Signed on 14th March 2013
This Convention will enter into force on 12 June 2014.
Effective in the United Kingdom:
(i) in respect of withholding taxes, on income derived on or after
12 June 2014;
(ii) in respect of income tax and capital gains tax, for any year of
assessment beginning on or after 6 April 2015;
(iii) in respect of corporation tax, for any financial year beginning on or
after 1 April 2015; and
Effective in Spain:
(i) in respect of withholding taxes, on income derived on or after
12 June 2014;
(ii) in respect of income taxes and other taxes (other than withholding
taxes), for any tax year beginning on or after 1 January 2015.
HM Revenue & Customs
April 2014
CONVENTION BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND
NORTHERN IRELAND AND THE KINGDOM OF SPAIN
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
The United Kingdom of Great Britain and Northern Ireland, and the Kingdom of Spain
desiring to conclude a Convention for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, have
agreed as follows:
Article 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
TAXES COVERED
1. This Convention shall apply to taxes on income and on capital imposed on
behalf of a Contracting State or of its political subdivisions or local authorities,
irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed
on total income, on total capital, or on elements of income or of capital, including taxes
on gains from the alienation of movable or immovable property, as well as taxes on
capital appreciation.
3. The existing taxes to which the Convention shall apply are in particular:
a) in Spain:
(i) the income tax on individuals;
(ii) the corporation tax;
(iii) the income tax on non residents;
(iv) the capital tax; and
(v) local taxes on income and on capital;
(hereinafter referred to as “Spanish Tax”);
b) in the United Kingdom:
(i) the income tax;
(ii) the corporation tax; and
(iii) the capital gains tax;
(hereinafter referred to as “United Kingdom tax”).
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4. The Convention shall apply also to any identical or substantially similar taxes
that are imposed after the date of signature of the Convention in addition to, or in place
of, the existing taxes. The competent authorities of the Contracting States shall notify
each other of significant changes that have been made in their taxation laws.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
a) the term “Spain” means the Kingdom of Spain and, when used in a
geographical sense, means the territory of the Kingdom of Spain, including inland
waters, the air space, the territorial sea and any maritime area outside the territorial
sea upon which, in accordance with international law and on application of its domestic
legislation, the Kingdom of Spain exercises or may exercise in the future jurisdiction or
sovereign rights with respect to the sea bed, its subsoil and superjacent waters, and
their natural resources;
b) the term “United Kingdom” means Great Britain and Northern Ireland, including its
inland waters, air space and territorial sea, and any maritime area outside its territorial
sea within which, in accordance with international law and on application of its
domestic legislation concerning the Continental Shelf, the United Kingdom exercises or
may exercise in the future jurisdiction or sovereign rights with respect to the sea bed,
its subsoil and superjacent waters, and their natural resources;
c) the terms “a Contracting State” and “the other Contracting State” mean Spain or
the United Kingdom as the context requires;
d) the term “person” includes an individual, a trust, a company, and any other body
of persons;
e) the term “company” means any body corporate or any entity that is treated as a
body corporate for tax purposes;
f) the term “enterprise” applies to the carrying on of any business;
g) the terms “enterprise of a Contracting State” and “enterprise of the other
Contracting State” mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other Contracting
State;
h) the term “international traffic” means any transport by a ship or aircraft operated
by an enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;
i) the term “competent authority” means:
(i) in Spain, the Minister of Economy and Finance or his authorised
representative;
(ii) in the United Kingdom, the Commissioners for Her Majesty’s Revenue and
Customs or their authorised representative;
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j) the term “national” means:
(i) in relation to Spain:
aa) any individual possessing the nationality of Spain;
bb) any legal person, partnership or association deriving its status as such
from the laws in force in Spain.
(ii) in relation to the United Kingdom, any British citizen, or any British subject
not possessing the citizenship of any other Commonwealth country or territory,
provided he has the right of abode in the United Kingdom; and any legal person,
partnership, association or other entity deriving its status as such from the laws in
force in the United Kingdom;
k) the term “business” includes the performance of professional services and of
other activities of an independent character;
l) the term “pension scheme” means:
(i) in Spain:
any scheme, fund, mutual benefit institution or other entity established in
Spain
(aa) which manages the right of its beneficiaries to receive income or
capital upon retirement, survivorship, widowhood, orphanhood, or
disability; and
(bb) contributions to which are eligible for tax benefits in the form of
reductions in the taxable base of personal taxes.
