­tion and for the pre­ven­tion of fis­cal eva­sion with respect to tax­es on income, as set out in the Annex­ure here­to, shall be giv­en effect to in the Union of India with effect from the first  day of April, 2016, being the first day of the fis­cal year next fol­low­ing the cal­en­dar year in which the said Agree­ment entered into force.

[F. No. 501/09/1995-FTD‑I]

(Akhilesh Ran­jan)

Joint Sec­re­tary

ANNEXURE

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND

THE GOVERNMENT OF THE REPUBLIC OF CROATIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR THE PREVENTION

OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Gov­ern­ment of the Repub­lic of India and the Gov­ern­ment of the Repub­lic of Croatia,

Desir­ing to con­clude an Agree­ment for the avoid­ance of dou­ble tax­a­tion and the pre­ven­tion of fis­cal eva­sion with respect to tax­es on income and with a view to pro­mot­ing eco­nom­ic coop­er­a­tion between the two countries,

Have agreed as follows:

Arti­cle I

PERSONAL SCOPE

This Agree­ment shall apply to per­sons who are res­i­dents of one or both of the Con­tract­ing States.

Arti­cle 2

TAXES COVERED

1.  This Agree­ment shall apply to tax­es on income imposed on behalf of a Con­tract­ing State or of its polit­i­cal sub­di­vi­sions or local author­i­ties, irre­spec­tive of the man­ner in which they are levied.

2.  There shall be regard­ed as tax­es on income all tax­es imposed on total income, or on ele­ments of income, includ­ing tax­es on gains from the alien­ation of mov­able or immov­able prop­er­ty, as well as tax­es on the total amounts of wages or salaries paid by enterprises.

3.  The exist­ing tax­es to which the Agree­ment shall apply are in particular:

(a) In India:

the income tax, includ­ing any sur­charge there­on; (here­inafter referred to as “Indi­an tax”).

(b) In Croatia:

(i)  the prof­it tax; and

(ii) the income-tax,

(here­inafter referred to as the “Croa­t­ian tax”);

4.  The Agree­ment shall apply also to any iden­ti­cal or sub­stan­tial­ly sim­i­lar tax­es which are   imposed after the date of sig­na­ture of the Agree­ment in addi­tion to, or in place of, the  exist­ing tax­es referred to in para­graph 3. The com­pe­tent author­i­ties of the Con­tract­ing  States shall noti­fy each oth­er of sig­nif­i­cant changes which have been made in their respec­tive tax­a­tion laws.

Arti­cle 3

GENERAL DEFINITIONS

1.  For the pur­pos­es of this Agree­ment, unless the con­text oth­er­wise requires:

(a) the term “Repub­lic of Croa­t­ia” means the ter­ri­to­ry of the Repub­lic of Croa­t­ia as well  as those mar­itime areas adja­cent to the out­er lim­it of ter­ri­to­r­i­al sea, includ­ing   seabed and sub-soil there­of, over which the Repub­lic of Croa­t­ia in accor­dance with   inter­na­tion­al law (and the laws of the Repub­lic of Croa­t­ia) exer­cis­es its sov­er­eign   rights and jurisdiction;

(b) the term “India” means the ter­ri­to­ry of India and includes the ter­ri­to­r­i­al sea and   air­space above it, as well as any oth­er mar­itime zone in which India has sov­er­eign   rights, oth­er rights and juris­dic­tion, accord­ing to the Indi­an law and in accor­dance   with inter­na­tion­al law, includ­ing the U.N. Con­ven­tion on the Law of the Sea;

© the term “per­son” includes an indi­vid­ual, a com­pa­ny, a body of per­sons and any   oth­er enti­ty which is treat­ed as a tax­able unit under the tax­a­tion laws in force in the   respec­tive Con­tract­ing States;

(d) the term “com­pa­ny” means any body cor­po­rate or any enti­ty which is treat­ed as a   body cor­po­rate for tax purposes;

(e) the terms “enter­prise of a Con­tract­ing State” and “enter­prise of the oth­er   Con­tract­ing State” mean respec­tive­ly an enter­prise car­ried on by a res­i­dent of a   Con­tract­ing State and an enter­prise car­ried on by a res­i­dent of the oth­er Con­tract­ing State;

(f)  the term “inter­na­tion­al traf­fic” means any trans­port by a ship or air­craft oper­at­ed by  an enter­prise which is a res­i­dent of a Con­tract­ing State, except when the ship or  air­craft is oper­at­ed sole­ly between places in the oth­er Con­tract­ing State;

(g) the term “com­pe­tent author­i­ty” means:

(i)  in the case of Croa­t­ia, the Min­is­ter of Finance or his autho­rized representative;

(ii) in the case of India, the Cen­tral Gov­ern­ment in the Min­istry of Finance

(Depart­ment of Rev­enue) or its autho­rized representative;

(h) the term “nation­al” means:

(i) any indi­vid­ual pos­sess­ing the nation­al­i­ty of a Con­tract­ing State;

(ii) any legal per­son, part­ner­ship or asso­ci­a­tion deriv­ing its sta­tus as such from the laws in force in a Con­tract­ing State;

(i) the term “fis­cal year” means:

(i) in the case of Croa­t­ia, the cal­en­dar year;

(ii) in the case of India, the finan­cial year begin­ning on the 1st day of April;

(J)  the term “tax” means Croa­t­ian tax or Indi­an tax, as the con­text requires, but shall  not include any amount which is payable in respect of any default or omis­sion in  rela­tion to the tax­es to which this Agree­ment applies or which rep­re­sents a penal­ty  or fine imposed relat­ing to those taxes;

(k) the terms “a Con­tract­ing State” and “the oth­er Con­tract­ing State” mean the Repub­lic   of Croa­t­ia or the Repub­lic of India as the con­text requires.

2. As regards the appli­ca­tion of the Agree­ment by a Con­tract­ing State any term not defined   there­in shall, unless the con­text oth­er­wise requires, have the mean­ing which it has under the law of that State con­cern­ing the tax­es to which the Agree­ment applies.

Arti­cle 4

RESIDENT

1.  For the pur­pos­es of this Agree­ment, the term “res­i­dent of a Con­tract­ing State” means  any per­son who, under the laws of that State, is liable to tax there­in by rea­son of his  domi­cile, res­i­dence, place of man­age­ment or any oth­er cri­te­ri­on of a sim­i­lar nature. This  term does not include any per­son who is liable to tax in that State in respect only of  income from sources in that State.

2.  Where by rea­son of the pro­vi­sions of para­graph 1  an indi­vid­ual is a res­i­dent of both Con­tract­ing States, then his sta­tus shall be deter­mined as follows:

(a) he shall be deemed to be a res­i­dent of the State in which he has a per­ma­nent home  avail­able to him; if he has a per­ma­nent home avail­able to him in both States, he  shall be deemed to be a res­i­dent of the State with which his per­son­al and eco­nom­ic  rela­tions are clos­er (cen­tre of vital interests);

(b) if the State in which he has his cen­tre of vital inter­ests can­not be deter­mined, or if  he has not a per­ma­nent home avail­able to him in either State, he shall be deemed  to be a res­i­dent of the State in which he has an habit­u­al abode;

© if he has an habit­u­al abode in both States or in nei­ther of them, he shall be deemed  to be a res­i­dent of the State of which he is a national;

(d) if he is a nation­al of both States or of nei­ther of them, the com­pe­tent author­i­ties of  the Con­tract­ing States shall set­tle the ques­tion by mutu­al agreement.

