France

This Convention applies to persons resident in both or one of the Contracting States.

For the purposes of this Convention:

1. The term ‘France’ refers to metropolitan France and the overseas departments (Guadalupe, Guyana, Martinique and Réunion).

The term 'Spain' refers to the Spanish State (Spain Peninsular, Balearic Islands and Canary Islands, Plazas and Provinces of Africa).

2. The term ‘person’ means:

(a) Any natural person.

(b) Any legal person.

(c) Any grouping of natural or legal persons which as such is subject to taxation.

1. For the purposes of this Convention, any person who, under the law of that State, is subject to the imposition by that State, by reason of his domicile, residence, legal status, address or any other similar criterion, is considered to be resident in a Contracting State.

2. Where, according to the provision of paragraph 1 above, a natural person is considered to be resident in both Contracting States, the case shall be resolved according to the following rules:

(a) This person is considered to be resident in the Contracting State in which he has permanent housing. Where permanent housing is available in both Contracting States, it is considered to be resident in the Contracting State with which it maintains closer personal and economic ties (centre of vital interests).

(b) If the Contracting State in which a person has the centre of his or her vital interests cannot be determined, or if that person does not have permanent housing in any of the Contracting States, he or she is considered resident in the Contracting State in which he or she habitually lives.

(c) If the person habitually lives in both Contracting States or does not live in either Contracting State, he or she is considered to be resident in the Contracting State of which he or she is a national.

(d) If that person possesses the nationality of the two Contracting States or does not possess that of either Contracting State, the competent administrative authorities of the two Contracting States shall settle the matter by mutual agreement.

3. Legal persons are considered residents of the Contracting State in which they have been incorporated. Where it is not possible to determine in this way the residence of legal persons, they shall be considered as residents of the State in which their place of effective management is exercised.

The preceding provision also applies to companies of persons, associations and groups, although, according to the national law governing them, they do not possess legal personality.

1. The term ‘permanent establishment’ refers to a fixed place of business in which an undertaking exercises all or part of its activity.

2. In particular, permanent establishments are regarded as:

(a) A management headquarters.

(b) A branch office.

(c) One office.

(d) One factory

(e) One workshop.

(f) A quarry or any other natural resource extraction site.

(g) Construction or assembly works lasting more than 12 months.

3. They are not considered permanent establishments:

(a) Facilities used for the sole purpose of storing, displaying or delivering goods belonging to the undertaking. If direct sales of goods to customers or intermediaries are carried out in these facilities, these facilities are considered permanent establishments.

(b) Goods belonging to the undertaking, deposited for the sole purpose of storing, displaying or delivering them. If these goods are sold directly in the places where they are deposited, these deposits are considered permanent establishments.

(c) Goods belonging to the undertaking, deposited for the sole purpose of processing by another undertaking.

(d) A fixed business facility used for the sole purpose of purchasing goods or gathering information for the enterprise.

(e) A fixed business facility used for the sole purpose of advertising, providing information, conducting scientific research or carrying out similar activities that are preparatory or auxiliary to the enterprise.

4. A person acting in a Contracting State on behalf of an undertaking of the other Contracting State — other than the independent agent referred to in paragraph 6 below — is considered to be a ‘permanent establishment’ in the former State if he habitually exercises in that State powers enabling him to conclude contracts on behalf of the undertaking, except where his activity is limited to the purchase of goods for the undertaking.

5. An insurance undertaking in one of the Contracting States is considered to have a permanent establishment in the other Contracting State from the moment that, through a representative who does not fall into the category of persons referred to in paragraph 6 below, receives premiums in the territory of that State or ensures risks situated in that territory.

6. An undertaking of one Contracting State is not considered to have a permanent establishment in the other Contracting State on the sole ground that the undertaking carries out commercial transactions in that other State through a broker, a general commissioner or another independent mediator, provided that these persons act within the ordinary framework of their activity.

7. The fact that a company domiciled in a Contracting State controls or is controlled by a company which is domiciled in the other Contracting State or which conducts commercial transactions there (whether through a permanent establishment or not), is not sufficient in itself to convert either of these two companies into a permanent establishment of the other.

1. Nationals of one Contracting State shall not be subject in the other Contracting State to any taxation or tax obligation which is different or more stringent than those which are or may be required of nationals of that other State which are under the same conditions.

2. In particular, nationals of a Contracting State who are subject to taxation in the territory of the other Contracting State may, under the same conditions as nationals of the latter State, enjoy exemptions, base reductions, deductions and reductions from any tax or tax, granted in consideration of family burdens.

3. The term ‘nationals’ means:

(a) With regard to Spain, all natural persons possessing Spanish nationality.

(b) As far as France is concerned, all natural persons possessing French nationality.

(c) All legal persons, companies of persons and associations incorporated under the law in force in any of the Contracting States

4. Stateless persons resident in one Contracting State shall not be subject in the other Contracting State to any taxation or tax obligation other than those which are or may be required of nationals of that other State under the same conditions.

