Canada

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

1. This Convention applies to income and property taxes payable by each Contracting State, irrespective of the system of its levy.

2. Income and property taxes are defined as taxes on all or any part of the income or property, including taxes on profits arising from the disposal of movable or immovable property, taxes on the amount of wages paid by the Companies, and taxes on capital gains.

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

(a) With regard to Canada:

Income taxes levied by the Government of Canada (hereinafter referred to as ‘Canadian taxes’).

(b) As regards Spain:

General income tax on natural persons.

General income tax on companies and other legal entities.

The following taxes on account: rural and livestock land contribution, urban land contribution, income from personal labour, capital income tax and tax on commercial and industrial activities and profits.

The area fee and the profit tax regulated by the Law of 27 June 1974, applicable to undertakings engaged in the investigation and exploitation of hydrocarbons.

(hereinafter referred to as ‘Spanish taxes’).

4. This Convention shall apply to future taxes of an identical or similar nature and to property taxes (which enter into force after the signature of this Convention) which are added to or replaced by existing taxes. The Contracting States shall notify each other of any changes made to their respective tax laws.

1. This Convention, unless otherwise interpreted:

(a) (i) The term ‘Canada’, used in a geographical sense, means the territory of Canada, including any region outside the territorial waters of Canada, where, under Canadian law, Canada may exercise rights relating to marine soil and subsoil and its natural resources.

(ii) The expression 'Spain' means the Spanish State (Spain peninsular, the Balearic Islands and the Canary Islands, the Spanish cities of Africa) and the areas adjacent to the territorial waters of Spain over which, in accordance with international law, Spain may exercise the rights relating to marine soil and subsoil and its natural resources.

(b) The terms ‘one Contracting State’ and ‘another Contracting State’ mean, according to the text, Spain or Canada.

(c) The term ‘person’ includes natural persons, inheritances, trusts, corporations and any other grouping of persons.

(d) The term ‘corporate’ means any legal person or any entity to be regarded as a legal person for tax purposes; in French, the term ‘society’ also includes a ‘corporation’ within the meaning of Canadian law.

(e) The terms ‘undertakings of one Contracting State’ and ‘undertaking of the other Contracting State’ mean, respectively, an undertaking operated by a resident of one Contracting State and an undertaking operated by a resident of the other Contracting State.

(f) The expression ‘competent authorities’ means:

(i) With regard to Canada, the Minister of National Income or his authorized representative.

(ii) As regards Spain, the Minister of Finance, the Technical Secretary-General or other authority duly authorized by the Minister.

(g) The term "taxes" means, according to the text, the Spanish tax or the Canadian tax.

(h) The term ‘national’ means:

(i) Any natural person possessing the nationality of a Contracting State.

(ii) Any legal person, company of persons and association constituted in accordance with the law in force in a Contracting State.

(i) ‘International traffic’ means any transport carried out by a ship or aircraft operated by an undertaking whose effective headquarters are located in a Contracting State, unless the operation is carried out only between points located in the other Contracting State.

2. For the purposes of the application of this Convention by a Contracting State, any expression not otherwise defined shall have unless the text requires a different interpretation, the meaning attributed by the law of that Contracting State to the taxes which are the subject of this Convention.

1. For the purposes of this Convention, ‘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.

2. Where, under the provisions of paragraph 1, a natural person is resident in both Contracting States, this shall be decided 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. Where it has a permanent dwelling in both Contracting 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 it is not possible to determine the Contracting State in which that person has the centre of his or her vital interests, 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 in which he or she habitually lives.

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

3. Where, under the provision of paragraph 1, a corporation is considered a resident of both Contracting States, the case shall be resolved as follows:

(a) Be considered a resident of the Contracting State of which he or she is a national.

(b) If he or she does not have the nationality of any of the 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.

4. Where, according to the provision of paragraph 1, a person, other than a natural person or a corporation, is resident in both Contracting States, the competent authorities of the Contracting States shall attempt by mutual agreement to resolve the matter and to determine the application of this Convention to that person.

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

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

(a) A management headquarters.

(b) Branch.

(c) Office.

d) Factory.

(e) Workshop.

(f) Mining, quarrying or any other natural resource extraction site.

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

3. The term ‘permanent establishment’ does not include:

(a) The use of facilities for the sole purpose of storing, displaying or delivering goods or goods belonging to the enterprise.

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

(c) The use of a deposit of goods or goods belonging to the undertaking for the sole purpose of their processing by other undertakings.

(d) The use of a fixed place of business for the sole purpose of purchasing goods or goods or collecting information for the enterprise.

(e) The maintenance of a fixed place of business for the sole purpose of advertising, providing information, conducting scientific research or carrying out other similar activities that are preparatory or auxiliary in nature.

4. A person acting in a Contracting State on behalf of an undertaking of the other Contracting State, except in the case of an independent agent covered by paragraph 5 of this text, is considered to constitute a permanent establishment in the Contracting State first mentioned if he has and habitually exercises in that State powers to conclude contracts on behalf of the undertaking, unless his activities are limited to the purchase of goods or goods for the enterprise.

