Italy

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

1. This Convention applies to income taxes levied by each of the Contracting States of their political or administrative subdivisions and their local entities, whatever the system of their levy.

2. Income taxes are those that tax the entire income or some category of income, including taxes on profits from the disposal of movable or immovable property, on the total amount of wages or salaries paid by the Enterprises as well as taxes on capital gains.

3. The current taxes to which the Convention specifically applies are:

(a) Where Italy is concerned:

(1) Personal income tax;

(2) Corporate income tax;

(3) Local income tax (imposta locale sui redditi);

even if they are collected by withholding tax at the source (hereinafter referred to as ‘Italian tax’).

(b) As regards Spain:

(1) Income tax on natural persons;

(2) Income tax on corporations and other legal entities;

(3) The following taxes on account: rural and urban territorial contributions; income tax on personal labour; capital income tax; and tax on commercial and industrial activities and profits;

(4) The Area Fee and Income Tax of Companies, regulated by the Law of 27 June 1974, applicable to Companies engaged in the investigation and exploitation of hydrocarbons.

5) Local income taxes (hereinafter referred to as the 'Spanish tax').

4. The Convention shall also apply to taxes of an identical or similar nature which are established after the signature of this Convention and which are added to or replaced by the present ones. At the end of each year, the competent authorities of the Contracting States shall notify each other of any significant changes made to their respective tax laws.

1. For the purposes of this Convention, unless the context of the Convention is different:

(a) The term 'Spain' means the Spanish State (Spain peninsular, Balearic Islands and Canary Islands and Spanish territories of Africa) and the areas adjacent to the territorial waters of Spain over which, in accordance with Spanish law, Spain may exercise the rights relating to the seabed, the sea subsoil and its natural resources.

(b) The term ‘Italy’ means the Italian Republic and includes areas outside the territorial sea of Italy and, mainly, the seabed and subsoil of the sea adjacent to the territory of the peninsula and the Italian islands and situated outside the territorial sea up to the limit indicated by Italian law to permit the exploration and exploitation of natural resources in those areas.

(c) The terms ‘one Contracting State’ and ‘the other Contracting State’ mean, depending on the context, Spain or Italy.

(d) “International traffic” means any transport by a vessel or aircraft operated by an Enterprise whose effective headquarters are located in a Contracting State, except where the vessel or aircraft is operated only between points located in the other Contracting State.

(e) The term ‘person’ includes natural persons, companies and any other grouping of persons.

(f) The term ‘Society’ means any legal person or entity that is considered a legal person for tax purposes.

(g) The terms ‘Company of one Contracting State’ and ‘Company of the other Contracting State’ mean, respectively, an Enterprise operated by a resident of a Contracting State (including the same State, its political or administrative subdivisions and its local entities), and an Enterprise operated by a resident of the other Contracting State (including the same State, its political or administrative subdivisions and its local entities).

(h) The term ‘national’ means:

(1) Any natural person possessing the nationality of a Contracting State,

(2) Any legal person, Society of Persons and Association constituted in accordance with the law in force in a Contracting State:

(i) the expression ‘competent authority’ means:

(1) In Spain:

The Minister of Finance or other authority duly authorized by the Minister.

(2) In Italy:

The Minister of Finance.

2. For the purposes of the application of the Convention by a Contracting State, any expression not defined in the Convention shall have, unless a different interpretation is given in its context, the meaning attributed to it by the law of that State concerning the taxes which are the subject of this Convention.

1. For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the law of that State, is subject to taxation at the place of domicile, residence, place of address or any other criterion of a similar nature. However, this term does not include persons who are subject to taxation in this State solely for the income they obtain from sources located in that State.

2. Where under the provisions of paragraph 1, a natural person is a resident of both Contracting States, his or her situation shall be resolved as follows:

(a) This person shall be considered a resident of the Contracting State where he or she has a permanent dwelling at his or her disposal. If it has permanent housing at its disposal in both States, it shall be considered a resident of the Contracting State with which it maintains closer personal and economic relations (centre of vital interests);

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

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

(d) If he is a national of either Contracting State or is not a national of either Contracting State, the competent authorities of the two Contracting States shall decide the case by mutual agreement.