3.  Where by rea­son of the pro­vi­sions of para­graph 1 a per­son oth­er than an indi­vid­ual is a res­i­dent of both Con­tract­ing States, then it shall be deemed to be a res­i­dent of the State in which its place of effec­tive man­age­ment is sit­u­at­ed. If the State in which its place of effec­tive man­age­ment is sit­u­at­ed can­not be deter­mined, then the com­pe­tent author­i­ties of the Con­tract­ing States shall set­tle the ques­tion by mutu­al agreement.

Arti­cle 5

PERMANENT ESTABLISHMENT

1.  For the pur­pos­es of this Agree­ment, the term “per­ma­nent estab­lish­ment” means a fixed  place of busi­ness through which the busi­ness of an enter­prise is whol­ly or part­ly car­ried on.

2.  The term “per­ma­nent estab­lish­ment” includes especially:

(a) a place of management;

(b) a branch;

© an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quar­ry or any oth­er place of extrac­tion of nat­ur­al resources;

(g) a sales outlet;

(h) a ware­house in rela­tion to a per­son pro­vid­ing stor­age facil­i­ties for oth­ers; and

(i)  a farm, plan­ta­tion or oth­er place where agri­cul­tur­al, forestry, plan­ta­tion or relat­ed activ­i­ties are car­ried on.

3.  A build­ing site or con­struc­tion or assem­bly project or super­vi­so­ry activ­i­ties in con­nec­tion there­with con­sti­tute a per­ma­nent estab­lish­ment only if such site, project or activ­i­ty last more than 12 months.

4. An enter­prise shall be deemed to have a per­ma­nent estab­lish­ment in a Con­tract­ing State and to car­ry on busi­ness through that per­ma­nent estab­lish­ment if it pro­vides ser­vices or facil­i­ties in con­nec­tion with, or sup­plies plant and machin­ery on hire used for or to be used in the prospect­ing for, or extrac­tion or exploita­tion of min­er­al oils in that State.

5. Notwith­stand­ing  the  pre­ced­ing  pro­vi­sions  of  this  Arti­cle,  the  term  “per­ma­nent estab­lish­ment” shall be deemed not to include:

(a) the use of facil­i­ties sole­ly for the pur­pose of stor­age, dis­play or deliv­ery of goods or  mer­chan­dise belong­ing to the enterprise;

(b) the main­te­nance of a stock of goods or mer­chan­dise belong­ing to the enter­prise  sole­ly for the pur­pose of stor­age, dis­play or delivery;

© the main­te­nance of a stock of goods or mer­chan­dise belong­ing to the enter­prise  sole­ly for the pur­pose of pro­cess­ing by anoth­er enterprise;

(d) the main­te­nance of a fixed place of busi­ness sole­ly for the pur­pose of pur­chas­ing  goods or mer­chan­dise or of col­lect­ing infor­ma­tion, for the enterprise;

(e) the main­te­nance of a fixed place of busi­ness sole­ly for the pur­pose of car­ry­ing on, for  the enter­prise, any oth­er activ­i­ty of a prepara­to­ry or aux­il­iary character;

(f) the main­te­nance of a fixed place of busi­ness sole­ly for any com­bi­na­tion of activ­i­ties men­tioned in sub-para­graphs (a) to (e), pro­vid­ed that the over­all activ­i­ty of the fixed place of busi­ness result­ing from this com­bi­na­tion is of a prepara­to­ry or aux­il­iary character.

6.  Notwith­stand­ing the pro­vi­sions of para­graphs  1  and 2, where a per­son — oth­er than an agent of an inde­pen­dent sta­tus to whom para­graph 8 applies — is act­ing in a Con­tract­ing  State on behalf of an enter­prise of the oth­er Con­tract­ing State, that enter­prise shall be deemed to have a per­ma­nent estab­lish­ment in the first-men­tioned Con­tract­ing State in respect of any activ­i­ties which that per­son under­takes for the enter­prise, if such a person:

(a) has and habit­u­al­ly exer­cis­es in that State an author­i­ty to con­clude con­tracts in the  name of the enter­prise, unless the activ­i­ties of such per­son are lim­it­ed to those men­tioned in para­graph 4 which, if exer­cised through a fixed place of busi­ness, would not make this fixed place of busi­ness a per­ma­nent estab­lish­ment under the pro­vi­sions of that para­graph; or

(b) has no such author­i­ty, but habit­u­al­ly main­tains in the first-men­tioned State a stock of  goods or mer­chan­dise from which he reg­u­lar­ly deliv­ers goods or mer­chan­dise on behalf of the enter­prise; or

© habit­u­al­ly secures orders in the first-men­tioned State, whol­ly or almost whol­ly for the  enter­prise itself or for the enter­prise and oth­er enter­pris­es con­trol­ling, con­trolled by, or  sub­ject to the same con­trol, as that enterprise.

7.  Notwith­stand­ing the pre­ced­ing pro­vi­sions of this Arti­cle, an insur­ance enter­prise of a  Con­tract­ing State shall, except in regard to re-insur­ance, be deemed to have a per­ma­nent  estab­lish­ment in the oth­er Con­tract­ing State if it col­lects pre­mi­ums in the ter­ri­to­ry of that  oth­er State or insures risks sit­u­at­ed there­in through a per­son oth­er than an agent of an  inde­pen­dent sta­tus to whom para­graph 8 applies.

8.  An enter­prise shall not be deemed to have a per­ma­nent estab­lish­ment in a Con­tract­ing  State mere­ly because it car­ries on busi­ness in that State through a bro­ker, gen­er­al  com­mis­sion agent or any oth­er agent of an inde­pen­dent sta­tus, pro­vid­ed that such  per­sons are act­ing in the ordi­nary course of their busi­ness. How­ev­er, when the activ­i­ties  of such an agent are devot­ed whol­ly or almost whol­ly on behalf of that enter­prise, he will  not be con­sid­ered an agent of an inde­pen­dent sta­tus with­in the mean­ing of this  paragraph.

9.  The fact that a com­pa­ny which is a res­i­dent of a Con­tract­ing State con­trols or is con­trolled  by a com­pa­ny which is a res­i­dent of the oth­er Con­tract­ing State, or which car­ries on  busi­ness in that oth­er State (whether through a per­ma­nent estab­lish­ment or oth­er­wise),  shall not of itself con­sti­tute either com­pa­ny a per­ma­nent estab­lish­ment of the other.

Arti­cle 6

INCOME FROM IMMOVABLE PROPERTY

1.  Income derived by a res­i­dent of a Con­tract­ing State from immov­able prop­er­ty (includ­ing  income from agri­cul­ture or forestry) sit­u­at­ed in the oth­er Con­tract­ing State may be taxed  in that oth­er State.

