Traités de double imposition - Double Tax Treaties : Luxembourg

CONVENTION BETWEEN
THE FEDERATIVE REPUBLIC OF BRAZIL AND
THE GRAND DUCHY OF LUXEMBOURG
FOR THE AVOIDANCE OF DOUBLE TAXATION
WITH RESPECT TO TAXES ON INCOME AND CAPITAL

Article 1
Personal scope

1. This Convention shall apply to persons who are residents of one or both of the Contracting States.

2. It is understood that the Convention shall not apply to the income or capital of "holding" companies which are residents of Luxembourg and which enjoy special fiscal treatment by virtue of Luxembourg laws in force, or by virtue of any other similar law which enters into force in Luxembourg after the signature of this Convention, nor to income that a resident of Brazil receives from those companies, nor to participation of such a resident in the aforementioned companies.

Article 2
Taxes covered

The existing taxes to which the Convention applies are:

(a)

in the case of the Grand Duchy of Luxembourg:

--	the individual income tax (l'impôt sur le revenu des personnes physiques),
--	the company income tax (l'impôt sur le revenu des collectivités);
--	the special tax on directors' fees (l'impôt spécial sur les tantièmes);
--	the capital tax (l'impôt sur la fortune);
--	the municipal trade tax on profits and working capital (l'impôt commercial communal);
--	the tax on payroll (l'impôt sur le total des salaires);
--	the land tax (l'impôt foncier);

(hereinafter referred to as "Luxembourg tax");

(b)

in the case of the Federative Republic of Brazil:

--	the federal tax on income (imposto federal sobre a renda) and gains of any nature, excluding taxes on excess remittances and on activities of minor importance;

(hereinafter referred to as "Brazilian tax").

2. The Convention shall also apply to any identical or similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes.

Article 3
General definitions

1. In this Convention, unless the context otherwise requires:

(a)

the term "Brazil" means the Federative Republic of Brazil;

(b)

the term "Luxembourg" means the Grand Duchy of Luxembourg;

(c)

the expressions "a Contracting State" and "the other Contracting State" mean Brazil or Luxembourg as the context requires;

(d)

the term "person" means an individual, a company or any other group of persons;

(e)

the term "company" means any legal entity or any entity which is treated as a legal entity for tax purposes;

(f)

the expressions "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 "nationals" means:

(i)	all individuals possessing the nationality of a Contracting State;
(ii)	all legal entities, partnerships and associations established in accordance with the laws in force in a Contracting State;

(h)

the expression "international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

(i)

the expression "competent authority" means:

(i)	in Brazil: the Minister of Finance, the Secretary of the Federal Revenue or their authorized representatives;
(ii)	in Luxembourg: the Minister of Finance or his duly authorized representative.

2. As regards the application of the Convention by a Contraction State any expression not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State concerning the taxes to which the Convention applies.

Article 4
Fiscal domicile

1. For the purposes of this Convention, the expression "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, place of management or an other criterion of a similar nature.

2. Where by reason of the provisions of paragraph 1 an individual is deemed to be a resident of both Contracting States, then his status shall be determined under the following rules:

(a)	he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
(b)	if the Contracting 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 Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
(c)	if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;
(d)	if he is a national of both Contracting 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 1 a person other than an individual is deemed to be a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.

Article 5
Permanent establishment

1. For the purposes of this Convention, the expression "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The expression "permanent establishment" includes especially:

(a)	a place of management;
(b)	a branch;
(c)	an office;
(d)	a factory;
(e)	a workshop;
(f)	a mine, a quarry or any other place of extraction of natural resources;
(g)	a building site or construction or assembly project which exists for more than six months.

3. An establishment shall not be regarded as permanent if:

(a)	the facilities are used solely for the purpose of storage, display or delivery of merchandise belonging to the enterprise;
(b)	the merchandise belonging to the enterprise is maintained in stock solely for the purpose of storage, display or delivery;
(c)	the merchandise belonging to the enterprise is stored solely for the purpose of processing by another enterprise;
(d)	a fixed place of business is used solely for the purpose of purchasing merchandise or of collecting information for the enterprise;
(e)	a fixed place of business is used by the enterprise solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character.

4. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State -- other than an agent of an independent status to whom paragraph 5 applies -- shall be deemed to be a "permanent establishment" in the first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of merchandise for the enterprise. Nevertheless, an insurance company of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State provided that, through a representative other than a person referred to in paragraph 5 below, it receives premiums in the territory of that other State or insures risks located in that same territory.

5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business.

6. The fact that a company which is a resident of a Contracting State controls or is controlled 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.

7. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State where it provides services of artistes and athletes mentioned in Article 17 of this Convention.

Article 6
Income from immovable property

1. Income from immovable property, including income from agriculture and forestry, may be taxed in the Contracting State in which such property is situated.

(a) The expression "immovable property" shall be defined in accordance with the law of the Contracting State in which the property in question is situated.

(b)

The expression shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting immovable 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, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services.

Article 7
Business profits

1. The profits of an enterprise of a Contracting State shall 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 are 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 shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred.

4.No profits shall be attributed to a permanent establishment by reason of the mere 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 Article.

Article 8
Shipping and air transport

1. Profits from the operations of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

Article 9
Associated enterprises

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.

Article 10
Dividends

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 may e taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but the tax so charged shall not exceed:

(a)	15 % of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 10 % of the capital of the company paying the dividends,
(b)	25 % of the gross amount of the dividends, in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such case, the provisions of Article 7 shall apply.

4. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights not being debt-claims, as well as income from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident.

5. Where a company resident of Luxembourg has a permanent establishment in Brazil this permanent establishment may be subject to a tax withheld at source in accordance with Brazilian law. However, such a tax shall not exceed 15 % of the profits of that permanent establishment as determined after the payment of the corporate income tax related to such profits.

6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, the other Contracting State may not impose any tax on the dividends paid by the company to persons who are not residents of that other State, nor subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

7. Limitations foreseen in paragraph 2, subparagraph (a), and in paragraph 5 shall not apply to dividends paid or to profits realized before the end of the fifth calendar year following the year in which this Convention enters into force.

Article 11
Interest

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 may also be taxed in the Contracting State in which it arises and according to the laws of that State, but the tax so charged shall not exceed 15 % of the gross amount of the interest.

3. Notwithstanding the provisions of paragraphs 1 and 2:

(a)	interest arising in a Contracting State and paid to the Government of the other Contracting State, a political subdivision thereof or an agency (including a financial institution) wholly owned by that Government or political subdivision shall be exempt from tax in the first-mentioned Contracting State;
(b)	interest arising from Government securities and from bonds representing loans issued by the Government of a Contracting State may only be taxed in that State;
(c)	the tax rate shall not exceed 10 % on interest from loans and credit granted for a period of at least 7 years by banking establishments which are tied to the sale of capital assets or to the planning, installation or supplying of industrial or scientific equipment as well as equipment for public works.

4. The term "interest", as used in this Article, means income from Government securities or bonds, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind, as well as other income assimilated to income from money lent by the taxation law of the Contracting State in which the income arises.

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, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectively connected. In such case, the provisions of Article 7 shall apply.

6. The limitations laid down in paragraphs 2 and 3 shall not apply to interest arising in a Contracting State and paid to a permanent establishment of an enterprise of the other Contracting State, which permanent establishment is situated in a third State.

7. Interest shall be deemed to arise in a Contracting State when the payer is that State itself or 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 a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

8. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, 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 recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12
Royalties

1. 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 may be taxed in the Contracting State in which they arise, and according to the laws of that State, but the tax so charged shall not exceed:

(a)	25 % of the gross amount of royalties arising from the use, or the right to use, any trade marks, cinematograph films or films or tapes for television or radio broadcasting;
(b)	15 % of the gross amount of royalties in all other cases.

3. The term "royalties" as used in this Article means payments of any kind paid as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films, films or tapes for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, as well as for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience or studies.

4. Royalties 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 royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the royalties was incurred and such royalties are borne by the permanent establishment then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of a Contracting State, has in the other Contracting State in which the royalties arise a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such case, the provisions of Article 7 shall apply.

6. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.

7. The limitation of tax foreseen in subparagraph (b) of paragraph 2 shall not apply to royalties paid to a resident of a Contracting State who owns directly or indirectly at least 50 % of the voting capita of the company paying the royalties up to the end of the fifth calendar year following the year in which this Convention enters into force.

