10 AOUT 1998. - An Act to Enact the Supplementary Convention, signed in Brussels on 6 March 1995, to amend the Convention between Belgium and Portugal with a view to avoiding double taxation and resolving certain other income tax issues, and the Final Protocol, signed in Brussels on 16 July 1969 (1)

ALBERT II, King of the Belgians,
To all, present and to come, Hi.
The Chambers adopted and We sanction the following:
Article 1^er. This Act regulates a matter referred to in Article 77 of the Constitution.
Art. 2. The Additional Convention, signed in Brussels on 6 March 1995, amending the Convention between Belgium and Portugal with a view to avoiding double taxation and resolving some other income tax issues, and the Final Protocol, signed in Brussels on 16 July 1969, will come out their full and full effect.
Promulgate this law, order that it be clothed with the seal of the State and published by the Belgian Monitor.
Given at Châteauneuf-de-Grasse on 10 August 1998.
ALBERT
By the King:
Minister of Foreign Affairs,
E. DERYCKE
Minister of Economy, Foreign Trade,
E. DI RUPO
Minister of Finance,
J.-J. VISEUR
Seal of the state seal:
Minister of Justice,
T. VAN PARYS
____
Note
Session 1997-1998:
Senate:
Documents. - Bill tabled on 27 May 1998, No. 1-995/1. - Report, no. 1-995/2. - Text adopted in session and transmitted to the Chamber, No. 1-995/3.
Annales parliamentarians. - Discussion, meeting of 8 July 1998. - Vote, meeting of 9 July 1998.
House of Representatives:
Documents. - Project transmitted by the Senate, No. 1650/1.
Annales parliamentarians. - Discussion, meeting of 16 July 1998. - Vote, meeting of 16 July 1998.

Additional Convention amending the Convention between Belgium and Portugal with a view to avoiding double taxation and resolving some other income tax issues and the Final Protocol signed in Brussels on 16 July 1969
His Majesty the King of the Belgians
and
President of the Portuguese Republic,
Desirous of concluding an additional Convention amending the Convention between Belgium and Portugal with a view to avoiding double taxation and resolving some other income tax issues and the Final Protocol signed in Brussels on 16 July 1969 (hereinafter referred to as "The Convention" and "the Final Protocol"),
Appointed to this effect for their Plenipotentiaries, namely:
His Majesty the King of the Belgians:
Frank Vandenbroucke, Minister of Foreign Affairs.
The President of the Portuguese Republic:
Dr. José Manuel Dur ($$)|Atao Barroso, Minister of Foreign Affairs.
The following provisions were agreed upon after having exchanged their full powers recognized in due form:
Article I
Article 2, paragraph 3, of the Convention is deleted and replaced by the following provisions:
Ҥ3. The current taxes to which the Convention applies are:
1° With regard to Belgium:
(a) the tax of natural persons;
(b) corporate tax;
(c) the tax of legal persons;
(d) non-resident tax;
(e) the special contribution assimilated to the tax of natural persons;
(f) the complementary contribution of crisis,
including pre-payments, additional cents to such taxes and pre-payments, and additional taxes to the tax of natural persons,
(hereinafter referred to as "Belgian tax").
2° With regard to Portugal:
(a) the income tax of natural persons (imposto sobre o rendimento das pessoas singulares);
(b) the income tax of legal persons (imposto sobre o rendimento das pessoas colectivas);
(c) Local tax on legal persons income tax (derrama),
(hereinafter referred to as "Portuguese tax"). »
Article II
Article 3, paragraph 1^erof the Convention, the first paragraph shall be deleted and replaced by the following provisions:
"1° (a) the term "Belgium" means the territory of the Kingdom of Belgium, including the territorial sea, as well as other areas on which, in accordance with international law, the Kingdom of Belgium exercises sovereign rights or jurisdiction;
(b) the term "Portugal" means the territory of the Portuguese Republic located on the European continent and the Azores and Madeira archipelagos, the territorial sea, as well as other areas on which, in accordance with Portuguese legislation has jurisdiction or sovereign rights relating to the exploration and exploitation of the natural resources of the seabed, the marine basement and the underlying waters; »
Article III
Article 4, paragraph 1^erthe Convention shall be deleted and replaced by the following provisions:
« § 1^er. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is subject to tax in that State, because of his domicile, residence, management seat or any other similar criterion. However, this term does not include persons who are subject to tax in that State only for income from sources in that State. »
Article IV
Paragraphs 3 and 4 of Article 10 of the Convention are deleted and replaced by the following:
Ҥ3. The term "dividends" used in this section refers to income derived from shares, shares or benefits, mine shares, founder shares or other beneficiary shares with the exception of receivables.
