(1) Except as otherwise provided in this Article, a resident of a Contracting State shall not be entitled to a benefit that would otherwise be accorded by this Agreement (other than a benefit under Article 9 or Article 26) unless such resident is a "qualified person", as defined in paragraph (2), at the time that the benefit would be accorded.

(2) A resident of a Contracting State shall be a qualified person at a time when a benefit would otherwise be accorded by the Agreement if, at that time, the resident is:

• (a) an individual;
• (b) that Contracting State, or a political subdivision, local authority or statutory body thereof, or an agency or instrumentality of that State, political subdivision or local authority;
• (c) a company or other entity, if the principal class of its shares is regularly traded on one or more recognised stock exchanges;
• (d) a person, other than an individual, that is a nonprofit organisation agreed upon by the competent authorities;
• (e) a person other than an individual if, at that time and on at least half of the days of a 12 month period that includes that time, persons who are residents of that Contracting State and that are entitled to benefits of this Agreement under sub-paragraphs (a) to (d) own, directly or indirectly, at least 50 percent of the shares of the person.

(3)

• (a) A resident of a Contracting State shall be entitled to benefits under this Agreement with respect to an item of income derived from the other Contracting State, regardless of whether the resident is a qualified person, if the resident is engaged in the active conduct of a business in the first-mentioned State and the income derived from the other State emanates from, or is incidental to, that business. For purposes of this Article, the term "active conduct of a business" shall not include the following activities or any combination thereof:
  • (i) operating as a holding company;
  • (ii) providing overall supervision or administration of a group of companies;
  • (iii) providing group financing (including cash pooling); or
  • (iv) making or managing investments, unless these activities are carried on by a bank, insurance enterprise or registered securities dealer in the ordinary course of its business as such.
• (b) If a resident of a Contracting State derives an item of income from a business activity conducted by that resident in the other Contracting State, or derives an item of income arising in the other State from a connected person, the conditions described in sub-paragraph (a) shall be considered to be satisfied with respect to such item only if the business activity carried on by the resident in the first-mentioned State to which the item is related is substantial in relation to the same or complementary business activity carried on by the resident or such connected person in the other Contracting State. Whether a business activity is substantial for the purposes of this paragraph shall be determined based on all the facts and circumstances.
• (c) For purposes of applying this paragraph, activities conducted by connected persons with respect to a resident of a Contracting State shall be deemed to be conducted by such resident.

(4) A resident of a Contracting State that is not a qualified person shall nevertheless be entitled to a benefit that would otherwise be accorded by this Agreement with respect to an item of income if, at the time when the benefit otherwise would be accorded and on at least half of the days of any 12 month period that includes that time, persons that are equivalent beneficiaries own, directly or indirectly, at least 75 percent of the shares of the resident.

(5) If a resident of a Contracting State is neither a qualified person pursuant to the provisions of paragraph (2), nor entitled to benefits under paragraph (3) or (4), the competent authority of the Contracting State in which benefits are denied under the previous provisions of this Article may, nevertheless, grant the benefits of this Agreement, or benefits with respect to a specific item of income, taking into account the object and purpose of this Agreement, but only if such resident demonstrates to the satisfaction of such competent authority that neither its establishment, acquisition or maintenance, nor the conduct of its operations, had as one of its principal purposes the obtaining of benefits under this Agreement. The competent authority of the Contracting State to which a request has been made, under this paragraph, by a resident of the other State, shall consult with the competent authority of that other State before either granting or denying the request.