2.  The term “immov­able prop­er­ty” shall have the mean­ing which it has under the law of the  Con­tract­ing State in which the prop­er­ty in ques­tion is sit­u­at­ed. The term shall in any case  include prop­er­ty acces­so­ry to immov­able prop­er­ty, live­stock and equip­ment used in agri­cul­ture and forestry, rights to which the pro­vi­sions of gen­er­al law respect­ing land­ed prop­er­ty apply, usufruct of immov­able prop­er­ty and rights to vari­able or fixed pay­ments as con­sid­er­a­tion for the work­ing of, or the right to work, min­er­al deposits, sources and oth­er nat­ur­al resources;  ships, boats, air­craft and motor cars shall not be regard­ed as immov­able property. -

3.  The pro­vi­sions of para­graph 1 shall apply to income derived from the direct use, let­ting, or use in any oth­er form of immov­able property.

4.  The pro­vi­sions of para­graphs 1 and 3 shall also apply to the income from immov­able prop­er­ty of an enter­prise and to income from immov­able prop­er­ty used for the per­for­mance of inde­pen­dent per­son­al services.

Arti­cle 7

BUSINESS PROFITS

1.  The prof­its of an enter­prise of a Con­tract­ing State shall be tax­able only in that State  unless the enter­prise car­ries on busi­ness in the oth­er Con­tract­ing State through a  per­ma­nent estab­lish­ment sit­u­at­ed there­in. If the enter­prise car­ries on busi­ness as  afore­said, the prof­its of the enter­prise may also be taxed in the oth­er State but only so much of them as is attrib­ut­able to that per­ma­nent establishment.

2.  Sub­ject to the pro­vi­sions of para­graph  3, where an enter­prise of a Con­tract­ing State car­ries on busi­ness in the oth­er Con­tract­ing State through a per­ma­nent estab­lish­ment sit­u­at­ed there­in, there shall in each Con­tract­ing State be attrib­uted to that per­ma­nent estab­lish­ment the prof­its which it might be expect­ed to make if it were a dis­tinct and sep­a­rate enter­prise engaged in the same or sim­i­lar activ­i­ties under the same or sim­i­lar con­di­tions and deal­ing whol­ly inde­pen­dent­ly with the enter­prise of which it is a per­ma­nent establishment.

3.  In deter­min­ing the prof­its of a per­ma­nent estab­lish­ment, there shall be allowed as  deduc­tions expens­es which are incurred for the pur­pos­es of the per­ma­nent estab­lish­ment,  includ­ing exec­u­tive and gen­er­al admin­is­tra­tive expens­es so incurred, whether in the State  in which the per­ma­nent estab­lish­ment is sit­u­at­ed or else­where, in accor­dance with the  pro­vi­sions of and sub­ject to the lim­i­ta­tions of the tax laws of that State.

4.  No prof­its shall be attrib­uted to a per­ma­nent estab­lish­ment by rea­son of the mere  pur­chase by that per­ma­nent estab­lish­ment of goods or mer­chan­dise for the enterprise.

5.  For the pur­pos­es of the pre­ced­ing para­graphs, the prof­its to be attrib­uted to the  per­ma­nent estab­lish­ment shall be deter­mined by the same method year by year unless  there is good and suf­fi­cient rea­son to the contrary.

6.  Where prof­its include items of income which are dealt with sep­a­rate­ly in oth­er Arti­cles of  this Agree­ment, then the pro­vi­sions of those Arti­cles shall not be affect­ed by the  pro­vi­sions of this Article.

Arti­cle 8

INTERNATIONAL TRAFFIC

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

2.  Income derived by a trans­porta­tion enter­prise which is a res­i­dent of a Con­tract­ing State  from the use, main­te­nance, or rental of con­tain­ers (includ­ing trail­ers and oth­er equip­ment  for the trans­port of con­tain­ers) used for trans­port of goods or mer­chan­dise in inter­na­tion­al  traf­fic shall be tax­able only in that Con­tract­ing State unless the con­tain­ers are used sole­ly  with­in the oth­er Con­tract­ing State.

3.  If the place of effec­tive man­age­ment of a ship­ping enter­prise is aboard a ship, then it shall  be deemed to be sit­u­at­ed in the Con­tract­ing State in which the home har­bour of the ship  is sit­u­at­ed or if there is no such home har­bour, in the Con­tract­ing State of which the  oper­a­tor of the ship is a resident.

4.  For the pur­pos­es of this Arti­cle inter­est on funds con­nect­ed with the oper­a­tion of ships or air­craft’ in inter­na­tion­al traf­fic shall be regard­ed as income derived from the oper­a­tion of such ships or air­craft and the pro­vi­sions of Arti­cle 11 shall not apply in rela­tion to such interest.

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

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 Agree­ment 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 if the recip­i­ent is the ben­e­fi­cial own­er of the div­i­dends the tax so charged shall not exceed:

(a) 5 per­cent of the gross amount of the div­i­dends if the ben­e­fi­cial own­er is a com­pa­ny (oth­er than a part­ner­ship) which holds direct­ly at least 10 per cent of the cap­i­tal of the com­pa­ny pay­ing the dividends;

(b) 15 per cent of the gross amount of the div­i­dends in all oth­er cases.

The com­pe­tent- author­i­ties of the Con­tract­ing States shall by mutu­al agree­ment set­tle the mode of appli­ca­tion of these limitations.

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 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 com­pa­ny mak­ing the dis­tri­b­u­tion is a resident.

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 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. -

5.  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 that State, but if the recip­i­ent is the ben­e­fi­cial own­er of the  inter­est the tax so charged shall not exceed 10 per cent of the gross amount of the inter­est. The com­pe­tent author­i­ties of the Con­tract­ing States shall by mutu­al agree­ment set­tle the mode of appli­ca­tion of this limitation.

3.  Notwith­stand­ing the pro­vi­sions of para­graph 2 inter­est aris­ing in a Con­tract­ing State shall  be exempt from tax in that State pro­vid­ed it is derived and ben­e­fi­cial­ly owned by:

(i)  the Gov­ern­ment, a polit­i­cal sub­di­vi­sion or a local author­i­ty of the oth­er Con­tract­ing State; or

(ii)  the Cen­tral Bank of the oth­er Con­tract­ing State or any oth­er bank or gov­ern­men­tal finan­cial institutions/agencies that may be mutu­al­ly agreed upon between the two Con­tract­ing States.

4.  The term “inter­est” as used in this Arti­cle means income from debt-claims of every kind,  whether or not secured by mort­gage and whether or not car­ry­ing a right to par­tic­i­pate in  the debtor’s prof­its, and in par­tic­u­lar, income from gov­ern­ment secu­ri­ties and income from  bonds or deben­tures, includ­ing pre­mi­ums and prizes attach­ing to such secu­ri­ties, bonds  or deben­tures. Penal­ty charges for late pay­ment shall not be regard­ed as inter­est for the  pur­pose of this Article.

