CONVENTION BETWEEN THE PORTUGUESE REPUBLIC AND THE

REPUBLIC OF TURKEY FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION WITH

RESPECT TO TAXES ON INCOME.

 

The Portuguese Republic and the Republic of Turkey,

desiring to conclude a Convention for the avoidance

of double taxation and the prevention of fiscal evasion

with respect to taxes on income, have agreed as follows:

CHAPTER i

Scope of the convention

Article ı

Persons covered

This Convention shall apply to persons who are residents

of one or both of the Contracting States.

Article 2

Taxes covered

ı- This Convention sh all apply to taxes on income

!mposed on behalf of a Contracting State or of its politı.

cal or administrative subdivisions or local authorities ,

ırrespectıve of the manner in which theyare levied.

2 – There sh all be regarded as taxes on Income taxes

imposed on total income, or on elements of income,

including taxes on gains from the alienation of movable

or immovable property, taxes on the total amounts of

wages or salaries paid by enterprises, as well as taxes

on capital appreciation.

3 – The existing taxes to which the Convention sh all

apply are in particular:

a) In the cas e of Portugal:

i) The personal Income tax [imposto sobre

o rendimento das pessoas singulares

(IRS)];

ii) The corporate Income tax [imposto sobre

O rendimento das pessoas colectivas

(IRC)]; and

iii) The local surtax on corporate Income tax

(Derrama);

(hereinafter referred to as «Portuguese

tax»);

b) In the cas e of Turkey:

i) The Income tax (Gelir Vergisi);

ii) The corporation tax (Kurumlar Vergisi);

iii) The levy imposed on the Income tax and

the corporation tax (Gelir Ve Kurumlar

Vergisi üzerinden alinan fon payi);

(hereinafter referred to as «Turkish

tax»),

4 – The Convention shall apply alsa to any identical

or substantially similar taxes that are imposed after the

date of signature of the Convention in addition to, or

in place of, the existing taxes. The competent authorities

of the Contracting States shall notify each other of any

significant changes that have been made in their taxation

laws.

CHAPTER II

Definitions

Article 3

General definitions

ı- For the purposes of this Convention, unless the

context otherwise requires:

a) The term «Portugal» means the Portuguese territory,

territoria! sea as well as the maritime

areas over which the Portuguese Republic has

jurisdiction or sovereign rights for the purposes

of exploration, exploitation and conservation of

natural resources, pursuant to international law;

b) The term «Turkey» means the Turkish territory,

territorial sea as well as the maritime areas over

which Turkey has jurisdiction or sovereign rights

for the purposes of exploration, exploitation and

conservation of natural resources, pursuant to

internationallaw;

c) The terms «a Contracting State» and «the other

Contracting State» mean Portuga! or Turkey,

as the context requires;

d) The term «person» includes an individual, a

companyand any other body of persons;

e) The term «company» means any body corporate

or any entity which is treated as a body corporate

for tax purposes;

f) The terms «enterprise of a Contracting State»

and «enterprise of the other Contracting State»

mean respectively an enterprise carried on by

a resident of a Contracting State and an enterprise

carried on by a resident of the other Contracting

State;

g) The term «international traffic» means any

transport by a ship, aircraft or road vehiele operated

by an enterprise of a Contracting State,

except when the ship, aircraft or road vehiele

is operated solely between places in the other

Contracting State;

h) The term «competent authority» means:

i) In Portugal, the Minister of Finance, the

Director Generalaf Taxation (Director-

Geral dos Impostos) or their authorised

representative;

ii) In Turkey: the Minister of Finance or his

authorised representative;

i) The term «national» means:

i) Any individual possessing the nationality

of a Contracting State;

ii) Any legal person, partnership or association

deriving its status as such from the

laws İ n force İ n a Contracting State.

2 – As regards the application of the Convention at

any time by a Contracting State, any term not defined

therein shall, unless the context otherwise requires, have

the meaning that it has at that time under the law of

that State for the purposes of the taxes to which the

Convention applies, any meaning under the applicable

tax laws of that State prevailing over a meaning given

to the term under other laws of that State.

Article 4

Resident

ı- For the purposes of this Convention, the term

«resident of a Contracting State» means any person who,

under the laws of that State, is liable to tax therein

by reason of his domicile, residence, legal head office,

place of management or any other criterion of asimilar

nature and alsa includes that State and any political

or administrative subdivision or local authority thereof.

