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DECREE NO 5,576, DE November 8, 2005.
Promulga the Convention between the Government of the Federative Republic of Brazil and the Government of the State of Israel Destination to Avoid Double Taxation and Prevent the Fiscal Evasion in Relation to the Income Tax, celebrated in Brasilia, on December 12, 2002.
THE PRESIDENT OF THE REPUBLIC, in the use of the attribution conferring you the art. 84, inciso IV, of the Constitution, and
Considering that the Government of the Federative Republic of Brazil and the Government of the State of Israel celebrated in Brasilia on December 12, 2002, a Convention Destination to Avoid Double Taxation and Prevenir the Fiscal Evasion in Relation to Income Tax ;
Considering that the National Congress has approved this Convention through Legislative Decree no 931, September 15, 2005 ;
Considering that the Convention entered into force internationally on September 21, 2005, under the terms of paragraph 1º of its Article 29 ;
DECRETA:
Art. 1o The Convention between the Government of the Federative Republic of Brazil and the Government of the State of Israel Destination to Avoid Double Taxation and Prevenir the Fiscal Epoon in Relation to Income Tax, celebrated in Brasilia on December 12, 2002, apensa by copy to this Decree, will be executed and fulfilled so entirely as it contains.
Art. 2o They are subject to approval by the National Congress any acts that may result in revision of the said Convention, as well as any further adjustments that, in the terms of art. 49, inciso I, of the Constitution, carries charges or engraved commitments to the national heritage.
Art. 3o This Decree goes into effect on the date of its publication.
Brasilia, November 8, 2005 ; 184 of Independence and 117 of the Republic.
LUIZ INACIO LULA DA SILVA
Samuel Pinheiro Guimarães Neto
This text does not replace the published in the DOU of 11/9/2005
CONVENTION BETWEEN THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL AND THE
GOVERNMENT OF THE STATE OF ISRAEL INTENDED TO PREVENT THE DUO
TAXATION AND PREVENTION OF TAX EVASION IN RELATION TO
INCOME TAX
The Government of the Federative Republic of Brazil
and
The Government of the State of Israel,
Wish to conclude a Convention designed to prevent double taxation and prevent tax evasion in tax on income,
Woke the following:
ARTICLE 1º
Visit People
The present Convention shall apply to persons residing in one or both of the Contracting States.
ARTICLE 2º
Targeted Taxes
1. The taxes to which the Convention will apply are:
a) in the case of Brazil:
-the federal tax on income ;
(henceforth named "Brazilian tax") ;
b) in the case of Israel:
i) the taxes arising from the Income Tax Act and supplementary legislation (inclusive of the tax of the societies and the capital gains tax) ;
ii) taxes on gains in the disposal of real estate property in accordance with the Taxation Act Fundaily (Valuation, Sale, Acquisition) ;
(henceforth named "Israeli tax").
2. The Convention shall also apply to any identical or substantially similar taxes that are introduced after the date of signature of the Convention, be it in addition to those mentioned above, be it in its replacement. The competent authorities of the Contracting States shall communicate the significant modifications that have occurred in their respective tax laws.
ARTICLE 3º
General Definitions
1. For the purposes of this Convention, unless the context imposes different interpretation:
a) the term "Brazil" means the continental and insular territory of the Federative Republic of Brazil, including its territorial sea, as defined in the United Nations Convention on the Law of the Sea, and the berth and subsoil correspondents, as well as any maritime area beyond the territorial sea, including the berth and underground, to the extent that Brazil exercises sovereign rights in such an area with respect to the exploitation and use of natural resources in accordance with International Law ;
b) the term "Israel" means the State of Israel and, when used in the geographical sense, comprises the territories of the State of Israel and the part of the sea bed and the respective subsoil upon which the State of Israel exercises sovereign rights in accordance with International Law ; and includes the area in relation to which, in accordance with the International Law and the laws of the State of Israel, Israel is empowered to exercise its rights regarding the exploitation and utilization of natural resources found under the sea ;
c) the expressions "a Contracting State" and "the other Contracting State" mean "Brazil" or "Israel", according to the context ;
d) the term "person" includes a physical person, a corporation and any other group of persons ;
e) the term "society" means any legal person or any entity considered legal person for tax purposes ;
f) the expressions "company of a Contracting State" and "company of the other Contracting State" mean, respectively, a company explored by a resident of a Contracting State and a company operated by a resident of the other Contracting State ;
g) the expression "international traffic" means any transport carried out by a ship or aircraft operated by a company whose effective direction seat is situated in a Contracting State, except where such a transport takes place only between points located in the other Contracting State ;
h) the term "tax" means the Brazilian tax or the Israeli tax, in accordance with the context ;
i) the expression "competent authority" means:
i) in Brazil: the Minister of State of the Farm, the Secretary of the Federal Revenue Office or its representatives authorized ;
ii) in Israel: the Minister of State of the Farm or his authorized repersentant ;
j) the term "national" means:
i) any physical person who possessions the nationality of a Contracting State ;
ii) any legal person, society of persons or association constituted in accordance with the legislation be in force in a Contracting State.
