India-Greece DTAA: Complete Guide to the Double Taxation Avoidance Agreement

Quick answer: The India-Greece DTAA, signed in 1965, is one of India's oldest live tax treaties and works nothing like a modern one. Dividends, interest and royalties carry no treaty rate cap at all — India taxes them at its full domestic rate of 20% under Article VIII, Article IX and Article VII, and there is no fees-for-technical-services article whatsoever. The treaty's real value lies in its permanent establishment rules, its zero-month construction PE threshold, and the exemption method it uses to relieve double taxation both ways under Article XVII — not in any withholding-rate relief.

Key takeaways:

• Dividends (Article VIII), interest (Article IX) and royalties (Article VII) are exclusive source-taxing rights with no treaty cap — India withholds at its full domestic rate of 20%
• There is no fees-for-technical-services article and no residual/other-income article, so nothing in the treaty limits India's domestic charge on management fees or technical service payments
• A construction, installation or assembly project is a permanent establishment from day one — Article II(1)(h)(bb) sets no time threshold at all
• Double taxation is relieved by the exemption method under Article XVII, not by tax credit — unusually, Greece must exempt Indian-source income that India is entitled to tax
• The treaty is a Covered Tax Agreement under the MLI: the Principal Purpose Test applies, and India (but not Greece) also applies a Simplified Limitation on Benefits

Overview and Dates

The India-Greece Double Taxation Avoidance Agreement (DTAA) was signed at New Delhi on 11 February 1965 and entered into force on 17 March 1967, following the exchange of ratification instruments required by Article XX. It is one of India's oldest live tax treaties, predating the OECD Model Tax Convention that shaped most treaties India signed from the 1980s onward — which is why there are no withholding-rate caps, no fees-for-technical-services article, no non-discrimination clause, no limitation-of-benefits article, no most-favoured-nation clause, and no beneficial-ownership test anywhere in the text. The preamble records only a wish "to conclude an Agreement for the avoidance of double taxation of income" — there is no "prevention of fiscal evasion" limb and no capital or wealth-tax article. It was notified in India by GSR 394, dated 17 March 1967, under section 90 of the Income-tax Act, 1961, and, under Article XX(2), takes effect in India for any assessment year beginning on or after 1 April 1964.

Article I limits the Agreement to the taxes in force in 1965 — India's income-tax, super tax and surcharge; Greece's personal and corporate income taxes plus a shipping-freight tax — but Article I(2) extends it to any substantially similar tax introduced later, so India's Income-tax Act, 2025 is covered by succession. Article II(1)(f) defines "resident of Greece" and "resident of India" in mutually exclusive terms: a person is resident of one state only if resident there for tax purposes and not resident in the other. A company is resident where incorporated or "wholly managed and controlled" — stricter than the modern place-of-effective-management test. Because the treaty has no tie-breaker article, a genuine dual resident falls outside the Agreement altogether (Greece reserved out of the MLI's dual-resident tie-breaker — see below). "Greece" is still defined in Article II(1)(a) as "the territory of the Kingdom of Greece," wording the 1974 abolition of the monarchy never updated.

Permanent Establishment Rules

Permanent establishment (PE) is a definition inside Article II(1)(h), not a standalone article, with Article III supplying the profit-attribution rule. The core test — "a fixed place of business in which the business of the enterprise is wholly or partly carried on" — lists a place of management, branch, office, factory, workshop, warehouse, mine, quarry or extraction site as PEs (II(1)(h)(aa)); a warehouse counts outright, unusual even by UN Model standards. The sharpest divergence from every other Indian treaty is II(1)(h)(bb): a construction, installation or assembly project creates a PE with no minimum duration at all — most Indian treaties require 6 to 12 months, this one requires none, and it says nothing about supervisory activities.

