Resolução da Assembleia da República n.º 127/2016 — Aprova a Convenção entre a República Portuguesa e o Reino da Arábia Saudita para Evitar a Dupla Tributação e Prevenir a…

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 if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

(i) in the case of the Kingdom of Saudi Arabia, the State, a political or administrative subdivision or a local authority thereof (including the Saudi Arabian Monetary Agency) and wholly owned State entities; and

(ii) in the case of the Portuguese Republic, the State, a political or administrative subdivision or a local authority thereof, or the Central Bank of Portugal.

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, founders' shares or other rights, not being debt-claims, participating in profits, 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.

4 - The provisions of paragraphs 1 and 2 of this article 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 of this Convention, 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

Income from debt-claims

1 - Income from debt-claims 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 income from debt-claims may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the income from debt-claims is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the income from debt-claims.

3 - Notwithstanding the provisions of paragraph 2 of this article, income from debt-claims shall be taxable only in the Contracting State of which the recipient is a resident, if such income is paid to and beneficially owned by:

4 - The term "income from debt-claims" 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 income from debt-claims for the purpose of this article.

5 - The provisions of paragraphs 1 and 2 of this article shall not apply if the beneficial owner of the income from debt-claims, being a resident of a Contracting State, carries on business in the other Contracting State in which the income from debt-claims 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 such 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.

6 - Income from debt-claims shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying such income, 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 such income is paid was incurred, and such income is borne by such permanent establishment or fixed base, then such income shall be deemed to arise in the 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 income from debt-claims, 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 Convention.

Article 12

Royalties

1 - Royalties 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 may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 8 per cent of the gross amount of the royalties.

3 - The term "royalties" as used in this article means payment 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, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

4 - The provisions of paragraphs 1 and 2 of this article shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties 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 are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 14 of this Convention, as the case may be, shall apply.

5 - Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties 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, 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 Convention.

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 of this Convention 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 be taxed in that other State.

3 - Gains 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 the Contracting State in which the place of effective management of the enterprise is situated.

4 - Gains derived by a resident of a Contracting State from the alienation of shares or of a comparable interest deriving more than 50 percent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.

5 - Gains from the alienation of shares other than those mentioned in paragraph 4 of this article representing a participation of at least 20 per cent in a company which is a resident of a Contracting State may be taxed in that State.

6 - Gains derived from the alienation of any property other than that referred to in the preceding paragraphs of this article 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:

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, dentists and accountants.

Article 15

Dependent personal services

1 - Subject to the provisions of articles 16, 18, 19, 20 and 21 of this Convention, 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 of this article, 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:

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 may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

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 or supervisory board or of another similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17

Artistes and sportspersons

1 - Notwithstanding the provisions of articles 14 and 15 of this Convention, 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 of this Convention, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3 - Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2 of this article, shall be exempt from tax in that other Contracting State if the visit to that other Contracting State is supported wholly or mainly by public funds of the first-mentioned Contracting State, a political or administrative subdivision or a local authority thereof, or takes place under a cultural agreement between the Governments of the Contracting States.

Article 18

Pensions

Subject to the provisions of paragraph 2 of article 19 of this Convention, 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 - Salaries, wages and other similar remuneration paid by a Contracting State or a political or administrative 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. However, such salaries, wages and other similar 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:

2 - Notwithstanding the provisions of paragraph 1 of this article, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political or administrative 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. However, such pensions and other similar remuneration 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, 17, and 18 of this Convention shall apply to salaries, wages, pensions, and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political or administrative subdivision or a local authority thereof.

Article 20

Teachers and researchers

An individual who is or was a resident of a Contracting State immediately before visiting the other Contracting State, solely for the purpose of teaching or scientific research at an university, college, school, or other similar educational or scientific research institution which is recognized by the Government of that other State, or under an official programme of cultural exchange, for a period not exceeding three years from the date of his first arrival in that other State, shall be exempt from tax in that other State on his remuneration for such teaching or research.

Article 21

Students

1 - Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

2 - In respect of grants, scholarships and remuneration from employment not covered by paragraph 1 of this article, a student, business apprentice or trainee referred to in paragraph 1 of this article and who is a resident of the State which he is visiting shall be entitled, during such education or training, to the same exemptions, reliefs, or reductions in taxes applicable to residents of that 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 Convention shall be taxable only in that State.

2 - The provisions of paragraph 1 of this article shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6 of this Convention, 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 of this Convention, as the case may be, shall apply.

3 - Notwithstanding the provisions of paragraphs 1 and 2 of this article, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention and arising in the other Contracting State may also be taxed in that other State.

Article 23

Methods for elimination of double taxation

1 - Where a resident of a Contracting State derives income which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in that other State. 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 that other State.

2 - Where in accordance with any provisions of this Convention income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

3 - In the case of the Kingdom of Saudi Arabia, the methods for elimination of double taxation will not prejudice to the provisions of the Zakat collection regime as regards Saudi nationals.

Article 24

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 Convention, 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. 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 this Convention.

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 this Convention. 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 this Convention.

4 - The competent authorities of the Contracting States may communicate with each other for the purpose of reaching an agreement in the sense of the preceding paragraphs.

5 - The competent authorities of the Contracting States may by mutual agreement settle the appropriate mode of application of this Convention and, especially, the requirements which the residents of a Contracting State must fulfil in order to obtain, in the other State, the tax reliefs or exemptions provided for by this Convention.

Article 25

Exchange of information

1 - The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political or administrative subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by articles 1 and 2.

2 - Any information received under paragraph 1 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) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. 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.

