India–Albania tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	10 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling.	There is none: no qualifying-holding tier, no minimum percentage of capital, no holding period and no second residual rate, so a controlling parent and a portfolio investor are capped identically and nothing…	Article 10, paragraph 2
Interest	10 per cent of the gross amount of the interest — Art. 11(2). A single flat ceiling, at the same level as dividends, royalties and technical fees.	Art. 11(3) exempts interest at source where it is derived and beneficially owned by (a) the Government, a political sub-division or a local authority of the other State; (b)(i) in the case of Albania, the…	Article 11, paragraph 2 and 3
Royalties	10 per cent of the gross amount — Art. 12(2), the same ceiling as for fees for technical services, and the same as dividends and interest.	Article 12 covers royalties and fees for technical services together at one 10 per cent gross rate, so the characterisation contest between the two limbs does not change the rate — and because dividends and…	Article 12, paragraph 2
Fees for technical services	10 per cent of the gross amount — Art. 12(2), inside the combined Royalties and Fees for Technical Services article and at the same rate as royalties.	There is no make-available condition. Art. 12(3)(b) defines fees for technical services as "payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement as consideration for…	Article 12, paragraph 2 and 3(b)

Status

In force	The Agreement was signed at New Delhi on 8 July 2013 and entered into force on 4 December 2013. The notification recites that "the date of entry into force of the said agreement is the 4th day of December, 2013, being the date of later of the notifications of completion of the procedures as required by the respective laws for entry into force of the said agreement, in accordance with paragraph 2 of Article 31 of the said agreement". Article 31(2) provides that "This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article." Article 31(3)(b) gives it effect in India "in respect of income derived or capital owned in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force", which on an entry into force of 4 December 2013 points to the fiscal year beginning 1 April 2014. The notification itself, however, directs that the provisions "shall be given effect to in the Union of India with effect from date of entry into force of said agreement i.e., the 4th day of December, 2013." The two dates are as printed in the Gazette and are set out here without reconciling them. Note that the Indian counterparty is the Council of Ministers of the Republic of Albania, not a body styled "the Government". Done in duplicate at New Delhi in the English, Hindi and Albanian languages, all texts equally authentic; "In case of divergence between texts, the English text shall prevail."
Given effect by	S.O. 47(E), Notification No. 02/2014, F. No. 501/1/2003-ftd-I, dated 7 January 2014, Ministry of Finance (Department of Revenue) (Income-tax), signed by Akhilesh Ranjan, Jt. Secy., published in the Gazette of India, Extraordinary, Part II, Section 3(ii). Made in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961).
Modified by the MLI	No synthesised text was found for this treaty in the source searched.
Principal purpose test	Article 29(6) is a main-purpose backstop sitting on top of the qualified-person machinery, and its opening words are what give it force: "Notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies." Four points. First, it overrides paragraphs 2 to 5, so satisfying the qualified-person test, the active-business clause or even obtaining a competent-authority grant does not immunise a person against it — the objective safe harbours are safe harbours from paragraph 1 only. Second, its subject is "any person", not merely a person other than an individual, so unlike the paragraph 1 gateway it reaches individuals as well as entities. Third, the standard is "the main purpose or one of the main purposes", the ordinary Indian formulation — wider than the "primary purpose" test in Article 27 of the Syria Agreement, and comparable to Art. 28(2) of the Colombia Agreement and Art. 30(2) of the Georgia Agreement, though drafted more broadly than Colombia's, which is confined to an enterprise and to the purpose of its creation. Fourth, and unusually, the object of the purpose is expressed as avoiding "taxes to which this Agreement applies" rather than as obtaining benefits under the Agreement — a formulation directed at tax avoidance generally rather than at treaty-shopping specifically, which is wider in one sense and, in another, requires the revenue to identify an avoidance of covered taxes rather than merely the obtaining of a treaty benefit. There is no MLI principal purposes test overlaid on this Agreement, because no synthesised text exists for Albania. Two differences from the PPT are worth noting for anyone used to it: Art. 29(6) contains no object-and-purpose escape, so it is harsher than the PPT once engaged; and it is framed around the arrangement of a person's affairs rather than around an item of income arising from an arrangement or transaction, so it is entity-focused where the PPT is income-focused.