There is no services PE and no anti-fragmentation rule. The agency PE test (II(1)(h)(dd)) catches a person who habitually negotiates and concludes contracts, maintains a delivery stock, or habitually secures orders for the enterprise or its group. The independent-agent exclusion (II(1)(h)(ee)) is unusually narrow — only "a broker of a genuinely independent status" — and the preparatory/auxiliary exclusion (II(1)(h)(cc)) covers only mere storage or exclusive purchasing, not display, delivery or research. A subsidiary is not, of itself, a PE of its parent (II(1)(h)(ff)). Article III attributes arm's-length profits to a PE and allows estimation "on a reasonable basis" where exact figures are unobtainable, with no force-of-attraction or head-office-expense rule. Article III(3) excludes rents, royalties, interest, dividends, management charges and personal-service remuneration from "industrial or commercial profits" altogether, so the treaty's own business-profits article never reaches them, however closely connected to a PE. India's domestic law still can: section 59 of the Income-tax Act, 2025 (section 44DA of the Income-tax Act, 1961) computes royalties and fees for technical services effectively connected with an Indian permanent establishment as business profits on a net basis, and section 207(2) excludes that income from its flat 20% rate.

Business Profits and Associated Enterprises

Article III(1) taxes business profits only in the enterprise's home state unless a PE exists in the other state, in which case profits attributable to the PE are taxable there. Article IV — titled "Business Profit" but functioning as the transfer-pricing article — lets either state adjust an associated enterprise's profits to an arm's-length basis, but has no corresponding-adjustment paragraph of its own requiring the other state to relieve the primary adjustment. Neither country listed this Agreement under its MLI Article 17(3)(a) reservation, and no synthesised text has been published for it; relief from the resulting economic double taxation is pursued through the mutual agreement procedure in Article XIX.

Dividends, Interest and Royalties: No Treaty Rate Caps

Article VIII (dividends), Article IX (interest) and Article VII (royalties) each give the source state — the payer's state — the exclusive right to tax that income, and none of the three caps the rate. Article VIII: "Dividends paid by a company which is a resident of one of the territories to a resident of the other territory may be taxed only in the first-mentioned territory" — the payer's state. Article IX and Article VII use equivalent "may be taxed only in that other territory" wording, where "that other territory" is again the source state.

Because there is no cap, an Indian payer withholds at India's ordinary domestic rate: 20% on dividends under section 207(1) (Table, Sl. No. 1) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961), and 20% on royalties under section 207(2) (Table, Sl. No. 1). None of the government, central-bank or shareholding-tier exemptions found in India's newer treaties exist here — Article IX is a single unnumbered sentence with nothing else attached. The trade-off runs the other way: because India has the exclusive right to tax this income, Article XVII(3) requires Greece to exempt it. A Greek recipient pays India's full 20% and nothing further in Greece — this treaty is not "more beneficial" than domestic law on any of these heads. See our dedicated withholding tax page for the full rate breakdown.

Immovable Property, Mining Royalties and the FTS Gap

Article X gives the situs state the exclusive right to tax immovable-property income, and deems "any rent or royalty or other income derived from the operation of a mine, quarry or any other place of extraction of natural resources" to be income from immovable property. Article VII's royalty definition expressly excludes these payments, so mineral-extraction royalties follow Article X's situs rule instead.

There is no article anywhere in this treaty for fees for technical services, management fees or consultancy income — no combined royalty-and-FTS clause, no "make available" test, and no residual "other income" article. Article III(3) removes "management charges" and "remuneration for labour or personal services" from business profits too, so nothing allocates the taxing right over these payments. Article XVII(1) then applies India's domestic law by default — "except where express provision to the contrary is made in this Agreement" — so India taxes fees for technical services at 20% under section 207(2) (Table, Sl. No. 2) of the Income-tax Act, 2025, with no treaty relief at all.

Capital Gains — A Pure Situs Rule

Article XI covers all capital gains in one sentence: gains "may be taxed only in the territory in which the capital asset is situated at the time of such sale, exchange or transfer." There is no paragraph-by-paragraph structure — no separate rule for PE assets, ships, aircraft or shares, and no residual "seller's state" catch-all. For a Greek resident selling shares in an Indian company, the shares are situated in India, so India taxes the gain exclusively at domestic rates, and Greece must exempt it under Article XVII(3). There is no land-rich test, no minimum-shareholding threshold and no grandfathering date of the kind added to newer treaties after 2017 — none of that machinery was ever needed for a treaty this old.