3. Where under the provisions of paragraph 1, a person who is not a natural person is resident in both Contracting States, he or she shall be considered a resident of the Contracting State in which his or her place of effective management is located.

1. For the purposes of this Agreement the term ‘permanent establishment’ means a fixed place of business through which an Enterprise carries out all or part of its activity.

2. The term ‘permanent establishment’ includes, in particular:

(a) A management headquarters;

(b) A branch office;

(c) An office;

(d) A factory;

(e) One workshop;

(f) A mine, quarry or any other place of extraction of natural resources;

(g) A construction or assembly work lasting more than 12 months.

3. A permanent establishment is not considered to exist if:

(a) The use of facilities is for the sole purpose of storing, displaying or delivering goods belonging to the Enterprise;

(b) The maintenance of a warehouse of goods belonging to the Company is for the sole purpose of storing, displaying or delivering them;

(c) The maintenance of a deposit of goods or goods belonging to the Enterprise is for the sole purpose of their processing by another Company;

(d) The maintenance of a fixed place of business is for the sole purpose of purchasing goods or collecting information for the Enterprise;

(e) The maintenance of a fixed place of business is for the sole purpose of advertising, providing information, scientific research or other similar activity of an auxiliary or preparatory nature for the Enterprise.

4. Any person who acted in a Contracting State on behalf of an Enterprise of the other Contracting State - other than an agent enjoying an independent status, referred to in paragraph 5 - shall be considered as a ‘permanent establishment’ in the first State if he has in that State powers, which he habitually exercises, to conclude contracts on behalf of the Enterprise, unless the activity of that person is limited to the purchase of goods for the Enterprise.

5. An Enterprise of one Contracting State is not considered to have a permanent establishment in the other Contracting State merely because it carries out its activities through a broker, a general commissioner, or any other intermediary enjoying an independent status, provided that these persons act within the ordinary framework of their activity.

6. The fact that a Company resident of a Contracting State controls or is controlled by a Company resident of the other Contracting State or that carries out its activity in that other State (whether by permanent establishment or otherwise) does not by itself make any of these Societies permanent establishment of the other State.

1. Income from immovable property, including income from agricultural or forestry holdings, may be taxed in the Contracting State in which such property is situated.

2. The term ‘real property’ shall be defined in accordance with the law of the Contracting State in which the property in question is situated. In any event, this term includes accessories, livestock and equipment from agricultural and forestry holdings, as well as rights to which private law provisions relating to real estate apply. In addition, the use of immovable property and the right to receive variable or fixed cannons for the exploitation or concession of exploitation of mineral deposits, sources and other natural resources are considered as ‘real property’. Ships, vessels and aircraft are not considered real property.

3. The provisions of paragraph 1 apply to income derived from direct use, lease or shareholding, disposal, as well as from any other form of exploitation of immovable property.

4. The provisions of paragraphs 1 and 3 also apply to income derived from the immovable property of an Enterprise and to the income from the immovable property used for the exercise of an independent profession.

1. The profits of an Enterprise of a Contracting State may only be taxed in that State unless the Enterprise carries out its business in the other Contracting State by means of a permanent establishment situated in that State. If the Enterprise does so, the profits of the Enterprise may be taxed in the other State, but only to the extent that they can be attributed to this permanent establishment.

2. Without prejudice to paragraph 3, where an Enterprise of a Contracting State by means of a permanent establishment situated in the Contracting State, in each Contracting State, the profits which it may have obtained from being a separate and separate Enterprise carrying out the same or similar activities under the same or similar conditions shall be attributed to that establishment and shall deal entirely independently with the Enterprise from which it is a permanent establishment.

3. For the purpose of determining the benefit of the permanent establishment, it shall be permitted to deduct the expenses incurred for the purpose of the permanent establishment, including management and general administrative expenses for the same purposes, whether incurred in the State in which the permanent establishment is located or elsewhere.