Dividends

Rate	10 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling.
The holding that unlocks it	There is none: no qualifying-holding tier, no minimum percentage of capital, no holding period and no second residual rate, so a controlling parent and a portfolio investor are capped identically and nothing turns on the size of the Albanian shareholder's stake. Art. 10(2) caps source tax at "10 per cent of the gross amount of the dividends" where the beneficial owner is a resident of the other State — the modern formulation requiring both beneficial ownership and residence of the beneficial owner in the other Contracting State, rather than the older "if the recipient is the beneficial owner". Because no MLI applies, no 365-day holding requirement has been imported. Note that the absence of a rate condition does not mean the absence of a condition: every benefit of this Agreement, the dividend cap included, is subject to the qualified-person test in Article 29, which is where the real gate sits for an Albanian holding company (see anti_abuse). A treaty with no participation threshold and a full limitation-of-benefits article places the whole of its anti-conduit weight on Article 29 rather than on the distributive articles.
Where this comes from	Article 10, paragraph 2

Art. 10(3) defines dividends as income from "shares of any kind", which is slightly wider than the plain "shares" used in the Colombia and Georgia definitions and comparable to the Namibian "shares of all kinds"; it is apt to cover preference and other special classes without argument. Paragraph 2 does not affect the taxation of the company in respect of the profits out of which the dividends are paid, and there is nothing corresponding to the Colombian Protocol's untaxed-profits limb, so nothing turns on whether the distributed profits bore tax. The effectively-connected carve-out refers the income to the business-profits and independent-personal-services articles in the ordinary way. Note that this is an income-and-capital treaty: Article 23 is a separate distributive rule for capital, so a capital-tax question is inside the Agreement and should not be treated as outside it.

Interest

Rate	10 per cent of the gross amount of the interest — Art. 11(2). A single flat ceiling, at the same level as dividends, royalties and technical fees.
Exemptions	Art. 11(3) exempts interest at source where it is derived and beneficially owned by (a) the Government, a political sub-division or a local authority of the other State; (b)(i) in the case of Albania, the Central Bank of Albania, and (b)(ii) in the case of India, the Reserve Bank of India, the Export-Import Bank of India or the National Housing Bank; or (c) any other institution as may be agreed upon from time to time between the competent authorities through exchange of letters. Three points. The Indian list is generous by the standards of India's network — three institutions named, the same three as in the Georgia Agreement, where Syria names only the Reserve Bank, Colombia names the Reserve Bank and exim Bank, and Namibia and Uganda name none at all. Nabard, sidbi, ifci and idbi remain outside. The two sides are asymmetrical in the ordinary way: Albania names its central bank alone, India names its central bank plus two development institutions. And limb (c) is the wide form of extension clause — "any other institution", not confined to governmental or financial bodies, so a private institution is capable of being added — but it is not self-executing, requiring an exchange of letters between the competent authorities, and the notified text reproduces no such exchange. As the record stands only limb (a) and the four named banks operate. Penalty charges for late payment are not interest (Art. 11(4)), so a late-payment surcharge is not sheltered by the 10 per cent cap.
Where this comes from	Article 11, paragraph 2 and 3

The interest exemption in Art. 11(3) and the interest cap in Art. 11(2) are both benefits of the Agreement and are both subject to Article 29. That is worth spelling out because it changes the order of analysis under this treaty compared with the others in this group: elsewhere the question on a claim to the exemption is simply whether the claimant is on the list, whereas here a claimant on the list must also be a qualified person under Art. 29(2) or restored by Art. 29(3) or Art. 29(4). For a government, a political sub-division or a central bank that is straightforward — Art. 29(2) treats a governmental entity as a qualified person — but for an institution added under limb (c) it is a live question. Penalty charges for late payment are excluded from the definition of interest by Art. 11(4).