Article 13
Capital gains

1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which the immovable property is situated.

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 professional services, including such gains from the global alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in the other State. However, gains from the alienation of ships and aircraft operated in international traffic and movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

3. Gains from the alienation of any property or right other than those mentioned in paragraphs 1 and 2 may be taxed in both Contracting States.

Article 14
Independent personal services

1. Income derived by a resident of a Contracting States in respect of professional services or other independent activities of a similar nature shall be taxable only in that State, unless the payment of such income is borne by a company being a resident of the other State or by a permanent establishment situated therein. In such case, the income may be taxed in that other State.

2. The term "professional services" includes, especially, independent scientific, technical, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15
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 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 shall be taxable only in the first-mentioned State:

(a)	the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the 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 of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

Article 16
Directors' fees

Directors' fees, attendance fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of a "Conselho Fiscal" or of any similar body of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17
Artistes and athletes

Notwithstanding the provisions of Articles 14 and 15, income derived by public entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are exercised.

Article 18
Pensions

1. Subject to the provisions of paragraphs 2 and 3 of Article 19, pensions and other similar remuneration, up to an amount of USD 3,000 per year, arising in a Contracting State and paid to a resident of the other Contracting State may only be taxed in that State. The amount exceeding USD 3,000 may be taxed in the first-mentioned Contracting State.

2. For the purposes of this Article, the expression "pensions and other similar remuneration" means periodical payments made after retirement on account of a former employment or as a compensation for damages sustained in connection with that former employment.

Article 19
Government service

(a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local 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 remuneration shall be taxable only in the other State if the services are rendered in that State and the individual receiving the remuneration 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 subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. The same applies to pensions and other payments, whether periodic or not, made under the social security laws of a Contracting State.
(b)	However, such pension shall be taxable only in the other Contracting State if the beneficiary is a resident and a national of that State.

3. The provisions of Articles 15, 16 and 18 shall apply to remuneration an pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20
Teachers

An individual who is a resident of a Contracting State at the beginning of his visit to the other Contracting State and who at the invitation of the Government of the other Contracting State, or of a university or other officially approved teaching or research establishment of that other State, is present in this last-mentioned State mainly for the purpose of teaching or performing research work, or for both purposes, shall be exempt from tax in this last-mentioned State for a period not exceeding two years as from the date of his arrival in that State on his remuneration connected with his teaching and research activities.

Article 21
Students

1. Payments which a student or apprentice who is, or who formerly was, a resident of a Contracting State and who is present in the other Contracting State solely for the purpose of his study or training, receives for his maintenance, education or training may not be taxed in the other State, provided that these payments come from sources situated outside this other State.

The same provision applies to remuneration which a student or apprentice receives for an employment performed in the Contracting State where he follows his studies or receives his training provided such remuneration is strictly necessary for his maintenance.

2. A student of a university, college or technical school of a Contracting State, who, in the other Contracting State, receives remuneration for activities performed there solely for the purpose of receiving a practical training connected with his studies, shall not be taxable in the last-mentioned State with respect to this remuneration provided that these activities do not last for more than two years.

Article 22
Income not expressly mentioned

Items of income of a resident of a Contracting State which are not expressly mentioned in the foregoing Articles of this Convention may be taxed in either Contracting State.

Article 23
Capital

1. Capital represented by immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated.

2. Capital represented by movable property forming part of the business property of a permanent establishment of an enterprise, or by movable property pertaining to a fixed base used for the performance of professional services, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.

3. Ships and aircraft operated in international traffic and movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Article 24
Methods for the elimination of double taxation

1. In the case of Brazil, double taxation shall be avoided as follows:

(a)	where a resident of Brazil derives income which, in accordance with the provisions of this Convention, may be taxed in Luxembourg. Brazil will allow as a deduction from the tax it charges on the income of this resident an amount equal to the income tax paid in Luxembourg;
(b)	the deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is appropriate to the income which may be taxed in Luxembourg.