5.  The pro­vi­sions of para­graphs 1 and 2 shall not apply if the ben­e­fi­cial own­er of the inter­est,  being a res­i­dent of a Con­tract­ing State, car­ries on busi­ness in the oth­er Con­tract­ing State  in which the inter­est aris­es, through a per­ma­nent estab­lish­ment sit­u­at­ed there­in, or  per­forms in that oth­er State inde­pen­dent per­son­al ser­vices from a fixed base sit­u­at­ed  there­in, and the debt-claim in respect of which the inter­est is 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.  Inter­est shall be deemed to arise in a Con­tract­ing State when the pay­er is that State itself,  a polit­i­cal sub­di­vi­sion, a local author­i­ty or a res­i­dent of that State. Where, how­ev­er, the  per­son pay­ing the inter­est, whether he is a res­i­dent of a Con­tract­ing State or not, has in a   Con­tract­ing State a per­ma­nent estab­lish­ment or a fixed base in con­nec­tion with which the   indebt­ed­ness on which the inter­est is paid was incurred, and such inter­est is borne by   such per­ma­nent estab­lish­ment or fixed base, then such inter­est shall be deemed to arise   in the Con­tract­ing State in which the per­ma­nent estab­lish­ment or fixed base is situated.

7.  Where, by rea­son of a spe­cial rela­tion­ship between the pay­er and the ben­e­fi­cial own­er or  between both of them and some oth­er per­son, the amount of the inter­est, hav­ing regard to  the debt-claim for which it is paid, exceeds the amount which would have been agreed   upon by the pay­er and the ben­e­fi­cial own­er in the absence of such rela­tion­ship, the   pro­vi­sions of this Arti­cle shall apply only to the last-men­tioned amount. In such case, the   excess part of the pay­ments shall remain tax­able accord­ing to the laws of each   Con­tract­ing State, due regard being had to the oth­er pro­vi­sions of this Agreement.

Arti­cle 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

1.  Roy­al­ties or fees for tech­ni­cal ser­vices 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 roy­al­ties or fees for tech­ni­cal ser­vices may also be taxed in the  Con­tract­ing State in which they arise, and accord­ing to the laws of that State, but if the  recip­i­ent is the ben­e­fi­cial own­er of the roy­al­ties or fees for tech­ni­cal ser­vices, the tax so charged shall not exceed  10  per cent of the gross amount of the roy­al­ties or fees for tech­ni­cal services.

3.  (a) The term “roy­al­ties” as used in this Arti­cle means pay­ments of any kind received as a con­sid­er­a­tion for the use of, or the right to use, any copy­right of lit­er­ary, artis­tic or  sci­en­tif­ic work includ­ing cin­e­mato­graph films, films or tapes or oth­er means of repro­duc­tion for radio or tele­vi­sion broad­cast­ing, satel­lite or cable trans­mis­sion for broad­cast­ing to the gen­er­al pub­lic through any form of elec­tron­ic media, any patent, trade mark, design or mod­el, plan, secret for­mu­la or process, or any indus­tri­al, com­mer­cial or sci­en­tif­ic equip­ment, or for infor­ma­tion con­cern­ing indus­tri­al, com­mer­cial or sci­en­tif­ic expe­ri­ence (know-how).

(b) The term “fees for tech­ni­cal ser­vices” means pay­ment of any kind in con­sid­er­a­tion for the ren­der­ing of any man­age­r­i­al, tech­ni­cal or con­sul­tan­cy ser­vices includ­ing the pro­vi­sion of ser­vices by tech­ni­cal or oth­er per­son­nel but does not include pay­ments for ser­vices men­tioned in Arti­cles 14 and 15 of this Agreement.

4.  The pro­vi­sions of para­graphs  1  and  2  shall not apply if the ben­e­fi­cial own­er of the roy­al­ties or fees for tech­ni­cal ser­vices being a res­i­dent of a Con­tract­ing State, car­ries on busi­ness in the oth­er Con­tract­ing State in which the roy­al­ties or fees for tech­ni­cal ser­vices arise, through a per­ma­nent estab­lish­ment sit­u­at­ed there­in, or per­forms in that oth­er State inde­pen­dent per­son­al ser­vices from a fixed base sit­u­at­ed there­in, and the right or prop­er­ty in respect of which the roy­al­ties or fees for tech­ni­cal ser­vices 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.

5.  Roy­al­ties or fees for tech­ni­cal ser­vices shall be deemed to arise in a Con­tract­ing State when the pay­er is that State itself, a polit­i­cal sub­di­vi­sion, a local author­i­ty or a res­i­dent of that State. Where, how­ev­er, the per­son pay­ing the roy­al­ties or fees for tech­ni­cal ser­vices, whether he is a res­i­dent of a Con­tract­ing State or not, has in a Con­tract­ing State a per­ma­nent estab­lish­ment or a fixed base in con­nec­tion with which the lia­bil­i­ty to pay the roy­al­ties or fees for tech­ni­cal ser­vices was incurred, and such roy­al­ties or fees for tech­ni­cal ser­vices are borne by such per­ma­nent estab­lish­ment or fixed base, then such roy­al­ties or fees for tech­ni­cal ser­vices shall be deemed to arise in the State in which the per­ma­nent estab­lish­ment or fixed base is situated.

6.  Where, by-rea­son of a spe­cial rela­tion­ship between the pay­er and the ben­e­fi­cial own­er or between both of them and some oth­er per­son, the amount of the roy­al­ties or fees for  tech­ni­cal ser­vices, hav­ing regard to the use, right or infor­ma­tion for which they are paid,  exceeds the amount which would have been agreed upon by the pay­er and the ben­e­fi­cial  own­er in the absence of such rela­tion­ship, the pro­vi­sions of this Arti­cle shall apply only to  the last-men­tioned amount. In such case, the excess part of the pay­ments shall remain  tax­able accord­ing to the laws of each Con­tract­ing State, due regard being had to the oth­er  pro­vi­sions of this Agreement.

Arti­cle 13

CAPITAL GAINS

1.  Gains derived by a res­i­dent of a Con­tract­ing State from the alien­ation of immov­able  prop­er­ty referred to in Arti­cle 6 and sit­u­at­ed in the oth­er Con­tract­ing State may be taxed in  that oth­er State.

2.  Gains from the alien­ation of mov­able prop­er­ty form­ing part of the busi­ness prop­er­ty of a  per­ma­nent estab­lish­ment which an enter­prise of a Con­tract­ing State has in the oth­er  Con­tract­ing State or of mov­able prop­er­ty per­tain­ing to a fixed base avail­able to a res­i­dent  of a Con­tract­ing State in the oth­er Con­tract­ing State for the pur­pose of per­form­ing   inde­pen­dent per­son­al ser­vices, includ­ing such gains from the alien­ation of such a  per­ma­nent estab­lish­ment (alone or with the whole enter­prise) or of such fixed base, may   also be taxed in that oth­er State.

3.  Gains  derived by an enter­prise of a Con­tract­ing State from the alien­ation of ships or  air­craft oper­at­ed in inter­na­tion­al traf­fic or mov­able prop­er­ty per­tain­ing to the oper­a­tion of  such ships or air­craft shall be tax­able only in that State.

4.  Gains from the alien­ation of shares of the cap­i­tal stock of a com­pa­ny the prop­er­ty of which  con­sists direct­ly or indi­rect­ly prin­ci­pal­ly of immov­able prop­er­ty sit­u­at­ed in a Con­tract­ing  State may be taxed in that State.

5.  Gains from  the alien­ation of shares, oth­er than those men­tioned in para­graph 4, in a  com­pa­ny which is a res­i­dent of  a Con­tract­ing State may be taxed in that Con­tract­ing State.