4. No benefit shall be attributed to a permanent establishment merely because it buys goods for the Company.

5. Where profits include income covered separately by other articles of this Convention, the provisions of those articles shall not be affected by those of this Article.

1. Profits from operating ships or aircraft in international traffic may be taxed only in the Contracting State in which the effective head office of the Enterprise is located.

2. If the seat of effective management of a Maritime Navigation Enterprise is on board a ship, that seat shall be deemed to be in the Contracting State where the base port of the ship is located and, if there is no such base port, in the Contracting State where the person operating the ship resides.

3. The provisions of paragraph 1 also apply to profits from participation in a pool, on a joint holding or in an international operating body.

When:

(a) An Enterprise of one Contracting State participates, directly or indirectly, in the direction, control or capital of an Enterprise of the other Contracting State or.

(b) the same persons participate, directly or indirectly, in the direction, control or capital of an Enterprise of one Contracting State and an Enterprise of the other Contracting State.

and, in either case, the two Companies are, in their commercial or financial relations, bound by terms, accepted or imposed, which differ from those agreed by independent Companies, the profits that one of the Companies would have obtained if these conditions did not exist but which in fact did not occur because of them, may be included in the profits of this Company and subject to taxation accordingly.

1. Dividends paid by a Company resident of one Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State in which the company paying the dividends resides and in accordance with the law of that State, but if the person receiving the dividends is the beneficial owner, the tax thus required may not exceed 15 per 100 of the gross amount of those dividends.

The competent authorities of the Contracting States shall, by mutual agreement, determine how these limits are to be applied.

This paragraph does not affect the Company's taxation of profits from those who pay dividends.

3. The term ‘dividends’ used in this Article includes the income from shares, shares or enjoyment bonds, parts of mines, parts of founders or other rights, except credit rights, which permit participation in profits, as well as income from other social shares subject to the same tax regime as the income from shares under the tax law of the State in which the distribution company resides.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of one Contracting State, exercises in the other Contracting State of which the Company that pays the dividends is resident, an industrial or commercial activity through a permanent establishment there situated, or provides professional services through a fixed base there, with which the share generated by the dividends is effectively linked. In such cases dividends are subject to taxation in this other Contracting State under its own domestic law.

5. Where a Company resident of a Contracting State obtains profits or income from the other Contracting State, that other State may not require any tax on dividends paid by the Company, except to the extent that these dividends are paid to a resident of that other State or the share generated by the dividends is effectively linked to a permanent establishment or a fixed base situated in that other State, or subject the undistributed profits of the Company to a tax on them, even if the dividends paid or the undistributed profits consist, in whole or in part, of profits or income from that other State.

1. Interest from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, these interests may be taxed in the Contracting State from which they come and in accordance with the law of that State, but if the person receiving the interest is the beneficial owner, the tax thus required may not exceed 12 per cent of the amount of interest. The competent authorities of the Contracting States shall, by mutual agreement, determine how this limit is to be applied.

3. Notwithstanding the provisions of paragraph 2, interest from one of the Contracting States is exempt from taxation in that State if:

(a) The debtor of interest is the Government of this Contracting State or one of its local entities; or

(b) Interest is paid to the Government of the other Contracting State or to one of its local Entities or to an institution or body (including financial institutions) wholly belonging to that Contracting State or to one of its local entities; or

(c) Interest is paid to other institutions or agencies (including financial institutions) on the basis of funding agreed upon by them under agreements concluded between the Governments of the Contracting States.

4. The term ‘interest’ used in this Article includes income from public funds, from loan obligations accompanied or not by mortgage guarantees or benefit-sharing clauses, and from loans of all kinds, as well as any other proceeds assimilated to income in amounts provided by the tax legislation of the State from which the income originates.

5. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the interest, resident of a Contracting State, exercises, in the other Contracting State from which the interest originates, an industrial or commercial activity through a permanent establishment there situated, or provides professional services through a fixed base there, with which the credit generated by the interest is effectively linked. In these cases, interest is taxable in this other Contracting State, under its own domestic law.