5. The imposition of permanent establishments held by an undertaking of one Contracting State in the other Contracting State may not be less favourable than that required of undertakings of that other State engaged in the same activity under the same conditions.

This provision does not oblige Contracting States to grant to residents of the other Contracting State the personal deductions, bonuses or exemptions it grants to its own residents in view of their situation (or family burdens).

6. Undertakings of a Contracting State whose capital, in whole or in part, is directly or indirectly owned or controlled by one or more residents of the other Contracting State shall not be subject in the first Contracting State to any tax or tax obligation which is different or more burdensome than those to which other undertakings of the same nature of the former Contracting State are or may be subject.

7. The term ‘tax’ in this Article refers to taxes of any kind and name.

For the purposes of applying the provisions of this Convention, the expression ‘competent authorities’ means:

in the case of Spain, to the Minister of Finance;

in the case of France, the Minister for Finance and Economic Affairs or his duly authorized representatives.

For the purposes of the application of this Convention by one of the Contracting States, any term not defined therein shall, unless its context otherwise requires, have the meaning conferred upon it by the Laws which in the Contracting State concerned regulate the taxes covered by this Convention.

1. This Convention applies to income taxes collected by each of the Contracting States, their administrative subdivisions and their local authorities, irrespective of the system of collection.

Income taxes are the taxes levied on the total income or on the elements of this income and the taxes to which the profits obtained from the disposal of property, movable or immovable property and capital gains are subject.

2. The provisions of this Convention are intended to prevent double taxation that may occur for the residents of the Contracting States by the simultaneous or successive collection by either State of the taxes referred to in the preceding paragraph.

3. The current taxes to which this Convention applies in each of the Contracting States are:

(A) As regards France:

1.^or Personal income tax.

2.^or The supplementary tax.

3.^or Tax on profits of corporations and other legal persons.

(B) As regards Spain:

1.^or The territorial, rustic and urban contribution.

2.^or The income tax on personal work.

3.^or Capital income tax.

4.^or The tax on commercial and industrial activities and profits.

5.^or Income tax on corporations and legal entities.

6.^or The general contribution on income.

7.^or For undertakings governed by the Act of 26 December 1958, which are engaged in the investigation and exploitation of hydrocarbons, the Convention applies, in addition to the other taxes listed in this article, to the area tax, gross product tax and excise duty on the profits of such companies.

8.^or Local income taxes.

9.^or In the province of Sahara:

(a) Income tax.

(b) Income tax.

(c) Corporate profit tax.

10. In the Ecuadorian provinces of Fernando Poo and Río Muni:

(a) The income tax on rustic farms.

(b) Income tax on urban farms.

(c) Income tax on movable property.

(d) Income tax.

(e) Corporate profit tax.

11. In Ifni province:

(a) Income tax.

(b) Income tax.

(c) Corporate profit tax.

4. The Convention shall also apply to future taxes of an identical or similar nature which are added to or replaced by current taxes. The competent authorities of the Contracting States shall, at the beginning of each year, communicate the amendments made to their tax legislation during the preceding year.

5. In the event that the tax legislation of one of the Contracting States is subject to changes which significantly affect the nature or nature of the taxes listed in paragraph 3 of this article, the competent authorities of the two States shall agree to determine the amendments, if any, to this Convention.

1. Income from immovable property shall be taxed only in the Contracting State where such property is situated.

2. The term ‘real property’ is defined in accordance with the law of the Contracting State in which the property in question is situated. In any event, this term includes the accessories, livestock and farm tools of agricultural and forestry enterprises, the rights to which the provisions of private law relating to territorial property, the use of immovable property and the rights to variable or fixed fees for the exploitation of mineral deposits, sources and other land wealth apply.

3. The provisions of paragraphs 1 and 2 above apply to income from direct exploitation, rural or urban leases and any other form of exploitation of immovable property, including income from agricultural or forestry enterprises. These provisions also apply to profits arising from the disposal of immovable property.

4. In addition to agricultural and forestry enterprises, the provisions of the previous three paragraphs also apply to income from the real estate of other enterprises and to the income from real estate intended for the pursuit of a liberal profession.

1. The profits of an enterprise in one Contracting State are subject to taxation only in that State, unless the enterprise engages in an industrial or commercial activity in the other State through a permanent establishment situated therein. In the latter case the tax may be levied in the other State on the profits of the undertaking, but only to the extent that these profits are attributable to that permanent establishment.

2. Where an undertaking of a Contracting State engages in an industrial or commercial activity in the other State by means of a permanent establishment situated therein, the profits which it would have been able to obtain if that establishment had constituted a distinct and separate undertaking carrying out identical or similar activities under the same or similar conditions and dealing entirely independently with the undertaking from which it constitutes a permanent establishment shall be charged in each of the States.

3. For the purposes of calculating the benefits of a permanent establishment, expenses demonstrated for the purposes pursued by this permanent establishment shall be deductible, including management costs and general administrative expenses, also demonstrated, whether incurred in the State in which this permanent establishment is located or elsewhere.

