MESHSTRYOFF1NANCE

(Department of Revenue)

(FOREIGN TAX DIVISION)

NOTIFICATION

New Delhi, the 7th February, 2001

INCOME TAX

G.S.R-74(E).—Whereas the annexed Protocol amending the Agreement

between the Government of the Republic of India and the Government of the Swiss

Federal Council for the Avoidance of Double Taxation With Respect To Taxes on

Income has come into force on 20¹¹' December, 2000, the date of the later of the

notifications by both the Contracting States to each other, under Article 16 of the

Protocol Amending the Agreement, of the satisfaction of all the legal requirements and

procedures for giving effect to the said Protocol,

Now, therefore, in exercise of the powers conferred by section 90 of the Incline

tax Act, 1961 (43 of 1%1), the Central Government hereby directs that all the provisions

of the said Protocol Amending the Agreement, shall be given effect to in the Union of

India.

[Notification No. 35/F. No. 501/7/73-FTD]

VIJAYMATHUR, Jt. Secy.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(i)1

ANNEXURE

PROTOCOL

AMENDING THE AGREEMENT

BETWEEN

THE REPUBLIC OF INDIA

AND

THE SWISS CONFEDERATION

FOR THE AVOIDANCE OF DOUBLE TAXATION

WITH RESPECT TO TAXES ON INCOME

THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE SWISS

FEDERAL COUNCIL

DESIRING to amend the Agreement between the Republic of India and

the Swiss Confederation for the avoidance of double taxation with respect

to taxes on income, signed at New Delhi on 2 November 1994 (hereinafter

referred to as "the Agreement"), have agreed as follows:

Article 1

Sub-paragraph n) or Pnragrnph 1 of Article 3 of the Agreement shall be

replaced by the following:

"a) the term "India" means the territory of India and includes the

territorial sea and the nir apace RIJOVC it, nn well as any other

maritime zone in which India has sovereign rights, other rights and

jurisdictions, according to the Indian law and in accordance with

international law, including the UN Convention on the Law of the

Sea,"

Article 2

1. The first sentence of sub-paragraph I) of pnrnginph 2 of Article 5 of

the Agreement shall be rcplaci d by the following:

"1) the furnishing of technical services, other than services as defined in

Article 12, within a Contracting State by an enterprise through employees

or other personnel, but only if:..."

In paragraph 3 of Article 5 of the Agreement the fallowing,

-sub-paragraph shall lie inserted alter sub-paragraph c):

"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 or business resulting from this

combination is of a preparatory or auxilliary character."

3. The following paragraph shall be inserted after paragraph 3 of Article

5 of the Agreement:

"4. Not\ withstanding the preceding provisions of this Article, an insurance

enterprise of a Contrasting State shall, except in regard to re-insurance,

be deemed to have a permanent establishment In the other Contacting

State if it collects premiums in the territory of that other State or insures

risks situated therein through a person other than an agent of an,

independent status to whom paragraph 6 applies."

380GI/2001—3

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(i)]

4. The existing paragraphs 4 to 6 of Article 5 of the Agreement shall

become paragraphs 5 to 7.

In the first sentence or paragraph 5 of Article 5 of the Agreement the

words"...-other than an agent of an independent status < > whom

paragraph 5 applies -..." shall be replaced by the words"...-other than an

agent of an independent status to whom paragraph 6 applies-...".

Article 3

Paragraph 1 of Article 6 of the Agreement shall be rerlaced by-the

following:

"1. Income from immovable property may also be taxed in the

Contracting State iri which such property is situated."

Article 4

1. Paragraph 1 of Article 8 of the Agreement shall be replaced by the

following:

"1. Profits derived by an enterprise of a Contracting State from the

operation of aircraft in international traffic shall be tnxabla only in that

State."