6. Interests are considered to come from a Contracting State when the debtor is the State itself, a political or administrative subdivision, a local entity or a resident of that State. However, where the debtor of interest, whether or not resident of a Contracting State, has in a Contracting State a permanent establishment in respect of which the debt giving rise to the payment of the interest is incurred and bears the burden thereof, the interest shall be considered as originating in the Contracting State in which the permanent establishment is situated.

7. Where, on account of special relations between the debtor and the creditor or where the interest paid by the debtor and the creditor with third parties is maintained, in view of the claim for payment, exceeds the amount that would have been agreed by the debtor and the effective creditor in the absence of such relations, the provisions of this article shall apply only to the latter amount. In this case, the excess may be imposed in accordance with the laws of each Contracting State taking into account the other provisions of this Convention.

1. Fees from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, these fees may be taxed in the Contracting State of origin and in accordance with the law of that State, but if the person receiving the royalties is the beneficial owner, the tax thus established may not exceed:

(a) 4 per cent of the gross amount of remuneration of any kind paid for the use or granting of a copyright on a literary, dramatic, musical or artistic work (excluding royalties relating to cinematographic films and to works recorded on magnetoscopic films or tapes intended for television).

(b) 8 per cent of the gross amount of royalties in all other cases.

The competent authorities of the Contracting States shall, by mutual agreement, determine how this limit is to be applied.

3. The term ‘royalties’ used in this Article includes amounts of any kind paid for the use or granting of a copyright on a literary, artistic or scientific work, including cinematographic films, of a patent, trademark, design, plan, formula or secret procedure, as well as the use or granting of use of industrial, commercial or scientific equipment, and information relating to industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficiary of the royalties, resident of one Contracting State, exercises in the other Contracting State, from which the royalties come, an industrial or commercial activity through a permanent establishment there situated or provides professional services through a fixed base there, with which the right or property for which the royalties are paid is effectively linked. In such cases, the fees may be subject to taxation in this other Contracting State under its own domestic law.

5. The royalties are considered to come from a Contracting State where the debtor is the State itself, a political or administrative subdivision, a local entity or a resident of that State. However, where the debtor of the royalties, whether or not he is resident of a Contracting State, has in a Contracting State a permanent establishment in respect of which the benefit giving rise to the payment of the royalties and bears the burden thereof, they shall be considered as originating in the Contracting State in which the permanent establishment is situated.

6. Where, on account of the 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 paid, exceeds the amount that would have been agreed by the debtor and the creditor in the absence of such relationships, the provisions of this article shall apply only to the latter amount. In this case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.

1. Profits arising from the disposal of immovable property as defined in article 6, paragraph 2, may be taxed in the Contracting State in which such property is situated.

2. Gains arising from the disposal of movable property forming part of the assets of a permanent establishment held by an Enterprise of one Contracting State in the other Contracting State, or from movable property belonging to a fixed basis held by a resident of one Contracting State in the other Contracting State for the provision of professional services, including gains arising from the overall disposal of this permanent establishment (only or with the Enterprise as a whole) or from this fixed basis, may be taxed in that other State. However, profits resulting from the disposal of ships and aircraft operated in international traffic and from movable property affected by their operation may be taxed only in the Contracting State in which the effective head office of the Enterprise is located.

3. Profits arising from the disposal of any property other than those referred to in paragraphs 1 and 2 may be taxed only in the Contracting State in which the transferor resides.

1. Revenues which a resident of a Contracting State obtains from the provision of professional services or the pursuit of other activities of an independent nature of a similar nature may be taxed 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 fixed base, income may be taxed in the other State, but only to the extent that it is attributable to this fixed base.

2. The term “professional services” includes, in particular, independent scientific, literary, artistic, educational or pedagogical activities, as well as independent activities of doctors, lawyers, engineers, architects, dentists and accountants.

1. Without prejudice to Articles 16, 18 and 19, salaries, wages and similar remuneration obtained by a resident of a Contracting State on the basis of wage employment may only be taxed in that State, unless the employment is exercised in the other Contracting State. If the employment is exercised in the latter State, the remuneration received for this purpose may be subject to taxation in the latter State.