(ii) in the United Kingdom:
any plan, scheme, fund, trust or other arrangement established in the
United Kingdom which:
(aa) is generally exempt from income taxation; and
(bb) operates principally to administer or provide pension or
retirement benefits or to earn income for the benefit of one or more such
arrangements.
2. As regards the application of the Convention at any time by a Contracting State,
any term not defined therein shall, unless the context otherwise requires, have the
meaning that it has at that time under the law of that State for the purposes of the taxes
to which the Convention applies, any meaning under the applicable tax laws of that
State prevailing over a meaning given to the term under other laws of that State.
Article 4
RESIDENT
1. For the purposes of this Convention, the term “resident of a Contracting State”
means any person who, under the laws of that State, is liable to tax therein by reason
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of his domicile, residence, place of management, place of incorporation or any other
criterion of a similar nature, and also includes that State and any political subdivision or
local authority thereof. This term, however, does not include any person who is liable to
tax in that State in respect only of income or capital gains from sources in that State or
capital situated therein. The term “resident of a Contracting State” includes a pension
scheme established in that State.
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 only of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);
b) if the State in which he has his centre of vital interests cannot be
determined, or if he does not have a permanent home available to him
in either State, he shall be deemed to be a resident only of the State in
which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident only of the State of which he is a national;
d) if he is a national of both 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 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be a
resident only of the State in which its place of effective management is situated.
4. For the purposes of applying this Convention:
a) an item of income, profit or gain:
(i) derived from a Contracting State through a partnership, a trust,
group of persons or other similar entity that is established in the other
Contracting State; and
(ii) treated as the income of beneficiaries, members or participants
of that partnership, trust, group of persons or other similar entity under
the tax laws of that other Contracting State;
shall be eligible for the benefits of the Convention that would be granted if it
were directly derived by a beneficiary, member or participant of that partnership,
trust, group of persons or other similar entity who is a resident of that other
Contracting State, to the extent that such beneficiaries, members or participants
are residents of that other Contracting State and satisfy any other conditions
specified in the Convention, without regard to whether the income is treated as
the income of such beneficiaries, members or participants under the tax laws of
the first-mentioned State;
b) an item of income, profit or gain:
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(i) derived from a Contracting State through a partnership, a trust,
group of persons or other similar entity that is established in the other
Contracting State; and
(ii) treated as the income of that partnership, trust, group of persons
or other similar entity under the tax laws of that other Contracting State;
shall be eligible for the benefits of the Convention that would be granted to a
resident of that other Contracting State, without regard to whether the income is
treated as the income of that partnership, trust, group of persons or other
similar entity under the tax laws of the first-mentioned State, if such partnership,
trust, group of persons or other similar entity is a resident of that other
Contracting State and satisfies any other conditions specified in the Convention;
c) an item of income, profit or gain:
(i) derived from a Contracting State through a partnership, trust,
group of persons or any other similar entity that is established in that
Contracting State;
(ii) treated as the income of beneficiaries, members or participants
of that partnership, trust, group of persons or other similar entity under
the tax laws of the other Contracting State; and
(iii) treated as the income of that partnership, trust, group of persons
or other similar entity under the tax laws of the first-mentioned State;
can be taxed under the tax laws of the first-mentioned State without any
restriction;
d) an item of income, profit or gain:
(i) derived from a Contracting State through a partnership, trust,
group of persons or other similar entity that is established in that
Contracting State; and
(ii) treated as the income of that partnership, trust, group of persons
or other similar entity under the tax laws of the other Contracting State;
shall not be eligible for the benefits of the Convention;
e) an item of income, profit or gain:
(i) derived from a Contracting State through a partnership, group of
persons or any other similar entity that is established in a State other
than the Contracting States; and
(ii) treated as the income of the beneficiaries, members or
participants of that partnership, group of persons or other similar entity
under the tax laws of the other Contracting State and under the tax laws
of the State where the entity is established;
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shall be eligible for the benefits of the Convention that would be granted if it
were directly derived by a beneficiary, member or participant of that partnership,
group of persons or other similar entity who is a resident of that other
Contracting State, to the extent that such beneficiaries, members or participants
are residents of that other Contracting State and satisfy any other conditions
specified in the Convention, without regard to whether the income is treated as
the income of such beneficiaries, members or participants under the tax laws of
the first-mentioned State provided that the State where the partnership, group
of persons or other similar entity is established has concluded with the first-
mentioned State an agreement containing a provision for the exchange of
information with a view to the prevention of fiscal evasion;
f) an item of income, profit or gain:
(i) derived from a Contracting State through a partnership, group of
persons or any other similar entity that is established in a State other
than the Contracting States; and
(ii) treated as the income of that partnership, group of persons or
other similar entity under the tax laws of the other Contracting State;
shall not be eligible for the benefits of the Convention.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, 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" includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop; and
f) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources.