Article 5

1. Article 9 or the Agreement shall become paragraph 1 ot Article 9.

The following patngraph s'lall be inserted nttcr paragraph 1 or Article

9 of the Agreement:

"2. Where a Contracting Slate 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 arc profits which would have accrued to the

enterprise of the first-mentioned Slate if the conditions made between the

two enterprises lind been those which would hove been made between

independent enterprises, then that other State shall make an appropriate

adjustment to the amount of (he tax charged therein on those profits. In

determining such adjustments, due regard shall be had to the other

provisions of this Agreement and the competent authorities of the

Contracting States shall, ifnecessary consult each other."

Article 6

1. The first sentence or paragraph 2 of Article 10 of the Agreement shall

be replaced by the following:

"2. However, such dividends may also be taxed in the Contracting State

of which the company paying the dividends is a resident and according to

the laws of that State, but if the beneficial owner of the dividends is a

resident of the other Contracting State, the tax so charged shall not

exceed 10 per cent of the gross amount of the dividends."

2. Paragraph 4 of Article 10 of the Agreement shall be' replaced L ' the

following:

"4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial

owner of the dividends, being n resident of a Contracting State, cariies on

business in the other Contracting State of which the company paying the

dividends is a resident, through n permanent establishment situated

therein, or performs in that other State independent personal services

from a fixed base situated therein, and the holding in respect of which the

dividends are paid is effectively connected with such permanent

establishment or fixed base. In such case trie provisions of Article 7 or

Article 14, as the case may be, shall apply."

3. In paragraph 5 of Article 10 of the Agreement the words "or a fixed

base" shall be inserted after the term "permanent establishment".

Article 7

1. Paragraph 2 of Article 11 or the Agreement shall be replaced by the

following:

"2. However, such interest may also be taxed in the Contracting State in

which it arises, and according to the laws of that State, but if the

beneficial owner of the interest h a resident of the other Contracting

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC, 3ft)]

State, the tax so charged si all not exceed 10 per cent of the gross

amount of the Interest."

2. Paragraph 3 of Article 11 of the Agreement shall be deleted.

3. The existing paragraph 4 of Article 11 of the Agreement shall become

paragraph 3.

4. Sub-paragraph a) of paragraph 3 of Article 11 of the Agreement shall

be replaced by the following;

"3. Notwithstanding the provisions of paragraph 2:

a) interest arising in Switzerland and paid to a resident of India shall be

•taxable only in India if it is paid in respect of a loan made, guaranteed,

or insured, or a credit extended, guaranteed or insured by the

Oovernmcnt, a political subdivision, a statutory body or a local

authority of India or the Export-Import Bank of India, the Reserve

Bank of India, Ihe Industrial Finance Corporation of India(JfJ.he

Industrial Development Bank of India, the National Housing Bank,

the Small Industries Development Bank of India or by ary institution

specified and agreed in Iclters exchanged between the comptetent

authorities of the Contracting States."

5. The existing paragraphs 5 to 8 of Article 11 of the Agt -ement shall

become paragraphs 4 to 7.

6. Paragraph 5 and 6 of Article 11 of the Agreement shall be replaced by

the following:

"5. The provisions of paragraphs 1 and 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 debt-claim in respect o' which the interest is paid is

effectively connected with such permanent establishment or fixed base. In

such a jase the provisions of Article 7or Article 14, as the case may be,

shall apply.

6. Inlorest shall be deemed to arise In a Contracting State when the

payer is that State itself, a political subdivision, a local authority or 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 n permanent establishment pr a fixed base in

connection with which the indebtedness on which the interest is paid was

incurred, and such interest if. borne by such permanent establishment or

fixed base, then such interest ihall be deemed to arise in the Contracting

State In which the pcrmancni establishment or fixed base is situated."

Article 8

1. The heading and paragraphs I to 7 of Article 12 of the Agreement

shall be replaced by the following:

"Article 12

Royalties and Pees for Technical Services

1. Royalties and fees for technical services arising in a Contracting State

and paid to a resident or the other Contracting. State may be taxed in that

other State.