4. As long as it is in use in a Contracting State to determine profits attributable to a permanent establishment on the basis of a sharing of the total profits of the enterprise among its various parties, paragraph 2 of this Article shall not preclude that Contracting State from determining the taxable profits according to the method in use.

5. No benefit shall be charged to a permanent establishment on the sole ground that the establishment purchased goods for the undertaking.

6. For the purposes of the preceding paragraphs, the benefits to be charged to a permanent establishment shall be calculated each year according to the same method, unless there are valid and sufficient grounds for otherwise proceeding.

When:

(a) An undertaking of a Contracting State participates directly or indirectly in the direction, control or capital of an undertaking of the other Contracting State; or

(b) The same persons participate directly or indirectly in the direction, control or capital of an undertaking of one Contracting State and of an undertaking of the other Contracting State, and in either case, the two undertakings are, in their commercial or financial relations, bound by accepted or imposed conditions which differ from those other conditions which would be agreed between independent undertakings, the profits which, without these conditions, could have been obtained by one of the undertakings but which did not take place because of those conditions, may be included in the profits of that undertaking and, consequently, subject to taxation.

1. Income from the operation, in international traffic, of ships or aircraft is taxable only in the Contracting State in which the seat of the effective management of the company is located.

2. Where the seat of the place of effective management of a shipping undertaking is on board a vessel, that seat shall be deemed to be situated in the Contracting State in which the port of registration of that vessel is located or, failing that, in the Contracting State in which the person operating the vessel is resident.

1. Profits derived from the disposal of goods or rights are taxable only in the Contracting State in which the assignor is resident.

2. Paragraph 1 above does not apply in the case of immovable property or property attached to the assets of a permanent establishment or a fixed base held by the assignor in the other State. In such cases, articles 9, paragraph 3, 10 and 22, respectively, shall apply.

1. Companies resident in one of the two States having a permanent establishment in the other State, as regards the distributions of profits they make, are subject to the tax applicable to such distributions in the latter State, in accordance with the law of the latter State. However, the amount of tax thus required may not exceed 15 per 100 of the gross amount of dividends taxable in that State.

The tax determined in accordance with the preceding paragraph shall be deducted from the corresponding tax, relating to the same profits, in the State of which the Company is resident and within the limit of this tax.

2. The Company resident in either of the two States shall not be subject in the other State to the tax referred to in paragraph 1 above for its participation in the management or capital of a Company resident in the other State or under any other relationship with that Company; but the profits distributed by the latter Company and subject to this tax shall be increased, where appropriate, to determine the basis of such tax with all the profits or advantages that the former Company would indirectly have obtained under the conditions provided for in Article 11 above. As regards these benefits and advantages, double taxation shall be avoided in accordance with Article 28.

1. Dividends paid by a company resident in one Contracting State to a resident in the other Contracting State are taxable in that other State.

2. However, the Contracting State in which the company paying the dividends is resident has the right to impose these dividends according to its legislation, but the rate of taxation it establishes may not exceed:

(a) Ten per cent of the gross amount of the dividends if the beneficiary of the dividends is a company (excluding the Companies of Persons) that has directly at least 50 per cent of the capital of the Company that pays the dividends, provided that this participation is represented by shares or social parties nominative from at least one year before the date of distribution.

(b) Fifteen per cent of the gross amount of these dividends in all other cases.

The competent authorities of the two States shall agree on how this limit is to be applied.

3. The term ‘dividends’ used in this Article refers to income from shares, shares or enjoyment bonds, parts of mines, parts of founders or other beneficiary parties, and the income of other social parties assimilated to share income by the tax legislation of the State in which the distribution company is resident.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficiary of the dividends, resident in one Contracting State, has, in the other Contracting State in which the company paying these dividends is resident, a permanent establishment with which the shareholding generated by the dividends is effectively related. In this case, Article 10 concerning the charging of profits to permanent establishments shall apply.

1. Interest from one Contracting State paid to a resident of the other Contracting State is taxable in that other State.

2. However, the Contracting State, from which the interest is paid to residents of the other Contracting State, has the right to tax these interest according to its legislation, but the tax rate it establishes may not exceed the rates set out below:

(A) As regards France:

In view of the current provisions of French tax legislation, the tax on interest on bonds and other negotiable borrowing instruments from French sources and paid to persons resident in Spain may not exceed 12 per 100. All other interests received by persons resident in Spain are exempt.

(B) As regards Spain:

In view of the current provisions of Spanish tax legislation, the imposition of interest of any kind from Spanish sources and paid to persons resident in France may not exceed 10 per 100.

However, interest on the Spanish public debt may be taxed by the Spanish State in accordance with its law, without any limit.

The competent authorities of the two States shall agree on the manner of application of the limits set by this Article.

3. The term ‘interest’ used in this article refers to the income of public funds, borrowing obligations, with or without mortgage guarantee or benefit-sharing clause, credits of any other nature and any other products which the tax laws of the debtor State assimilate to the income of sums borrowed.