3. A building site or construction or installation project constitutes a permanent
establishment only if it lasts more than twelve months.
4. Notwithstanding the preceding provisions of this Article, the term "permanent
establishment" shall be deemed not 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;
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c) the maintenance of a stock of goods 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 of 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;
f) the maintenance of a fixed place of business solely for any combination
of activities mentioned in subparagraphs a) to e), provided that the overall activity
of the fixed place of business resulting from this combination is of a preparatory or
auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other
than an agent of an independent status to whom paragraph 6 applies - is acting on
behalf of an enterprise and has, and habitually exercises, in a Contracting State an
authority to conclude contracts on behalf of the enterprise, that enterprise shall be
deemed to have a permanent establishment in that State in respect of any activities
which that person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph 4 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.
6. An enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that 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.
7. 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 have the meaning which it has under 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; ships, boats and aircraft shall not 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 form of immovable property.
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4. Where the ownership of shares or other rights directly or indirectly entitles the
owner of such shares or rights to the enjoyment of immovable property, the income
from the direct use, letting or use in any other form of such right to the enjoyment may
be taxed in the Contracting State in which the immovable property is situated.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from
immovable property of an enterprise.
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 that 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 determining 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. 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.
5. 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.
6. Where profits include items of income or capital gains which are dealt with
separately in other Articles of this Convention, then the provisions of those Articles
shall not be affected by the provisions of this Article.
Article 8
SHIPPING AND AIR TRANSPORT
1. Profits of an enterprise of a Contracting State from the operation of ships or
aircraft in international traffic shall be taxable only in that State.
2. The provisions of paragraph 1 shall also apply to profits from the participation in
a pool, a joint business or an international operating agency.
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Article 9
ASSOCIATED ENTERPRISES
1. 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
commercial or financial relations which differ from those which would be made between
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 that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State –
and taxes accordingly – profits on which an enterprise of the other State has been
charged to tax in that other Contracting State and that other State agrees that the
profits so included are profits which would have accrued to the enterprise of the
first-mentioned State if the conditions made between the two enterprises had been
those which would have been made between independent enterprises, then that other
State shall make an appropriate adjustment to the amount of the tax charged therein
on those profits. In determining such adjustment, due regard shall be had to the other
provisions of this Convention and the competent authorities of the Contracting States
shall if necessary consult each other.
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:
a) 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
beneficial owner of the dividends is a resident of the other Contracting State,
the tax so charged shall not exceed:
(i) 10 per cent of the gross amount of the dividends, except as
provided in subparagraph a) (ii);
(ii) 15 per cent of the gross amount of the dividends where those
dividends are paid out of income (including gains) derived directly
or indirectly from immovable property within the meaning of
Article 6 by an investment vehicle which distributes most of this
income annually and whose income from such immovable
property is exempted from tax;
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b) shall, notwithstanding the provisions of subparagraph a), be exempt
from tax in the Contracting State of which the company paying the dividends is
a resident if the beneficial owner of the dividends is:
(i) a company which is a resident of the other Contracting State and
controls, directly or indirectly, at least 10 per cent of the capital in
the company paying the dividends (other than where the
dividends are paid by an investment vehicle as mentioned in
subparagraph a) (ii)); or
(ii) a pension scheme which is a resident of the other Contracting
State.
This paragraph shall not 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 this Article means income from shares,
“jouissance” shares or “jouissance” rights, mining shares, founders' shares or other
rights, not being debt-claims, participating in profits, as well as any other item which is
subjected to the same taxation treatment as income from shares by the laws 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 dividends, being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident, through a
permanent establishment situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent establishment. In such
case the provisions of Article 7 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 not 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 dividends
are paid is effectively connected with a permanent establishment 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 beneficially owned by a resident of
the other Contracting State shall be taxable only in that other Contracting State.
