Double Tax Avoidance Agreement Between India And Netherlands

Published on 09 April 2021 by in Uncategorized


3. The competent authorities of the States strive to resolve by mutual agreement any difficulty or doubt about the interpretation or application of the Convention. They can also agree on the elimination of double taxation in cases not provided for by the convention. 2. If one of the States collects the profits that would have been made by the company of the first state and the taxes on which a company of the other State was imposed in that other state, are the profits that would have been incurred by the enterprise of the first state if the conditions imposed between the two enterprises had been between independent enterprises and between independent enterprises and between independent enterprises. , this other state makes an appropriate correction of the amount of tax on these profits. The other provisions of this Convention are duly taken into account in determining this correction and the competent authorities of the States consult, if necessary. This attempt to end double taxation has led to claims that companies in both countries have evaded tax. Both India and the Netherlands are working to amend the treaty to fill this leak. “Investors transiting through the Netherlands benefit from a favourable return regime as investors in Mauritius, Singapore or Cyprus. However, the need for economic substance is greater in the Netherlands than in many other low-tax areas,” said partner Amit Maheshwari, Ashok Maheshwary and Associates Llp. The purpose of a company`s “economic substance” requirement is to ensure that the benefits of the tax treaty only benefit legitimate investors.

Tax officials consider unprofitable investment vehicles in the country of origin as instruments of tax evasion and abuse of tax treaties. and in both cases, conditions different from those that would be achieved between independent companies are imposed or imposed between the two companies in their commercial or financial relations, so that any profits that would be paid to one of the companies, but which have not accumulated as a result of these conditions, can be included in the profits of that business and be taxed accordingly. Under the Indian agreement to avoid double taxation and the prevention of tax evasion with the Netherlands, investments made by Dutch companies are exempt from capital gains when shares are sold in Indian companies, provided that certain drivers are required to do so. The contract stipulates that the sale of unlisted shares of an Indian company in India is taxable only in very limited circumstances. It also implies that real estate shares in India include a different value than that used for businesses. The contract allows capital gains to be taxed in India if 10% or more of an Indian company`s shares are sold to an Indian resident, but that is with one exception – these capital gains can be taxed in the Netherlands if the sale is part of a corporate restructuring. The tax provisions are similar for the two contracting countries. (h) “international traffic” refers to any transport by boat or aircraft operated by a company that has its effective place of management in one state, unless the vessel or aircraft is operated only between locations in another state. 3. Notwithstanding the provisions of paragraphs 1 and 2, the income of an artist or athlete established in one of the states engaged in his or her personal activities in one state in the other state is taxable only in the first country if the activities of the other state are fully or substantially supported by public funds of the first state. , including their political sub-divisions or local authorities, and these activities are carried out as part of a bilateral cultural agreement between the two states.

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