(6) For the purposes of this and the previous paragraphs of this Article:

• (a) the term "recognised stock exchange" means:
  • (i) the BM&F Bovespa ("B3") and any other stock exchange subject to regulation by the Securities and Exchange Commission of Brazil ("Comissão de Valores Mobiliários-CVM" in Portuguese) or its successor;
  • (ii) the securities market operated by the Singapore Exchange Limited, Singapore Exchange Securities Trading Limited and the Central Depository (Pte) Limited or their respective successors, and any other stock exchange subject to regulation by the Monetary Authority of Singapore;
  • (iii) the stock exchanges of Amsterdam, Brussels, Dublin, Frankfurt, Hamburg, Hong Kong, Kuala Lumpur, London, Madrid, Milan, Mumbai, New York, Paris, Seoul, Shanghai, Sydney, Tokyo, Toronto and Zurich, and the NASDAQ System; and
  • (iv) any other stock exchange which the competent authorities of the Contracting States agree to recognise for the purposes of this Article;
• (b) with respect to entities that are not companies, the term "shares" means interests that are comparable to shares;
• (c) the term "principal class of shares" means the class or classes of shares of a company or entity which represents the majority of the aggregate vote and value of the company or entity;
• (d) two persons shall be "connected persons" if one owns, directly or indirectly, at least 50 percent of the beneficial interest in the other (or, in the case of a company, at least 50 percent of the aggregate vote and value of the company's shares) or another person owns, directly or indirectly, at least 50 percent of the beneficial interest (or, in the case of a company, at least 50 percent of the aggregate vote and value of the company's shares) in each person. In any case, a person shall be connected to another if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same person or persons;
• (e) the term "equivalent beneficiary" means any person who would be entitled to benefits with respect to an item of income accorded by a Contracting State under the domestic law of that Contracting State, this Agreement or any other international agreement which are equivalent to, or more favourable than, benefits to be accorded to that item of income under this Agreement. For the purposes of determining whether a person is an equivalent beneficiary with respect to dividends received by a company, the person shall be deemed to be a company and to hold the same capital of the company paying the dividends as such capital the company claiming the benefit with respect to the dividends holds.

(7)

• (a) Where:
  • (i) an enterprise of a Contracting State derives income from the other Contracting State and the first-mentioned Contracting State treats such income as attributable to a permanent establishment of the enterprise situated in a third jurisdiction; and
  • (ii) the profits attributable to that permanent establishment are exempt from tax in the first-mentioned State,
• the benefits of the Agreement shall not apply to any item of income on which the tax in the third jurisdiction is less than 60 percent of the tax that would be imposed in the first-mentioned State on that item of income if that permanent establishment were situated in the first-mentioned State. In such a case, any income to which the provisions of this paragraph apply shall remain taxable according to the domestic law of the other Contracting State, notwithstanding any other provisions of the Agreement.
• (b) The preceding provisions of this paragraph shall not apply if the income derived from the other State emanates from, or is incidental to, the active conduct of a business carried on through the permanent establishment (other than the business of making, managing or simply holding investments for the enterprise's own account, unless these activities are banking, insurance or securities activities carried on by a bank, insurance enterprise or registered securities dealer, respectively).
• (c) If benefits under this Agreement are denied pursuant to the preceding provisions of this paragraph with respect to an item of income derived by a resident of a Contracting State, the competent authority of the other Contracting State may, nevertheless, grant these benefits with respect to that item of income if, in response to a request by such resident, such competent authority determines that granting such benefits is justified in light of the reasons such resident did not satisfy the requirements of this paragraph (such as the existence of losses). The competent authority of the Contracting State to which a request has been made under the preceding sentence shall consult with the competent authority of the other Contracting State before either granting or denying the request.

(8) Notwithstanding the other provisions of this Agreement, a benefit under this Agreement shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Agreement.

(9) Where a benefit under this Agreement is denied to a person under paragraph (8), the competent authority of the Contracting State that would otherwise have granted this benefit shall nevertheless treat that person as being entitled to this benefit, or to different benefits with respect to a specific item of income, if such competent authority, upon request from that person and after consideration of the relevant facts and circumstances, determines that such benefits would have been granted to that person in the absence of the transaction or arrangement referred to in paragraph (8). The competent authority of the Contracting State to which the request has been made will consult with the competent authority of the other State before rejecting a request made under this paragraph by a resident of that other State.