Royalties

Rate	10 per cent of the gross amount — Art. 12(2), the same ceiling as for fees for technical services, and the same as dividends and interest.
Where this comes from	Article 12, paragraph 2

Article 12 covers royalties and fees for technical services together at one 10 per cent gross rate, so the characterisation contest between the two limbs does not change the rate — and because dividends and interest sit at the same 10 per cent, there is very little to gain from characterisation arguments on rate alone anywhere in this treaty. What characterisation does still affect is the source rule and the availability of the Article 7 route. The royalty definition in Art. 12(3)(a) is the standard wide Indian form: copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, patents, trade marks, designs, models, plans, secret formulae or processes, the use of or right to use industrial, commercial or scientific equipment, and information concerning industrial, commercial or scientific experience. Films are inside on the copyright limb, and the equipment limb carries no know-how condition of the kind the Namibia Convention attaches, so bare equipment rental is a royalty at 10 per cent gross. Art. 12(5) is the source rule and it has two limbs, the second of which is easy to miss and unusual: where royalties or fees do not arise in either State under sub-paragraph (a), but the royalties relate to a right or property used, or the fees relate to services performed, in one of them, they are deemed to arise there. So a payment made by a third-State payer with no permanent establishment in either Contracting State — the case in which sub-paragraph (a) produces no source at all — is nonetheless Indian-source if the right is used or the services are performed in India. Very few Indian treaties carry this residual limb; Syria and Georgia do, and it extends the Indian charge appreciably beyond the ordinary payer-based rule.

Fees for technical services

Rate	10 per cent of the gross amount — Art. 12(2), inside the combined Royalties and Fees for Technical Services article and at the same rate as royalties.
Make-available requirement	No
Where this comes from	Article 12, paragraph 2 and 3(b)

There is no make-available condition. Art. 12(3)(b) defines fees for technical services as "payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel." The article does not require that technology, skill or know-how be made available to the payer, so an Albanian service provider cannot argue that nothing was transferred: the charge attaches to the consideration for the service. Three features matter. (i) Three categories — managerial, technical or consultancy; "professional" services are not named, so an individual professional's fee is not swept in by the words of the definition itself. (ii) The inclusive limb, "including the provision of services of technical or other personnel", carries secondment and manpower supply into the article — the limb that the Colombia article omits from its own text and supplies only by protocol. (iii) The only carve-out is for payments falling under Article 14 (independent personal services) or Article 15 (dependent personal services), and that carve-out is where the argument lies. Since no make-available point is available and the rate is the same 10 per cent as royalties, interest and dividends, the productive line of argument under this treaty is not that the payment is something other than a technical fee but that it falls within Articles 14 or 15 and is therefore outside Art. 12 altogether — which for an individual provider means the fixed-base and day-count tests of Article 14 rather than a gross charge. The interaction with the permanent establishment article is the other half of the picture: Art. 5(3)(b) creates a service PE after more than six months in any twelve-month period, and it carries no exclusion for services taxed under Article 12 of the kind the Namibia Convention has, so Indian-source service income is exposed on two fronts — 10 per cent gross under Art. 12 from the first rupee, or net-basis PE taxation under Arts. 5 and 7 once the six-month threshold is crossed. And whichever front applies, the benefit is available only to a qualified person under Article 29.