4. The provisions of paragraphs 1 and 2 shall not apply where the beneficiary of the interest, resident in a Contracting State, has, in the other Contracting State from which the interest originates, a permanent establishment to which the claim producing it is actually affected. In this case, Article 10 on the charging of profits to permanent establishments shall apply.

5. Interest shall be considered as originating in a Contracting State where the debtor is the same State, an administrative subdivision, a local corporation or a resident of that State. However, where the debtor of interest, whether or not resident in a Contracting State, has in a Contracting State a permanent establishment for whose needs the borrowing that produces the interest and bears the burden of these interests has been made, such interest shall be deemed to have come from the Contracting State where the permanent establishment is situated.

6. If, as a result of special relationships between the debtor and the creditor, or of those between the debtor and the creditor, the amount of interest paid, taking into account the claim for which they are satisfied, exceeds that which the debtor and the creditor would have agreed if such relationships did not exist, the provisions of this article shall apply only to the latter amount. In this case, overpayments shall be taxable under the national laws of the Contracting States, taking into account the other provisions of this Convention.

1. Fees from one Contracting State paid to a resident of the other Contracting State are taxable in that other State.

2. However, the Contracting State, from which the fees are paid to a resident of the other Contracting State, has the right to tax these fees in accordance with its legislation, but the tax rate to be applied may not exceed 5 per 100 of the gross amount of those fees. The competent authorities of the two States shall agree on how this limit is to be applied.

3. The term ‘royalties’ used in this article designates remuneration of any kind paid for the use of the granting of copyright on a literary, artistic or scientific work, including cinematographic films, patents, trademarks, designs, plans, procedures or secret formulae; the use or granting of the use of industrial, commercial or scientific equipment; and information relating to industrial, commercial or scientific experience.

4. The proceeds from the disposition of rights or property referred to in paragraph 3 are taxable only in the Contracting State in which the assignor is resident.

5. The provisions of paragraphs 1, 2 and 4 shall not apply where the beneficiary of the royalties or profits resident in a Contracting State has in the other Contracting State from which the royalties or profits originate a permanent establishment to which the right or property producing them is actually affected. In this case, Article 10 on industrial and commercial benefits shall apply.

6. Income from intellectual or industrial property is considered to have come from a Contracting State when it is owed by that same State, by a part of its administrative subdivisions or its local corporations or by one of its residents. However, if the debtor, whether or not it is resident in one of the Contracting States, has a permanent establishment in one of these States, and if the goods or rights in question have been acquired in the interest of that establishment, the income the burden of which is borne by the permanent establishment is considered to be from the State where the establishment is located.

7. If, as a result of special relations between the debtor and the creditor or of those between them and third parties, the amount of the fees paid, having regard to the benefit for which they are satisfied, exceeds the amount which the debtor and the creditor would have agreed if such relationships did not exist, the provisions of this article shall apply only to the latter amount. In this case, overpayments shall be taxable under the national laws of the Contracting States, taking into account the other provisions of this Convention.

1. Without prejudice to Articles 19, 20 and 21, wages, salaries and other similar remuneration which a resident of a Contracting State receives under paid employment shall be taxable only in that State, unless such employment is performed in the other Contracting State. If the employment is performed in the latter State, the remuneration received for this reason is taxable in the other State.

2. By way of derogation from paragraph 1 above, remuneration received by a resident of one Contracting State by virtue of wage employment performed in the other Contracting State shall be taxed only in the first Contracting State if:

(a) The beneficiary remains in the other State for one or more periods not exceeding a total of one hundred and eighty-three days in the course of the fiscal year concerned.

(b) Remuneration is paid by a person or on behalf of a person who is not resident in the other State; and

(c) Remuneration is not deducted from the benefits of a permanent establishment or a fixed basis which the person on behalf of the person working in the other State has.

The above three conditions must be met simultaneously.

3. Notwithstanding the preceding provisions of this Article, remuneration for an activity carried out on board a ship or aircraft in international traffic is taxable in the Contracting State in which the seat of the effective management of the undertaking is situated.

4. Border workers who justify this quality by presenting a border document recognized by a particular convention between the Contracting States shall be subject to taxation on salaries, wages and other remunerations which they receive for the same purpose only in the Contracting State in which they are resident.

1. Remuneration, including pensions paid directly or from funds constituted by a Contracting State or one of its administrative subdivisions or local corporations to a natural person by virtue of services rendered to that State or to these subdivisions or corporations in the exercise of functions of a public nature, shall be taxable only in that State. However, this provision shall not apply where remuneration is granted to persons who possess the nationality of the other State without being subjects of the first State at the same time. In this case, remuneration shall be taxable only in the State in which such persons are resident.

2. The provisions of Articles 18, 20 and 21 shall apply to remuneration and pensions paid in the form of services rendered in connection with the pursuit of a commercial or industrial activity by one of the Contracting States or one of its administrative subdivisions or local authorities.

Without prejudice to article 19, paragraph 1, pensions and life income shall be taxable only in the Contracting State in which the beneficiary is resident.