2. For the implementation of the Convention, at any time, by a Contracting State, any term here undefined shall, unless the context requires different interpretation, the meaning that this time is assigned to it by the legislation of that State on taxes that are the subject of this Convention, prevailing the meaning assigned to that term by the tax legislation in force in that State on the meaning that they assign to it other laws of that State.
ARTICLE 4º
Fiscal Domicile
1. For the purposes of this Convention, the expression'resident of a Contracting State' means any person who, by virtue of the legislation of that State, is subject to tax in that State on the grounds of his domicile, residence, seat of direction or any other criterion of a similar nature, and also includes both that state and any political subdivision or local authority.
2. Where, by virtue of the provisions of paragraph 1º, a physical person is resident of both the Contracting States, their situation shall be determined as follows:
a) that person will be considered as a resident of the state with which his / her personal and economic links are narier (center of vital interests) ;
b) if the State in which such person has the center of his vital interests cannot be determined, it shall be deemed to be resident of the State in which you have a permanent dwelling ; if she has a permanent dwelling in both states, or if you do not have a permanent dwelling in any of the States, you will be considered as a resident of the State in which you remain habitually ;
c) if such person remain habitually in both states or if they do not usually remain in any of them, it shall be considered as resident only of the State of which it is national ;
d) if that person is national of both states or if not national of any of them, the competent authorities of the States Contractors will resolve the issue of common agreement.
3. Where, by virtue of the provisions of paragraph 1º, a person, other than a physical person, is resident of both Contracting States, he shall be deemed to be resident only of the State in which his or her registered office is situated.
ARTICLE 5º
Permanent Establishment
1. For the purposes of this Convention, the expression "permanent establishment" means a fixed business installation by means of which a company exercises all or part of its activity.
2. The expression "permanent establishment" includes especially:
a) a seat of direction ;
b) a filial ;
c) an office ;
d) a factory ;
e) a workshop ; and
f) a mine, an oil or gas well, a quarry or any other natural resource extraction site.
3. A workshop or construction or installation or assembly will constitute a permanent establishment only if it exists for more than 9 months.
4. Notwithstanding the preceding provisions of this Article, the expression'permanent establishment' shall be deemed not to include:
a) the use of facilities solely for the purpose of storage, exhibition or delivery of goods or goods belonging to the company ;
b) the maintenance of a stock of goods or goods belonging to the company solely for the purpose of storage, exposure or delivery ;
c) the maintenance of a stock of goods or goods belonging to the company solely for processing purposes by another company ;
d) the maintenance of a fixed business installation solely for the purpose of buying goods or goods or obtaining information for the company ;
e) the maintenance of a fixed business installation solely for the purpose of developing, for the company, any other activity of preparatory or ancial character ;
f) the maintenance of a fixed business installation solely for the purposes of any combination of the activities mentioned in the (a) a (e), provided that the general activity of the fixed business installation resulting from that combination has preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1º and 2º of this Article, when a person-who is not an independent agent to which paragraph 6º-is applied on behalf of a company and habitually has and exercises, in a Contracting State, powers to conclude contracts on behalf of the Company, it shall be considered that such a company has a permanent establishment in that State for any activity that such person develops for the company, unless such activities are limited to the mentioned in paragraph 4º, which, if exercised through a fixed business installation, would not allow for consideration of such fixed installation as a permanent establishment under the said paragraph.
6. You will not consider that a company of a Contracting State has a permanent establishment in the other Contracting State for the mere fact of exercising its activity through a broker, general commissioner or any other agent who enjoys an independent "status" as long as these people act within the normal scope of their activities.
7. The fact that a resident society of a Contracting State control or is controlled by a resident society of the other Contracting State, or develops its activity in that other State (either through a permanent establishment either in another way), it shall not in itself be sufficient to make any such societies a permanent establishment of the other.
ARTICLE 6º
Real Estate Income
1. The income that a resident of a Contracting State obtain from real estate (including farm or forestry income) located in the other Contracting State may be taxed in that other State.