Capital gains on shares

Treatment	Full and unqualified source-State taxing right over share gains, in a single short paragraph. Art. 13(4): "Gains from the alienation of shares in a company which is a resident of a Contracting State may be taxed in that State." India therefore retains a taxing right over gains on shares of an Indian company held by an Albanian resident. What makes this Article structurally different from most of the treaties in this group is what is absent: there is no separate immovable-property-rich company paragraph. The Uganda, Kyrgyz, Georgia, Mongolia and Colombia agreements all split the shares limb in two — a land-rich paragraph turning on the composition of the company's assets, and a general paragraph for all other shares. Article 13 of this Agreement, like the Syrian one, has only the general paragraph. Paragraph 4 catches shares in a resident company whatever the company's assets consist of, and no paragraph anywhere in Article 13 turns on immovable property held through a company. Two consequences follow, and they pull in opposite directions. The interpretive difficulties that attend the word "principally" elsewhere — no percentage, no valuation date, no averaging rule — do not arise here, because there is no such test to construe. But the source State's right is correspondingly confined to shares in a company resident in that State: there is no limb reaching shares in a company resident in neither State that derives its value from immovable property situated in one of them, so an indirect holding structure falls outside Art. 13(4) and lands in the residual rule. Article 13(5) is that residual and it is exclusive, leaving gains from any other property taxable only in the State of residence of the alienator.
Grandfathering	None. The Agreement fixes no grandfathering date, carries no acquisition-date cut-off for shares and has no transitional paragraph. It has had effect from the Indian fiscal year identified in in_force and has never been amended, and because no MLI applies no 365-day look-back has been added. A disposal is tested under the same rules whenever the shares were acquired. There is no predecessor agreement whose transitional treatment would have to be considered: this is India's first and only Agreement with Albania on the sources used here.
Conditions	None within Article 13 itself: no holding threshold, no minimum percentage, no minimum period, no listing carve-out, no de minimis, no value test and no asset-composition test. The single requirement is that the company whose shares are alienated is a resident of the taxing State. But the absence of conditions in Article 13 is misleading if read alone, and this is the point at which Albania diverges sharply from every other treaty in this group. Article 29 is a full qualified-person limitation-of-benefits article applying to all benefits of the Agreement, and the benefit most likely to be claimed under Article 13 is the residence-only protection in Art. 13(5). An Albanian holding company claiming that protection on a gain must be a qualified person under Art. 29(2) — listed, or 50 per cent resident-owned, and not caught by the gross-income base-erosion proviso — or be restored by the active-business clause in Art. 29(3) or the competent-authority discretion in Art. 29(4), and must in any event survive the main-purpose backstop in Art. 29(6). Under the Uganda, Kyrgyz and Mongolia treaties the equivalent claim faces no treaty filter at all. This Agreement also covers taxes on capital, and Article 23 (Capital) allocates capital separately from Article 13, so a capital-tax question on the same shares is governed by a different article.
Where this comes from	Article 13, paragraph 4 and 5

Permanent establishment

Construction or installation PE	More than six months — Art. 5(3)(a): "A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than six months." The covered works are wide — building site, construction, installation and assembly projects with their connected supervisory activities are all named — so there is no gap for a pure installation contract of the kind the Uganda and Mongolia texts leave open. The threshold is "more than" six months, so exactly six months does not create a permanent establishment. The clock runs on the duration of the site, project or activities; the Agreement says nothing about when it starts, so there is no equivalent of the Kenya protocol's exclusion of purely preparatory mobilisation time, and there is no protocol here at all. There is no anti-splitting rule: no aggregation of related-enterprise time as in the Colombia Protocol, and no MLI Article 14, because no synthesised text exists for Albania. The threshold therefore applies to each enterprise separately.
Service PE	Yes, and the Agreement states it in months rather than days: more than six months within any twelve-month period. Art. 5(3)(b): "The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose constitutes a permanent establishment, but only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than six months within any twelve-month period." The two limbs of paragraph 3 share the same six-month figure but they are not the same test, and the difference decides cases. The construction limb runs on the duration of the site — a continuous period, measured on the project itself. The service limb aggregates "a period or periods" within a rolling twelve-month window, and confines the aggregation to "the same or connected project". So a broken pattern of visits totalling seven months across a year creates a service PE where the same total spread across a construction project that was live for only five months would not, and conversely unconnected engagements are not added together however much time they consume. The personnel must be "engaged by the enterprise for such purpose". The window is "any twelve-month period", not the fiscal year. And the threshold is "more than" six months, so six months exactly does not create a permanent establishment. Note that the unit is months, not days: the treaty does not say 180 or 183 days, and converting it to a day count is an interpretation the text does not authorise, which matters at the margin for an engagement running just either side of half a year. Unlike the Namibia Convention, Art. 5(3)(b) carries no exclusion for services taxed under the technical-fee article, so the service PE and Article 12 bite at once.
Agency PE	Yes — Art. 5(5), in the three-limb form but without the group extension. A dependent person creates a PE if he has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise; or has no such authority but habitually maintains a stock of goods from which he regularly delivers on behalf of the enterprise; or habitually secures orders in that State wholly or almost wholly for the enterprise itself. The order-securing limb is confined to the enterprise itself — there is no extension to orders secured for enterprises controlling, controlled by or under common control with it, which the Uganda and Kyrgyz agency limbs both carry. The conclude-contracts limb uses the pre-beps "in the name of the enterprise" formulation and has not been replaced by the MLI commissionnaire rule, because no MLI applies. Art. 5(6) adds a separate insurance PE: an insurance enterprise, except as to re-insurance, has a PE in the other State if it collects premiums there or insures risks situated there through a person other than an independent agent. Art. 5(7) is the independent-agent exclusion and treats an agent devoted wholly or almost wholly to one enterprise as not of independent status — the single-limb anti-exclusivity rider, so exclusivity alone defeats independence, without the cumulative non-arm's-length requirement found in the Kenya text.
Where this comes from	Article 5, paragraph 3(a), 3(b), 5, 6 and 7