1. Participation in profits, attendance allowances and similar remunerations received by a resident of a Contracting State as a member of the Board of Directors or Supervisory Board of a Company which is resident in the other Contracting State shall be taxable only in the latter State.

2. The remuneration which the persons referred to in paragraph 1 receive in any other way is subject, according to its nature, to the provisions of article 18 or article 22.

1. The income which a resident of a Contracting State receives from the pursuit of a liberal profession or other independent activities of a similar nature shall be taxable only in that State, unless that resident normally has a fixed basis in the other Contracting State for the pursuit of his or her activities. If it has such a base, the share of income that can be attributed to it will be taxable in the latter State.

2. For the purposes of this article, liberal professions are considered, in particular scientific, artistic, literary, teaching or pedagogical activities and that of doctors, lawyers, architects or engineers.

The income received by the mediators, in remuneration for services rendered in the field of their own activities, shall be taxed in accordance with the following rules:

(a) In Spain, the income received by a mediator from a permanent establishment or a fixed base located in Spain and the income received by a resident of Spain and not from a permanent establishment located in France are taxed;

(b) In France, the income received by a mediator from a permanent establishment located in France and the income received by a resident of France and not from a permanent establishment located in Spain are taxed.

By way of derogation from any other provision of this Agreement, the income earned by entertainment professionals, such as theatre, cinematographer, radio or television artists, musicians and sports professionals in the performance of their professional activities as such, shall be taxable only in the Contracting State in which these activities are carried out.

Any sums which a student or a person carrying out an internship, from one of the Contracting States, who remains in the other State for the sole purpose of continuing his studies or acquiring vocational training, receives in order to meet his costs of support, studies or training, shall not be taxable in that other State, provided that they come from sources outside that State.

Teaching staff, resident in a Contracting State, temporarily transferred to the other State to teach at universities, Liceos or colleges of that other State, for a period not exceeding two years, shall not be subject to taxation in the latter State for compensation granted by that State for the performance of the teaching function during that period, and in addition to the salary paid by the State of origin.

The income not mentioned in the preceding articles is taxable only in the State in which the beneficiary is resident, unless such income is due to the activity of a permanent establishment held by that beneficiary in the other Contracting State.

Double taxation shall be avoided as follows:

(A) As regards France:

1. Revenues the taxation of which, according to this Agreement, is attributed exclusively to Spain shall be exempt from the French taxes referred to in the third paragraph of Article 8(A) of that Agreement.

2. Notwithstanding the provisions of paragraph 1 above, the French taxes referred to in that paragraph may be calculated, in respect of income taxable in France under this Convention, at the rates corresponding to all taxable income under French law.

3. France may, for the purpose of settling the taxes applicable to persons resident in its territory, include in the bases of these taxes all categories of income whose taxation under this Convention is not attributed exclusively to Spain. France shall, however, deduct from the taxes thus calculated the amount of the Spanish tax levied on income the source of which is in Spain and which falls within the bases of taxation of the two Contracting States. This deduction shall, however, be limited to the part of the French taxes corresponding to the relationship between, on the one hand, these incomes and, on the other hand, the total taxable income in France.

4. With regard to the income from transferable securities referred to in Articles 15 and 16 of this Convention, the deduction referred to in paragraph 3 of this article is made under the following conditions:

(a) In the case of dividends from Spain which have been paid by withholding tax on Spanish capital income under the conditions laid down in Article 15 above, this tax is deducted, irrespective of the withholding tax which has taken place at the source as income tax on natural persons, where such withholding tax does not apply, from the taxes on the basis of which such dividends are included.

However, where dividends from Spain and received by a resident of France have been subject to Spanish tax on the profits of oil companies, this tax is considered to cover the withholding tax referred to in the preceding paragraph and applicable in France to these dividends.

(b) In the case of interest from Spain which has incurred Spanish capital income tax as a withholding tax at the source, under the conditions laid down in Article 16 above, this tax shall be deducted:

In the case of interest on bonds and other negotiable borrowing instruments, it is the withholding tax on the income of natural persons, i.e. where such withholding tax is not payable, of the taxes on the basis of which they are covered.

In the case of interest on other loan securities, the taxes on the basis of which these interests are covered.

For this purpose, the interest enjoyed by a reduction in the Spanish tax pursuant to Article 1 of the Decree-Law of 19 October 1961, which grants reductions of certain taxes applicable to loans issued by Spanish companies and loans granted to them by foreign financial institutions to finance new investments, shall be considered as if they had borne the Spanish tax under the conditions provided for in Article 16, paragraph B).

(B) As regards Spain:

1. Revenues whose taxation is attributed exclusively to France in accordance with this Agreement shall be exempt from the Spanish taxes referred to in Article 8, paragraph 3 B.

2. However, the taxes referred to in the preceding paragraph may be calculated taking into account, for the purposes of determining the applicable rate, all income, whatever its origin, which could have been taxed under Spanish law.

3. Without prejudice to the above paragraphs, Spain may include on the basis of taxes applicable to its residents income of any kind taxable under Spanish law, as if this Convention did not exist.