This term, however, does not include any person who

is liable to tax in that State in respect only of income

from sources in that State.

2 – Where by reason of the provisions of paragraph ı

an individual is a resident of both Contracting States,

then his status shall be determined as follows:

a) He shall be deemed to be a resident only of

the State in which he has a permanent home

available to him; if he has a permanent home

available to him in both States, he shall be

deemed to be a resident only of the State with

which his personal and economic relations are

closer (centre of vital interests);

b) if the State in which he has his centre of vital

interests cannot be determined or if he has not

a permanent home available to him in either

State, he shall be deemed to be a resident only

of the State in which he has an habitual abode;

c) if he has an habitual abode in both States or

in neither of them, he shall be deemed to be

a resident only of the State of which he is a

national;

d) if he is a national of both States or of neither

of them, the competent authorities of the Contracting

States shall settle the question by

mutual agreement.

3 – Where by reason of the provisions of paragraph ı

of this artiele, a person other than an individual is a

resident of both Contracting States, then it shall be

deemed to be a resi de nt only of the Contracting State

in which its place of effective management is situated.

However, if its place of effective management can not

be determined, then the competent authorities of the

Contracting States shall determine by mutual agreement

the State of which the person shall be deemed to be

a resident for the purpose of this Convention.

Article 5

Permaneni establishmen!

ı- For the purposes of this Convention, the term

«permanent establishment» means a fixed place of business

through which the business of an enterprise is

wholıyor partly carried on.

2 – The term «permanent establishment» includes

especially:

a) A place of management;

b) A branch;

c) An office;

d) A factory;

e) A workshop; and

f) A mine, an oil or gas well, a quarry or any other

place of extraction of natural resources.

3 – A building site, construction, assembly or installation

project or supervisory activities in connection

therewith constitute a permanent establishment only if

they last more than 9 months.

4 – Notwithstanding the preceding provisions of this

artiele, the term «permanent establishment» shall be

deemed not to include:

a) The use of facilities solely for the purpose of

storage, display or delivery of goods or merch

and ise belonging to the enterprise;

b) The maintenance of a stock of goods or merchandise

belonging to the enterprise solely for

the purpose of storage, display or delivery;

c) The maintenance of a stock of goods or rnerch

and ise belonging to the enterprise solely for

the purpose of processing by anather enterprise;

d) The maintenance of a fixed place of business

solely for the purpose of purchasing goods or

merchandise, or of collecting information, for

the enterprise;

e) The maintenance of a fixed place of business

solely for the purpose of carrying on, for the

enterprise any other activity of a preparatory

or auxiliary character;

f) The maintenance of a fixed place of business

solely for any combination of activities mentioned

in sub-paragraphs a) to e), provided that

the overall activity of the fixed place of business

resulting from this combination is of a preparatory

or auxiliary character.

 

Notwithstanding the provisions of paragraphs ı

and 2, where a person other than an agent of an independent

status to who m paragraph 6 applies is acting

in a Contracting State on behalf of an enterprise of

the other Contracting State, that enterprise shall be

deemed to have a permanent establishment in the firstmentioned

State if:

a) He has and habitually exereises in a Contracting

State an authority to conclude contracts on

behalf of the enterprise, unless his activities are

limited wholly to the activities deseribed in paragraph

4, which, if exereised through a fixed place

of business would not make this fixed place of

business a permanent establishment under the

provisions of that paragraph; or

b) He has no such authority but habitually maintains

in the first-mentioned State a stock of

goods or merchandise from which he regularly

delivers goods or merchandise on behalf of the

enterprise and conducts any other activity that

contributes to the sal e of goods or merchandise.

6 – An enterprise shall not be deemed to have a

permanent establishment in a Contracting State merely

because it carries on business in that State through a

broker, general commissian agent or any other agent

of an independent status, pravided that such persons

are acting in the ordinary course of their business.

7 – The fact that a company which is a resident of

a Contracting State contrals or is contralled by a company

which is a resident of the other Contracting State,

or which carries on business in that other State (whether

through a permanent establishment or otherwise), shall

not of itself constitute either company a permanent

establishment of the other.

CHAPTER III

Taxation of İ ncome

Article 6

Income from immovable property

ı- Income derived by a resident of a Contracting

State from immovable property (including Income from

agriculture or forestry) situated in the other Contracting

State may be taxed in that other State.