The two thresholds in paragraph 3 are the heart of this Article and they are both expressed in months rather than days, which is the more common Indian drafting but not universal — Georgia uses 90 days and Syria 270 days and 183 days for the same two limbs. Six months for construction is the middle of the range in this group: shorter than Mongolia's nine months and Syria's 270 days, longer than Georgia's 90 days, and the same as Colombia, Kyrgyzstan and Namibia. Six months for services is at the generous end: Georgia and Kenya use 90 days and Syria 183 days, so an Albanian enterprise has materially more room before a service PE arises — though the trade-off is Article 12, which taxes technical fees at 10 per cent gross from the first rupee with no make-available filter. The service PE and the technical-fee article operate together rather than exclusively, unlike the Namibia Convention where Art. 5(3)(b) expressly excludes services referred to in its FTS article. There is no aggregation rule of any kind in this Agreement — no protocol clause aggregating related-enterprise time as in Colombia, and no MLI Article 13 or Article 14 overlay — so both thresholds apply to each enterprise separately, and the treaty's only aggregation is its own "same or connected project" rule applied within the one enterprise. Whatever the analysis under Article 5, the benefit of Article 7 net-basis treatment, like every other benefit of this Agreement, is available only to a qualified person under Article 29.

Anti-abuse: limitation of benefits, and the MLI

LOB	Article 29 is a full limitation-of-benefits article of the objective, qualified-person type, and it is by a wide margin the strongest anti-abuse machinery of any treaty in this group — the others have either a short main-purpose article of two to four paragraphs (Colombia, Georgia, Syria), a switch-over clause (Namibia), or nothing at all (Uganda, Kyrgyzstan, Mongolia). It should be treated as a substantive gate, not as boilerplate, and it applies to every benefit of the Agreement: the 10 per cent caps in Articles 10, 11 and 12, the interest exemption in Art. 11(3), net-basis treatment under Article 7, and the residence-only protection in Art. 13(5). The structure runs as follows. Paragraph 1 is the gateway: a person other than an individual is entitled to the benefits of the Agreement only if it is a "qualified person" under paragraph 2. Note that the gateway is confined to persons other than individuals, so an individual resident does not have to qualify — the article is aimed at entities. Paragraph 2 defines qualified person by an exhaustive list: a governmental entity; a company incorporated in either State whose principal class of shares is listed and regularly traded on a recognised stock exchange, or at least 50 per cent of the aggregate vote or value of whose shares is owned directly or indirectly by resident individuals or by other qualifying entities; a partnership or association of persons at least 50 per cent of whose beneficial interests is so owned; and a charitable or tax-exempt entity whose main activities are carried on in either State. Two features of the ownership test are worth isolating: it is measured by "aggregate vote or value", so a holding that clears one measure but not the other does not qualify, and it is satisfied by indirect as well as direct ownership, so an intermediate resident holding company does not by itself defeat it. Paragraph 2 then carries a base-erosion proviso which bites separately even on a person that is otherwise qualified: benefits are denied where more than 50 per cent of the person's gross income is paid or payable, directly or indirectly, to non-residents of either State in a form deductible for tax purposes. That proviso excludes arm's length payments made in the ordinary course of business for services or tangible property, and certain bank obligations — so ordinary trading and financing costs do not count against it, but royalties, management fees and interest routed onward to third-State affiliates do. A conduit that passes income through will fail the proviso even if its shares are wholly owned by Albanian residents. Paragraph 3 is the restoration clause: benefits are restored where the resident actively carries on business in its State of residence and the income is connected with or incidental to that business — the active-trade-or-business test familiar from the American model, and the route by which a genuine Albanian operating company that fails the ownership test nonetheless obtains relief. Paragraph 4 is a competent-authority discretion: the other State's competent