2. The expression "real estate" shall have the meaning assigned to it by the legislation of the Contracting State in which the goods are situated. The expression shall in any case include accessories of real estate, livestock and equipment used on agricultural and forestry holdings, the rights to which the provisions of private law relating to the property of goods apply real estate, the enjoyment of real estate and the rights to variable or fixed payments by the holding or concession of the exploitation of mineral deposits, sources and other natural resources ; vessels and aircraft shall not be considered real estate.
3. The provisions of paragraph 1º shall apply to income from direct use, lease, or use, in any other form, of real estate.
4. The provisions of paragraphs 1º and 3º shall also apply to income arising from real estate of a company.
ARTICLE 7º
Profits of Companies
1. The profits of a company from a Contracting State shall be taxable only in that State, unless the company exercises its activity in the other Contracting State through a permanent establishment therein. If the company exercises its activity in the indicated form, its profits may be taxed in the other state, but only in respect of the share of the profits attributable to that permanent establishment.
2. Within the provisions of paragraph 3º, when a company of a Contracting State carries out its activity in the other Contracting State through a permanent establishment therein, it shall be assigned, in each Contracting State, to that permanent establishment, the profits it would obtain if it were a distinct and separate company, which exercised identical or similar activities, under identical or similar conditions, and treated with absolute independence with the company that it is a permanent establishment.
3. For the determination of the profits of a permanent establishment, it shall be permitted to deduct the expenses that have been made to achieve the purposes of that permanent establishment, including the direction expenses and the general charges of administration thus incurred.
4. No profit will be awarded to a permanent establishment by the simple fact of the purchase of goods or goods, by that permanent establishment, for the company.
5. Where the profits include income treated separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8º
Shipping and Air Transport
1. Profits from the exploitation of ships or aircraft in international traffic will be taxable only in the Contracting State where the company's effective direction office is situated. However, if the effective direction office is not situated in any of the Contracting States, such profits shall be taxable only in the Contracting State of which the Company is resident.
2. If the effective direction seat of a shipping company is located on board a vessel, it shall be deemed to be situated in the Contracting State in which the port of registration of that vessel is found, or, in the absence of port of registration, in the Contracting State in which the person who operates the vessel resides.
3. The provisions of paragraph 1º shall also apply to profits arising from participation in a "pool", consortium or international operating agency, but only on the part of the profits thus obtained attributable to the said participation.
ARTICLE 9º
Associated Companies
When:
a) a company of a Contracting State participation in, directly or indirectly, in the direction, control or capital of a company of the other Contracting State, or
b) the same persons participate, directly or indirectly, in the direction, in control or in the capital of a company of a Contracting State and from a company of the other Contracting State, and in either case, the two companies, in their business or financial relations, are connected by conditions accepted or imposed that dictate from those that would be established between companies independent, the profits that, without these conditions, would have been obtained by one of the companies, but were not by virtue of such conditions, could be included in the profits of that company and as such taxation.
ARTICLE 10
Dividends
1. Dividends paid by a resident corporation 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 in which the corporation is resident that pays them and in accordance with the legislation of that State, but, if the effective beneficiary of the dividends is a resident of the other Contracting State, the tax thus required will not be able to exceed:
a) 10% of the gross amount of dividends, if the effective beneficiary detains directly at least 25% of the capital of the society that pays the dividends ;
b) 15% of the gross amount of dividends in all other cases.
The present paragraph shall not affect the taxation of the corporation with reference to profits that originate the dividends.
3. The term "dividends", as employed in this Article, means income from shares, shares or rights of fruition, shares of mining companies, parts of founder or other rights to share in profits, with the exception of credits, as well as income from other capital holdings subject to the same tax treatment as income from shares by state legislation in which the corporation that distributes them is resident.
4. The provisions of paragraphs 1º and 2º shall not apply if the effective beneficiary of the dividends, resident of a Contracting State, exercise, in the other Contracting State that he is resident of the corporation paying the dividends, entrepreneurial activity by intermediate of a permanent establishment therein and the shareholding of the dividends is effectively linked to that permanent establishment. In such a case, the provisions of Article 7º shall apply.
5. Where a resident of a Contracting State holds a permanent establishment in the other Contracting State, such permanent establishment may be subject to a tax withheld at the source in accordance with the legislation of that other State Contractor. Such a tax, however, will not be able to exceed 10% of the gross amount of the profits of that permanent establishment, determined after the payment of the corporate income tax relating to those profits.