2. The term “interest” as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtor's profits, and in particular, income from government securities
and income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures, as well as all other income assimilated to income
from money lent by the taxation laws of the State in which the income arises. Penalty
charges for late payment shall not be regarded as interest for the purpose of this
Article. The term shall not include any item which is treated as a dividend under the
provisions of Article 10.
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3. The provisions of paragraph 1 shall not 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, and the debt-claim in respect of which the interest is paid is effectively
connected with such permanent establishment. In such case the provisions of Article 7
shall apply.
4. 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 paid
exceeds, for whatever reason, 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 laws of each Contracting
State, due regard being had to the other provisions of this Convention.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and beneficially owned by a resident of
the other Contracting State shall be taxable only in that other State.
2. 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, 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, or for payments of any kind
in respect of cinematograph films and recordings for radio and television.
3. The provisions of paragraph 1 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 and the right or property in respect of which the royalties are paid is
effectively connected with such permanent establishment. In such case the provisions
of Article 7 shall apply.
4. 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
paid exceeds, for whatever reason, 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 laws of each
Contracting State, due regard being had to the other provisions of this Convention.
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 State.
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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 including such gains from the alienation of such a
permanent establishment (alone or with the whole enterprise) may be taxed in that
other Contracting State.
3. Gains derived by a resident of a Contracting State from the alienation of ships or
aircraft operated in international traffic by an enterprise of that State or movable
property pertaining to the operation of such ships or aircraft, shall be taxable only in
that State.
4. Gains derived by a resident of a Contracting State from the alienation of shares,
other than shares in which there is substantial and regular trading on a Stock
Exchange, or comparable interests, deriving more than 50 per cent of their value
directly or indirectly from immovable property situated in the other Contracting State
may be taxed in that other State.
5. Gains from the alienation of shares or other rights, which directly or indirectly
entitle the owner of such shares or rights to the enjoyment of immovable property
situated in a Contracting State, may be taxed in that State.
6. Gains from the alienation of any property other than that referred to in
paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the
alienator is a resident.
Article 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is exercised in
the other Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period
commencing or ending in the fiscal year concerned, and
b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State, and
c) the remuneration is not borne by a permanent establishment which the
employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in
respect of an employment exercised aboard a ship or aircraft operated in international
traffic may be taxed in the Contracting State in which the enterprise operating the ship
or aircraft is resident.
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Article 15
DIRECTORS' FEES
Directors' fees and other similar payments derived by a resident of a Contracting State
in his capacity as a member of the board of directors of a company which is a resident
of the other Contracting State may be taxed in that other State.
Article 16
ARTISTES AND SPORTSMEN
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a
resident of a Contracting State as an entertainer, such as a theatre, motion picture,
radio or television artiste, or a musician, or as a sportsman, from his personal activities
as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a
sportsman in his capacity as such accrues not to the entertainer or sportsman but to
another person, that income may, notwithstanding the provisions of Articles 7 and 14,
be taxed in the Contracting State in which the activities of the entertainer or sportsman
are exercised.
Article 17
PENSIONS
Subject to the provisions of paragraph 2 of Article 18, pensions and other similar
remuneration paid to an individual who is a resident of a Contracting State, shall be
taxable only in that State.
Article 18
GOVERNMENT SERVICE
1.
a) Salaries, wages and other similar remuneration paid by a Contracting State or a
political subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision or authority shall be taxable only in
that State.
b) However, such salaries, wages and other similar remuneration shall be taxable
only in the other Contracting State if the services are rendered in that State and
the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.
2.
a) Notwithstanding the provisions of paragraph 1, pensions and other similar
remuneration paid by, or out of funds created by, a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be taxable only in that
State.
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b) However, such pensions and other similar remuneration shall be taxable only in
the other Contracting State if the individual is a resident of, and a national of, that
State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages,
pensions, and other similar remuneration in respect of services rendered in connection
with a business carried on by a Contracting State or a political subdivision or a local
authority thereof.
Article 19
STUDENTS
Payments which a student or business apprentice who is or was immediately before
visiting a Contracting State a resident of the other Contracting State and who is present
in the first-mentioned State solely for the purpose of his education or training receives
for the purpose of his maintenance, education or training shall not be taxed in that
State, provided that such payments arise from sources outside that State.