2. Notwithstanding paragraph 1, remunerations obtained by a resident of a Contracting State on the basis of wage employment in the other Contracting State may only be taxed in the first Contracting State if:

(a) The recipient remains in the other State, for one or more periods, in total not more than one hundred and eighty-three days during the fiscal year concerned; and

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

(c) Remuneration is not borne by a permanent establishment or a fixed basis which the employer has in the other State.

3. Notwithstanding the foregoing provisions of this Article, remunerations earned on account of employment on board a ship or aircraft operated in international traffic may be taxed in the Contracting State where the effective head office of the Company is located.

Participations, attendance allowances and other similar remunerations which a resident of a Contracting State obtains as a member of a Board of Directors or Supervisory Board of a Company resident of the other Contracting State may be subject to taxation in that other State.

1. By way of derogation from Articles 14 and 15, the rents which entertainment professionals, such as theatre, cinema, radio or television artists and musicians, as well as sportsmen, may obtain from their personal activity and as such may be subject to taxation in the Contracting State in which these activities are carried out.

2. By way of derogation from Articles 7, 14, and 15, where income derived from activities carried out by an artist or athlete personally and as such is attributed to a person other than the artist or athlete himself, such income may be taxed in the Contracting State in which the activities of the artist or athlete are carried out.

Without prejudice to the provisions of article 19, paragraph 2, pensions and other similar remuneration paid to a resident of a Contracting State on account of previous employment may only be subject to taxation in that State.

1. (a) Remuneration, excluding pensions, paid by a Contracting State or one of its political or administrative subdivisions or local entities to a natural person, for the purpose of services rendered to that State or to this subdivision or Entity, may only be subject to taxation in that State.

(b) However, such remuneration may only be taxed in the other Contracting State if the services are provided in that State and if the beneficiary of the remuneration is a resident of that State who:

(i) possesses the nationality of this State; or

(ii) It has not acquired the status of resident of this State solely to provide the services.

2. (a) Pensions paid by a Contracting State or by one of its political or administrative subdivisions or local entities, either directly or from funds constituted for that purpose, to a natural person for the purpose of services rendered to that State, to this branch or entity, may only be subject to taxation in that State.

(b) Such pensions may, however, be subject to taxation only in the Contracting State in which the beneficiary was resident provided that he or she has the nationality of that State.

3. The provisions of articles 15, 16 and 18 apply to remuneration and pensions paid for services provided within the framework of a commercial or industrial activity carried out by a consistent State, one of its political or administrative subdivisions or local entities.

1. A resident of a Contracting State who, at the invitation of a University, College or other Institute of Higher Education or Scientific Research of the other Contracting State, visits that other State for the sole purpose of teaching or conducting scientific research in the said Institutions for a period not exceeding two years, cannot be subject to taxation in that other State for the remuneration received for such teaching or research activities.

2. The amounts that a student or a trainees who is or has been, immediately before arriving in a Contracting State, resident of the other Contracting State which is in the first State for the sole purpose of continuing their studies or training, receive to cover their costs of maintenance, education or training, may not be subject to taxation in that State, provided that they come from sources outside that State.

1. The income of a resident of a Contracting State, whatever its source, not mentioned in the previous articles of this Convention, may be taxed only in that State.

2. Paragraph 1 shall not apply where the beneficiary of such income, resident of a Contracting State, engages in an industrial or commercial activity in the other Contracting State through a permanent establishment situated there, or provides his professional services through a fixed base situated there, with which the right or ownership for which the income is paid is effectively linked. In this case, income may be taxed in this other Contracting State under its own domestic law.

1. It is established that double taxation shall be avoided in accordance with the following paragraphs of this article.

2. As regards Italy:

Where a resident of Italy receives income which may be taxed in Spain, Italy, when determining his income taxes, as covered by Article 2 of this Convention, he may include such income in the tax base of those taxes, unless the provisions of this Convention do not provide otherwise.

In this case, Italy must deduct from the taxes thus determined the income tax paid in Spain, but the amount of the deduction may not exceed that part of the Italian tax that is attributable to those incomes in the proportion to which these incomes participate in the formation of the total income.