6. Where a resident corporation of a Contracting State receives profits or income from the other Contracting State, that other State shall not be able to collect any tax on dividends paid by the corporation, except to the extent that such dividends are paid to a resident of that other State or to the extent that the shareholding of the dividends is effectively linked to a permanent establishment situated in that other State, nor to charge any tax on the taxation of the undistributed profits of the corporation, even if the dividends paid or the undistributed profits consist, in whole or in part, of profits or income from that other State.
ARTICLE 11
Interest
1. Interest accruing from 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 from which they come and in accordance with the legislation of that State, but, if the effective beneficiary of the interest is a resident of the other Contracting State, the tax thus required does not may exceed 15% of the gross amount of interest.
3. Notwithstanding the provisions of paragraphs 1º and 2º:
a) interest accruing from a Contracting State and having as effective beneficiaries the Government of the other Contracting State, one of its political subdivisions, a local authority or any agency (including a financial institution) of exclusive property of that Government, political subdivision, or local authority, shall be exempt from tax in the first Contracting State, the less to apply (b) (b) ;
b) the interest in bonds, securities or debentures issued by the Government of a Contracting State, by one of its political subdivisions, by a local authority or any agency (including a financial institution) of exclusive property of that Government, political subdivision or local authority, will only be taxable in that State.
4. The term "interest", as employed in this Article, means the income of claims of any nature, whether or not accompanied by mortgage guarantees or a clause of participation in the profits of the debtor, and, in particular, the income of public debt, securities or debentures, as well as any other income that the state's tax legislation from which they come from assimilates to the income of borrowed-from-borrowed.
5. The provisions of paragraphs 1º and 2º shall not apply if the effective beneficiary of the interest, resident of a Contracting State, to exercise, in the other Contracting State of which they come from interest, entrepreneurial activity through an establishment permanent situated therein and the credit in respect of which the interest is paid is effectively linked to that permanent establishment. In such a case, the provisions of Article 7º shall apply.
6. The limitation of the aliquot of the tax set out in paragraph 2º shall not apply to interest arising from a Contracting State and paid to a permanent establishment of a company of the other Contracting State situated in a third State.
7. The interest shall be deemed to come from a Contracting State when the debtor is that same State, a political subdivision, a local authority or a resident of that State. However, when the debtor of interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment in relation to which the obligation has been contracted which gives rise to the payment of interest and falls to that State permanent establishment the payment of such interest, such interest shall then be considered from the State in which the permanent establishment is situated.
8. When, in consequence of a special relationship between the debtor and the effective beneficiary, or between both and any other person, the amount of interest paid, considering the credit for which they are due, to exceed what would have been agreed between the debtor and the beneficial beneficiary in the absence of such a relationship, the provisions of this Article shall apply only to the latter amount. In such a case, the surplus part of the payments shall be taxable in accordance with the legislation of each Contracting State, taking into account the other provisions of this Convention.
ARTICLE 12
Royalties
1. The "royalties" coming from 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 from which they come and in accordance with the legislation of that State, but, if the effective beneficiary of the "royalties" is a resident of the other Contracting State, the tax thus required will not be able to exceed:
(a) 15% of the gross amount of the "royalties" arising from the use or concession of the use of industry or trade marks ;
b) 10% of the gross amount of the "royalties" in all other cases.
3. The term "royalties", as employed in this Article, means payments of any kind received as remuneration for the use, or by the right of use, of a copyright on a literary, artistic or scientific work (including films cinematographic and film or tapes for transmission by radio or television), of any patent, brand of industry or trade, drawing or model, plan, secret formula or process, as well as by use, or by the right of use, of an equipment industrial, commercial or scientific, or by information relating to the experience gained in the industrial, commercial or scientific sector.
4. The provisions of paragraphs 1º and 2º shall not apply if the effective beneficiary of the "royalties", resident of a Contracting State, exercises, in the other Contracting State from which they come from the "royalties", entrepreneurial activity through an permanent establishment therein, and the right or well generator of the "royalties" is effectively linked to such permanent establishment. In such a case, the provisions of Article 7º shall apply.
5. The royalties will be considered from a Contracting State when the debtor is that same state, a political subdivision, a local authority or a resident of that State. However, when the debtor of the'royalties', resident or not of a Contracting State, has in a Contracting State a permanent establishment in relation with which the obligation to pay the "royalties" has been contracted, and falls to that permanent establishment the payment of these "royalties", these will then be considered from the State in which the permanent establishment is situated.
6. When, in consequence of a special relationship between the debtor and the effective beneficiary, or between both and any other person, the amount of the "royalties", taking into account the use, right or information by which they are paid, exceed what it would be like agreed between the debtor and the beneficial beneficiary in the absence of such a relationship, the provisions of this Article shall apply only to the latter amount. In such a case, the surplus part of the payments shall be taxable in accordance with the legislation of each Contracting State, taking into account the other provisions of this Convention.