However, Spain shall deduct from the total taxes thus obtained the lower of the following amounts:

(a) The amount of taxes paid in France on income received in France and which have been integrated into the basis of the Spanish tax.

(b) The proceeds of the effective average rate of taxation applicable, in this case, in Spain to income of French origin.

1. This chapter applies to inheritance taxes required by each of the Contracting States.

Inheritance taxes are those that are required by reason of death in the form of taxes on the relict flow and on the hereditary quotas, and those that fall on the ‘mortis causa’ donations.

2. The purpose of this Convention is to avoid double taxation which may result from the death of a person resident in one of the two Contracting States due to the simultaneous levy of Spanish and French taxes on inheritance.

3. The following taxes are covered by this Convention:

(a) With regard to Spain:

The tax on the relicto flow.

The inheritance tax required on hereditary quotas.

(b) As regards France:

The inheritance tax required on hereditary quotas.

4. This Convention is signed taking into account the legislation in force in Spain and France on the date of its signature. It shall also apply to future taxes of the same or similar nature which are added to or replaced by current taxes. The competent authorities of the Contracting States shall, at the beginning of each year, notify each other of any changes made to their tax legislation during the previous year.

5. If the tax legislation of one of the Contracting States undergoes changes that significantly affect the nature or nature of the taxes referred to in paragraph 3 of this Article, the competent authorities of the two States shall agree to determine the adaptations, if any, to be made to this Convention.

6. Except as provided for in Articles 37 and 38, the Convention does not apply to taxes on donations between living persons.

Real estate (including attachments) is subject to inheritance tax only in the Contracting State in which they are located. Livestock and farm tools used on an agricultural or forestry holding shall be taxed only in the Contracting State in which it is situated.

The rights to which the rules of private law on territorial property and the rights of usufruct on immovable property apply are considered immovable property. Credits of any kind secured by mortgage are excluded.

The classification of an asset or a right as an immovable property or as an attachment to an immovable property shall be carried out in accordance with the law of the State in which the property in question or the property on which the right belongs is situated.

1. Tangible or incorporeal movable property left as a deceased person who is resident at the time of his death in one of the two Contracting States and invested in a commercial, industrial or other undertaking shall be subject to inheritance tax in accordance with the following rules:

(a) If the enterprise has a permanent establishment only in one of the two Contracting States, the assets shall be taxed only in that State, and the same rule applies if the enterprise engages in activities in the territory of the other State without having a permanent establishment in it.

(b) If the enterprise has a permanent establishment in both Contracting States, the goods are taxed in each State to the extent that they are affected by the permanent establishment located in the territory of that State.

The term ‘permanent establishment’ means any fixed business facility as defined in Article 4 of this Convention, and as regards civil real estate companies, any property operated in accordance with its social purpose.

2. The provisions of paragraph 1 shall not apply to investments made by the deceased in the form of transferable securities (shares, obligations, parts of beneficiaries or other securities), shareholdings in capital companies (limited liability companies, cooperative societies, civil societies subject to the tax regime of capital companies) or in the form of a commandeer in simple-mandated companies.

Tangible or incorporeal movable property which is dependent on permanent facilities and which is affected by the pursuit of a liberal profession in one of the two Contracting States shall be subject to inheritance tax only in the State in which such facilities are located.

Tangible movable property, including furniture, clothing, domestic troweling and art objects and collections other than furniture referred to in articles 31 and 32, is subject to inheritance tax where they are actually on the date of the death of the deceased.

However, ships, aircraft, cars and other motor vehicles shall be taxed in the State in which they are registered.

1. Incorporated property of the estate to which articles 31 and 32 do not apply shall be subject only to inheritance taxes in the State in which the deceased was resident at the time of his death.

2. For the purposes of applying the preceding paragraph:

The transferable securities and other claims shall be treated as intangible assets.

Patents, trademarks and intellectual property rights shall be taxed in the Contracting State in which they are registered. If they have been registered in the two Contracting States, the State in which the person concerned was not domiciled shall require a tax on the value of the rights arising from the registration in its territory.

1. The debts relating to the undertakings referred to in Articles 31 and 32 shall be charged to the goods concerned. If the company has, as the case may be, a permanent establishment or a permanent installation in each of the two States, the debts are charged to the property affected by the establishment or facility on which it depends. If they are dependent on several permanent establishments or facilities, these debts are charged on a pro rata basis to the value of the gross assets of those establishments or facilities.

2. Debts secured by immovable property or property rights, or by ships, aircraft or motor vehicles covered by Article 33, with property affected by the pursuit of a liberal profession under the conditions laid down in Article 32, or by property affected by an undertaking covered by Article 31, shall be charged against such property. If the same debt is secured at the same time by property located in the two States, the imputation is made on the assets located in each in proportion to the gross value of these assets.

This provision shall apply only to the debts referred to in the first subparagraph to the extent that they are not covered by the charge provided for in this paragraph.