Article 20
OTHER INCOME
1. Items of income beneficially owned by a resident of a Contracting State, wherever
arising, not dealt with in the foregoing Articles of this Convention, shall be taxable only
in that State.
2. Notwithstanding the provisions of paragraph 1, where an amount of income is
paid to a resident of a Contracting State out of income received by trustees or personal
representatives administering the estates of deceased persons and those trustees or
personal representatives are residents of the other Contracting State, that amount shall
be treated as arising from the same sources, and in the same proportions, as the
income received by the trustees or personal representatives out of which that amount
is paid.
3. The provisions of paragraph 1 shall not apply to income, other than income
from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner
of such income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, and the
right or property in respect of which the income is paid is effectively connected with
such permanent establishment. In such case the provisions of Article 7 shall apply.
4. Where, by reason of a special relationship between the resident referred to in
paragraph 1 and some other person, or between both of them and some third person,
the amount of the income referred to in that paragraph exceeds the amount (if any)
which would have been agreed upon between them in the absence of such a
relationship, the provisions of this Article shall apply only to the last-mentioned amount.
In such a case, the excess part of the income shall remain taxable according to the
laws of each Contracting State, due regard being had to the other applicable provisions
of this Convention.
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Article 21
CAPITAL
1. Capital represented by immovable property referred to in Article 6, owned by a
resident of a Contracting State and situated in the other Contracting State, may be
taxed in that other State.
2. Capital represented by 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 may be taxed in that other State.
3. Capital represented by ships and aircraft operated in international traffic by an
enterprise of a Contracting State and by movable property pertaining to the operation
of such ships and aircraft shall be taxable only in that Contracting State.
4. Capital constituted by shares or other rights in a company or any other body of
persons, deriving more than 50 per cent of their value directly or indirectly from
immovable property situated in a Contracting State or by shares or other rights which
entitle its owner to a right of enjoyment of immovable property situated in a Contracting
State, may be taxed in the Contracting State in which the immovable property is
situated.
5. All other elements of capital of a resident of a Contracting State shall be taxable
only in that State.
Article 22
ELIMINATION OF DOUBLE TAXATION
1. In Spain, double taxation shall be avoided following either the provisions of its
internal legislation or the following provisions in accordance with the internal legislation
of Spain:
a) Where a resident of Spain derives income or owns elements of capital
which, in accordance with the provisions of this Convention, may be taxed in
the United Kingdom, Spain shall allow:
(i) as a deduction from the tax on the income of that resident, an amount
equal to the income tax paid in the United Kingdom;
(ii) as a deduction from the tax on the capital of that resident, an amount
equal to the tax paid in the United Kingdom on the same elements of
capital;
(iii) the deduction of the underlying corporation tax, which shall be given in
accordance with the internal legislation of Spain.
Such deduction shall not, however, exceed that part of the income tax or capital tax, as
computed before the deduction is given, which is attributable, as the case may be, to
the income or the same elements of capital which may be taxed in the United Kingdom.
b) Where in accordance with any provision of the Convention income
derived or capital owned by a resident of Spain is exempt from tax in
Spain, Spain may nevertheless, in calculating the amount of tax on the
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remaining income (or capital) of such resident, take into account the
exempted income or capital.
2. Subject to the provisions of the law of the United Kingdom regarding the
allowance as a credit against United Kingdom tax of tax payable in a territory outside
the United Kingdom or, as the case may be, regarding the exemption from United
Kingdom tax of a dividend or of the profits of a permanent establishment arising in a
territory outside the United Kingdom (which shall not affect the general principle
hereof):
a) Spanish tax payable under the laws of Spain and in accordance with this
Convention, whether directly or by deduction, on profits, income or
chargeable gains from sources within Spain (excluding in the case of a
dividend tax payable in respect of the profits out of which the dividend is
paid) shall be allowed as a credit against any United Kingdom tax
computed by reference to the same profits, income or chargeable gains
by reference to which Spain’s tax is computed;
b) a dividend which is paid by a company which is a resident of Spain to a
company which is a resident of the United Kingdom shall be exempted
from United Kingdom tax, when the exemption is applicable and the
conditions for exemption under the law of the United Kingdom are met;
c) the profits of a permanent establishment in Spain of a company which is
a resident of the United Kingdom shall be exempted from United
Kingdom taxation where the exemption is applicable and the conditions
for exemption under the law of the United Kingdom are met;
d) in the case of a dividend not exempted from tax under subparagraph b)
above which is paid by a company which is a resident of Spain to a
company which is a resident of the United Kingdom and which controls
directly or indirectly at least 10 per cent of the voting power in the
company paying the dividend, the credit mentioned in subparagraph a)
above shall also take into account the Spanish tax payable by the
company in respect of its profits out of which such dividend is paid.