ARTICLE 13
Capital Gains
1. The gains obtained by a resident of a Contracting State of the disposal of real estate, as referred to in Article 6º, located in the other Contracting State, may be taxed in that other State.
2. The gains obtained by a resident of a Contracting State from the disposal of shares or other societal rights of a company from which more than half of the assets consist, directly or indirectly, of real estate situated in the other State Contractor may be taxed in that other state.
3. The gains obtained by a resident of a Contracting State from the sale, exchange or other form of provision, directly or indirectly, of shares of a resident company of the other Contracting State may be taxed in that other State, but only if the resident of the first mentioned State detains the property, directly or indirectly, at any time in the period of twelve months prior to such sale, exchange or other form of disposition, of shares giving entitlement to 10% or more of the right to vote in society. However, the tax thus charged will not be able to exceed 15% of the gross amount of such gains. The expression "detain the property indirectly", as used in this paragraph, includes, but is not limited, the property by a related person.
4. The gains arising from the disposal of movable property that are part of the asset of a permanent establishment that a company of a Contracting State posits in the other Contracting State, including the gains arising from the disposal of that permanent establishment (either isolated or with the company ensemble), can be taxed in that other state.
5. Gains arising from the disposal of ships or aircraft used in international traffic or mobile goods allocated to the operation of such ships or aircraft shall be taxable only in the Contracting State where the seat of direction is situated effective of the company.
6. The gains arising from the disposal of any goods other than those mentioned in the above paragraphs may be taxed in both Contracting States.
ARTICLE 14
Independent Professional Services
1. Income earned by a resident of a Contracting State for the provision of professional services, or as a result of other activities of an independent character, shall be taxable only in that State unless remuneration for such services or activities be paid by a resident of the other Contracting State or to a permanent establishment therein. In such cases, income may be taxed in that other state.
2. The expression "professional services" covers, in particular, the independent activities of scientific, literary, artistic, educational or pedagogical character, as well as the independent activities of doctors, lawyers, engineers, architects, dentists and counters.
ARTICLE 15
Dependent Professional Services
1. Ressaved the provisions of Articles 16, 18, 19, 20 and 21, wages, wages and other similar remuneration perceived by a resident of a Contracting State on the grounds of a job will only be taxable in that State unless the employment be exercised in the other Contracting State. If employment is thus exercised, the corresponding remuneration may be taxed in that other state.
2. Notwithstanding the provisions of paragraph 1º, remuneration perceived by a resident of a Contracting State depending on a job exercised in the other Contracting State shall be taxable only in the first state mentioned if:
a) the beneficiary remains in the other State for a period or periods that do not exceed, in total, 183 days in any period of twelve months that start or end during the considered fiscal year ; and
b) the remuneration is paid by an employer, or on behalf of an employer, who is not a resident of the other State ; and
c) the charge of remuneration does not fit a permanent establishment that the employer posits in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration perceived as a reason for a job exercised on board a ship or aircraft operated in international traffic may be taxed in the Contracting State in which is situated the effective direction seat of the company.
ARTICLE 16
Direction Remuneration
The remuneration of direction and other similar consideration received by a resident of a Contracting State in the quality of member of board or any advice from a resident society of the other Contracting State may be taxed in that other state.
ARTICLE 17
Artists and Desportists
1. Notwithstanding the provisions of Articles 14 and 15, the income earned by a resident of a Contracting State of his personal activities exercised in the other Contracting State in the quality of professional of spectacles, such as theatre artist, cinema, radio or television, or as a musician, or in the quality of sportsmanship, can be taxed in that other state.
2. When the income from personal activities exercised by a professional of spectacles or a sportsman, in that capacity, are awarded not to the professional of spectacles or sportsman, but the other person, such income may not, in spite of the provisions of Articles 7, 14 and 15, to be taxed in the Contracting State in which the activities of the professional of spectacles or sportsman are exercised.
3. The provisions of paragraphs 1º and 2º shall not apply to income from activities exercised in a Contracting State by professionals of spectacles or sportsmen if the visit to that State is cost entirely or mainly by public funds from the other Contracting State or from one of its political subdivisions or by a government-controlled institution. In such cases, income will only be taxable in the State of which the professional of spectacles or the sportsman is a resident.
ARTICLE 18
Annuities and Pensions
1. Within the provisions of paragraph 2º of Article 19, pensions, other similar remuneration on the grounds of a previous employment and annuities paid to a resident of a Contracting State may be taxed in that State.