authority may grant benefits notwithstanding a failure to qualify. It is a discretion, not an entitlement, and the Agreement supplies no criteria for its exercise. Paragraph 5 defines "recognised stock exchange", in India, as any stock exchange recognised under the Securities Contracts (Regulation) Act, 1956, together with any other exchange the competent authorities agree to recognise — so the listing test is tied to a domestic Indian statute by reference. The practical upshot: an Albanian holding company that is neither listed nor 50 per cent resident-owned, and that does not actively carry on business in Albania, must fall back on the competent-authority discretion in Art. 29(4) or fail the test outright.
PPT	Article 29(6) is a main-purpose backstop sitting on top of the qualified-person machinery, and its opening words are what give it force: "Notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies." Four points. First, it overrides paragraphs 2 to 5, so satisfying the qualified-person test, the active-business clause or even obtaining a competent-authority grant does not immunise a person against it — the objective safe harbours are safe harbours from paragraph 1 only. Second, its subject is "any person", not merely a person other than an individual, so unlike the paragraph 1 gateway it reaches individuals as well as entities. Third, the standard is "the main purpose or one of the main purposes", the ordinary Indian formulation — wider than the "primary purpose" test in Article 27 of the Syria Agreement, and comparable to Art. 28(2) of the Colombia Agreement and Art. 30(2) of the Georgia Agreement, though drafted more broadly than Colombia's, which is confined to an enterprise and to the purpose of its creation. Fourth, and unusually, the object of the purpose is expressed as avoiding "taxes to which this Agreement applies" rather than as obtaining benefits under the Agreement — a formulation directed at tax avoidance generally rather than at treaty-shopping specifically, which is wider in one sense and, in another, requires the revenue to identify an avoidance of covered taxes rather than merely the obtaining of a treaty benefit. There is no MLI principal purposes test overlaid on this Agreement, because no synthesised text exists for Albania. Two differences from the PPT are worth noting for anyone used to it: Art. 29(6) contains no object-and-purpose escape, so it is harsher than the PPT once engaged; and it is framed around the arrangement of a person's affairs rather than around an item of income arising from an arrangement or transaction, so it is entity-focused where the PPT is income-focused.
Where this comes from	Article 29 (six paragraphs: qualified-person gateway, definitions with a base-erosion proviso, active-business restoration, competent-authority discretion, recognised-stock-exchange definition, and a main-purpose backstop overriding paragraphs 2 to 5)

This record carries the treaty text as notified in the Gazette in 2014. The Income Tax Department publishes MLI synthesised texts for those of its treaties the MLI has modified, and a search of that collection returns no Albania entry — Georgia has one, Albania does not. On that material there is only one text of this Agreement and nothing to reconcile, and none of the MLI overlay is established as applying: no anti-treaty-shopping preamble, no MLI principal purposes test, no saving clause, no 365-day holding condition on the dividend rate, no 365-day look-back on share gains, no commissionnaire rule, no anti-fragmentation rule and no splitting-up-of-contracts rule on the six-month thresholds in Art. 5(3). The consequence for this treaty is smaller than for most, because its bilateral anti-abuse machinery is already the strongest in this group: Article 29 is a full qualified-person limitation-of-benefits article with a stock-exchange test, an ownership test, a base-erosion proviso, an active-business restoration clause and a competent-authority discretion, and it closes at Art. 29(6) with a main-purpose backstop. An MLI principal purposes test would add an objective reasonableness standard and an object-and-purpose escape, but it would be operating alongside machinery that already does most of the work. Whether Albania has signed or ratified the MLI, and whether India has listed this Agreement as a Covered Tax Agreement, is not established from the sources used here; the conclusion rests on the absence of a synthesised text in the department's collection and on the notified text carrying no modification marker.

The protocols, in order

A treaty read without its protocols is a wrong answer.