3. For the purposes of paragraphs 1 and 2, profits, income and gains owned by a
resident of a Contracting State which may be taxed in the other Contracting State in
accordance with this Convention shall be deemed to arise from sources in that other
State.
Article 23
MISCELLANEOUS PROVISIONS
1. Where under any provision of this Convention a Contracting State reduces the
rate of tax on, or exempts from tax, an item of income, profit or gain of a resident of the
other Contracting State and under the laws in force in that other Contracting State that
resident in respect of that item is subject to tax in that other State only on that part of
such income, profit or gain which is remitted to or received in that other State and not
by reference to the full amount thereof, then the reduction or exemption shall apply only
to so much of the income, profit or gain as is taxed in that other State.
2. No relief shall be available under this Convention if the main purpose or one of
the main purposes of any person concerned with the creation, assignment or alienation
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of any shares, debt-claims, assets or other rights in respect of which income or gains
arise was to take advantage of this Convention by means of that creation, assignment
or alienation.
Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting
State to any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that
other State in the same circumstances, in particular with respect to residence, are or
may be subjected.
2. The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably levied
in that other State than the taxation levied on enterprises of that other State carrying on
the same activities.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 4 of Article
11, paragraph 4 of Article 12, paragraph 4 of Article 20, or paragraph 2 of Article 23
apply, interest, royalties and other disbursements paid by an enterprise of a
Contracting State to a resident of the other Contracting State shall, for the purpose of
determining the taxable profits of such enterprise, be deductible under the same
conditions as if they had been paid to a resident of the first-mentioned State. Similarly,
any debts of an enterprise of a Contracting State to a resident of the other Contracting
State shall, for the purpose of determining the taxable capital of such enterprise, be
deductible under the same conditions as if they had been contracted to a resident of
the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned
or controlled, directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to any taxation or any
requirement connected therewith which is other or more burdensome than the taxation
and connected requirements to which other similar enterprises of the first-mentioned
State are or may be subjected.
5. Nothing contained in this Article shall be construed as obliging either Contracting
State to grant to individuals not resident in that State any of the personal allowances,
reliefs and reductions for tax purposes which are granted to individuals so resident or
to its nationals.
6. The provisions of this Article shall apply to the taxes referred to in Article 2 of this
Convention.
Article 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the provisions of
this Convention, he may, irrespective of the remedies provided by the domestic law of
those States, present his case to the competent authority of the Contracting State of
which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of
the Contracting State of which he is a national. The case must be presented within
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three years from the first notification of the action resulting in taxation not in
accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case
by mutual agreement with the competent authority of the other Contracting State, with
a view to the avoidance of taxation which is not in accordance with the Convention.
Any agreement reached shall be implemented notwithstanding any time limits or other
procedural limitations in the domestic law of the Contracting States, except such
limitations as apply to claims made in pursuance of such an agreement.
3. The competent authorities of the Contracting States shall endeavour to resolve
by mutual agreement any difficulties or doubts arising as to the interpretation or
application of this Convention. They may also consult together for the elimination of
double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate with
each other directly, including by means of face to face meetings, for the purpose of
reaching an agreement in the sense of the preceding paragraphs.
5. Where,
a) under paragraph 1, a person has presented a case to the competent authority
of a Contracting State on the basis that the actions of one or both of the
Contracting States have resulted for that person in taxation not in accordance
with the provisions of this Convention, and
b) the competent authorities are unable to reach an agreement to resolve that
case pursuant to paragraph 2 within two years from the presentation of the
case to the competent authority of the other Contracting State,
any unresolved issues arising from the case shall be submitted to arbitration if the
person so requests.
These unresolved issues shall not, however, be submitted to arbitration if any person
directly affected by the case is still entitled, under the domestic law of either State, to
have courts or administrative tribunals of that State decide these issues or if a decision
on these issues has already been rendered by such a court or administrative tribunal or
if the case has been presented to either competent authority under the European
convention on the elimination of double taxation in connection with the adjustment of
profits of associated enterprises, signed on 23rd July 1990. Unless a person directly
affected by the case does not accept the mutual agreement that implements the
arbitration decision, that decision shall be binding on both Contracting States and shall
be implemented notwithstanding any time limits in the domestic laws of these States.