2. However, such pensions and other similar remuneration may also be taxed in the other Contracting State if the corresponding payment is effected by a resident of that other State or by a permanent establishment in it.
3. Notwithstanding the provisions of paragraphs 1º and 2º, pensions and other payments effected as a result of the social follow-on legislation of a Contracting State or one of its political subdivisions or a local authority shall be taxable only in that state.
4. In this Article:
a) the expression "pensions and other similar remuneration" means periodic payments effected after retirement on the grounds of previous employment or the title of compensation for damages suffered in previous employment consequence ;
b) the term "annuity" means a certain amount, payable periodically on certain deadlines, either for lifetime or for a period of time of time determined or determinable, as a result of a commitment to make the payments as retribution for a full and adequate countervaver in cash or valuable in cash (other than for services rendered).
ARTICLE 19
Public functions
1. a) wages, wages and other similar remuneration, excluding pensions, paid by a Contracting State or one of its political subdivisions or a local authority to a physical person, for services rendered to that State or subdivision or authority, will be taxable only in that state.
b) However, such salaries, ordered and other similar remuneration will be taxable only in the other Contracting State if the services are provided in that other State and if the physical person is a resident of that other State who:
i)-be a national of that state ; or
ii)-have not become a resident of that State solely for the purpose of providing the services.
2. a) Any pension paid by a Contracting State or one of its political subdivisions or a local authority, directly or by means of funds made by them, to a physical person on the grounds of services rendered to that State or subdivision or authority will be taxable only in that State ;
b) However, such a pension will be taxable only in the other Contracting State if the physical person is resident and national of that State.
3. The provisions of Articles 15, 16 and 18 shall apply to wages, wages and other similar remuneration, and pensions paid on the grounds of services rendered within the scope of an entrepreneurial activity exercised by a Contracting State or one of its subdivisions policies or a local authority.
ARTICLE 20
Teachers and Researchers
A physical person who is, or has been, in period immediately prior to his visit to a Contracting State, a resident of the other State Contracting State and that, at the invitation of the Government of the first mentioned State or of a university, or establishment of higher education, school, museum or other cultural institution of that first State, or that, under an official programme of cultural exchange, remain in that State for a period not longer than two consecutive years, with the sole purpose of teaching, lecturing or conducting research at such institutions, will be exempt from tax in that State regarding the remuneration for such activity, provided that the payment of such remuneration comes from outside that State.
ARTICLE 21
Students and Apprentices
1. Payments that a student or trainee who is, or has been, in period immediately prior to his visit to a Contracting State, resident of the other Contracting State, and who remain in the first State only with the only end of there pursue your studies or training, receive to cope with expenses with your maintenance, education or training, will not be taxed in that State, provided that these payments come from sources located outside that State.
2. In relation to grants, scholarships and employment remuneration not covered by paragraph 1º, a student or apprentice that treats paragraph 1º, during the period of these studies or training, will have, ademais, the right to benefit from the same exemptions, rebates or tax reductions from which they enjoy the residents of the State who are visiting.
ARTICLE 22
Other Yields
1. The incomes of a resident of a Contracting State coming from the other Contracting State and not treated in the preceding Articles of this Convention may also be taxed in that other State.
2. The provisions of paragraph 1º shall not apply to income, except those resulting from real estate as defined in paragraph 2º of Article 6º, if the recipient of such income, being a resident of a Contracting State, shall exercise business activities in the other Contracting State through a permanent establishment therein, and the right or good in respect of which the income is paid is effectively linked to the permanent establishment in question. In such a case, the provisions of Article 7º shall apply.
ARTICLE 23
Methods to Eliminate Double Taxation
1. In the case of Israel, double taxation will be eliminated as follows:
In accordance with the provisions and observed the limitations of the legislation of Israel, subject to any amendments without amending the general principle here adopted, Israel will grant its residents, as a credit against the Israeli tax, the value corresponding to the Brazilian tax paid on income originating in Brazil, in an amount not higher than the tax payable in Israel on such incomes.
2. In the case of Brazil, double taxation will be eliminated as follows:
When a resident of Brazil receives income which, in accordance with the provisions of this Convention, can be taxed in Israel, Brazil will admit, in accordance with the provisions and observed the limitations of its legislation, such as a deduction of the income tax of that resident calculated in Brazil, an amount equal to the tax on income paid in Israel.
However, such a deduction shall not exceed the fraction of the income tax, calculated before deduction, corresponding to the income that may be taxed in Israel.