2. In the case of Luxembourg double taxation shall be avoided as follows:

(a)

where a resident of Luxembourg receives income or owns capital not referred to in subparagraphs (b) and (c) below, which in accordance with the provisions of this Convention may be taxed in Brazil, Luxembourg shall exempt such income or capital from tax, but may, in calculating the amount of tax on the remaining income or capital of such resident, apply the rate which would apply if such income or capital had not been exempted;

(b)

subject to the provisions of subparagraph (c), where a company which is a resident of Luxembourg owns as from the beginning of its accounting period, continuously, directly at least 25 % of the capital of a company which is a resident of Brazil, then income arising from that holding and the holding itself shall be exempt from tax in Luxembourg. The exemption also applies when together several companies which are residents of Luxembourg hold at least a fourth of the capital of the company which is a resident of Brazil and when one of the companies which is a resident of Luxembourg owns in each of the other companies which are residents of Luxembourg a holding above 50 %;

(c)

where a resident of Luxembourg receives income which, in accordance with the provisions of Article 10, paragraph 2, of Article 11, paragraphs 2 and 3, subparagraph (c), of Article 12, paragraph 2, of Article 13, paragraphs 1 and 3, and of Articles 14, 16, 17, 18 and 22, may be taxed in Brazil, then Luxembourg will permit a deduction from the income tax it levies on the income of this resident in an amount equal to the tax paid in Brazil. The deduction shall not, however, exceed that part of the tax, as calculated before the deduction is taken, which is appropriate to the income received from Brazil;

(d)

for the purposes of the deduction provided for in subparagraph (c) above, the Brazilian tax shall always be deemed as being paid:


(i)	at a rate of 25 % in case of dividends not mentioned in subparagraph (b);
(ii)	at a rate of 20 % in case of interest;
(iii)	at a rate of 25 % in case of the royalties mentioned in Article 12, paragraph 2, subparagraph (b).

Article 25
Non-discrimination

1. The nationals 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 Contracting State in the same circumstances are or may be subjected.

2. 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 than the taxation levied on enterprises of the other Contracting State carrying on the same activities.

This provision 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.

3. Enterprises of a Contracting State, the capital of which is wholly or 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 or 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.

4. In this Article the term "taxation" means taxes of every kind and description.

Article 26
Mutual agreement procedure

1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result for him in taxation not in accordance with this Convention, he may, irrespective of the remedies provided by the national laws of those States, present his case to the competent authority of he Contracting State of which he is a resident.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is 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 not in accordance with the Convention.

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. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When in order to reach agreement it seems advisable to have an oral exchange of opinions, such exchange may take place through a Commission of representatives of the competent authorities of the Contracting States.

Article 27
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 Conventions and of the domestic laws of each Contracting State concerning the taxes covered by the Convention, in so far as the taxation thereunder is in accordance with the Convention. All information so exchanged shall be treated as secret and shall only be disclosed to persons or authorities in charge of assessment or collection of the taxes to which this Convention applies.

2. In no case shall the provisions of paragraph 1 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 commercial, industrial, or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

Article 28
Diplomatic officials and international organizations

1. Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.

2. The Convention shall not apply to international organizations, to agencies or officials thereof, or to persons who are members of diplomatic or consular missions of third States who are present in a Contracting State and who are not treated as residents of either Contracting State for purposes of taxes on income or on capital.

Article 29
Methods of application

The competent authorities of the Contracting States shall determine, by mutual agreement, the methods to apply the Convention and shall communicate directly with each other for the application of the Convention.

Article 30
Entry into force

1. This Convention shall be ratified and the instruments of ratification shall be exchanged at Brasilia, as soon as possible.

2. This Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect for the first time :

(a)	as respects taxes withheld at source, to sums paid or remitted on or after January 1 of the calendar year immediately following the year in which the Convention enters into force;
(b)	as respects other taxes covered by this Convention, to taxes relating to taxable periods beginning on or after January 1 of the calendar year immediately following the year in which the Convention enters into force.

Article 31
Termination

1. This Convention shall remain in force indefinitely. However, either Contracting State may terminate the Convention by giving written notice of termination through diplomatic channels at least six months before the end of any calendar year, as of the third year following its entry into force.

2. In such event, the Convention shall apply for the last time:

(a)	as respects taxes withheld at source, to sums paid or remitted before the expiration of the calendar year in which notice of termination has been given;
(b)	as respects other taxes covered by this Convention, to taxes relating to taxable periods beginning in the calendar year in which the notice of termination has been given.