2 – The term «imrnovable property» shall have the

meaning which it has under the law of the Contracting

State in which the property in question is situated. The

term shall in any case include property accessory to

immovable property, livestock and equipment used in

agriculture (including the breeding and cultivation of

fish) and forestry, rights to which the provisions of general

law respecting landed property apply, usufruct of

immovable property and rights to variable or fixed payments

as consideration for the working of, or the right

to work, mineral deposits, sources and other natural

resources; ships, aircraft and road vehicles sh all not be

regarded as immovable property.

3 – The provisions of paragraph ı shall apply to

İ ncome derived from the direct use, letting, or use in

any other form of immovable property.

4 – The provisions of paragraphs ıand 3 shall alsa

apply to the Income from immovable property of an

enterprise and to Income from immovable property used

for the performance of independent personal services.

Article 7

Business profits

ı- The profits of an enterprise of a Contracting

State sh all be taxable only in that State unless the enterprise

carries on business in the other Contracting State

through a permanent establishment situated therein. if

the enterprise carries on business as aforesaid, the profits

of the enterprise may be taxed in the other State but

only so much of them as is attributable to that permanent

establishment.

2 – Subject to the provisions of paragraph 3, where

an enterprise of a Contracting State carries on business

in the other Contracting State through a permanent

establishment situated therein, there shall in each Contracting

State be attributed to that permanent establishment

the profits which it might be expected to make

if it were a distinct and separate enterprise engaged

in the same or similar activities under the same or similar

conditions and dealing wholly independently with the

enterprise of which it is a permanent establishment.

3 – In determining the profits of a permanent establishment,

there sh all be allawed as deductions expenses

which are incurred for the purposes of the permanent

establishment, including executive and general administrative

expenses so incurred, whether in the State in

which the permanent establishment is situated or

elsewhere.

4 – No profits shall be attributed to a permanent

establishment by reason of the me re purchase by that

permanent establishment of goods or merchandise for

the enterprise.

5 – Where profits include items of Income which are

dealt with separately in other Articles of this Convention,

then the provisions of those Articles shall not be affected

by the provisions of this Artiele.

Article 8

Shipping, air and land transport

ı- Profits of an enterprise of a Contracting State

from the operation of ships, aircraft or road vehicles

in international traffic shall be taxable only in that State.

2 – The provisions of paragraph ı sh all alsa apply

to profits derived from the participation in apool, a

joint business or an international operating ageney.

Article 9

Associated enterprises

ı- Where:

a) An enterprise of a Contracting State participates

directly or indirectly in the management, control

or capital of an enterprise of the other Contracting

State; or

b) The same persons participate directly or indirectly

in the management, control or capital of

an enterprise of a Contracting State and an

enterprise of the other Contracting State;

and in either case conditions are made or imposed

between the two enterprises in their commercial or

financial relations which differ from those which would

be made between independent enterprises, then any

profits which would, but for those conditions, have

accrued to one of the enterprises, but, by reason of

those conditions, have not so accrued, may be included

in the profits of that enterprise and taxed accordingly.

2 – Where a Contracting State includes in the profits

of an enterprise of that State – and taxes accordingly –

profits on which an enterprise of the other Contracting

State has been charged to tax in that other State and

the profits so included are profits which would have

accrued to the enterprise of the first-mentioned State

if the conditions made between the two enterprises had

been those which would have been made between independent

enterprises, then that other State sh all make

an appropriate adjustment to the amount of the tax

charged therein on those profits, if the other Contracting

State considers the adjustment justified. 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

Dividcnds

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 mayaıso 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:

a) 5 per cent of the gross amount of the dividends

paid if the beneficial owner is a company (other

than a partnership) that, for an uninterrupted

period of two years prior to the payment of the

dividends, or if the company paying the dividends

has existed for less than two years during

the lifetime of the company, holds directiyat

least 25 per cent of the capital (capital social)

of the company paying the dividends; or

b) 15 per cent of the gross amount of the dividends,

in all other cases.

The competent authorities of the Contracting States

shall by mutual agreement settle the mo de of application

of these limitations. This paragraph shall not affect the

taxation of the company in respect of the profits out

of which the dividends are paid.

3 – The term «dividends» as used in this artiele

means Income from shares, «jouissance» sh ares or

«jouissance» rights, founders’ shares or other rights, not

being debt-claims, participating in profits, as well as

Income from other corporate rights which is subjected

to the same taxation treatment as Income from shares

by the laws of the State of which the company making

the distribution is a resident.