The competent authorities of the Contracting States shall by mutual agreement settle
the mode of application of this paragraph.
Article 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information as is foreseeably relevant for carrying out the provisions of this Convention
or to the administration or enforcement of the domestic laws concerning taxes of every
kind and description imposed on behalf of the Contracting States, or of their political
19
subdivisions or local authorities, insofar as the taxation thereunder is not contrary to
this Convention, in particular, to prevent fraud and to facilitate the administration of
statutory provisions against tax avoidance. The exchange of information is not
restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be
treated as secret in the same manner as information obtained under the domestic laws
of that State and shall be disclosed only to persons or authorities (including courts and
administrative bodies) concerned with the assessment or collection of, the enforcement
or prosecution in respect of, the determination of appeals in relation to the taxes
referred to in paragraph 1, or the oversight of the above. Such persons or authorities
shall use the information only for such purposes. They may disclose the information in
public court proceedings or in judicial decisions. Notwithstanding the foregoing,
information received by a Contracting State may be used for other purposes when such
information may be used for such other purposes under the law of the requesting State
and the competent authority of the supplying State authorises such use.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to
impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting State;
c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or information the
disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting State in accordance with this
Article, the other Contracting State shall use its information gathering measures to
obtain the requested information, even though that other State may not need such
information for its own tax purposes. The obligation contained in the preceding
sentence is subject to the limitations of paragraph 3 but in no case shall such
limitations be construed to permit a Contracting State to decline to supply information
solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a
Contracting State to decline to supply information solely because the information is
held by a bank, other financial institution, nominee or person acting in an agency or a
fiduciary capacity or because it relates to ownership interests in a person.
Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal privileges of members of diplomatic
missions or consular posts under the general rules of international law or under the
provisions of special agreements.
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Article 28
ENTRY INTO FORCE
1. The Governments of the Contracting States shall notify each other, through
diplomatic channels when the internal procedures required by each Contracting State
for the entry into force of this Convention have been complied with.
2. The Convention shall enter into force after the period of three months following
the date of receipt of the later of the notifications and its provisions shall have effect:
(i) in respect of taxes withheld at source, on or after the date on which the
Convention enters into force;
(ii) in respect of other taxes, for taxation years beginning on or after the date
on which the Convention enters into force;
(iii) for all other matters, on or after the date on which the Convention enters
into force.
3. The Convention between the United Kingdom of Great Britain and Northern
Ireland and Spain for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income and Capital signed at London on 21st
October 1975, as modified by a subsequent exchange of notes (“the prior
Convention”), shall cease to have effect in respect of any tax with effect from the date
upon which this Convention has effect in respect of that tax in accordance with the
provisions of paragraph 2 and shall terminate on the last such date.
4. Notwithstanding the provisions of this Article, the provisions of Articles 25
(Mutual Agreement Procedure) and 26 (Exchange of Information) shall, in accordance
with subparagraph iii) of paragraph 2, have effect from the date of entry into force of
this Convention, without regard to the taxable year or chargeable period to which the
matter relates. However, paragraph 5 of Article 25 shall apply only to cases first
presented to the competent authority on or after the date on which this Convention
enters into force.
5. Notwithstanding the entry into force of this Convention, an individual who is
benefiting from Article 21 (Teachers) of the prior Convention at the time of entry into
force of this Convention shall continue to be entitled to that benefit as if the prior
Convention had remained in force.
Article 29
TERMINATION
This Convention sha
ll remain in force until terminated by a Contracting State. Either
Contracting State may terminate the Convention, through diplomatic channels, by
giving written notice of termination at least six months before the end of any calendar
year beginning on or after the expiration of a period of five years from the date of its
entry into force. In such event, the Convention shall cease to have effect
(i) in respect of taxes withheld at source, on amounts paid or credited after
the end of that calendar year;
(ii) in respect of other taxes, for taxation years beginning after the end of that
calendar year;
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(iii) for all other matters, after the end of that calendar year.
In witness whereof the undersigned, duly authorised thereto, have signed this
Convention.
