The Government of the People's Republic of China and the Government of the Republic of Italy, 　　Desiring to conclude an Agreement to avoid double taxation and to prevent fiscal evasion with respect to taxes on income, 　　Have agreed as follows: 　　Article 1 Personal Scope 　　This Agreement shall apply to persons who are residents of one or both of the Contracting States. 　　Article 2 Taxes Covered 　　1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting States or of its political or administrative subdivisions or local authorities, irrespective of the manner in which they are levied. 　　2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. 　　3. The existing taxes to which the Agreement shall apply are in particular: 　　(a) in the case of the People's Republic of China: 　　(i) the individual income tax; 　　(ii) the income tax concerning joint ventures with Chinese and foreign investment; 　　(iii) the income tax concerning foreign enterprises; and 　　(iv) the local income tax. 　　(hereinafter referred to as "Chinese tax") 　　(b) in the case of the Republic of Italy; 　　(i) the personal income tax ( 1'imposta sulreddito delle personne fisiche); 　　(ii) the corporate income tax (1'imposta sulreddito delle persone giuridiche); 　　(iii) the local income tax (1'imposta lcoale sulreddito); even if they are collected by withholding at source, (Hereinafter referred to as "Italian tax"). 　　4. This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes. 　　Article 3 General Definitions 　　(a) the term "China" means the People's Republic of China; when used in a geographical sense, means all the territory of the People's Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, within which the People's Republic of China has sovereign rights of exploration for and exploitation of resources of the seabed and its sub-soil and super-jacent water resources in accordance with international law; 　　(b) the term "Italy" means the Republic of Italy and includes any area beyond the territorial waters of Italy which, in accordance with the customary international law and the laws of Italy concerning the exploration for and exploitation of natural resources, may be designated as an area within which the rights of Italy with respect to the seabed and subsoil and natural resources may be exercised; 　　(c) the terms "a Contracting States" and "the other Contracting States" mean China or Italy as the context requires; 　　(d) the term "person" includes an individual, a company and any other body of persons; 　　(e) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; 　　(f) the terms "enterprise of a Contracting States" and "enterprise of the other Contracting States" mean respectively an enterprise carried on by a resident of a Contracting States and an enterprise carried on by a resident of the other Contracting States; 　　(g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of head office or 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; 　　(h) the term "nationals" means: 　　(i) all individuals possessing the nationality of a Contracting State; 　　(ii) all legal persons, partnerships and associations deriving their status as such from the law in force in a Contracting State; 　　(i) the term "competent authority" means: 　　(i) in the case of China, the Ministry of Finance, or its authorized representative; 　　(ii) in the case of the Republic of Italy, the Ministry of Finance. 　　2. As regards the application of this Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that Contracting State concerning the taxes to which this Agreement applies. 　　 Article 4 Resident 　　1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to tax therein by reason of his domicile, residence, place of head office, place Of management, or any other criterion of a similar nature. 　　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 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 tae 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 l a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its head office or its place of effective management is situated. 　　Article 5 permanent Establishment 　　1. For the purposes of this Agreement, 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" shall include especially: 　　(a) a place of management; 　　(b) a branch; 　　(c) an office; 　　(d) a factory; 　　(e) a workshop; 　　(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; 　　(g) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months; 　　(h) the furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same project or a connected project for a period or periods aggregating more than six months within any twelve-month period. 　　3. The term "permanent establishment" shall not be deemed 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 good 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 for 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. 　　4. Notwithstanding the provisions of paragraphs 1 and 2, where a person--other than an agent of an independent status to whom the provisions of paragraph 5 apply--is acting in a Contracting State on behalf of an enterprise of the other Contracting State, has and habitual1y exercises an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in the first mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, unless his activities are limited to those mentioned in paragraph 3 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. 　　5. An enterprise of a Contracting State shall no be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting 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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will no be considered an agent of an independent status within the meaning of this paragraph. 　　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. Article 6 Income from Immovable Property 　　1. Income derived by a resident of a Contracting State from immovable 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" shall be defined in accordance with the law of the Contracting State in which the property in question is situated. The term 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 landed 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 shall also be considered as "immovable property". Ships, be and aircraft shall no 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 from 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 independent personal 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 is attributable to the 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 the determination of 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, whether in the State in which the permanent establishment is situated or elsewhere. 　　4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 　　5. 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. 　　6. For the purposes of the preceding paragraphs, the 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. 　　7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, 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 operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of head office or the place of effective management of the enterprise is situated. 　　2. If the place of head office or 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 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 tat 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 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 recipient is the beneficial owner of the dividends the tax so charged shall not exceed 10 per cent of the gross amount of the dividends. The provisions of this paragraph shall no affect the taxation of the company in respect of the profits out of which the dividends are paid. 　　3. The term "dividends" as used in the Article means income from shares, "jouissance" share or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation law of the State of which the company making the distribution is a resident. 　　4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividend, being a resident of a Contracting State, carries on business in the other Contacting State of which the company paying the dividends is a resident, through a 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 the provisions of Article 7 or Article 14, as the case may be, shall apply. 　　5. Where a company which is a resident of a Contracting State, derives profits or income from the other Contracting State that other State may no 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 dividend are Paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. 　　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 law of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 10% of the gross amount of the interest. 　　3. Notwithstanding the provision of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that state if the interest is paid to: 　　(a) the Government of the other Contracting State, a local authority and the central bank thereof or any financial institution wholly owned by that Government; 　　(b) any resident of that other state with respect to debt-claims indirectly financed by the Government of that other State, a local authority and the cenrtal bank thereof or any financial institution wholly owned by that Government. 　　4. Th term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind. 　　5. The provisions of paragraphs from l to 3 shall no 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 of which the interest is paid is effectively connected with such permanent establishment or fixed base. ln such case the provisions of Article 7 or Article l4. as the case may be, shall apply. 　　6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative 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 or a fixed base, in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 　 7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, 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 beneficial owner 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 Agreement. 　　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 also be taxed in the Contracting State in which they arise, and according to the law of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 10 percent of the gross amount of the royalties. 　 3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of , or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of , or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 　　4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent 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 royalties are paid 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. 　　5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative 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 or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 　　6. Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, 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 beneficial owner 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, dur regard being had to the other provisions of this Agreement. 　　Article 13 Capital Gains 　　1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other Contracting State. 　　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 independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in that other Contracting State. 　　3. Gains from the alienation of ships or aircraft operated in international traffic and movable property, pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State in which the place of head office or the place of effective management of the enterprise is situated. 　　4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State. 　　5. Gains from the alienation of shares other than those mentioned in paragraph 4 representing a participation of 25 per cent in a company which is a resident of a Contracting State may be taxed in that Contracting State. 　　6. Gains derived by a resident of a Contracting State from the alienation of any property other than that referred to in paragraphs 1 to 5 and arising in the other Contracting State may be taxed in that other Contracting State. 　 Article 14 Independent Personal Services 　　1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State; however, such income may also be taxed in the other Contracting State in the following circumstances: 　　(a) If he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in such case only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or 　　(b) if his stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days in the calendar year concerned; in such case only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other State. 　　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, dentists and accountants.