4 – Profits of a company of a Contracting State carrying

on business İ n the other Contracting State through

a permanent establishment situated therein may after

having been taxed under Article 7, be taxed on the

remaining amount in the Contracting State in which

the permanent establishment is situated and in accordance

with the provisions of domestic law of that State,

but the tax so charged shall not exceed 5 per cent of

that amount.

5 – The provisions of paragraphs 1 and 2 shall not

apply if the beneficial owner of the dividends, being

a resident of a Contracting State, carries on business

in the other Contracting State of which the company

paying the dividends is a resident, through a permanent

establishment situated therein, or performs in that other

State independent personal services from a fixed base

situated therein, and the holding in respect of which

the dividends are pa id is effectively connected with such

permanen! establishment or fixed base. In such case

the provisions of Article 7 or Article 14, as the case may

be, shall apply.

6 – Subject to the provision of paragraph 4, 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 estab-

!ishment or a fixed base situated in that other State,

nar subject the company’s undistributed profits to a tax

on the company’s undistributed profits, even if the dividen

ds pa id or the undistributed profits consist wholly

or partly of profits or Income arising in such other State.

Article 11

lnterest

1 – Interest arising in a Contracting State and paid

to a resident of the other Contracting State may be

taxed in that other State.

2 – However, such interest mayaıso 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 interest is a resident of the other Contracting State,

the tax so charged shall not exceed:

a) 10 per cent of the gross amount of the interest

if it is paid on a loan made for a period of

more than two years;

b) 15 per cent of the gross amount of the interest,

in all other cases.

3 – Notwithstanding the provisions of paragraph 2:

a) The Central Bank of Turkey shall be exempt

from Portuguese tax with respect to interest arising

in Portugal;

b) The Central Bank of Portugal shall be exempt

from Turkish tax with respect to interest arising

in Turkey;

c) The Government, the political or administrative

subdivisions or the local authorities of one of

the Contracting States shall be exempt from tax

in the other Contracting State with respect to

interest arising in that other State.

4 – The term «interest» as used in this Article means

Income from debt-clairns 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.

5 – The provisions of paragraphs ıand 2 shall not

apply if the beneficial owner of the interest, being a

resident of a Contracting State, carries on business in

the other Contracting State in which the interest arises,

through a permanent establishment situated therein, or

performs in that other State independent personal services

from a fixed base situated therein, and the debtdaim

in respect of which the interest is paid is effectively

connected with such permanent establishment or fixed

base. In such case the provisions of Article 7 or artiele

ı4, as the case may be, sh all apply.

6 – Interest shall be deemed to arise in a Contracting

State when the payer is a resident of that State. Where,

however, the person paying the interest, whether he is

a resident of a Contracting State or not, has in a Contracting

State a permanent establishment or a fixed base

in connection with which the indebtedness on which

the interest is paid was incurred, and such interest is

borne by such permanent establishment or fixed base,

then such interest shaII 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 same other person, the amount of

the interest, having regard to the debt-claim for which

it is paid, exceeds the amount which would have been

agreed upon by the payer and the beneficial owner in

the absence of such relationship, the provisions of this

Article shaII 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 ro the other provisions of this

Convention.

Article 12

Royalties

ı- 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 mayalsa be taxed in the

Contracting State in which theyarise 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 10 per cent of the

gross amount of the royalties.

3 – The term «royalties» as used in this Article means

payments of any kind received as a consideration for

the use of, or the right to use, any copyright of literary,

artistic or scientific work including cinematograph films,

and films or recordings for radio or television broadcasting,

any patent, trade mark, design or model, plan,

seeret 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 ı and 2 shall not

apply if the beneficia! 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 roya1ties are paid

is effectively conneeted with such permanent establishment

or fixed base. In such case the provisions of Article 7

or Article 14, as the ease 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 Contraeting 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 that permanent establishment or fixed base,

then such royalties shaII 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 same other person, the amount of

the royalties, having regard to the use, right or information

for which theyare 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 sh alI 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

ı- Gains derived by a resident of a Contracting State

from the alienation of immovable property referred to

in Article 6 and situated in the other Contracting State

may be taxed in that other State.

2 – Gains from the alienation of movable property

forming part of the business property of a permanent

establishment which an enterprise of a Contracting State

has in the other Contracting State or of movable property

pertaining to a fixed base available to a resident

of a Contracting State in the other Contracting State

for the purpose of performing independent personal services,

including such gains from the alienation of such

a permanent establishment (alone or with the whole

enterprise) or of such fixed base, may be taxed in that

other State.