Shipping, Air Transport and Individuals

Article V exempts an enterprise's aircraft income from tax in the other state unless the aircraft is operated wholly or mainly between places within that other state — a place-of-operation test, not the modern place-of-effective-management standard. Article VI handles shipping differently: both states may tax, but the source state reduces its tax by 50%, creditable against the residence state's tax; the mirror rule is suspended while Greece does not tax foreign shipping income, in which case India taxes exclusively. Coastal traffic is excluded, and section 172(1)–(6) of the Income-tax Act, 1961 continues to apply alongside Article VI.

For individuals, Article XII stops the host state taxing remuneration paid out of the other state's public funds for services rendered in the host state, unless the recipient is a citizen of the host state — the rule is extended to the Reserve Bank of India, the Public Railways Authorities and the Postal Administration of India, and to the Bank of Greece, Greek State Railways and the Greek Postal and Telegraphic Administration — and it does not apply to services connected with a trade or business carried on for profit. Article XIII sends pensions and annuities to the source state exclusively. Article XIV covers professional services and employment income — including directors' fees, since there is no separate directors' article — taxing them where performed, subject to an exemption for stays not exceeding 183 days (counted differently in each direction: "the calendar year immediately preceding the relevant fiscal year" for an Indian resident in Greece, and "the relevant 'previous year'" for a Greek resident in India), plus three further conditions. Article XV exempts visiting professors and teachers for up to two years; Article XVI exempts students and apprentices on remittances and study-related earnings.

Elimination of Double Taxation: The Exemption Method

Article XVII relieves double taxation by exemption, not credit — a point some existing summaries of this treaty get backwards. Article XVII(2) requires India to exempt Greek-source income Greece has taxed under the treaty; Article XVII(3) is the mirror, requiring Greece to exempt Indian-source income India has taxed. Article XVII(4) still lets each state use exempted income to set the graduated rate on remaining income — exemption with progression. The only credit mechanism anywhere in the treaty is the 50% shipping reduction in Article VI; for a Greek investor with Indian dividend, interest, royalty or capital-gains income, Greece gives up its own tax entirely rather than granting a credit — which, combined with the absence of any Indian rate cap, is the treaty's real source of value.

Anti-Abuse Rules: GAAR, the PPT and an Asymmetric Simplified LOB

The treaty itself has no limitation-of-benefits article, no principal-purpose clause, no beneficial-ownership test in Articles VII, VIII or IX, and no MFN clause — there has never been a protocol. Anti-abuse protection instead comes from India's domestic General Anti-Avoidance Rule (GAAR, section 159(6) of the Income-tax Act, 2025; section 90(2A) of the Income-tax Act, 1961) and the OECD's Multilateral Instrument. India and Greece both listed each other under the MLI — India as CTA #26 (deposited 25 June 2019), Greece as CTA #19 (deposited 30 March 2021) — so the MLI's Principal Purpose Test applies in full. What makes this treaty distinctive is the Simplified Limitation on Benefits (SLOB): India opted in, but Greece chose an MLI option under which its own SLOB applies only where the other state has also opted in — so India applies the SLOB test alongside the PPT, while Greece does not apply one at all. Greece reserved out of nearly every other substantive MLI article, including the dual-resident tie-breaker, the dividend transfer-transaction rule, the land-rich-shares rule, and the methods-of-elimination article — so Article XVII's exemption method and the Article II(1)(h) PE definition survive the MLI unchanged.

How to Claim Treaty Benefits

A Greek resident needs a Tax Residency Certificate from Greece's Independent Authority for Public Revenue (AADE), which issues e-TRCs automatically in Greek and English with an electronic seal, or a paper TRC with a wet-ink signature where an apostille is required. On the Indian side, the non-resident must also electronically file Form 41 (formerly Form 10F); the treaty-more-beneficial comparison under section 159(4) of the Income-tax Act, 2025 (section 90(2) of the Income-tax Act, 1961) simply resolves to India's domestic rate, since the treaty sets none for dividends, interest or royalties. The Indian payer deducts tax under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961) and files Form 145 (formerly Form 15CA) before remitting; a Chartered Accountant's certificate in Form 146 (formerly Form 15CB) is needed only where the taxable remittance exceeds INR 5 lakh and no section 395 certificate has been obtained. A payee uncertain of the rate can apply under section 395(1) (section 197 of the 1961 Act) for a lower-deduction certificate, though there is ordinarily nothing to certify below the domestic rate. Related-party transactions also require Form 48 (formerly Form 3CEB); unresolved disputes go to Article XIX's mutual agreement procedure.