2. However, such royalties and fees for technical services may also be

taxed in the Contracting State in which they arise and according to the

laws of that State; but if the beneficial owner of the royalties or fees for

technical services 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

or the fees for technical services.

3. The term "royalties" as used in this Article means payments >f any

kind received as a consideration for the use of, or the right to use, any

literary,

artistic,

scientific

work,

including

cinematograph films or work on film, tape or other means of reproduction

for use in connection with radio or television broadcasting, any patent

trademark, design or model, plan, secret formula or process, or for the

use of, or the right to use, any industrial, commercial, or scientific

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART U—SEC. 3(i)]

equipment, or for information concerning industrial, commercial or

scientific experience.

For purposes of this Article the term "fees for technical services"

means payments of any kind to any person in consideration for the

rendering of any managerial, technical or consultancy services, including

the provision of services by technical or other personnel.

Notwithstanding paragraph <1, "fees for technical services" docs not

include amounts paid:

for teaching in or by educational institutions;

b) for services covered by Article 14 or Article 15, as the case may be.

6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial

owner of the royalties or fees for technical services, being a resident of a

Contracting State, onrries on business in the other Contracting State in

which the royalties or fers Tor technical services nrisi , through a

permanent establishment situated therein, or performs in that other

State Independent personal services from a fixed bnsc situated (.herein,

and the contract in respect of which the royalties or fees for technical

services

are

pnid

is effectively

connected

with

such

permanent

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

Article 14, as the case may be, shall apply.

Royalties and fees for technical services shall be deemed to erise in a

Contracting State when the payer is that State itself, a political

subdivision, a local authority or a resident of that State. Where, however,

the person paying the royalties or fees for technical services, 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

liability to pay the royalties or fees for technical services was Incurred,

and such royalties or fees for technical services are borne by such

permanent establishment or fixed base, then such royalties or fees for

technical services shall be deemed to n.ise in the Stafe in which the

permanent establishment or fixed base is situated."

In paragraph 8 of Article 12 of the Agreement the term "included

services" shall be replaced by the term "technical services".

Article 9

1. Paragraph 2 of Article 13 of the Agreement shall be replaced by the

following:

"2. Gains from the alienation of movable property forming part of the

business property of a permanent establishment which an ent< rpri^e 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 who e enterprise)or

of such fixed base, may also be taxed in that other State."

2. Paragraph 5 of Article 13 shall be nplaccd by the following: -

"5. Gains from" the alienation of shares other than those mentioned in

Paragraph 4, of a company which is a resident of a Contracting State:

(a) shall be taxable only in the Contracting State of which the alienator is

a resident;

(b) notwithstanding the provision of sub-paragraph (a), India may tax

gains from the alienation of shares in a company which is a resident

of India.

In this case the provisions of sub-paragraph (b) of paragraph 1, of Article

23 shall apply."

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(i)l

Article 10

1. The following Article 14 relating to Independent Personal Services

shall be inserted after Artiicle 13 realting to Capital Gains:

Article 14

Independent Personal Services

1. Income derived by a resident of a Contracting Slate in respect of

professional services or other activities of an independent character shall

be taxable only in that State except in the following circumstances, when

such income may also be taxed in the other Contracting State.

a) if he has a fixed base regularly available to him in the other

Contracting State for the purpose of performing his activities; in that

case, only no much of the income as is attributable to that fixed base

may be taxed in that other State; or

b) if his stay in the other State is for a period or periods aggregating 183

days or more in any 12-month period commencing or ending in the

fiscal year concerned; in that case, only so much of the income as is

derived from his activities performed in that other State may be t.ixed

in that other Stnlc.

2. The term "professional services" includes especially independent

scientific, literary, artistic, educational or teaching activities as well as

the independent activities of physicians, lawyers, engineers, architects,

surgeons, dentists and accountants."

