Approves The Protocol Between The Portuguese Republic And Ireland, Signed In Lisbon On 11 November 2005, Reviewing The Convention For The Avoidance Of Double Taxation And The Prevention Of Fiscal Evasion With Respect To Taxes On Income And The Protocol...

Original Language Title: Aprova o Protocolo entre a República Portuguesa e a Irlanda, assinado em Lisboa em 11 de Novembro de 2005, Que Revê a Convenção para Evitar a Dupla Tributação e Prevenir a Evasão Fiscal em Matéria de Impostos sobre o Rendimento e Respectivo Protocolo, ass

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Read the untranslated law here: http://app.parlamento.pt/webutils/docs/doc.pdf?path=6148523063446f764c3246795a5868774d546f334e7a67774c336470626d6c7561574e7059585270646d467a4c316776644756346447397a4c334277636a4d304c5667755a47396a&fich=ppr34-X.doc&Inline=false

MOTION for a RESOLUTION paragraph 34/X Whereas the signature in Lisbon, on 11 November 2005, of the Protocol between the Portuguese Republic and Ireland to review the Convention for the avoidance of double taxation and prevention of Fiscal evasion with respect to income tax and its Protocol, signed at Dublin on 1 June 1993; So: under d) of paragraph 1 of article 197 of the Constitution, the Government presents to the Assembly of the Republic the following resolution: to approve the Protocol between the Portuguese Republic and Ireland, signed in Lisbon on 11 November 2005, reviewing the Convention for the avoidance of double taxation and prevention of Fiscal evasion with respect to income tax and its Protocol , signed at Dublin on 1 June 1993, whose text, authenticated versions in Portuguese and English, if published in the annex.

Seen and approved by the Council of Ministers of 16 March 2006 Prime Minister the Minister of Parliamentary Affairs Minister Presidency 2 PROTOCOL between the Portuguese Republic and Ireland to review the Convention for the avoidance of double taxation and the prevention of FISCAL evasion with respect to taxes on income and ITS PROTOCOL, SIGNED at DUBLIN on 1 JUNE 1993 the Republic of Portugal and Ireland , desiring to conclude a Protocol amending the Convention between the Contracting Parties for the avoidance of double taxation and the prevention of Fiscal evasion with respect to taxes on income and its Protocol, signed at Dublin on 1 June 1993 (hereinafter "the Convention"), have agreed as follows: article 1 the number 2 of article 13 (gains) of the Convention of 1993 shall be deleted and shall be replaced by the following : «2. For the purposes of paragraph 1 of this article, gains from the alienation of immovable property situated in the other Contracting State comprise the gains from shares or similar rights, with the exception of quoted shares on the stock exchange, and that retreat, directly or indirectly, more than 50% of the respective value of real estate situated in that other State.» 3 article 2 in article 13 (capital gains) of the Convention of 1993 is added in a new paragraph 6, to read as follows: ' 6. The provisions of paragraph 5 of this article shall not affect the right of a Contracting State, in accordance with domestic law, charge a tax on gains from the alienation of shares, securities or other units of a company which is a resident of that Contracting State as well as claims on a company which is a resident of that Contracting State, if such gains are not subject to tax in the other Contracting State, and (a) the said earnings are earned by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the three years immediately preceding such alienation and (b) (i) a natural person who received the gains held, directly or indirectly, at any time, alone or together with their spouse or one of their relatives by blood or by marriage, at least 5% issued share capital corresponding to a particular category of shares of that company, or (ii) the value of the participation exceeds 500,000 euros.»

Article 3 Insert a new paragraph in the Protocol to the Convention of 1993, in the following terms: Ad article 24, paragraph 3 it is understood that the provisions of the Convention shall not be construed so as to prevent the application by a Contracting State of the thin capitalization provisions provided for in its domestic law, except in cases where the Member companies demonstrate that, given the specific characteristics of their activities or economic circumstances 4 own , the conditions or imposed between those enterprises are in conformity with the principle of absolute independence (arm's length principle).