3. Debts not included in paragraphs 1 and 2 shall be charged against assets to which article 34 applies.

4. If the charge provided for in the preceding three paragraphs left a balance uncovered in one of the Contracting States, that balance would be deducted from the other assets subject to inheritance tax in the same State.

Notwithstanding the provisions of this Convention, each State retains the right to calculate the tax on hereditary property that it is entitled to tax exclusively, according to the rate to be applied if all assets subject to taxation under its domestic law were to be considered.

The subjects of each Contracting State shall enjoy in the territory of the other State, in respect of inheritance or donation taxes, the same benefits as, in view of the family situation and burdens, the nationals of the latter State bear.

Communities and public establishments, public utility establishments and societies, associations, institutions and foundations based in the territory of one of the two Contracting States shall enjoy in the territory of the other, under the conditions provided for by the law of the other, exemptions, deductions and bonuses and other benefits granted in respect of taxes on donations and on inheritance to entities of the same or similar kind which have their headquarters in the territory of the latter State.

1. The tax authorities of the Contracting Parties shall exchange with each other the information which the tax laws of both States permit to obtain in normal administrative practice and which they consider useful in ensuring the normal clearance and collection of the taxes referred to in this Convention and the application, as far as these taxes are concerned, of the legal provisions relating to the suppression of tax fraud.

2. Information exchanged which is of a secret nature shall not be communicated to persons other than those responsible for the settlement and collection of the taxes referred to in this Agreement. No information revealing a trade, industrial or professional secret shall be provided. Information may be refused if the requested State considers that by its nature it poses a danger to its sovereignty or security, or is likely to prejudice its general interests.

3. The exchange of information may be carried out on its own initiative, or on request, when it relates to specific cases. The competent authorities of the two Contracting States shall, by mutual agreement, draw up a list of the information to be supplied on their own initiative.

1. Where a resident of a Contracting State considers that the measures taken by one or both Contracting States entail or may represent for him a charge that is not in conformity with this Convention, he may, irrespective of the remedies provided for by national law, submit his case to the competent authority of the Contracting State in which he is resident.

2. This competent authority shall endeavour, if it considers the complaint well founded and if it is not in a position to adopt a satisfactory solution, to settle the matter by means of an amicable agreement with the competent authority of the other Contracting State, in order to avoid the imposition which does not comply with this Convention.

3. The competent authorities of the Contracting States shall endeavour to resolve by amicable means any difficulties or to dispel any doubts arising from the interpretation or application of this Convention. They may also agree to try to avoid double taxation in cases not provided for therein.

4. The competent authorities of the Contracting States may communicate directly with each other, in order to reach agreement, in the cases provided for in the preceding paragraphs. Where it is considered that this agreement can be facilitated through personal contacts, such an exchange of views may take place within a Commission composed of representatives of the competent authorities of the two States.

The competent authorities of the two Contracting States shall agree to determine the modalities of application of this Convention.

1. This Convention may apply in its present form or with the necessary modifications to French overseas territories which receive taxes of a similar nature to those to which this Convention applies. The extension shall take effect from the day, and with the modifications and conditions (including those relating to the cessation of its application), to be established by mutual agreement between the Contracting States by exchange of diplomatic notes or by any other procedure in accordance with the domestic provisions of the two States.

2. Unless the Contracting States take another decision, the denunciation of this Convention by one of them, as provided for in Article 45, shall terminate the application of its provisions to all territories to which it has been extended, in accordance with this Article.

The provisions of this Convention shall not affect the tax privileges enjoyed by diplomatic or consular officials, in accordance with the general principles of international law or under the provisions of special agreements.

1. This Convention shall be ratified, and the Instruments of ratification shall be exchanged in Paris as soon as possible.

2. It shall enter into force one month after the exchange of the Instruments of ratification, and its provisions shall apply for the first time:

(a) As regards taxes on dividends and interest levied on retention at source, as referred to in articles 15 and 16, profits agreed upon after their entry into force.

(b) With regard to other income taxes, taxation of profits for the calendar year during which the instruments of ratification have been exchanged or for periods closed in the course of that year.

(c) With regard to inheritance, the taxation of the inheritance of deceased persons on the day and from the day on which the instruments of ratification were exchanged.

This Convention shall remain in force until it is denounced by one of the Contracting States.

However, each State may, by a prior notice of six months, notified through diplomatic channels, denounce it in whole or in part with effect from the end of the calendar year.

In this case, the Convention shall apply for the last time:

(a) With regard to taxes on dividends and interest levied on retention at source, as referred to in articles 15 and 16, profits agreed upon before the end of the calendar year, at the end of which the denunciation takes effect.

(b) With regard to other income taxes, the taxation of income for the calendar year, at the end of which the denunciation takes effect.

(c) With regard to inheritance taxes, the imposition of inheritances by deceased persons by 31 December of that year.

In faith, the Plenipotentiaries of the two States sign and affix their seals to this Convention.

Done at Madrid on 8 January 1963, in two copies, in the Spanish and French languages, both texts being equally authentic.