3 – Gains of an enterprise of a Contracting State

from the alienation of ships, aircraft or road vehieles

operated in international traffic or movable property

pertaining to the operation of such ships, aircraft or

road vehicles shall be taxable only in that State.

4 – Gains from the alienation of any property other

than that referred to in paragraphs ı, 2 and 3, shall

be taxable only in the Contracting State of which the

alienatar is a resident.

5 – The provisions of paragraph 4 shall not affect

the right of a Contracting State to levy according to

its own law a tax on gains derived by a resident of the

other State from the alienation of shares that represent

a participation of more than 25 percent of the capital

stock of a company which is resident of the first-mentioned

State if the alienation takes place to a resident

of the first-mentioned State, and if the period between

acquisition and alienatian does not exceed one year.

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. However, such Income mayaıso be taxed

in the other Contracting State if such services or activities

are performed in that other State and if:

a) He has a fixed base regularly available to him

in the other State for the purpose of performing

those services or activities; or

b) He is present in that other State for the purpose

of performing those services or activities for a

period or periods amounting in the aggregate

to lS3 days or more in any continuous period

of 12 months.

In such circumstances, only so much of the income

as is attributable to that fixed base or derived from the

services or activities performed during his presence in

that other State, as the case may be, may be taxed in

that other State.

2 – Ineerne derived by an enterprise of a Contracting

State in respect of professional service s or other activities

of asimilar character shall be taxable only in that State.

However, such Income mayaıso be taxed in the other

Contracting State if such services or activities are performed

in that other State and if:

a) The enterprise has a permanent establishment

in that other State through which the services

or activities are performed; or

b) The period or periods during which the services

are performed exceed in the aggregate 1S3 days

in any continuous period of 12 months.

In such circumstances, only so much of the income

as is attributable to that permanent establishment or

to the services or activities performed in that other State,

as the case may be, may be taxed in that other State.

In either case, the enterprise may c\cct to be taxed in

that other State in respect of such Income in accordance

with the provisions of Article 7 of this Convention as

if the Income were attributable to a permanent estab-

Iishment of the enterprise situated in that other State.

This election sh all not affect the right of that other State

to impose a withholding tax on such income.

3 – The term «professional services» ineludes especially

independent scientific, Iiterary, artistic, educationalar

teaching activities as well as the independent

activities of physicians, lawyers, engineers, architects,

dentists and accountants, and other activities requiring

specific professional skill,

Article 15

Dependent personal services

1 – Subject to the provisions of artieles 16, IS, 19,

20 and 21, salaries, wages and other similar remuneration

derived by a resident of a Contracting State in

respect of an employment sh all be taxable only in that

State unless the employment is exercised in the other

Contracting State. if the employment is so exercised,

such remuneration as is derived therefrom may be taxed

in that other State.

2 – Notwithstanding the provisions of paragraph 1,

remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other

Contracting State sh all be taxable only in the first-mentioned

State if:

a) The recipient is present in the other State for

a period or periods not exceeding in the aggregate

183 days in any twelve month period commencing

or ending in the calendar year concemed,

and

b) The remuneration is paid by, or on behalf of,

an employer who is not a resident of the other

State, and

c) The remuneration is not borne by a permanent

establishment or a fixed base which the

employer has in the other State.

3 – Notwithstanding the preceding provisions of this

artiele, remuneration derived in respect of an employment

exereised aboard a ship, aireraft or road vehicle

operated in international traffic by an enterprise of a

Contracting State may be taxed in that State.

Article 16

Directors’ fees

Directors’ fees and other similar payments derived

by a resident of a Contracting State in his capaeity as

a member of the board of directors or supervisory board

of a company which is a resident of the other Contracting

State or as a member of any other organ which performs

the same functions in the company may be taxed in

that other State.

Article 17

Artistes and sportsmen

1 – Notwithstanding the provisions of Articles 14 and

15, Income derived by a resident of a Contracting State

as an entertainer, such as a theatre, motion picture,

radio or television artiste, or amusician, or as a sportsrnan,

from his personal activities as such exereised in

the other Contracting State, may be taxed in that other

State.

2 – Where Income in respect of personal activities

exereised by an entertainer or a sportsman in his capacity

as such accrues not to the entertainer or sportsman himself

but to anather person, that Income may, notwithstanding

the provisions of artieles 7, 14 and 15, be taxed

in the Contracting State in which the activities of the

entertainer or sportsman are exereised.