However, no deduction shall be made if the income is taxed in Italy by means of a definitive tax withholding tax, at the request of the beneficiary and in accordance with Italian law.

3. With regard to Spain:

Where a resident of Spain receives income which, according to the Convention, may be taxed in Italy, Spain shall grant, in the tax levied on the income of that resident, a deduction of an amount equal to the tax paid in Italy. However, the amount thus deducted may not exceed the tax fraction, calculated before the deduction, corresponding to the income received from Italy, and this deduction from the Spanish tax applies both to general taxes and to account taxes.

4. Where, in accordance with any provision of the Convention, income received by a resident of a Contracting State is exempt from tax in that State, the latter may, however, calculate the amount of tax on the remaining income of that resident, and in accordance with its domestic law, take account of the exempt income.

1. Nationals of a Contracting State, whether or not they are residents of one of the Contracting States, shall not be subject in the other Contracting State to any taxes or obligations relating thereto which are not or are more burdensome than those to which nationals of that other State who are under the same conditions are or may be subject.

2. A permanent establishment which an Enterprise of one Contracting State has in the other Contracting State shall not be subject to taxation in that State in a less favourable manner than the Enterprises of that other State carrying out the same activities.

This provision cannot be interpreted as obliging a Contracting State to grant to residents of the other Contracting State the personal deductions, reliefs and tax deductions it grants to its own residents in consideration of their civil State or family burdens.

3. Unless the provisions of article 9, article 11, paragraph 7, or article 12, paragraph 6, apply, interest, royalties or other expenses paid by an Enterprise of one Contracting State to a resident of the other Contracting State shall be deductible for the purpose of determining the profits subject to taxation of this Enterprise, on the same terms as if they had been paid to a resident of the first Contracting State.

4. Undertakings of a Contracting State whose capital is wholly or partly detained or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subject in the State referred to above to any tax or obligation relating thereto which is not or is more burdensome than those to which other similar undertakings of the former State are or may be subject.

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

1. Where a resident of a Contracting State considers that the measures taken by one or both Contracting States imply or may represent for him an imposition that is not in conformity with the provisions of this Convention, irrespective of the remedies provided for by the domestic law of those States, he may submit his case to the competent authority of the Contracting State of which he is a resident. This procedure may not be used after two years from the date of notification or collection at the source of the tax.

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

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

4. The competent authorities of the Contracting States may communicate directly with each other in order to reach agreement as indicated in the preceding paragraphs. Where it is considered that personal contacts may facilitate the achievement of this agreement, such contacts may take place within a committee composed of representatives of the competent authorities of the Contracting States.

1. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention or of the national law of the Contracting States relating to taxes covered by the Convention, to the extent that the taxation required by that Convention is not contrary to the Convention and to prevent tax evasion. The exchange of information is not limited by Article 1. Information received by a Contracting State shall be kept secret in the same manner as information obtained under the domestic law of that State and shall be communicated only to the persons or authorities (including courts and administrative bodies) responsible for the management or collection of taxes covered by the Convention, to the declaratory or executive procedures relating to such taxes covered by the Convention, to the declaratory or executive procedures relating to such taxes or to the resolution of appeals relating to such taxes. The above-mentioned persons or authorities shall use these reports only for these purposes. They may disclose such information in public hearings of the courts or in court judgements.

2. Under no circumstances may the provisions of paragraph 1 be interpreted as obliging a Contracting State to:

(a) Take administrative measures contrary to its legislation or administrative practice or those of the other Contracting State;

(b) Provide information that cannot be obtained on the basis of its own legislation or in the exercise of its normal administrative practice or that of the other Contracting State;

(c) Provide information revealing a commercial, industrial or professional secret or a commercial procedure, or information whose communication is contrary to public policy.

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 special agreements.

1. Taxes collected in a Contracting State by withholding tax shall be refunded at the request of the person concerned or the State in which he resides when the right to receive such taxes is limited by the provisions of this Convention.