Article 4 (1) each Contracting State shall notify to the other the completion of the procedures required by its law for the entry into force of this Protocol. (2) this Protocol shall enter into force on the date of receipt of the last of these notifications and shall take effect: (a) In Ireland: (i) in respect of income tax and capital gains tax, for any fiscal year beginning on or after 1 January in the calendar year next following that of the entry into force of this Protocol; (ii) in respect of corporation tax, for any financial year beginning on or after 1 January in the calendar year next following that of the entry into force of this Protocol; (b) In Portugal: (i) in respect of taxes withheld at source, the fact giving rise to them appearing on or after 1 January of the year next following that of the entry into force of this Protocol; (ii) in respect of other taxes, in relation to income produced in any fiscal year beginning on or after 1 January of the year next following the entry into force of this Protocol.

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

5 DONE in duplicate at Lisbon, the eleven days of the month of November 2005, in Portuguese and English languages, both texts being equally authentic.

For the PORTUGUESE REPUBLIC for IRELAND Secretary of State for European Affairs Fernando Neves Ireland Ambassador Patrick Connor ´ 6 PROTOCOL PROTOCOL BETWEEN THE PORTUGUESE REPUBLIC AND IRELAND AMENDING THE CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ITS PROTOCOL SIGNED AT DUBLIN ON 1 JUNE 1993, The Portuguese Republic and Ireland;

Desiring to completion date the Protocol to amend the Convention between the Contracting Parties for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and its Protocol, signed at Dublin on June 1, 1993 (hereinafter referred to as «the Convention»);

Have agreed as follows: ARTICLE 1 Paragraph 2 of Article 13 (Capital Gains) of the Convention shall be deleted and 1993 replaced by the following: ' 2. For the purposes of paragraph 1, gains from the alienation of immovable property situated in the other Contracting State shall include gains from shares or comparable interests, other than shares quoted on the stock exchange , deriving more than 50 per cent of their value directly or indirectly from immovable property situated in that other State.»

7 ARTICLE 2 Insert new Paragraph 6 in Article 13 (Capital Gains) of the 1993 Convention as follows:


«6. The provisions of paragraph 5 shall not affect the right of a Contracting State to levy according to its laws, the tax on gains from the alienation of shares in securities of, or other corporate rights of, or debt claims on a company which is a resident of that Contracting State, if such gains are not subject to tax in the other Contracting State , and (a) such gains are derived by an individual who is a resident of the other Contracting State and was a resident of the first-mentioned State at anytime during the three years immediately preceding the aforementioned alienation, and (b) (i) the individual who derived the gains has held at any time, either alone or with his or her spouse or one of their relations by blood or marriage , directly or indirectly, at least 5 per cent of the issued share capital of the particular class of shares in that company, or (ii) the value of the participation exceeds Euro 500.000.»

ARTICLE 3 Insert this new paragraph in the Protocol to the 1993 Convention.

Ad Article 24, Paragraph 3 It is understood that the provisions of the Convention shall not be interpreted so as to prevent the application by a Contracting State of the thin capitalisation provisions provided for in its domestic law, except in those cases in which the associated enterprises can show that due to the special characteristics of their activities or their specific economic general circumstances , the conditions made or imposed between those enterprises are in conformity with the arm's length principle. 8 ARTICLE 4 (1) Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Protocol. (2) This Protocol shall enter into force on the date of the receipt of the later of these notifications and shall thereupon have effect: (a) In Portugal: (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 year next following the year in which the Protocol 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 year next following the year in which the Protocol enters into force. (b) In Ireland: (i) as respects income tax and capital gains tax, for any year of assessment beginning on or after the first day of January in the calendar year next following the year in which this Protocol enters into force; (II) as respects corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following the year in which this Protocol enters into force;

In WITNESS WHEREOF, the Arbitration Forum Surani authorised thereto, have signed this Protocol.

Done in duplicate at Lisbon this eleven day of November 2005, in the Portuguese and English languages, both texts being equally authoritative.

9 FOR THE PORTUGUESE REPUBLIC FOR IRELAND Secretary of State for European Affairs Ambassador Fernando Neves of Ireland Patrick ´ Connor