3 – Income derived by an entertainer or a sportsman

from activities exercised in a Contracting State sh all be

exempt from tax in that State, if the visit to that State

is supported wholly or mainly by public funds of the

other contracting state a politİ cal or adminİ strative subdivision

or local authority thereof.

Article IS

Pensions

Subject to the provisions of paragraph 2 of article

19, pensions and other similar remuneration paid to

a resident of a Contracting State in consideration of

past employment shall be taxable only in that State.

This provision shall alsa apply to life annuities paid to

a resident of a Contracting State.

Article 19

Government service

ı- a) Salaries, wages and other similar remuneration,

other than a pension, paid by a Contracting State

or a political or administrative subdivision or alocal

authority thereof to an individual in respect of services

rendered to that State or subdivision or authority shall

be taxable only in that State;

b) However, such 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:

i) Is a national of that State; or

ii) Did not become a resident of that State solely

for the purpose of rendering the services.

2 – a) Any pension paid by, or out of funds created

by, a Contracting State or a political or administrative

subdivision or alocal authority thereof to an individual

in respect of services rendered to that State or subdivision

or authority shall be taxable only in that State.

b) However, such pension shall be taxable only in

the other Contracting State if the individual is a resident

of, and a nationalof, that State.

3 – The provisions of Artieles IS, 16, 17 and 18 shall

apply to salaries, wages and other similar remuneration,

and to pensions, 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

Professors 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 whieh is re cognised

as non-profitable by the Government of that

other State, or und er an official programme of cultural

exchange, for a period not exceeding two years from

the date of his first arrival in that other State, shall

be exempt from tax in that other State on his rernuneration

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-rnentioned State solely for the

purpose of his educatian or training receives for the

purpose of his maintenance, education or training shall

not be taxed in the first-rnentioned State, provided that

such payments arise from sources outside that State.

2 – Remuneration which a student or a trainee who

is or was immediately before visiting a Contracting State

a resident of the other Contracting State derives from

an employment which he exereises in the first-mentioned

?tate for a period or periods not exceeding 183 days

ın a calendar year in order to obtain practical experience

related to his education or formatian shall not be taxed

in that State.

Article 22

Other income

ı- Items of Income of a resident of a Contracting

State, wherever arising, not dealt with in the foregoing

artieles of this Convention sh all be taxable only in that

State.

2 – The provisions of paragraph 1 shall not apply

to income, other than Income from immovable property

as defined in paragraph 2 of Article 6, if the recipient

of such income, being a resident of a Contracting State,

carries on business in the other Contracting State

through a permanent establishment situated therein, or

performs in that other State independent personal services

from a fixed base situated therein, and the right

or property in respect of which the Income is pa id is

effectively connected with such permanent establishment

or fixed base. In such cas e the provisions of Article 7

or Article 14, as the case may be, sh all apply.

CHAPTER IV

Elimination of double taxation

Article 23

Elimination of double taxation

1 – In the case of Portugal, double taxation sh all be

avoided as follows:

a) Where a resident of Portugal derives income

which, in accordance with the provisions of this

Convention, may be taxed in Turkey, Portugal

shall allow as a deduction from the tax on the

Income of that resident an amount equal to the

tax paid in Turkey. 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 Portugal;

b) Where in accordance with any provisions of this

Convention Income derived bya resident of Portugal

is exempt from tax in this State, Portugal

may nevertheless, in calculating the amount of

tax on the retnaining Income of such resident

take into account the exempted income;

c) Notwithstanding the provision of sub-paragraph

a), where a company (other than a partnership)

which is resident of Portugal receives

dividends from a company which is resident of

Turkey and which is not exempt from corporation

tax in Turkey, Portugal shall allow a

deduction for 95 per cent of such dividends

ineluded in the tax base of the company receiving

dividends, provided that the company which

is resident of Portugal is a company that, for

an uninterrupted period of two years prior to

the paymen t of the dividends, or if the company

paying the dividends has existed for less than

two years during the lifetime of the company,

holds directiyat least 2S per cent of the capital

(capital social) of the company paying the

dividends.