In witness whereof the Plenipotentiaries of the two States have signed this Convention and have affixed hereto their Seals.

Done in Luxembourg, on November 8, 1978, in two original copies, in the Portuguese and French languages, each text being equally authentic.

PROTOCOL

At the moment of the signature of the Convention for the avoidance of double taxation and for the regulation of other subjects with respect to taxes on income and capital concluded today between the Federative Republic of Brazil and the Grand Duchy of Luxembourg, the undersigned Plenipotentiaries have agreed upon the following provisions which constitute an integral part of the Convention.

1. Ad Article 4, paragraph 1
In the case of Luxembourg the expression "resident of a Contracting State" also means partnerships, limited partnerships and civil companies of Luxembourg law which have their place of effective management in Luxembourg.

2. Ad Article 10
Stocks and shares, wholly or partially, gratuitously allocated by a corporation (sociedade de capitais) of a Contracting State to a resident of the other Contracting State, including bonus rights and subscription rights connected therewith, shall not be liable to income tax in the last-mentioned State, when the issue of such stocks and shares causes a corresponding reduction of the ratio of the participation in the corporation as embodied by the old stocks or shares held by the recipient of the allocated new stocks or shares.

3. Ad Article 11
It shall be understood that commission fees paid by a resident of Brazil to a banking establishment or to a financial agency which is a resident of Luxembourg in connection with a service rendered by such an establishment or agency shall be deemed to be interest and are dealt with in accordance with the provisions of Article 11.

4. Ad Article 12, paragraph 3
The expression "for information concerning industrial, commercial or scientific experience or studies" in paragraph 3 of Article 12 includes income from technical assistance and technical services.

5. Ad Article 14
The provisions of Article 14 shall apply even if the activities mentioned in that Article are performed by a civil company.

6. Ad Article 23
In case Brazil establishes a tax on capital, the Contracting States shall renegotiate all the provisions concerning that tax.

7. Ad Article 24, paragraph 2, subparagraph (b)
The term "company" referred to in Article 24, paragraph 2, subparagraph (b), includes corporations, limited liability companies and partnerships limited by shares.

8. Ad Article 24, paragraph 2, subparagraph (d)
In determining the taxable income and the tax to be paid by a resident of Luxembourg as regards income received from Brazil referred to in Article 24, paragraph 2, subparagraph (d), Luxembourg shall in no case take into account an amount exceeding the gross amount of the income paid in Brazil, in accordance with the following example:

Gross interest on bonds derived from Brazil	1,000
Brazilian tax withheld at source	150
New amount received	850
Expenses and charges concerning the interest:	240
Brazilian tax to be credited in Luxembourg: 20% of 1,000 =	200
Taxation in Luxembourg:
Gross interest (850 + 150) =	1,000
Expenses and charges concerning the interest	240
Net interest	760
Luxembourg tax belonging to that income (assumed rate of 40%)	304
Credit for the Brazilian tax	200
Luxembourg tax to be paid	104

9. Ad Article 25, paragraph 2
The provisions of paragraph 5 of Article 10 shall not be deemed to be contrary to the provisions of paragraphs 2 of Article 25.

10. Ad Article 25, paragraph 3
The provisions of Brazilian law which do not allow the deduction of royalties defined in paragraph 3 of Article 12 paid by a company resident of Brazil to a resident of Luxembourg who owns at least 50 % of the Capital of that company, for the purposes of the determination of the taxable pro fits of that company in Brazil, shall not be deemed to be in conflict with the provisions of paragraph 3 of Article 25 of the Convention.

If, after the signature of the Convention, Brazil allows, for purposes of the determination of tax able profits of a company resident of Brazil, the deduction of royalties paid by that company to a company resident of a third State situated outside Latin America which owns at least 50 % of the capital of the company resident of Brazil, then the same deduction shall be automatically applicable as regards the relationships between a company resident of Brazil and a company resident of Luxembourg which are in the same circumstances.

In witness whereof the Plenipotentiaries of the two States have signed this Protocol and have affixed hereto their Seals.

Done in Luxembourg on November 8, 1978 in two original copies in the Portuguese and French languages, each text being equally authentic.