Worked Example

A Greek investment company holding shares in an Indian private limited company receives ₹50,00,000 in dividends, with no PE in India. Article VIII gives India the exclusive, uncapped right to tax the dividend, so the Indian company withholds ₹10,00,000 (20% under section 207(1), Table, Sl. No. 1) plus surcharge and cess, remitting the balance. Because India taxed the dividend "in accordance with this Agreement," Article XVII(3) requires Greece to exempt the full ₹50,00,000 — the Greek company owes India's tax and nothing more. Compare the same ₹50,00,000 paid to a German shareholder, where Article 10(2) of the India-Germany treaty caps Indian tax at 10%: this treaty offers no equivalent cap, so the entire benefit is the Greek-side exemption, not any reduction at the Indian source.

Common Mistakes

• Treating this as a rate-reducing treaty. Articles VIII, IX and VII do not cap dividends, interest or royalties — India withholds at its full 20% domestic rate.
• Applying a construction-PE grace period. Article II(1)(h)(bb) has no minimum duration; a project can create a PE on day one.
• Assuming a services PE exists. There is no 90-day or 183-day services test in this treaty.
• Citing MFN or an amending protocol. There has never been a protocol to this Agreement, and no MFN clause.
• Importing India-Germany or India-Denmark style interest exemptions. Article IX has no government, central-bank or institutional carve-out of any kind.
• Calling Article XVII a credit mechanism. It is an exemption method; the only credit in the treaty is the 50% shipping rule in Article VI.

Frequently Asked Questions

What is the India-Greece DTAA?

The India-Greece DTAA is a 1965 tax treaty, in force since 17 March 1967, and one of India's oldest live agreements. Unlike modern treaties, it sets no withholding-rate caps on dividends, interest or royalties — India taxes all three at its full domestic rate. Its value lies instead in its permanent establishment and capital gains rules, and in requiring Greece to exempt Indian-source income under Article XVII.

Does the India-Greece DTAA reduce withholding tax on dividends, interest or royalties?

No. Article VIII (dividends), Article IX (interest) and Article VII (royalties) each give India, as the source state, the exclusive right to tax this income with no cap at all. An Indian payer withholds at the full domestic rate of 20% regardless of the treaty. The benefit runs the other way: Article XVII(3) requires Greece to exempt this income once India has taxed it.

How does the India-Greece DTAA define a permanent establishment?

Permanent establishment is defined in Article II(1)(h) as a fixed place of business, and a warehouse counts as one outright. A construction, installation or assembly project creates a PE with no minimum time threshold at all — unlike most Indian treaties, which require 6 to 12 months. There is no services PE test, and the independent-agent exclusion covers only genuinely independent brokers.

Is there a fees-for-technical-services rate under the India-Greece DTAA?

No. The treaty has no fees-for-technical-services article, no combined royalty-and-FTS clause and no residual other-income article. Article III(3) excludes management charges and personal-service remuneration from business profits entirely, so nothing in the treaty limits India's taxing right. India taxes these payments at its ordinary domestic rate of 20% with no treaty relief available.

How does the India-Greece DTAA relieve double taxation?

By exemption, not credit. Article XVII(2) requires India to exempt Greek-source income that Greece has taxed under the treaty, and Article XVII(3) requires Greece to exempt Indian-source income that India has taxed. Article XVII(4) still lets each state use the exempted income when calculating the graduated rate on the taxpayer's other income. The only credit mechanism in the whole treaty is the 50% shipping reduction in Article VI.

Does the MLI change the India-Greece DTAA?

Yes, but narrowly. Both countries listed each other as a Covered Tax Agreement, so the MLI's Principal Purpose Test applies to deny abusive treaty claims. India also applies a Simplified Limitation on Benefits, but Greece does not, making this an asymmetric anti-abuse standard. Greece reserved out of nearly every other MLI article, so Article XVII's exemption method and the PE definition remain unmodified.