2 – In the case of Turkey, double taxation shall be

avoided as follows:

a) Subject to the provisions of the laws of Turkey

regarding the allowance as a credit against Turkish

tax of tax payable in a territory outside Turkey,

Portuguese tax payable under the laws of

Portugal and in accordance with this Convention,

in respect of Income (including profits and

chargeable gains) derived by a resident of Turkey

from sources within Portugal shall be

allawed as a deduction from the Turkish tax

on such income. Such deduction, however, shall

not exceed the amount of Turkish tax, as computed

before the deduction is given, attributable

to such income;

b) Where in accordance with any provisions of this

Convention Income derived by a resident of Turkey

is exempt from tax in Turkey, Turkey may

nevertheless, in calculating the amount of tax

on the remaining Income of such resident take

into account the exempted income.

CHAPTER V

Special provisions

Article 24

Non-discrimination

ı- Natianals of a Contracting State shall not be subjected

in the other Contracting State to any taxation

or any requirement connected therewith, which is other

or more burdensome than the taxation and connected

requirements to which nationals of that other State in

the same circumstances, in particular with respect to

residence, are or may be subjected. This provision shall,

notwithstanding the provisions of Article 1, alsa apply

to persons who are not residents of one or both of the

Contracting States.

2 – Subject to the provisions of paragraph 4 of artiele

10, the taxation on a permanent establishment which

an enterprise of a Contracting State has in the other

Contracting State shall not be less favourably levied in

that other State than the taxation levied on enterprises

of that other State carrying on the same activities.

3 – Except where the provisions of paragraph ı of

article 9, paragraph 7 of article 11, or paragraph 6 of

Article 12, apply, interest, royalties and other disbursements

paid by an enterprise of a Contracting State to

a resident of the other Contracting State sh all, for the

purpose of determining the taxable profits of such enterprise,

be deductible under the same conditions as if they

had been paid to a resident of the first-mentioned State.

4 – Enterprises of a Contracting State, the capital

of which is wholıyor partly owned or controlled, directly

or indirectly, by one or more residents of the other Contracting

State, shall not be subjected in the first-mentioned

State to any taxation ar any requirement connected

therewith which is other or more burdensome

than the taxation and connected requirements to which

other similar enterprises of the first-mentioned State

are or may be subjected.

5 – These provisions shall not be construed as obliging

a Contracting State to grant to residents of the other

Contracting State any personal allowances, reliefs and

reductions for taxation purposes on account of civil status

or family responsibilities which it grants to its own

residents.

6 – The provisions of this Article shall apply to the

taxes covered by this Convention.

Article 25

Mutual agreement procedure

1 – Where a person considers that the actions of one

or both of the Contracting States result or will result

for him in taxation not in accordance with the provisions

of this 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 or, if his case comes

under paragraph ıof article 24, to that of the Contracting

State of which he is a nationaL. The case must

be presented within three years from the first notification

of the action resulting in taxation not in accordance

with the provisions of the Convention.

2 – The competent authority shall endeavour, if the

objection appears to it to be justified and if it İ s not

itself able to arrive at a satisfactory solution, to resolve

the case by mutual agreement with the competent

authority of the other Contracting State, with a view

to the avoidance of taxation which is not in accordance

with the Convention. Any agreement reached sh all be

implemented notwithstanding any time limits in the

domestic law of the Contracting States.

3 – The competent authorities of the Contracting

States shall endeavour to resolve by mutual agreement

any difficulties or doubts arising as to the interpretation

or application of the Convention.

4 – The competent authorities of the Contracting

States may communicate with each other directly, including

through a joint commission consisting of themselves

or their representatives, for the purpose of reaching an

agreement in the sense of the preceding paragraphs.

Article 26

Exchange of information

1 – The competent authorities of the Contracting

States shall exchange such information as is necessary

for carrying out the provisions of this Convention or

of the domestic laws of the Contracting States concerning

taxes covered by the Convention insofar as the taxation

thereunder is not contrary to the Convention. Any

information received by a Contracting State shall be

treated as seeret in the same manner as information

obtained under the domestic laws of that State and shall

be diselosed only to persons or authorities (ineluding

courts and adminİ strative bodies) concerned with the

assessment or collection of, the enforcement or prosecution

in respect of, or the determination of appeals

in relation to, the taxes covered by the Convention. 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.

2 – In no case shall the provisions of paragraph ı

be construed so as to impose on a Contracting State

the obligation:

a) To carry out administrative measures at variance

with the laws and administrative practice of that

or of the other Contracting State;

b) To supply information which is not obtainable

under the laws or in the normal course of the

administration of that or of the other Contracting

State;

c) To supply information which would disclose any

trade, business, industrial, commercial or professional

seeret or trade process, or information,

the diselosure of which would be contrary to

public policy (ordre public).