No Protocol is annexed to this notification. The instrument notified is the Agreement alone, as signed at New Delhi on 8 July 2013, and no amending notification appears in the copy read. The absence of a protocol is worth stating because of what this Agreement does instead: where most Indian treaties of this period push their anti-abuse content into a short limitation-of-benefits article and leave the detail to a protocol, Albania builds a full qualified-person test into Article 29 itself, with six paragraphs including definitions. There is accordingly no protocol paragraph glossing the construction clock, the interest exemption or the source rules, as there is in the Kyrgyz and Colombia agreements — every question must be answered from the Articles.
The Income Tax Department's notification archive holds an entry for this notification, but it carries no html text of the instrument: the entry provides only the linked Gazette pdf, which is a 37-page scanned image file with no text layer (thirty-seven page images, no embedded fonts). There is therefore no clean machine-readable government text of this Agreement available from that source, and this record rests on the page images of the Gazette. See read and gaps.
No synthesised text exists for Albania, so no MLI change to this Agreement is established here. See synthesised_text.

The words themselves

Quoted from the treaty as notified.

A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than six months.

Article 5, paragraph 3(a) of the treaty as notified.

The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose constitutes a permanent establishment, but only where activities of that nature continue ( for the same or connected project ) within the country for a period or periods aggregating more than six months within any twelve-month period.

Article 5, paragraph 3(b) of the treaty as notified.

the tax so charged shall not exceed 10 per cent of the gross amount of the dividends

Article 10, paragraph 2 of the treaty as notified.

Gains from the alienation of shares in a company which is a resident of a Contracting State may be taxed in that State.

Article 13, paragraph 4 of the treaty as notified.

any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies

Article 29, paragraph 6 of the treaty as notified.

What to watch

Article 29 is the first thing to check on any Albanian claim, and it is a substantive gate rather than boilerplate. A person other than an individual gets no benefit of this Agreement at all unless it is a qualified person under Art. 29(2) — listed on a recognised stock exchange, or 50 per cent owned by aggregate vote or value by resident individuals or other qualifying entities — or is restored by the active-business clause in Art. 29(3) or the competent-authority discretion in Art. 29(4). No other treaty in this group has machinery of this kind: Colombia, Georgia and Syria have short main-purpose articles, Namibia has a switch-over clause, and Uganda, Kyrgyzstan and Mongolia have nothing. A structure that would pass unexamined under those treaties can fail here on the face of the text.
The base-erosion proviso in Art. 29(2) bites separately and independently of the ownership test. Benefits are denied where more than 50 per cent of the person's gross income is paid or payable, directly or indirectly, to non-residents of either State in deductible form — with arm's length payments in the ordinary course of business for services or tangible property, and certain bank obligations, excluded from the count. So a wholly Albanian-owned company still fails if it on-pays the bulk of its income as deductible royalties, management fees or interest to third-State affiliates. This is the provision that catches a conduit which satisfies the shareholder test.
Article 29(6) overrides paragraphs 2 to 5. Being a qualified person, passing the active-business test, or even obtaining a competent-authority grant does not protect against it: "Notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies." Note that its subject is "any person", so it reaches individuals, whom the paragraph 1 gateway does not; and that it has no object-and-purpose escape of the kind the MLI principal purposes test carries, so once engaged it is harsher than a PPT.
Every rate in this Agreement is 10 per cent — dividends Art. 10(2), interest Art. 11(2), royalties and fees for technical services Art. 12(2) — with no participation threshold on dividends and no reduced tier anywhere. Because the rates coincide, characterisation arguments aimed at the rate are largely futile. What characterisation still decides is the source rule and the route out of Article 12: the productive argument for a service provider is that the payment falls within Article 14 or Article 15, both of which are expressly carved out of the FTS definition, rather than that no technology was made available — Article 12 has no make-available limb.
Article 5(3) sets construction and service thresholds at the same six months, but they are different tests and the difference decides cases. A construction site runs on its own duration; service activity aggregates "a period or periods" for the same or connected project within any twelve-month rolling window. So a broken pattern of visits totalling more than six months across a year creates a service PE where a continuous five-month construction project does not, and unconnected engagements are never added together. Both are "more than" six months, so exactly six months creates nothing, and the unit is months rather than days. There is no aggregation of related-enterprise time — no protocol clause of the Colombian kind and no MLI Article 14.
Article 13(4) is not confined to land-rich companies. Any gain on shares in a company resident in a Contracting State is taxable in that State, whatever the company's assets consist of, with no holding threshold, no de minimis and no grandfathering date. The corollary is that there is no land-rich paragraph at all, so a gain on shares in a third-State company deriving its value from Indian immovable property is outside Art. 13(4) and falls into the residence-only rule in Art. 13(5) — where it must still pass Article 29.
Article 12(5) carries a residual source rule that is easy to miss and that extends the Indian charge well beyond the ordinary payer-based test. Where royalties or fees do not arise in either State under sub-paragraph (a) — the case of a third-State payer with no permanent establishment in either State — but the royalties relate to a right or property used, or the fees relate to services performed, in one of them, they are deemed to arise there. Only a handful of Indian treaties carry this limb; Syria and Georgia are the others in this group.
The notified commencement is unusual and the Gazette does not resolve it. Article 31(3)(b) gives the Agreement effect in India "in respect of income derived or capital owned in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force", which on an entry into force of 4 December 2013 points to the fiscal year beginning 1 April 2014. The notification, however, directs that the provisions "shall be given effect to in the Union of India with effect from date of entry into force of said agreement i.e., the 4th day of December, 2013." For income arising between 4 December 2013 and 31 March 2014 the two readings differ, and nothing in the Gazette text reconciles them. Note also that the Albanian counterparty is the Council of Ministers of the Republic of Albania, not a body styled "the Government", which matters when applying provisions framed by reference to "the Government" of a Contracting State — Art. 11(3)(a) among them.

