INDIA- NETHERLANDS DOUBLE TAXATION AVOIDANCE AGREEMENT
The government of the Republic of India and the government of the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital signed a Double Taxation Avoidance Agreement (“DTAA”) which come into force from 21 January, 1989.
Applicability
The DTAA shall apply to persons who are residents of one or both of the contracting states. The taxes to which the DTAA shall apply to in the concerned states are:
a. In Netherland:
- income-tax;
- wages tax;
- company tax;
- dividend tax; and
- capital tax.
b. In India:
- income-tax including any surcharge thereon,
- the surtax; and
- wealth-tax.
Key highlights
Following are a few highlights of the India- Netherlands DTAA:
- Resident of one state who receives income from immovable property located in the other state, may be subject to taxation in that other state.
- Only the state where the business’s place of effective management is located, may tax profits from the operation of airplanes in international traffic.
- Dividends paid by a company which is a resident of one state to a resident of the other state, may be taxed in other state at the rate of 10%.
- The recipient is the beneficial owner of the interests, dividends, royalties and fees for technical services which shall be subject to a withholding tax at a rate of 10%.
- Any student or business apprentice who is or was a resident of one state prior to travelling to another and who is there exclusively for educational or training purposes is exempt from paying taxes in that other state.
Inference
Recognizing that bilateral protection of such investments under a contract will further the aforementioned goal, encourage individual business initiative, and boost prosperity in both the contracting states and as a result this DTAA has been helpful in promoting bilateral cooperation and relations. The main object of the DTAA was to strengthen the long-standing relationship between these nations, extend and deepen the economic links, especially with regards to investments made by one state’s investors in the territory of the other state.