2. Applications for repayment shall be submitted within the time limits laid down by the law of the Contracting State obliged to make such repayment and shall be accompanied by an official declaration by the Contracting State in which the taxpayer resides certifying the existence of the conditions required to benefit from the exemptions or reductions provided for in this Convention.

3. The competent authorities of the Contracting States shall decide by mutual agreement, in accordance with Article 24, how this Article is to be applied. They may also, by amicable agreement, establish other procedures for the application of the tax limits provided for in this Convention.

1. This Convention shall be ratified and the instruments of ratification shall be exchanged in Madrid as soon as possible.

2. This Convention shall enter into force on the date of the exchange of instruments of ratification and its provisions shall apply:

(a) Taxes at source on income paid from 1 January 1977.

(b) Other taxes in respect of periods of taxation ending from 1 January 1977.

3. The provisions of the Spanish-Italian Agreement on the Tax Regime of Companies of 28 November 1927 shall cease to apply since the application of this Agreement.

This Convention shall remain in force until it is denounced by one of the Contracting States. Any Contracting State may denounce the Convention by diplomatic means, at least six months before the end of each calendar year. In such a case, the Convention shall cease to apply:

(a) Taxes at source on income paid from 1 January of the year following the year in which the complaint took place.

(b) Other taxes in respect of periods of taxation ending from 1 January following that in which the complaint took place.

In faith, the plenipotentiaries of the two States have signed and sealed this Convention.

Done at Rome on 8 September of a thousand nine hundred and seventy-seven, in two copies, in the Spanish, Italian and French languages, the three texts being equally reliable and the French text prevailing in case of doubt.

For the Government of Spain (unreadable signature).

For the Government of Italy (unreadable signature).

AGREEMENT PROTOCOL

The Convention between Spain and Italy to prevent double taxation of income taxes and to prevent tax evasion.

At the time of signing the Agreement concluded today between Spain and Italy to prevent double taxation of income taxes and to prevent tax evasion, the undersigned plenipotentiaries agree on the following additional provisions which form an integral part of the Convention.

It is agreed that:

(a) With regard to article 6 of this Convention, the provisions of the oral proceedings of the second session (Rome, 29 May-3 June 1957) of the Italian-Spanish Joint Commission, which have been the subject of an exchange of letters between Italy and Spain of 28 March 1958, and which constitute the annexes to the Italian-Spanish cultural agreement of 11 August 1955, are hereby confirmed for all purposes. Mainly the tax exemptions agreed in the aforementioned agreements, including those provided for in favour of the assets of the Spanish College S. Clemente (Albornoz), in Bologna, produces all its effects from the dates indicated there.

(b) As regards Article 7(3), ‘expenses incurred for the purpose of the permanent establishment’ means expenses directly related to the activity of the permanent establishment;

(c) As regards Article 12, the term 'royalties' includes payments due on the basis of technical and economic studies of an industrial or commercial nature;

(d) With regard to article 24, paragraph 1, the expression ‘regardless of the remedies provided for by national law’ means that the commencement of the mutual agreement procedure is not an alternative to the domestic contentious procedure to which, in any case, it must be dealt in advance when the dispute relates to an application of taxes which is not in conformity with the Convention.

(e) With regard to article 28, applications for repayment made under this Convention by a resident of a Contracting State in respect of taxes due before the entry into force of this Convention may be submitted within two years of the date of entry into force of this Convention.

(f) Notwithstanding the provisions of article 28, paragraph 2, the provisions of article 8 shall apply to taxes due from 1 January 1969.

Done at Rome on 8 September of a thousand nine hundred and seventy-seven, in two copies, in the Spanish, Italian and French languages, the three texts being equally reliable and the French text prevailing in case of doubt.

For the Government of Spain (unreadable signature).

For the Government of Italy (unreadable signature).

This Convention entered into force on 14 November 1980, in accordance with Article 28(2) thereof.

What is made public for general knowledge.

Madrid, November 18, 1980.–The Technical Secretary General of the Ministry of Foreign Affairs, Juan Antonio Pérez-Urruti Maura.