Protocol of Exchange of Instruments of Ratification

PROTOCOL OF EXCHANGE OF INSTRUMENTS OF RATIFICATION

The undersigned, Elizabeth Frawley Bagley, Ambassador of the United States of America, and Dr. Jaime Gama, Minister of Foreign Affairs of the Portuguese Republic, being duly authorized by their respective Governments, have met for the purpose of exchanging instruments of ratification of the Convention between the Government of the United States of America and the Portuguese Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, together with a related Protocol, signed at Washington on 6 September 1994.

The United States instrument of ratification repeats the understandings as stated in the resolution of the Senate of the United States of America. The instrument of ratification states:

(a) Understanding: That if the Portuguese Republic changes its internal policy with respect to government ownership of commercial banks in a manner that has the effect of exempting from U.S. tax the U.S.-source interest paid to Portuguese commercial banks under paragraph 3(b) of Article 11, the Government of Portugal shall so notify the Government of the United States and the two Governments shall enter into consultations with a view to restoring the balance of benefits under the proposed Convention.

(b) Understanding: That the second sentence of paragraph 2 of Article 2 of the proposed Convention shall be understood to include the specific agreement that the Portuguese Republic regularly shall inform the Government of the United States of America as to the progress of all negotiations with and actions taken by the European Union or any representative organization thereof, which may affect the application of paragraph 3(b) of Article 10 of the proposed Convention.

The Portuguese Government has accepted these understandings. The respective instruments of ratification of the aforesaid Convention having been examined and found to be in due form, the exchange took place this day.

In accordance with Article 30, paragraph 2, the Convention shall enter into force upon the exchange of instruments of ratification, that is on this eighteenth day of December 1995.

In witness whereof, the respective Plenipotentiaries have signed the Present Protocol of Exchange of Instruments of Ratification.

Done in duplicate, in the English and Portuguese languages, at Lisbon this eighteenth day of December 1995.