Article 27

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.

CHAPTER VI

Final provisions

Article 28

Entry into foree

1 – Each Contracting State shall notify to the other

Cont,racting ,State the completion of the procedures

requıred by ıts law for the bringing into force of this

Convention. This Convention shall enter into foree on

the date of the later of these notifications.

2 – The provisions of this Conventian sh all have

effect:

a) In Portugal:

i) In respeet of taxes withheld at source,

the fact giving rise to them appearing on

or after the first day of J anuary of the

year next following the year 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 year

next following the year in which this Convention

enters into force;

b) In Turkey – in respect of taxes for the taxable

period beginning on or af ter first day of January

next followmg the date upon which this Convention

enters into force and subsequent taxable

periods.

Article 29

Termination

1 – This Convention sh all remain in force until terminated

b~ a Contracting State. Either Contracting State

may termmate the Convention, through diplomatic

channels, by giving notice of termination at least six

moı:ıth~ befor~ the end of any calendar year after the

expıratıon of fıve years from the date of entry into force

of the Convention.

2 – In such event, the Conventian shall cease to 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 that specified in the

said notice of termination;

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 year

next following that specified in the said

notice of termination;

b) In Turkey – for, ta~es with respect to every taxable

penod begmnmg on or af ter the first day

?f January of the year next following that specıfıed

m the saıd notice of termination.

In witness whereof the undersigned, duly authorised

thereto, have signed this Convention.

DO,ne in duplieate at Lisbon this eleven day of May,

2005 ın the Portuguese, Turkish and English languages,

all texts being equally authentic. In case of any divergence

of interpretation or application of this Convention,

the English text sh all prevail.

For the Portuguese Republic:

Luis Campas e Cunha. Minister of State and

Finance,

For the Republic of Turkey:

Ali Tuygan, Undersecretary of the Ministry of

Foreign Affairs.

PROTOCOL

At the moment of signature of the Convention for

the Avoidance of Double Taxation and the Prevention

of Fiscal Evasion with respect to Taxes on Income concluded

this day between the Portuguese RepubIic and

the Republic of Turkey, the undersigned have agreed

upon the following additional provisions, which form

an integral part of the Convention.

Ad Article 6

With referenee to Article 6, it is understood that the

provisions deseribed therein sh all alsa apply to income

from associated movable (personal) property and from

the provision of services for the maintenance or operation

of immovable property (real property).

Ad Article 8

For the purposes of paragraph 2 of Article 8, it is

und~rstood that the provisions of that paragraph inelude

profits of a consonium or a similar form of association

as corresponds to the partieipation held in the consortium

or association by a company that is resident of

a Contracting State.

Ad Article 10

With reference to paragraph 3 of Article 10, it is understood

that the term «dividends» alsa ineludes: in the

case of Portugal, profits attributed under an arrange-

~~nt ~or p.articipation in profits (associaçao em partıcıpaçao);

m the case of Turkey, Income derived from

an investment fund and investment trust.

Ad Article 12

For the purposes of paragraph 3 of Article 12, it is

un~erstood that the term «royalties» ineludes gains

denved from the use of such right or property in the

case of an alienation of such right or property to the

extent that such gains are contingent on the productivity

use, or dispositian thereof. ‘

Ad Article 14

With reference to paragraph 2 of Article 14, it is understood

that if the enterprise of a Contracting State elects

to be taxed in the other Contracting State in accordance

with the provisions of article 7 of this Convention the

tax withheld in that other State on the Income of’ that

enterprise may be deducted from the tax ca\culated on

i~c,ome whic~ is determined in accordance with the provısıons

of Article 7 of this Conventİ on.

Article 25

With respect to paragraph 2 of Article 25, it is understood

that the taxpayer must elaim the refund resulting

from such mutual agreement within a time period provided

by the domestic law after the tax administration

has notified the taxpayer of the result of the mutual

agreement.

In witness whereof the undersigned, duly authorised

thereto, have signed this Protocol.

Done in duplicate at Lisbon this eleven day of May,

2005 in the Portuguese, Turkish and English languages,

all texts being equally authentic. In case of any divergence

of interpretation or application of this Protocol,

the English text sh all prevail.

For the Portuguese Republic:

Luis Campas e Cunha, Minister of State and

Finance.

For the Republic of Turkey:

Ali Tuygan, Undersecretary of the Ministry of

Foreign Affairs.

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