Done in duplicate at London this Fourteenth day of March 2013 in the English and
Spanish languages, both texts being equally authoritative.
For the United Kingdom of Great
Britain and Northern Ireland:
For the Kingdom of Spain:
David Gauke H.E Mr Federico Trillo-Figueroa Martínez-
Conde
22
PROTOCOL
TO THE CONVENTION BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN
AND
NORTHERN IRELAND AND THE KINGDOM OF SPAIN
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EV
ASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
At the moment of signing the Convention between the Kingdom of Spain and the
United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on
Capital, the undersigned have agreed upon the following provisions which shall be an
integral part of the Convention:
I. With reference to subparagraph l) of paragraph 1 of Article 3 (General
Definitions), paragraph 1 of Article 4 (Residence) and sub-subparagraph (ii) of
subparagraph b) of paragraph 2 of Article 10 (Dividends)
It is understood that the term “pension scheme” includes:
a) in the case of Spain,
(i) any fund regulated under the Amended Text of the Law on pension
funds and pension schemes (Texto refundido de la Ley sobre fondos y planes de
pensiones), passed by Legislative Royal Decree 1/2002 of 29
th
November;
(ii) any entity defined under Article 64 of the Amended Text of the Law on
the regulation and monitoring of private insurances (Texto refundido de la Ley de
ordenación y supervisión de los seguros privados) passed by Legislative Royal
Decree 6/2004 of 29
th
October, provided that in the case of mutual funds all
participants are employees; promoters and sponsoring partners are the companies,
institutions or individual entrepreneurs to which the employees are engaged; and
benefits are exclusively derived from the social welfare agreement between both
parties, as well as any other comparable entity to them regulated within the scope
of the political subdivisions (Comunidades Autónomas);
(iii) insurance companies regulated under the Amended Text of the Law on
the regulation and monitoring of private insurances passed by Legislative Royal
Decree 6/2004 of 29
th
October whose activity is the coverage of the contingencies
provided for in the Amended Text of the Law on pension funds and pension
schemes;
b) in the case of the United Kingdom, pension schemes (other than a social
security scheme) registered under Part 4 of the Finance Act 2004, including
pension funds or pension schemes arranged through insurance companies and unit
trusts where the unit holders are exclusively pension schemes.
The competent authorities may agree to include in the above, pension schemes of
identical or substantially similar economic or legal nature which are introduced by way
of statute or legislation in either State after the date of signature of the Convention.
23
24
II. With reference to Article 3 (General definitions), paragraph 4 of Article 4
(Resident) and Article 20 (Other income)
It is understood that the term “trust” means a trust that is a resident of the United
Kingdom under its domestic law.
III. With reference to subparagraph a) (ii) of paragraph 2 of Article 10 (Dividends)
It is understood that the term “investment vehicle” means:
(i) In Spain, any entity regulated under the Law 11/2009 of 26
th
October on
Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario;
(ii) In the United Kingdom, a real estate investment trust within the meaning of Part
12 of Corporation Tax Act 2010 and a property authorised investment fund
within the meaning of Part 4A of the Authorised Investment Funds (Tax)
Regulations 2006 (SI 2006/964).
IV. With reference to paragraph 4 of Article 6 (Income from immovable property)
No income derived from an immovable property shall be attributable to owners of rights
to the enjoyment of such immovable property on a time-sharing agreement, when such
enjoyment does not exceed two weeks in a calendar year.
V. With reference to Articles 20 (Other income) and 22 (Elimination of double
taxation)
Residents of Spain who are beneficiaries of a United Kingdom trust will be taxed in
Spain on the gross amount of income they receive or are entitled to receive from the
trust.
In such a case, Spain shall allow as a deduction from the tax on the income of that
resident, an amount equal to the effective income tax paid in the United Kingdom by
the beneficiary as a consequence of the income distribution after all relevant
repayment claims have been made by the beneficiary. Such deduction shall not,
however, exceed that part of the income tax, as computed before the deduction is
given, which is attributable to the income which may be taxed in the United Kingdom.
In witness whereof the undersigned, duly authorised thereto, have signed this Protocol.
Done in duplicate at London this Fourtheen day of March 2013 in the English and
Spanish languages, both texts being equally authoritative.
For the United Kingdom of Great Britain
and Northern Ireland
For the Kingdom of Spain
David Gauke H.E Mr Federico Trillo-Figueroa Martínez-
Conde