3 - In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

4 - 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 3 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.

5 - In no case shall the provisions of paragraph 3 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 26

Members of diplomatic missions and consular posts

Nothing in this Convention 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 27

Miscellaneous provisions

1 - Nothing in this Convention shall affect the application by a Contracting State of its domestic provisions to prevent tax evasion and tax avoidance.

2 - The provisions of this Convention shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the property or right in respect of which the income is paid to take advantage of those provisions by means of such creation or assignment.

3 - The benefits foreseen in this Convention shall not be granted to a resident of a Contracting State which is not the beneficial owner of the income derived from the other Contracting State.

Article 28

Entry into force

1 - Each of the Contracting States shall notify to the other through diplomatic channels the completion of the procedures required by its law for the entry into force of this Convention. This Convention shall enter into force on the first day of the second month following the month in which the latter of these notifications was received.

2 - The provisions of this Convention shall apply:

(i) with regard to taxes withheld at source, in respect of amounts paid on or after the first day of January next following the date upon which this Convention enters into force;

(ii) with regard to other taxes, in respect of taxable years beginning on or after the first day of January next following the date upon which this Convention enters into force;

(i) in respect of taxes withheld at source, the fact giving rise to them appearing on or after the first day of January of the calendar year next following that in which this Convention enters into force;

(ii) in respect of other taxes, as to income arising in any fiscal year beginning on or after the first day of January of the calendar year next following that in which this Convention enters into force.

Article 29

Termination

1 - This Convention shall remain in force indefinitely but either of the Contracting States may terminate this Convention through the diplomatic channel, by giving to the other Contracting State written notice of termination not later than 30 June of any calendar year starting five years after the year in which this Convention entered into force.

2 - In such event this Convention shall cease to apply:

(i) with regard to taxes withheld at source, in respect of amounts paid after the end of the calendar year in which such notice is given;

(ii) with regard to other taxes, in respect of taxable years beginning after the end of the calendar year in which such notice is given;

(i) in respect of taxes withheld at source, the fact giving rise to them appearing on or after the first day of January of the calendar year next following that in which such notice of termination is given;

(ii) in respect of other taxes, as to income arising in the fiscal year beginning on or after the first day of January of the calendar year next following that in which such notice of termination is given.

In witness whereof the undersigned, duly authorized thereto, have signed this Convention.

Done in duplicate at Lisbon on this 8th day of April, 2015, corresponding to the 19 Jumada'II, 1436H, in the Portuguese, Arabic and English languages, all texts being equally authentic. In case of any divergence of interpretation of the text of this Convention, the English text shall prevail.

For the Portuguese Republic:

Paulo Núncio, Secretary of State of Tax Affairs.

For the Kingdom of Saudi Arabia:

Tawfig Fawzan Al-Rabiah, Minister of Commerce and Industry.

PROTOCOL TO THE CONVENTION BETWEEN THE PORTUGUESE REPUBLIC AND THE KINGDOM OF SAUDI ARABIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF TAX EVASION WITH RESPECT TO TAXES ON INCOME.

At the moment of signing the Convention between the Portuguese Republic and the Kingdom of Saudi Arabia for the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Taxes on Income (hereinafter referred to as "the Convention"), the signatories have agreed that the following provisions shall form an integral part of the Convention:

1 - With reference to subparagraph d) of paragraph 1 of article 3 of the Convention, it is understood that the term "person" includes the State, its political or administrative subdivisions or local authorities.

2 - With reference to paragraph 1 of article 4 of the Convention, it is understood that the term "resident" also includes a legal person organized under the laws of the Kingdom of Saudi Arabia and that is generally exempt from tax in the Kingdom of Saudi Arabia and is established and maintained in the Kingdom of Saudi Arabia either:

3 - With reference to article 6 of the Convention, it is understood that the provisions of article 6 of the Convention shall also apply to income from movable property or income derived from services, which are connected with the use or the right to use the immovable property, either of which, under the taxation law of the Contracting State in which the property is situated, is assimilated to income from immovable property.

4 - With reference to article 7 of the Convention:

5 - With reference to paragraph 2 of article 9 of the Convention, it is understood that the corresponding adjustment shall only be made by the first-mentioned State if this State agrees that it is justified.

6 - With reference to paragraph 3 of the article 10 of the Convention, it is understood that, in the case of the Portuguese Republic, the term "dividends" also includes profits attributed under an arrangement for participation in profits, which are subjected to the same tax treatment as dividends from shares under the Portuguese tax law.

7 - With reference to article 25 of the Convention, it is understood that the information received by a Contracting State under article 25 of the Convention shall be used only for the purpose of carrying out the provisions of the Convention or to the administration or enforcement of the domestic laws referred to in paragraph 1 of article 25 of the Convention.

8 - With reference to the Convention, in case the Kingdom of Saudi Arabia introduces an income tax applicable to its nationals who are resident in the Kingdom of Saudi Arabia, or the existing tax is modified accordingly, then the two Contracting States shall enter into negotiations in order to introduce in the Convention an article on nondiscrimination.

In witness whereof the undersigned, duly authorized thereto, have signed this Protocol.

Done in duplicate at Lisbon on this 8th day of April, 2015, corresponding to the 19 Jumada'II, 1436H, in the Portuguese, Arabic and English languages, all texts being equally authentic. In case of any divergence of interpretation of the text of this Protocol, the English text shall prevail.

For the Portuguese Republic:

Paulo Núncio, Secretary of State of Tax Affairs.

For the Kingdom of Saudi Arabia:

Tawfig Fawzan Al-Rabiah, Minister of Commerce and Industry.