6.  Gains from the alien­ation of any prop­er­ty oth­er than that referred to in para­graphs 1 to 5, shall be tax­able only in the Con­tract­ing State of which the alien­ator is a resident.

Arti­cle 14

INDEPENDENT PERSONAL SERVICES

1.  Income derived by a res­i­dent of a Con­tract­ing State in respect of pro­fes­sion­al ser­vices or  oth­er activ­i­ties of an inde­pen­dent char­ac­ter shall be tax­able only in that State except in  the fol­low­ing cir­cum­stances, when such income may also be taxed in the oth­er ‘Con­tract­ing State:

(a) if he has a fixed base reg­u­lar­ly avail­able to him in the oth­er Con­tract­ing State for the  pur­pose of per­form­ing his activ­i­ties; in that case, only so much of the income as is  attrib­ut­able to that fixed base may be taxed in that oth­er State; or

(b) if his stay in the oth­er State is for a peri­od or peri­ods aggre­gat­ing 183 days or more in  any 12-month peri­od com­menc­ing or end­ing in the fis­cal year con­cerned; in that case,  only so much of the income as is derived from his activ­i­ties per­formed in that oth­er  State may be taxed in that oth­er State.

2.  The term “pro­fes­sion­al ser­vices” includes espe­cial­ly inde­pen­dent sci­en­tif­ic, lit­er­ary,  artis­tic,  edu­ca­tion­al or teach­ing activ­i­ties as well as the inde­pen­dent activ­i­ties of  physi­cians, lawyers, engi­neers, archi­tects, sur­geons, den­tists and accountants.

Arti­cle 15

DEPENDENT PERSONAL SERVICES

1.  Sub­ject to the pro­vi­sions of Arti­cles  16,  18 and  19, salaries, wages and oth­er sim­i­lar  remu­ner­a­tion derived by a res­i­dent of a Con­tract­ing State in respect of an employ­ment shall be tax­able only in that State unless the employ­ment is exer­cised in the oth­er Con­tract­ing State. If the employ­ment is so exer­cised, such remu­ner­a­tion as is derived there­from may be taxed in that oth­er State.

2.  Notwith­stand­ing the pro­vi­sions of para­graph 1, remu­ner­a­tion derived by a res­i­dent of a  Con­tract­ing State in respect of an employ­ment exer­cised in the oth­er Con­tract­ing State  shall be tax­able only in the first-men­tioned State if:

(a) the recip­i­ent is present in the oth­er State for a peri­od or peri­ods not exceed­ing in the  aggre­gate 183 days in any 12-month peri­od com­menc­ing or end­ing in the fis­cal year  con­cerned, and

(b) the remu­ner­a­tion is paid by, or on behalf of, an employ­er who is not a res­i­dent of the  oth­er State, and

© the remu­ner­a­tion is not borne by a per­ma­nent estab­lish­ment or a fixed base which the  employ­er has in the oth­er State.

3.  Notwith­stand­ing the pre­ced­ing pro­vi­sions of this Arti­cle, remu­ner­a­tion derived in respect of an employ­ment exer­cised aboard a ship or air­craft oper­at­ed in inter­na­tion­al traf­fic, by  an enter­prise of a Con­tract­ing State may be taxed in that State.

Arti­cle 16

DIRECTORS’ FEES

Direc­tors’ fees and oth­er sim­i­lar pay­ments derived by a res­i­dent of a Con­tract­ing State in his capac­i­ty as a mem­ber of the board of direc­tors of a com­pa­ny which is a res­i­dent of the oth­er Con­tract­ing State may also be taxed in that oth­er State.

Arti­cle 17

ARTISTES AND SPORTSPERSONS

1.  Notwith­stand­ing the pro­vi­sions of Arti­cles 14 and 15, income derived by a res­i­dent of a  Con­tract­ing State as an enter­tain­er, such as a the­atre, motion pic­ture, radio or tele­vi­sion  artiste, or a musi­cian, or as a sportsper­son, from his per­son­al activ­i­ties as such exer­cised   in the oth­er Con­tract­ing State, may be taxed in that oth­er State.

2.  Where income in respect of per­son­al activ­i­ties exer­cised by an enter­tain­er or a   sportsper­son in his capac­i­ty as such accrues not to the enter­tain­er or sportsper­son   him­self but to anoth­er per­son, that income may, notwith­stand­ing the pro­vi­sions of Arti­cles   7, 14 and 15, be taxed in the Con­tract­ing State in which the activ­i­ties of the enter­tain­er or sportsper­son are exercised.

3.  The pro­vi­sions of para­graphs 1 and 2, shall not apply to income from activ­i­ties per­formed  in a Con­tract­ing State by enter­tain­ers or sportsper­sons if the vis­it to that State is  sub­stan­tial­ly sup­port­ed by pub­lic funds of one or both of the Con­tract­ing States or of  polit­i­cal sub­di­vi­sions or local author­i­ties there­of. In such a case, the income is tax­able only  in the Con­tract­ing State of which the enter­tain­er or sportsper­son is a resident.

Arti­cle 18

PENSIONS

Sub­ject to the pro­vi­sions of para­graph 2 of Arti­cle 19, pen­sions and oth­er sim­i­lar remu­ner­a­tion paid to a res­i­dent of a Con­tract­ing State in con­sid­er­a­tion of past employ­ment shall be tax­able only in that State.

Arti­cle 19

GOVERNMENT SERVICE

1.  (a) Remu­ner­a­tion, oth­er than a pen­sion, paid by a Con­tract­ing State or a polit­i­cal sub­di­vi­sion or a local author­i­ty there­of to an indi­vid­ual in respect of ser­vices ren­dered to that State or sub­di­vi­sion or author­i­ty shall be tax­able only in that State.

(b) How­ev­er, such remu­ner­a­tion shall be tax­able only in the oth­er Con­tract­ing State if the  ser­vices are ren­dered in that State and the indi­vid­ual is a res­i­dent of that State who.,

(i) is a nation­al of that State; or

(ii) did not become a res­i­dent of that State sole­ly for the pur­pose of ren­der­ing the services.

2.  (a) Any pen­sion paid by, or out of funds cre­at­ed by, a Con­tract­ing State or a polit­i­cal sub­di­vi­sion or a local author­i­ty there­of to an indi­vid­ual in respect of ser­vices ren­dered to that State or sub­di­vi­sion or author­i­ty shall be tax­able only in that State.

(b) How­ev­er, such pen­sion shall be tax­able only in the oth­er Con­tract­ing State if the  indi­vid­ual is a res­i­dent of, and a nation­al of, that State.

3.  The pro­vi­sions of Arti­cles 15, 16 and 18 shall apply to remu­ner­a­tion and pen­sions in respect of ser­vices ren­dered in con­nec­tion with a busi­ness car­ried on by a Con­tract­ing State or a polit­i­cal sub­di­vi­sion or a local author­i­ty thereof.