2. The existing Article 14 shall be renumbered as Article 15 and

replaced by the following Article:

"Article IB

Dependent Personal Services

1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries,

wages and other similar remuneration derived by a resident of a

Contracting State in respect of an employment shall be taxable only

in that State unless the employment is exercised in the other

Contracting

State. If the employment is so exercised,

such

remuneration as is deri\ ed therefrom may be taxed in t iat 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 C mtracting State shall he. taxable only in the

first-mentioned State if:

a) the recipient is present in the other State for n period or periods not

exceeding in Uie aggregate 183 days in any 12-inonth period

commencing or ending in Ihe fiscal year concerned, 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

this

Article,

remuneration derived in respect of an employment exercised aboJ-fM a

ship or aircraft operated in international traffic, by an enterprise of a

Contracting State may be taxed in that State."

3. Articles 15 to 20 of the Agreement shall become Articles 16 to 21.

Article 11

The following Article shall be inserted after Article 21 of the Agreement:

"Article 22

Other Income

1. Items of income of a resident of a Contracting State, wherever arising,

not dealt with in the foregoing Articles of this Agreement shall 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 Contra-ting State through a permanent

3 S?<? &p "t™ - L

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC.3(i)]

establishment situated therein, or performs in that other State independent personal

services from a fixed base situated therein, and the right or property in respect of

which the income is paid Is effectively connected with such permant nt establishment

or fixed base. In such case the provisions of Articlf 7 or Article 14, as the case may be,

shall apply.

3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State

derives income from sources within the other Contracting State in the forrr of lotteries,

crossword puzzles, races including horse races, card games and other games of any

sort or gambling or betting of any form or nature whatsoever, BUch, income may be

taxed in that other Contracting State."

Article 12

1. Article 21 of the Agreement shall become Article 23.

2. In sub-paragraph a) of paragraph 2 of renumbered Article 23 of the Agreement

the reference made to sub-paragraph d) shall be deleted.

In sub-paragraph b) of paragraph 2 of renumbered Article 23 of the Agreement,

the term "included services" shall be replaced by the term "tcchnlca' services".

4. Sub-paragraph c) of paragraph 2 or renumbered Article 23 of the Agreement shall

be deleted.

5. Sub-paragraph d) or paragraph 2 of renumbered Article 23 of the Agreement shall

be replaced by the following:

"c) Where a resident of Switzerland derives interest dealt with in sectinn 10(4), 10(4B),

10(15)(iv) and SOL of the Indian Income Tire Act of 1961 (43 or 1961) and referred to ih

sub-paragraph d) of paragraph 3 of Article 11, Switzerland shall allow, upon request, a

relief to such resident of an amount equal to 10 per cent of the gross amount of the

Interest."

Article 13

1. Article 22 of the Agreement shall become Article 24.

2. Paragraph 1 of renumbered Article 24 of the Agreement shall be replaced by the

following:

"1. Nationals

Contracting

State

shall

not

subjected fa. the

other

Contracting State to any taxation or any requirement connected therewith

which i i other or more burdensome than the taxation and connected

requirements to which nationals of that other State in the same

circumstances and under the same conditions are or may be si bjected.

This provision shall, notwithstanding the provisions of Article 1, also

apply to persons who arc not residents of one or both of the Contracting

States."

3. The following paragraph shall be inserted after paragraph 2 of

renumbered Article 24 of the Agreement:

"3. Except where the provisions of Article 9, paragrapli 7 of Article 11, or

paragraph 8 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 shall, 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. The existing paragraphs 3 and 4 of renumbered Article 24 of the

Agreement shall become paragraphs 4 and 5.

Article 14

Articles 23 to 27 of the Agreement shall become Articles 25 to 29.

Article 15

In the first sub-paragraph of paragraph 1 of the Protocol to the

Agreement the words "...in paragraph 2, sub-paragraph a) of Article

12." shall be replaced by the words "...in paragraph 2 of Article 12.".