3. Where, in accordance with any provision of this Convention, the income earned by a resident of a Contracting State is exempt from tax in that State, that State may, however, in calculating the amount of the incident tax on the other income of such a resident, take the exempt income into account.
ARTICLE 24
Non-Discrimination
1. Nationals of a Contracting State shall not be subject, in the other Contracting State, to any taxation, or obligation with it related, amusing or more engraved than those to which they are or may be subject to nationals of that other State that they find themselves in the same situations, in particular with respect to the residence. This provision, notwithstanding the provisions of Article 1º, shall apply to persons who are not residents of one or both of the Contracting States.
2. The taxation of a permanent establishment that a company of a Contracting State has in the other Contracting State shall not be determined less favouring in that other State than that of the undertakings of that other State which exercise the same activities. This provision shall not be construed to compel a Contracting State to grant residents of the other Contracting State any personal deductions, rebates and reductions for tax purposes depending on the civil status or charges family granted to their own residents.
3. Except in cases to which the provisions of Article 9º, paragraph 8º of Article 11, or paragraph 7º of Article 12, shall apply, the interest, royalty and other expenses paid by a company of a Contracting State to a resident of the other Contracting State will be, for the purposes of determining the taxable profits of that company, deductible under the same conditions as if they had been paid to a resident of the first mentioned state.
4. Companies in a Contracting State whose capital is wholly or partly directly or indirectly, held or controlled by one or more residents of the other Contracting State, shall not be subject, in the first state mentioned, to any taxation, or obligation with it related, diverse or more engraved than those to which they are or may be subject to other similar undertakings of the first mentioned State, whose capital is wholly or partly directly or indirectly, detained or controlled by one or more residents of a third state.
5. In this Article, the term "taxation" means the taxes aimed at by this Convention.
ARTICLE 25
Benefits Limitation
1. A legal entity that is a resident of a Contracting State and obtains income from sources in the other Contracting State shall not be entitled, in the other Contracting State, to the benefits of this Convention, if more than 50% of the recipient participation in such an entity (or, in the case of a corporation, more than 50% of shares entitled to vote or of the capital of the corporation) are held, directly or indirectly, by any combination of one or more persons who are not residents of a State Contractor.
The provision of this paragraph shall not apply if such an entity develops, in the Contracting State of which it is a resident, an activity substantial business other than mere detention of shares, securities or other assets.
2. A competent authority of a Contracting State may deny the benefits of this Convention to any person, or with respect to any transaction, if, in his opinion, the granting of such benefits constitutes an abuse of the Convention in compliance with their purposes. The competent authority of the Contracting State concerned shall communicate the application of this provision to the competent authority of the other Contracting State.
ARTICLE 26
Friendlier Procedure
1. Where a resident of a Contracting State considers that the measures taken by one or both of the Contracting States shall result, or shall result, in relation to you, in a taxation at odds with the provisions of this Convention, you may, regardless of the resources provided for by the domestic law of those States, submit their case to the discretion of the competent authority of the Contracting State from which it is resident.
2. The competent authority, if the complaint appears justified and if it itself is not in a position to give it satisfactory solution, it shall endeavour to settle the matter by agreement friendly with the competent authority of the other State Contractor, in order to avoid taxation not complying with the Convention.
3. The competent authorities of the Contracting States shall endeavour, by means of amicable agreement, to resolve any difficulties or doubts as to the interpretation or implementation of the Convention.
4. The competent authorities of the Contracting States will be able to communicate directly in order to reach an agreement under the terms indicated in the preceding paragraphs.
ARTICLE 27
Exchange of Information
1. The competent authorities of the Contracting States shall exchange with each other the information necessary to apply the provisions of this Convention or those of the internal laws of the Contracting States relating to the taxes targeted by the Convention in the measure where the taxation in them is not contrary to the Convention. The exchange of information will not be restricted by Article 1º. Any information received by a Contracting State shall be deemed secret in the same manner as an information obtained under the internal legislation of that State and will only be communicated to the persons or authorities (including courts and bodies administration) in charge of the launch or collection of the taxes referred to in this Convention, or the establishment of proceedings on infractions relating to such taxes, or of the appraisal of resources to them correspondingly.
2. The provisions of paragraph 1º shall not, in any case, be construed to impose on a Contracting State the obligation to:
(a) to take administrative action contrary to its legislation and administrative practice or those of the other Contracting State ;
(b) provide information that may not be obtained on the basis of its legislation or in the normal course of the administration of that State or of the another Contractor State ;
c) provide revealing information of any commercial, business, industrial, or professional secret, or commercial process, or information whose revelation would be contrary to public order ("ordre public").