Ratifications were exchanged in Paris on 29 November 1963.

[heading] ADDITIONAL PROTOCOL

At the time of signing this Convention, the undersigned Plenipotentiaries have made the following declarations, specifying the conditions of application of Articles 10 and 14 of that Convention.

I

(A) For the purposes of Article 10(4), the taxable profit in Spain of French companies having one or more permanent establishments in Spain shall be determined in accordance with Spanish domestic rules, without prejudice to Articles 2, 3 and 4 of the Convention signed on 18 May 1926 between Spain and France.

However, for the determination of the total computable profit for the calculation of the taxable profit of the permanent establishment located in Spain, capital gains resulting from any mandatory legal revaluation shall be excluded, both from fixed assets and from holdings and portfolio securities located outside Spain.

Unless the following provisions are used to defraud the Spanish tax law, they shall also not be taken into account for the same purpose:

(a) The capital gains resulting from optional or free revaluations of fixed asset items (excluding holdings and portfolio securities) located outside Spain.

(b) The capital gains resulting from the transfer of fixed assets (excluding holdings and portfolio securities) located outside Spain.

(B) French undertakings which have one or more permanent establishments in Spain may choose to be injured by the same scheme as is provided for for Spanish undertakings operating in all their activities in Spain.

This option shall be valid for two years and shall be exercised before the beginning of the first of the financial years concerned.

(C) With the exception of the provisions of paragraph A above, the provisions of the Convention signed on 18 May 1926 shall cease to apply to the taxes referred to in this Convention.

II

For the purposes of applying article 14, account shall be taken of the fact that, where a company resident in one of the two States has a permanent establishment in the other State, the incorporation into capital of the reserves constituted in return for the compulsory legal revaluation or an optional revaluation of the fixed assets located outside the territory of the latter State shall not be considered as taxable distribution in that State.

Mr. Minister,

At the time of signing the Convention negotiated between our two States for the purpose of avoiding double taxation and establishing rules for mutual administrative assistance in the field of income taxes and inheritance taxes, I have the honour to inform you, on behalf of the High Contracting Party I represent, that the provisions of article 4, paragraph 5, of this Convention shall be interpreted as follows:

An insurance undertaking in one of the two Contracting States which has a representative authorized by the authorities of the other State shall not be deemed to have a permanent establishment in the latter State unless the latter representative is not limited to the performance of an administrative function and engages in an activity which, in view of its nature and importance, is sufficient to allow the undertaking to be considered, through that representative, to engage in a regular and normal commercial activity in the other country.

Furthermore, it should be understood that where an insurance undertaking in one of the two States has a permanent establishment in the other State, the reinsurance premiums accepted shall not be taken into account for the calculation of the taxable profit other than in the State in which the undertaking is resident.

Please accept, Minister, the assurance of my high consideration.

ARMAND DU CHAYLA

H.E. Mr Fernando María Castiella Maíz, Minister for Foreign Affairs. — Madrid.

[precept] Your Excellency, Ambassador,

By letter of the same date, Your Excellency has indicated to me the following:

“At the time of signing the Convention negotiated between our two States with the aim of avoiding double taxation and establishing rules for mutual administrative assistance in the field of income taxes and inheritance taxes, I have the honour to inform you, on behalf of the High Contracting Party I represent, that the provisions of Article 4, paragraph 5, of this Convention shall be interpreted as follows:

An insurance undertaking in one of the two Contracting States which has a representative authorized by the authorities of the other State shall not consider that it has a permanent establishment in the latter State unless the latter representative is not limited to the performance of an administrative function and engages in an activity which, in view of its nature and importance, is sufficient to allow the undertaking to be considered, through that representative, to engage in a regular and normal commercial activity in the other country.

Moreover, it must be understood that where an insurance undertaking in one of the two States has a permanent establishment in the other State, the reinsurance premiums accepted shall not be taken into account for the calculation of the taxable profit other than in the State in which the undertaking is resident.’

I have the honour to inform you that the High Contracting Party which I represent agrees with the text of the preceding communication.

Please accept, Mr. Ambassador, the assurance of my high consideration.

FERNANDO MARY CASTIELLA MAÍZ

H.E. Sir. Armand du Chayla, Ambassador Extraordinary and Plenipotentiary of France.—Madrid.

Therefore, having seen and examined the forty-five articles that make up that Convention, the Additional Protocol and Exchange of Letters, heard by the Commission of the Spanish Courts in compliance with article 14 of its Organic Law, I have come to approve and ratify what is provided for, as I hereby approve and ratify it, promising to comply with it, observe it and ensure that it is implemented and observed in a timely manner in all its parts, for the purpose of its further validation and firmness, I will issue this instrument of ratification signed by Me, duly sealed and endorsed by the undersigned Minister of Foreign Affairs.

[ignore]Dated in Madrid on July 11th, one thousand nine hundred and sixty-three.

FRANCE FRANCE

The Minister for Foreign Affairs,

FERNANDO MARY CASTIELLA AND MAÍZ