This term also means:
(a) income even paid in the form of interest that, according to the domestic tax legislation of the State whose debiting society is resident, is treated as income of shares;
(b) income attributed by a resident of Portugal who carries on an economic activity to a partner, under a contract to participate in the profits of that resident (associated with $$($) of Atao em participaç ($$) of Atao).
§ 4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficiary of the dividends, a resident of a Contracting State, has in the other Contracting State whose dividend-paying corporation is a resident, a permanent establishment to which the dividend-generating interest is effectively connected. In this case, the provisions of Article 7 shall apply. »
Article V
Paragraph 4 of Article 11 of the Convention is deleted and replaced by the following provisions:
“§4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficiary of the interest, a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment to which the debt or deposit generating interest is effectively connected. In this case, the provisions of Article 7 shall apply. »
Article VI
Paragraphs 2 and 4 of Article 12 of the Convention are deleted and replaced respectively by the following:
Ҥ2. However, such royalties may be imposed in the Contracting State from which they arise and according to the law of that State, but the tax so charged shall not exceed 10 per cent of their gross amount.
§ 4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficiary of the royalties, a resident of a Contracting State, has in the other Contracting State in which the royalties arise a permanent establishment to which the right or property that is generating royalties is effectively connected. In this case, the provisions of Article 7 shall apply. »
Article VII
Article 16 of the Convention is deleted and replaced by the following provisions:
“Article 16
Revenues from corporate leaders
§ 1^er. The fortieth, attendance and other similar remuneration that a resident of a Contracting State receives as a member of the board of directors or of a similar body of a resident corporation of the other Contracting State may be taxed in that other State. However, these revenues are taxable in accordance with the provisions of section 15 when they distribute the exercise of a permanent activity as such.
These provisions also apply to remuneration received as a result of the exercise of functions which, under the laws of the Contracting State whose company is resident, are treated as functions of a nature similar to those exercised by a person referred to in these provisions.
§ 2. Compensation that a person referred to in subsection 1^er shall be paid from the company because of the exercise of a day-to-day activity of direction or technical character and the remuneration that a resident of a Contracting State derives from his or her personal activity as a partner in a corporation, other than a corporation by shares, resident of the other Contracting State, shall be taxable in accordance with the provisions of Article 15, as if it were remuneration that an employee derives from an employee's employment and »
Article VIII
Article 17 of the Convention is deleted and replaced by the following provisions:
“Article 17
Artists and athletes
« § 1^er. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State from his or her personal activities in the other Contracting State as an artist of the spectacle, such as a theatre, cinema, radio or television artist, or a musician, or as a sportsman, may be taxed in that other State.
§ 2. Where the income of activities that an entertainer or a sportsperson exercises personally and in this capacity is attributed not to the artist or to the athlete himself but to another person, such income shall be taxable, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State where the activities of the artist or athlete are carried out. »
Article IX
Article 21 of the Convention is deleted and replaced by the following provisions:
“Article 21
Other income
§ 1^er . The income elements of a resident of a Contracting State, wherever they arise, which are not dealt with in the preceding articles of this Convention shall be taxable only in that State.
§ 2. The provisions of paragraph 1^er shall not apply to income other than income derived from real property, as defined in Article 6, paragraph 2, where the beneficiary of such income, resident of a Contracting State, has in the other Contracting State a permanent establishment and that the right or property that generates income is effectively connected to it. In this case, the provisions of Article 7 shall apply.
§ 3. Notwithstanding the provisions of paragraph 1^er and 2, the income of a resident of a Contracting State who is not covered in the preceding articles of the Convention and who come from the other Contracting State may also be taxed in that other State. »
Article X
Article 22 of the Convention is deleted.
Article XI
Article 23 of the Convention is deleted and replaced by a new article 22 as follows:
“Article 22
§ 1^er. With regard to Belgium, double taxation is avoided as follows:
1° Where a Belgian resident receives income that is taxable in Portugal in accordance with the provisions of this Convention, with the exception of those of articles 10, paragraph 2, 11, paragraphs 2 and 6 and 12, paragraphs 2 and 6, Belgium exempts from tax these incomes, but it may, in calculating the amount of its taxes on the rest of that resident's income, apply the same rate as if the income in question had not been exempted.
2° Subject to the provisions of Belgian law relating to the imputation on Belgian tax of taxes paid abroad, where a Belgian resident receives income elements that are included in his or her total income subject to Belgian tax and that consist of taxable dividends in accordance with Article 10, paragraph 2, and not exempted from Belgian tax under the following 3°, in taxable interest in accordance with Article 11, paragraphs 2 or
3° The dividends that a corporation that is a resident of Belgium receives from a corporation that is a resident of Portugal and that are taxable in Portugal in accordance with Article 10, paragraph 2, are exempted from the corporate tax in Belgium, under the conditions and limits provided for in Belgian law.