Arti­cle 20

STUDENTS AND APPRENTICES

1.  A stu­dent or busi­ness appren­tice who is or was a res­i­dent of a Con­tract­ing State imme­di­ate­ly before vis­it­ing the oth­er Con­tract­ing State and who is present in that oth­er Con­tract­ing State sole­ly for the pur­pose of his edu­ca­tion or train­ing shall be exempt from tax in that oth­er State on:

(a) pay­ments made to him by per­sons resid­ing out­side that oth­er State for the pur­pos­es  of his main­te­nance, edu­ca­tion or train­ing; and

(b) remu­ner­a­tion from employ­ment in that oth­er State, in an amount not exceed­ing US$ 1000 or its equiv­a­lent amount dur­ing any fis­cal year,

as the case may be, pro­vid­ed that such employ­ment is direct­ly relat­ed to his stud­ies or is under­tak­en for the pur­pose of his maintenance.

2.  The ben­e­fit of this Arti­cle shall extend only for such peri­od of time as may be rea­son­able  or cus­tom­ar­i­ly required to com­plete the edu­ca­tion or train­ing under­tak­en, but in no event  shall any indi­vid­ual have the ben­e­fits of this Arti­cle for more than five con­sec­u­tive years  from the date of his first arrival in that oth­er Con­tract­ing State.

Arti­cle 21

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1.  A pro­fes­sor or teacher who is or was a res­i­dent of the Con­tract­ing State imme­di­ate­ly  before vis­it­ing the oth­er Con­tract­ing State for the pur­pose of teach­ing or engag­ing in  research, or both, at a uni­ver­si­ty, col­lege, school or oth­er approved insti­tu­tion in that oth­er  Con­tract­ing State shall be exempt from tax in that oth­er State on any remu­ner­a­tion for  such teach­ing or research for a peri­od not exceed­ing two years from the date of his arrival  in that oth­er State.

2.  This Arti­cle shall not apply to income from research, if such research is under­tak­en  pri­mar­i­ly for the pri­vate ben­e­fit of a spe­cif­ic per­son or persons.

3.  For the pur­pos­es of this Arti­cle and Arti­cle 20, an indi­vid­ual shall be deemed to be a  res­i­dent of a Con­tract­ing State if he is res­i­dent in that State in the fis­cal year in which he  vis­its the oth­er Con­tract­ing State or in the imme­di­ate­ly pre­ced­ing fis­cal year.

4.  For the  pur­pos­es of para­graph 1  “approved insti­tu­tion” means an insti­tu­tion which has been approved in this regard by the com­pe­tent author­i­ty of the con­cerned State.

Arti­cle 22

OTHER INCOME

1.  Items of income of a res­i­dent of a Con­tract­ing State, wher­ev­er aris­ing, not dealt with in the  fore­go­ing Arti­cles of this Agree­ment shall be tax­able only in that State.

2.  The pro­vi­sions of para­graph  1  shall not apply to income, oth­er than income from immov­able prop­er­ty as defined in para­graph 2 of Arti­cle 6, if the recip­i­ent of such income, being a res­i­dent of a Con­tract­ing State, car­ries on busi­ness in the oth­er Con­tract­ing State through a per­ma­nent estab­lish­ment sit­u­at­ed there­in, or per­forms 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 or Arti­cle 14, as the case may be, shall apply.

3.  Notwith­stand­ing the pro­vi­sions of para­graph 1, if a res­i­dent of a Con­tract­ing State derives   income from sources with­in the oth­er Con­tract­ing State in the form of lot­ter­ies, cross­word  puz­zles, races includ­ing horse races, card games and oth­er games of any sort or  gam­bling or bet­ting of any form or nature what­so­ev­er, such income may be taxed in the  oth­er Con­tract­ing State.

Arti­cle 23

ELIMINATION OF DOUBLE TAXATION

1.  The laws in force in either of the Con­tract­ing State will con­tin­ue to gov­ern the tax­a­tion of  income in the respec­tive Con­tract­ing States except where pro­vi­sions to the con­trary are  made in this Agreement.

2.  In the case of Croa­t­ia dou­ble tax­a­tion shall be elim­i­nat­ed as follows:

Where a res­i­dent of Repub­lic of Croa­t­ia derives income which, in accor­dance with the pro­vi­sions of this Agree­ment, may be taxed in India, Repub­lic of Croa­t­ia shall allow as a deduc­tion from the tax on the income of that res­i­dent an amount equal to the income tax paid in India. Such deduc­tion shall not, how­ev­er, exceed that part of the income tax as com­put­ed before the deduc­tion is giv­en, which is attrib­ut­able to the income which may be taxed in India.

3.  In the case of India dou­ble tax­a­tion shall be elim­i­nat­ed as follows:

Where a res­i­dent of India derives income which, in accor­dance with the pro­vi­sions of this Agree­ment, may be taxed in the Repub­lic of Croa­t­ia, India shall allow as a deduc­tion from the tax on the income of that res­i­dent an amount equal to the income tax paid in Croa­t­ia whether direct­ly or by deduc­tion at source. Such amount shall not how­ev­er exceed that part of the income tax, as com­put­ed before the deduc­tion is giv­en, which is attrib­ut­able to the income which may be taxed in Croatia.

4.  Income which in accor­dance with the pro­vi­sions of this Agree­ment, is not to be sub­ject­ed  to tax in a Con­tract­ing State, may be tak­en into account for cal­cu­lat­ing the rate of tax to be  imposed in that Con­tract­ing State.

Arti­cle 24

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, in par­tic­u­lar with respect to res­i­dence, are or may be sub­ject­ed. This  pro­vi­sion shall, notwith­stand­ing the pro­vi­sions of Arti­cle 1, also apply to per­sons who are  not res­i­dents of one or both of the Con­tract­ing States.

2.  The tax­a­tion on a per­ma­nent estab­lish­ment which 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 enter­pris­es of that oth­er State car­ry­ing on the same activ­i­ties.  This pro­vi­sion shall not be con­strued as pre­vent­ing a Con­tract­ing State from charg­ing the  prof­its of a per­ma­nent estab­lish­ment which a com­pa­ny of the oth­er Con­tract­ing State has  in the first-men­tioned State at a rate of tax which is high­er than that imposed on the prof­its of a sim­i­lar com­pa­ny of the first-men­tioned Con­tract­ing State, nor as being in con­flict with the pro­vi­sions of para­graph 3 of Arti­cle 7 of this Agreement.

This pro­vi­sion shall not be con­strued as oblig­ing 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 respon­si­bil­i­ties which it grants to its own residents.

3.  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.

4.  Except where the pro­vi­sions of para­graph 1 of Arti­cle 9, para­graph 7 of Arti­cle 11, or para­graph 6 of Arti­cle 12, apply, inter­est, roy­al­ties and oth­er dis­burse­ment paid by an enter­prise of a Con­tract­ing State to a res­i­dent of the oth­er Con­tract­ing State shall, for the .pur­pose 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.

5.  The pro­vi­sions of this Arti­cle shall, notwith­stand­ing the pro­vi­sions of Arti­cle 2, apply to  tax­es of every kind and description.

Arti­cle 25

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 Agree­ment, 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 his case comes under para­graph 1 of Arti­cle 24, to that of the Con­tract­ing State of which he is a nation­al. The case must be pre­sent­ed with­in three years from the first noti­fi­ca­tion of the action result­ing in tax­a­tion not in accor­dance with the pro­vi­sions of the Agreement.

