The Government of the United States of America and the Government of the Portuguese Republic, 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: 　　　　　　　　　　　　　　ARTICLE 1 　　　　　　　　　　　　　Personal Scope 　　This Convention shall apply to persons who are residents of one or both of the Contracting States, except as otherwise provided in the Convention. 　　　　　　　　　　　　　　ARTICLE 2 　　　　　　　　　　　　　Taxes Covered 　　1. The existing taxes to which this Convention shall apply are: 　　(a) in Portugal: 　　(i) Personal income tax (Imposto sobre o Rendimento das Pessoas Singulares - IRS); 　　(ii) Corporate income tax (Imposto sobre o Rendimento das Pessoas Colectivas - IRC); and 　　(iii) Local surtax on corporate income tax (Derrama), (hereinafter referred to as "Portuguese tax"). 　　(b) in the United States: 　　(i) the Federal income taxes imposed by the Internal Revenue Code (but excluding social security contributions); and 　　(ii) the excise tax with respect to the investment income of private foundations under section 4940 of the Internal Revenue Code, as it may be amended from time to time without changing the general principle thereof, (hereinafter referred to as "United States tax"). 　　2. The Convention shall apply also to any identical or substantially similar taxes which 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 State shall notify each other of any significant changes that have been made in their respective taxation laws and of any official published material concerning the application of the Convention. 　　　　　　　　　　　　　　　ARTICLE 3 　　　　　　　　　　　　General Definitions 　　1. For the purposes of this Convention, unless the context otherwise requires: 　　(a) the terms "a Contracting State" and "the other Contracting State" mean Portugal or the United States as the context requires; 　　(b) the term "Portugal" means the territory of the Portuguese Republic situated in the European Continent, the archipelagoes of Azores and Madeira, the respective territorial sea and any other zone in which, in accordance with the laws of Portugal and international law, the Portuguese Republic has sovereign rights with respect to the exploration and exploitation of the natural resources of the seabed and subsoil, and of the superjacent waters; 　　(c) the term "United States" means the United States of America and, when used geographically, means the States thereof, the District of Columbia, the territorial sea adjacent to those States, and any other zone adjacent thereto in which, in accordance with the laws of the United States and international law, the United States has sovereign rights with respect to the exploration and exploitation of the natural resources of the seabed and subsoil, and of the superjacent waters; 　　(d) the term "person" includes but is not limited to an individual, a company, and any other body of persons; 　　(e) the term "company" means any body corporate or any entity that 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 "national" means: 　　(i) any individual possessing the nationality of a Contracting State; and 　　(ii) any legal person, association, or other entity deriving its status as such from the laws in force in a Contracting State; 　　(h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State except when such transport is solely between places in the other Contracting State; 　　(i) the term "competent authority" means: 　　(i) in the case of the United States: the Secretary of the Treasury or his delegate; and 　　(ii) in the case of Portugal: the Minister of Finance, the Director General of Taxation (Director Geral das Contribui??es e Impostos), or their authorized representative. 　　2. As regards the application of the Convention by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that State concerning the taxes to which the Convention applies. 　　　　　　　　　　　　　ARTICLE 4 　　　　　　　　　　　　　Residence 　　1. 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, place of management, place of incorporation, or any other criterion of a similar nature. However, this term does not include any person that 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 1, 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 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 of the State with which his personal and economic relations are closer (center of vital interests); 　　(b) if the State in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident 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 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 1, a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavor to settle the question by mutual agreement. If the competent authorities are unable to make such a determination, the person shall not be considered to be a resident of either Contracting State for the purposes of enjoying benefits under this Convention. ARTICLE 5 Permanent Establishment 　　1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or 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 or a construction, installation, or assembly project, or supervisory activities in connection with such a site or project, or an installation or drilling rig or ship used for the exploration or development of natural resources, constitutes a permanent establishment only if such site, project, or activities last more than 6 months. 　　4. Notwithstanding the preceding provisions of this Article, an enterprise of a Contracting State that carries on business of a permanent nature in the other Contracting State through its own employees or any other personnel engaged for such purpose for a period or periods amounting to or exceeding in the aggregate 9 months in any 12-month period commencing or ending in the taxable year concerned shall be deemed to have a permanent establishment in the other State. 　　5. Notwithstanding the preceding provisions of this Article, 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 merchandise 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 merchandise belonging to the enterprise solely for the purpose of processing by another 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 the activities mentioned in subparagraphs (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. 　　6. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting on behalf of an enterprise and has and habitually exercises in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 5 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 　　7. Notwithstanding the provisions of paragraph 3 regarding supervisory services or the provisions of paragraph 4, 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 commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 　　8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company that is a resident of the other Contracting State, or that 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. 　　　　　　　　　　　　　　ARTICLE 6 　　　　　　Income from Immovable Property (Real Property) 　　1. Income derived by a resident of a Contracting State from immovable property (real property), including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State. 　　2. The term "immovable property" or "real property," as the case may be, shall have the meaning that it has under the law of the Contracting State in which the property in question is situated. The term in any case shall include property accessory to immovable property (real property), livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property (real 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 and aircraft shall not be regarded as immovable property (real 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 (real property). 　　4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property (real property) of an enterprise and to income from immovable property (real property) used for the performance of independent personal services. ARTICLE 7 Business Profits 　　1. The business profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on or has carried on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the business 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 or has carried 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 business profits which it might be expected to make if it were a distinct and independent 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 and with any other associated enterprise. 　　3. In determining the business profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including research and development expenses, interest, and other similar expenses and a reasonable allocation of executive and general administrative expenses, whether incurred in the State in which the permanent establishment is situated or elsewhere. 　　4. No business 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. For the purposes of the preceding paragraphs, the business profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 　　6. Where business profits include items of income that are dealt with separately in other Articles of the Convention, the provisions of those Articles shall not be affected by the provisions of this Article. ARTICLE 8 Shipping and Air Transport 　　1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 　　2. The provisions of the preceding paragraph shall also apply to profits from participation in a pool, a joint business, or an international operating agency. ARTICLE 9 Associated Enterprises 　　1. 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 that would be made between independent enterprises, then any profits that, but for those conditions, would 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 competent authority of that other State agrees that the profits so included are profits that would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those that would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be paid to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other. 　　3. The provisions of paragraph 1 shall not limit the application of any provisions of the law of either Contracting State relating to the determination of the tax liability of a person, provided that the determination of that tax liability is consistent with the principles stated in this Article. ARTICLE 10 Dividends 　　1. Dividends paid by a company that 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 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 15 percent of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 　　3. Notwithstanding the provisions of paragraph 2, if the beneficial owner is a company that is a resident of the other Contracting State and that, for an uninterrupted period of 2 years prior to the payment of the dividend, owns directly at least 25 percent of the capital (capital social) of the company paying the dividends, the tax so charged shall not exceed: 　　(a) with respect to dividends paid after December 31, 1996, and before January 1, 2000, 10 percent of the gross amount of such dividends; and 　　(b) with respect to dividends paid after December 31, 1999, the rate that Portugal may apply to such dividends paid to residents of European Union member states, provided, however, that the applicable rate shall not be less than 5 percent. 　　4. Paragraph 3 shall not apply in the case of dividends paid by a United States Regulated Investment Company or a Real Estate Investment Trust. In the case of dividends from a Regulated Investment Company, paragraph 2 shall apply. In the case of dividends from a Real Estate Investment Trust, paragraph 2 shall apply if the beneficial owner of the dividends is an individual holding a less than 25 percent interest in the Real Estate Investment Trust; otherwise, the rate of withholding applicable under domestic law shall apply. 　　5. The term "dividends" as used in this Article means income from shares, "jouissance" shares, founders' shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights that 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.The term "dividends" also includes income from arrangements, including debt obligations, carrying the right to participate in profits, to the extent so characterized under the law of the Contracting State in which the income arises. In the case of Portugal, the term also includes profits attributed under an arrangement for participation in profits (associa?|o em participa?|o). 　　6. The provisions of paragraphs 1, 2, and 3 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on or has carried 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 or has performed 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 the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply. 　　7. Where a company that 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 establishment or a fixed base situated in that other State.