4° Where, in accordance with Belgian law, losses incurred by a company operated by a resident of Belgium in a permanent establishment located in Portugal have been effectively deducted from the profits of that undertaking for its taxation in Belgium, the exemption provided under 1° does not apply to the profits of other taxable periods that are attributable to that establishment, to the extent that such profits from other taxable periods that are attributable to that establishment are no longer payable to Portugal, to the extent that
§ 2. With regard to Portugal, double taxation is avoided, in accordance with the provisions of Portuguese legislation (as long as they do not derogate from the general principles contained in this paragraph, as follows:
1° When a resident of Portugal receives income that, in accordance with the provisions of the Convention, is taxable in Belgium, Portugal deducts from the income tax of that resident an amount equal to the tax paid in Belgium.
The amount deducted may, however, not exceed the portion of the income tax calculated before deduction, which corresponds to taxable income in Belgium.
2° When a resident corporation of Portugal receives dividends from a resident corporation of Belgium in the capital of which the first corporation directly holds a share of at least 25 p.c. Portugal deducted, when determining the taxable benefit subject to the income tax of legal persons, 95 p.c. of these dividends included in the taxable basis, in the terms and conditions provided for in Portuguese legislation.
3° Where, in accordance with any provision of the Convention, the income received by a resident of Portugal is exempted from tax in that State, the latter may, however, to calculate the amount of tax on the rest of the income of that resident, take into account the exempted income. »
Article XII
Article 24 of the Convention becomes Article 23 and paragraphs 4, 5 and 6 are deleted and replaced by the following:
Ҥ4. Nothing in this Convention shall be construed as requiring a Contracting State to grant personal deductions, deductions and tax reductions to residents of the other Contracting State on the basis of the situation or family expenses that it grants to its own residents.
§ 5. The imposition of a permanent establishment that a business of a Contracting State has in the other Contracting State is not established in that other State in a less favourable manner than the taxation of the enterprises of that other State that exercise the same activity.
Nothing in this article shall be construed as preventing:
1° a Contracting State to impose, in accordance with its domestic legislation, the dividends relating to an interest that is effectively connected to a permanent establishment in that State of which a resident corporation of the other Contracting State has;
2° Belgium to impose at the rate provided by its domestic legislation the benefits of a Belgian permanent establishment of a resident company of Portugal, provided that the above-mentioned rate does not exceed the maximum rate applicable to the profits of the resident companies of Belgium.
§ 6. Except in the case of application of Article 9, Article 11, paragraph 6, or Article 12, paragraph 6, interest, royalties and other costs paid by a business of a Contracting State to a resident of the other Contracting State shall be deductible for the determination of the taxable profits of that undertaking, under the same conditions as if they had been paid to a resident of the first State. »
Article XIII
Article 28 of the Convention is deleted.
Articles 25, 26, 27, 29 and 30 become articles 24, 25, 26, 27 and 28.
Article XIV
Items 1 and 2 of the Final Protocol are deleted and replaced by the following:
“1. Ad. article 2, paragraph 3, 2°.
The income tax of natural persons and the income tax of legal persons includes all deductions at the source under these taxes.
2. Ad. article 3, paragraph 1^er1°.
It is understood that, in the event of a conflict between the domestic legislation of a Contracting State and international law, the latter will have primacy.
3. Ad article 12, paragraph 3.
The term " royalties" also includes payments relating to technical assistance benefits that are incidental to the use or concession of the use of goods, rights or information referred to in that provision, to the extent that such benefits are carried out in the Contracting State from which royalties arise. »
Article XV
§ 1^er. This Additional Convention shall be ratified and the instruments of ratification shall be exchanged as soon as possible.
§ 2. The Additional Convention shall enter into force on the fifteenth day following that of the exchange of instruments of ratification and its provisions shall apply:
(a) With regard to Belgium:
1° to the taxes due to the source of which the fact generator will occur from 1^er January of the calendar year following that of its entry into force:
2° to other taxes on taxable periods beginning on or after 1^er January of the calendar year following that of its entry into force.
(b) With regard to Portugal:
1° to the taxes due to the source of which the fact generator will occur from 1^er January of the calendar year following that of its entry into force:
2° to other taxes on income from calendar years or taxable periods beginning on or after 1^er January of the calendar year following that of its entry into force.
DONE in Brussels on 6 March 1995, in duplicate, in French, Dutch and Portuguese languages, the three texts being equally authentic.
The exchange of instruments of ratification took place on 21 March 2001.
In accordance with article XV, the Convention entered into force on 5 April 2001.