2.  The com­pe­tent author­i­ty shall endeav­our, if the objec­tion appears to it to be jus­ti­fied and if  ‚it is 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 Agree­ment. Any agree­ment  reached shall be imple­ment­ed notwith­stand­ing any time lim­its in the domes­tic law of the  Con­tract­ing States.

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  Agree­ment. They may also con­sult togeth­er for the elim­i­na­tion of dou­ble tax­a­tion in cas­es  not pro­vid­ed for in the Agreement.

4.  The com­pe­tent author­i­ties of the Con­tract­ing States 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.

Arti­cle 26

EXCHANGE OF INFORMATION

1.  The com­pe­tent author­i­ties of the Con­tract­ing States shall exchange such infor­ma­tion   (includ­ing doc­u­ments), as is nec­es­sary for car­ry­ing out the pro­vi­sions of this Agree­ment or   of the domes­tic laws of the Con­tract­ing States con­cern­ing tax­es cov­ered by the  Agree­ment inso­far as the tax­a­tion there­un­der is not con­trary to the Agree­ment in  par­tic­u­lar-for the pre­ven­tion of fraud or eva­sion of such tax­es. The exchange of  infor­ma­tion is not restrict­ed by Arti­cle 1. Any infor­ma­tion received by a Con­tract­ing State  shall be treat­ed as secret in the same man­ner as infor­ma­tion obtained under the domes­tic  laws of that State and shall be dis­closed only to per­sons or author­i­ties (includ­ing courts  and admin­is­tra­tive bod­ies) involved in the assess­ment or col­lec­tion of, the enforce­ment or  pros­e­cu­tion in respect of, or the deter­mi­na­tion of appeals in rela­tion to, the tax­es cov­ered  by the Agree­ment. Such per­sons or author­i­ties shall use the infor­ma­tion only for such  pur­pos­es. They may dis­close the infor­ma­tion in pub­lic court pro­ceed­ings or in judi­cial  deci­sions. Notwith­stand­ing the fore­go­ing, infor­ma­tion received by a Con­tract­ing State may  be used for oth­er pur­pos­es when such infor­ma­tion may be used for such oth­er pur­pos­es  under the laws of both Con­tract­ing States and the com­pe­tent author­i­ty of the sup­ply­ing  State autho­ris­es such use.

2.  In no case shall the pro­vi­sions of para­graph  1 be con­strued so as to impose on a Con­tract­ing State the obligation:

(a) to car­ry out admin­is­tra­tive mea­sures at vari­ance with the laws and admin­is­tra­tive prac­tice of that or of the oth­er Con­tract­ing State;

(b) to sup­ply infor­ma­tion or doc­u­ments which is not obtain­able under the laws or in the  nor­mal course of the admin­is­tra­tion of that or of the oth­er Con­tract­ing State;

© to sup­ply infor­ma­tion which would dis­close any trade, busi­ness, indus­tri­al, com­mer­cial  or pro­fes­sion­al secret or trade process, or infor­ma­tion, the dis­clo­sure of which would be con­trary to pub­lic policy.

3.  If infor­ma­tion is request­ed by a Con­tract­ing State in accor­dance with this Arti­cle, the oth­er Con­tract­ing State shall use its infor­ma­tion gath­er­ing mea­sures to obtain the request­ed infor­ma­tion, even though that oth­er State may not need such infor­ma­tion for its own tax  pur­pos­es. The oblig­a­tion con­tained in the pre­ced­ing sen­tence is sub­ject to the lim­i­ta­tions  of para­graph 2 but in no case shall such lim­i­ta­tions be con­strued to per­mit a Con­tract­ing  State to decline to sup­ply infor­ma­tion sole­ly because it has no domes­tic inter­est in such  information.

4.  In no case shall the pro­vi­sions of para­graph 2 be con­strued to per­mit a Con­tract­ing State  to decline to sup­ply infor­ma­tion sole­ly because the infor­ma­tion is held by a bank, oth­er finan­cial insti­tu­tion, nom­i­nee or per­son act­ing in an agency or a fidu­cia­ry capac­i­ty or because it relates to own­er­ship inter­ests in a person.

Arti­cle 27

ASSISTANCE IN THE COLLECTION OF TAXES

The Con­tract­ing States shall lend assis­tance to each oth­er in the col­lec­tion of rev­enue claims. This assis­tance is not restrict­ed by Arti­cles 1 and 2. The com­pe­tent author­i­ties of the Con­tract­ing States may by mutu­al agree­ment set­tle the mode of appli­ca­tion of this Article.

2.  The term “rev­enue claim” as used in this Arti­cle means an amount owed in respect of  tax­es of every kind and descrip­tion imposed on behalf of the Con­tract­ing States, or of their  polit­i­cal sub­di­vi­sions or local author­i­ties, inso­far as the tax­a­tion there­un­der is not con­trary to this Agree­ment or any oth­er instru­ment to which the Con­tract­ing States are par­ties, as well as inter­est, admin­is­tra­tive penal­ties and costs of col­lec­tion or con­ser­van­cy relat­ed to such amount.

3.  When a rev­enue claim of a Con­tract­ing State is enforce­able under the laws of that State  and is owed by a per­son who, at that time, can­not, under the laws of that State, pre­vent its col­lec­tion, that rev­enue claim shall, at the request of the com­pe­tent author­i­ty of that State,  be accept­ed for pur­pos­es of col­lec­tion by the com­pe­tent author­i­ty of the oth­er Con­tract­ing   State. That rev­enue claim shall be col­lect­ed by that oth­er State in accor­dance with the   pro­vi­sions of its laws applic­a­ble to the enforce­ment and col­lec­tion of its own tax­es as if the ‚rev­enue claim were a rev­enue claim of that oth­er State.

4.  When a rev­enue claim of a Con­tract­ing State is a claim in respect of which that State may,  under its law, take mea­sures of con­ser­van­cy with a view to ensure its col­lec­tion, that rev­enue claim shall, at the request of the com­pe­tent author­i­ty of that State, be accept­ed for pur­pos­es of tak­ing mea­sures of con­ser­van­cy by the com­pe­tent author­i­ty of the oth­er Con­tract­ing State. That oth­er State shall take mea­sures of con­ser­van­cy in respect of that rev­enue claim in accor­dance with the pro­vi­sions of its laws as if the rev­enue claim were a rev­enue claim of that oth­er State even if, at the time when such mea­sures are applied, the rev­enue claim is not enforce­able in the first-men­tioned State or is owed by a per­son who has a right to pre­vent its collection.

5.  Notwith­stand­ing the pro­vi­sions of para­graphs 3 and 4, a rev­enue claim accept­ed by a Con­tract­ing State for pur­pos­es of para­graphs 3 or 4 shall not, in that State, be sub­ject to the time lim­its or accord­ed any pri­or­i­ty applic­a­ble to a rev­enue claim under the laws of that State by rea­son of its nature as such.  In addi­tion, a rev­enue claim accept­ed by a Con­tract­ing State for the pur­pos­es of para­graphs 3 or 4 shall not, in that State, have any pri­or­i­ty applic­a­ble to that rev­enue claim under the laws of the oth­er Con­tract­ing State.