What this page does not tell you. The source for this record is a scanned image of the Gazette, and that limitation should be stated plainly because it was tested for this pass. The Income Tax Department's notification archive holds an entry for Notification No. 2/2014 / S.O. 47(E), but the entry carries no html text of the instrument — it provides only the linked Gazette pdf, and that pdf is a 37-page file consisting entirely of page images, with thirty-seven embedded images, no embedded fonts and no text layer of any kind. There is therefore no clean machine-readable government text of the India-Albania Agreement available from the department's site, unlike Georgia, for which a published synthesised text supplies the same instrument as text. This record accordingly rests on the page images, in which the Hindi text occupies pages 1 to 20 and the English text pages 21 to 37; only the English was worked from. The scan is legible throughout the English pages and no article was unreadable, but no machine-readable collation of the full text was possible, and the detail recorded here is confined to what those page images established: Articles 5, 10 to 13, 23, 29 and 30 to 32 in particular. Articles 6 to 9, 14 to 22 and 24 to 28 are not set out in detail. This record reproduces the Agreement as notified in 2014 and nothing later; no Protocol was annexed, so if any protocol was concluded afterwards it is not covered here. Albania's MLI position is not established from the sources used here: no synthesised text for Albania appears in the department's collection, and the conclusion that no principal purposes test applies rests on that absence and on the notified text carrying no modification marker, not on a check of the OECD Depositary listing, which would settle whether Albania has signed or ratified the MLI and whether India has listed this Agreement as a Covered Tax Agreement. The record does not resolve the mismatch between the effect date directed by the notification (4 December 2013) and the effect rule in Article 31(3)(b) (the fiscal year beginning on or after 1 April next following entry into force). Art. 11(3)(c) contemplates further exempt institutions agreed "through exchange of letters" between the competent authorities; whether any such exchange has occurred since 2013, and which institutions it names, is not established from the sources used here, so as matters stand only the government limb and the four named banks operate. Article 29 supplies no criteria for the exercise of the competent-authority discretion in paragraph 4, does not say on whom the burden of establishing qualified-person status lies, and does not define "actively carries on business" for the purposes of paragraph 3; Art. 29(5) ties the recognised-stock-exchange definition to the Securities Contracts (Regulation) Act, 1956 without saying whether the reference is to that Act as it stood in 2013 or as amended from time to time. Nothing here addresses Indian domestic overrides such as section 206AA, the surcharge and cess payable on top of the treaty rate, the certification requirements in Rule 21AB, or Albanian domestic law.

The India–Albania tax treaty