B. In the third sub-paragraph of paragraph 1 of the Protocol to the

Agreement the words "With respect to paragraph 4 of Article 5..."

shall be replaced by the words "With respect to paragraph 5 o Article

5...".

C. In the Protocol to the Agreement the following paragraph shall be

inserted after paragraph 2 :

"3. With reference to paragraph 2 of Article 9

380GI/2001—5

THEGAZETTE OF INDIA: EXTRAORDINARY

IPARTII—SEC.3(J)1

It is understood that Switzerland shall only make an approriate

adjustment after consultation with the competent authority of India and

after reaching an agreement on the adjustments of profits in both

Contracting State*,"

The existing paragraph 3 of the Protocol to the Agreement shall be

replaced by the following:

4. With r«fl»r«nce to Article* 10, 11 and 12

If after the signature of the Protocol of 16^th February, 2000 under any

Convention, Agreement or Protocol between India and a third State which

is a member of the OECD India should limit its taxation at source on

dividends, interest, royalties or fees for technical services to a rate lower

or a scope more restricted than the rate or scope provided for in this

Agreement on the said items of income, then, Switzerland and India shall

enter into negotiations without undue delay in order to provide thC same

treatment to Switzerland as that provided to the third State."

E. In the Protocol to the Agreement the following paragraph shall be

inserted after paragraph 4:

"5. With reference to sub-paragraph b) of paragraph S of Article 13

It is understood that if at a later stage Switzerland shall introduce a

capital gains tax on the alienation of shares of a Swiss company other

than shares of a company mentioned in paragraph 4, paragraph 5 of

Article 13 shall be replaced by the following:

"5.

Gains from the alienation of shares other than those mentioned in

paragraph 4 in a company which is a resident of a Contracting State may

be taxed in that State."

In this case sub-paragraph b) of paragraph 1 of Article 23 of the

Agreement shall be deleted.

F. The existing paragraph 4 of the Protocol to the Agreenent shall

become paragraph 6.

O. In the Protocol to the Agreement the following paragraph shall be

inserted after paragraph 6:

"7. With reference to paragraph 4 of Article 24

It is understood that this provision shall not be construed as p. eventing a

Contracting State from charging the profits of a permanent establishment

which a company of the other Contracting State has in the first-

mentioned State at a rate of tax which is higher than that imposed on the

profits of a similar company of the first-mentioned Contracting State, nor

as being in conflict with the provisions of paragraph 3 of Article 7 of this

Agreement.

H. The existing paragraph 5 of the Protocol to the Agreement shall

become paragraph 8 and its heading shnll be replaced by the following:

"8. V/lth reference to Article 28"

Article 16

1. The Governments of the Contracting States_shall notify each other

through_diplomatic channels that all legal requirements and procedures

for giving effect to this Protocol have been satisfied.

2. The Protocol, which shall form an integral part of the Agreement,

shall < nter into force on the date of the later of the notifications referred

to in paragraph 1 and its provisions shall have effect:

a) in India, in respect of income arising in any fiscal year beginning on

or after the first day of Apri¹ next following the calendar year in which

the Protocol entered into force; and

b) in Switzerland, in respect of income arising in any fiscal year

beginning on or after th-3 first day of January next following the

calendar year in which the Protocol entered into force.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(i)]

IN WITNESS WHEREOF the undersigned, duly authorized thereto by their respective Governments,

ha\ e signed this Protocol.

DONE in duplicate at New Delhi this 16th day of February, 2000 in the German, Hindi and English

languages, all the texts being equally authentic. In case of divergence of interpretation the English tex t

shall prevail.

For the Government of

For the

(lie Republic of India

Swiss Federal Council

(YASHWANT SINHA)

(PASCAL COUCHEPIN)

Printed bv the Manager, Govt of India Pnjw. Ring Roud. Mnyupun, New Delhi-] 10064

and Published bv the Controller ol Publications. Delhi-] 10054