  1. -Pro­ceed­ings with respect to the exis­tence, valid­i­ty or the amount of a rev­enue claim of a Con­tract­ing State shall only be brought before the courts or admin­is­tra­tive bod­ies of that State.  Noth­ing in this Arti­cle shall be con­strued as cre­at­ing or pro­vid­ing any right to such pro­ceed­ings before any court or admin­is­tra­tive body of the oth­er Con­tract­ing State.

7.  Where, at any time after a request has been made by a Con­tract­ing State under  para­graphs 3 or 4 and before the oth­er Con­tract­ing State has col­lect­ed and remit­ted therel­e­vant rev­enue claim to the first-men­tioned State, the rel­e­vant rev­enue claim ceas­es to be:

(a) in the case of a request under para­graph 3, a rev­enue claim of the first-men­tioned  State that is enforce­able under the laws of that State and is owed by a per­son who, at that time, can­not, under the laws of that State, pre­vent its col­lec­tion, or

(b) in the case of a request under para­graph 4, a rev­enue claim of the first-men­tioned   State in respect of which that State may, under its laws,  take mea­sures of   con­ser­van­cy with a view to ensure its collection.

The com­pe­tent author­i­ty of the first-men­tioned State shall prompt­ly noti­fy the com­pe­tent author­i­ty of the oth­er State of that fact and, at the option of the oth­er State, the first­men­tioned State shall either sus­pend or with­draw its request.

8.  In no case shall the pro­vi­sions of this Arti­cle be con­strued so as. to impose on a  Con­tract­ing State the obligation:

(a) to car­ry out admin­is­tra­tive mea­sures at vari­ance with the laws and admin­is­tra­tive  prac­tice of that or of the oth­er Con­tract­ing State;

(b) to car­ry out mea­sures which would be con­trary to pub­lic pol­i­cy (ordre public);

© to pro­vide assis­tance if the oth­er Con­tract­ing State has not pur­sued all rea­son­able  mea­sures of col­lec­tion or con­ser­van­cy, as the case may be, avail­able under its laws  or admin­is­tra­tive practice;

(d) to pro­vide assis­tance in those cas­es where the admin­is­tra­tive bur­den for that State is  clear­ly dis­pro­por­tion­ate to the ben­e­fit to be derived by the oth­er Con­tract­ing State.

Arti­cle 28

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Noth­ing in this Agree­ment shall affect the fis­cal priv­i­leges of mem­bers of diplo­mat­ic mis­sions or con­sular posts under the gen­er­al rules of inter­na­tion­al law or under the pro­vi­sions of spe­cial agreements.

Arti­cle 29

ENTRY INTO FORCE

1.  The Con­tract­ing States shall noti­fy each oth­er in writ­ing, through diplo­mat­ic chan­nels, of  the com­ple­tion of the pro­ce­dure required by the respec­tive laws for the entry into force of  this Agreement.

2.  This Agree­ment shall enter into force thir­ty days after the date of receipt of the lat­er of the  noti­fi­ca­tions referred to in para­graph 1 of this Article.

3.  The pro­vi­sions of this Agree­ment shall have effect:

(a) in Croa­t­ia: in respect of income or prof­its aris­ing in any fis­cal year begin­ning on or  after the first day of Jan­u­ary next fol­low­ing the cal­en­dar year in which the Agree­ment  enters into force; and

(b) in India: in respect of income aris­ing in any fis­cal year begin­ning on or after the first  day of April next fol­low­ing the cal­en­dar year in which the Agree­ment enters into force.

Arti­cle 30

TERMINATION

This Agree­ment shall remain in force indef­i­nite­ly until ter­mi­nat­ed by a Con­tract­ing State. Either Con­tract­ing State may ter­mi­nate the Agree­ment, through diplo­mat­ic chan­nels, by giv­ing notice of ter­mi­na­tion in writ­ing at least six months before the end of any cal­en­dar year begin­ning after the expi­ra­tion of five years from the date of entry into force of the Agree­ment. In such event, the Agree­ment shall cease to have effect:

(a) in Croa­t­ia: in respect of income or prof­its aris­ing in any fis­cal year begin­ning on or after   the first day of Jan­u­ary next fol­low­ing the cal­en­dar year in which the notice of ter­mi­na­tion   is given;

(b) in India: in respect of income aris­ing in any pre­vi­ous year begin­ning on or after the 1st   April next fol­low­ing the cal­en­dar year in which the notice of ter­mi­na­tion is given.

IN WITNESS WHEREOF the under­signed, being duly autho­rised there­to, have signed this Agreement.

DONE in two orig­i­nals at Zagreb this 12th day of Feb­ru­ary, 2014 in the Hin­di, Eng­lish and Croa­t­ian lan­guages, all three texts being equal­ly authen­tic. In case of diver­gence between the texts the Eng­lish text shall prevail.

FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA

FOR THE GOVERNMENT OF THE REPUBLIC OF CROATIA

(Smt. Pre­neet Kaur)

(Mr. Slavko Linic)

Min­is­ter of State for Exter­nal Affairs

Min­is­ter of Finance

PROTOCOL

At the sign­ing of the Agree­ment between the Gov­ern­ment of the Repub­lic of Croa­t­ia and the Gov­ern­ment of the Repub­lic of India for the avoid­ance of dou­ble tax­a­tion and for the pre­ven­tion of fis­cal eva­sion with respect to tax­es on income, the under­signed have agreed that the fol­low­ing shall form an inte­gral part of the Agreement.

Ad Arti­cles 10, 11, 12 and 13

(a) Notwith­stand­ing the pro­vi­sions of this Agree­ment, a com­pa­ny res­i­dent in a Con­tract­ing   State in which per­sons who are not res­i­dents of that State hold, direct­ly or indi­rect­ly, a   par­tic­i­pa­tion of more than 50 per cent of the share cap­i­tal, shall not be enti­tled to the  relieves pro­vid­ed for by the Agree­ment in respect of div­i­dends, inter­est, roy­al­ties and cap­i­tal gains aris­ing in the oth­er Con­tract­ing State. This pro­vi­sion shall not apply where the said Com­pa­ny is engaged in sub­stan­tive busi­ness oper­a­tions, oth­er than the mere hold­ing of shares or prop­er­ty, in the Con­tract­ing State of which it is a resident.

(b) A com­pa­ny which under the pre­ced­ing sub­para­graph would not be enti­tled to the ben­e­fits   of the Agree­ment in respect of the afore­men­tioned items of income, could still be grant­ed   such ben­e­fits if the com­pe­tent author­i­ties of the Con­tract­ing States agree under Arti­cle 25  of the Agree­ment that the estab­lish­ment of the com­pa­ny and the con­duct of its oper­a­tions   are found­ed on sound busi­ness rea­sons and thus do not have as its pri­ma­ry pur­pose the obtain­ing of such benefits.

IN WITNESS WHEREOF the under­signed, being duly autho­rised there­to, have signed this Protocol.

DONE in two orig­i­nals at Zegreb this 12th day of Feb­ru­ary 2014 in the Croa­t­ian, Hin­di and Eng­lish lan­guages, all three texts being equal­ly authen­tic. n case of diver­gence between the texts the Eng­lish text shall prevail.

FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA

FOR THE GOVERNMENT OF THE REPUBLIC OF CROATIA

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