ARTICLE 28
Members of Diplomatic Missions
and Consular Posts
No provision of this Convention shall affect the tax privileges of members of diplomatic missions or consular posts arising both from the general standards of international law and the provisions of special agreements.
ARTICLE 29
Input in Vigor
1. Each Contracting State shall notify the other, by means of diplomatic channels, compliance with the procedures required by its legal order for the entry into force of this Convention. The Convention shall enter into force on the date of receipt of the last of those notifications.
2. The provisions of this Convention shall produce effects:
i) in respect of taxes withheld at the source, at the paid sums, remitted or credited on or after the first day of January of the calendar year immediately following that in which the Convention enters into force ;
ii) in respect of the other taxes targeted by this Convention, to the income produced in the fiscal year beginning in or after of the first day of January of the calendar year immediately following that in which the Convention enters into force.
ARTICLE 30
Complaint
Any of the Contracting States may denounce this Convention, after a period of five years of the date of its entry into force, upon written notice delivered to the other Contracting State through diplomatic channels, provided that such notice is given no later than the thirtieth day of June of any calendar year. In this case, the Convention will no longer apply:
i) in respect of taxes withheld at the source, at the paid sums, remitted or credited on or after the first day of January of the calendar year immediately following that in which notice of denunciation was given ;
ii) in respect of the other taxes of which it treats this Convention, to the income produced in the fiscal year beginning on or after the first day of January of the calendar year immediately following that in which the notice of denunciation was given.
In testimony to what, the undersigned, duly authorized, have signed the present Convention.
Done in Brasilia, in duplicate, on December 12, 2002, corresponding to the 7º day of Tevet, 5763, in the Portuguese, Hebrew languages and english, being all three equally authentic texts. In the event of any divergence of interpretation, the text in English shall prevail.
_______________________________
BY THE GOVERNMENT OF THE REPUBLIC
FEDERATIVE OF BRAZIL
CELSO LAFER
Minister of Foreign Affairs
____________________________
BY THE GOVERNMENT OF THE STATE
DE ISRAEL
DANIEL GAZIT
Extraordinary Ambassador and
Plenipotentiary
P R O T O O L O
At the time of the signing of this Convention between the Government of the Federative Republic of Brazil and the Government of the State of Israel intended to avoid double taxation and prevent tax evasion in respect of income taxes, the undersigned, for this duly authorized, have agreed the following provisions, which form an integral part of the Convention.
1. With reference to Article 11, paragraph 4º
It is understood that interest paid as "remuneration on equity" ("remuneration on equity") in accordance with the Brazilian tax legislation are also considered interest for the purposes of paragraph 4º of Article 11.
2. With reference to Article 12, paragraph 3º
It is understood that the expression "by information concernant to industrial, commercial or scientific experience" mentioned in paragraph 3º of Article 12 includes income originating from the provison of technical assistance and technical services.
However, if, in accordance with any Convention between Brazil and a third State not situated in Latin America that enter into force thereafter whereas this Convention is in force, Brazil shall exclude technical assistance and technical services from the definition of royalties, or agree to a minor aliquot, the same provision shall apply under this Convention, with effect from the date on which the Convention with the aforementioned third State is to enter into force.
3. With reference to Article 24
It is understood that the provisions of paragraph 5º of Article 10 are not in conflict with the provisions of paragraph 2º of Article 24.
It is understood that the provisions of the tax legislation of a Contracting State that do not allow the royalties as defined in the paragraph 3º of Article 12, paid by a permanent establishment situated in that Contracting State to a resident of the other Contracting State which develops an entrepreneurial activity in the Contracting State first mentioned by means of a permanent establishment, be deductible at the time of determination of the taxable income of the above-mentioned permanent establishment are not in conflict with the provisions of Article 24.
It is also understood that, with respect to Article 24, the provisions of this Convention do not prevent a Contracting State from applying the provisions of its tax legislation relating to "undercapitalization".
In testimony to what, the undersigned, for this duly authorized, have signed this Protocol.
Done in Brasilia, in duplicate, on December 12, 2002, corresponding to the 7º day of Tevet, 5763, in the Portuguese, Hebrew languages and english, being all three equally authentic texts. In the event of any divergence of interpretation, the text in English shall prevail.
_______________________________
BY THE GOVERNMENT OF THE REPUBLIC
FEDERATIVE OF BRAZIL
CELSO LAFER
Minister of Foreign Affairs
____________________________
BY THE GOVERNMENT OF THE STATE
DE ISRAEL
DANIEL GAZIT
Extraordinary Ambassador and
Plenipotentiary