5. An enterprise of one Contracting State is not considered to have a permanent establishment in the other Contracting State on the sole ground that it engages in activities in that other State through a broker, a general commissioner or any other mediator enjoying an independent status, provided that such 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 activities in that other State (either through a permanent establishment or otherwise) does not by itself make any of these companies permanent establishment of the other State.

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

2. For the purposes of this Convention, 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, the term includes accessories, livestock and equipment used on agricultural and forestry holdings; rights to which private law provisions relating to real estate, the use of immovable property and the right to receive variable or fixed fees for the exploitation or concession of the exploitation of mineral deposits, sources or other land wealth apply. Ships, vessels and aircraft are not considered real property.

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

4. The provisions of paragraphs 1 and 3 also apply to income derived from the real estate of an enterprise and from immovable property used for the provision of professional services.

1. The profits of an enterprise in one Contracting State may be taxed in that State only, unless the enterprise carries out operations in the other State through a permanent establishment located in that State. If the undertaking exercises or has exercised its activity in such a way, the profits of the undertaking may be taxed in the other State, but only to the extent that they can be attributed to the permanent establishment.

2. Without prejudice to the provisions of paragraph 3, when an enterprise of one Contracting State engages in business in the other Contracting State through a permanent establishment situated therein, in each Contracting State the profits it would obtain from the establishment if it were a separate undertaking carrying out the same or similar activities, under the same or similar conditions, and dealt entirely independently with the enterprise of which it is a permanent establishment.

3. For the purpose of determining the benefit of the permanent establishment, the deduction of expenses incurred for the purposes of the permanent establishment shall be permitted, duly demonstrated, including management and general administrative expenses for the same purposes, either in the State in which the permanent establishment is situated or elsewhere.

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

5. For the purposes of the preceding paragraphs, the profits attributable to the permanent establishment shall be calculated each year by the same method, unless there are valid and sufficient grounds for proceeding otherwise.

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

1. The profits of an enterprise in a Contracting State from the operation of ships or aircraft in international traffic may only be taxed in that State.

2. Without prejudice to the provisions of paragraph 1 and article VII, profits from the operation of ships or aircraft primarily engaged in the transport of passengers or goods exclusively between places located in a Contracting State are subject to taxation in that State.

3. The provisions of paragraphs 1 and 2 of this article also apply to the above profits obtained by an undertaking of a Contracting State as a result of its participation in a pool, a joint holding or an international exploitation body.

1. 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 enterprise of one Contracting State and of 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 to be agreed by independent companies, the profits that one of the companies would have obtained, if these conditions did not exist and which in fact did not occur because of them, may be included in the profits of this company and subject to taxation accordingly.

2. Where the profits on which an undertaking of one Contracting State has satisfied its taxes in that State are included in the profits of an undertaking of the other Contracting State and are thus accrued, and where these profits have been obtained by that undertaking of the other State if the terms agreed between the two companies have been identical to those established between two independent undertakings, the first State shall make an adjustment corresponding to the amount of taxes received on those profits. The determination of the adjustment shall take into account the other provisions of this Convention relating to the nature of the income.

3. A Contracting State shall not rectify the profits of an enterprise in the cases referred to in paragraph 1 after the expiry of the limitation periods provided for in its national law and, in any event, after the end of five years from the end of which the profits that had been rectified had been made by an enterprise of that State.

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

2. However, such dividends may be taxed in the Contracting State in which the company paying the dividends resides and in accordance with the law of that State; but where the person receiving the dividends is the beneficial owner, the tax thus required may not exceed 15 per cent of the gross amount of these dividends. The provisions of this paragraph do not affect the company's taxation of profits from which dividends are paid.

3. The term ‘dividends’ used in this Article covers the income from shares, shares or enjoyment bonds, mining holdings, founder's shares or other rights, except credit rights, which permit participation in the profits, as well as income from other shareholdings assimilated to the income from shares under the tax law of the State in which the distribution company resides.

4. The provisions of paragraph 2 do not apply if the dividend beneficiary, resident of one Contracting State, exercises in the other Contracting State of which the corporation that pays the dividends is resident, a commercial or industrial activity through a permanent establishment or a liberal profession on a fixed basis, if the share generated by the dividends is effectively linked to them. In this case, the provisions of article VII or article XIV, as applicable, apply.

5. Where a company is a resident of a Contracting State, the other Contracting State may not require any tax on dividends paid by that State, unless such dividends have been satisfied to a resident of that other State or where the share generated by the dividends is actually linked to a permanent establishment or a fixed base situated in that other State; nor may it subject the undistributed profits of the company to a tax on them, even if the dividends paid or profits not distributed consist, in whole or in part, of profits or income from that other State.

6. Notwithstanding the other provisions of this Convention:

(a) A company resident in Spain with a permanent establishment in Canada shall remain subject, in accordance with the provisions of Canadian law, to additional tax on companies other than Canadian companies, but this tax shall not exceed 15 per 100.

(b) A corporation resident in Canada with a permanent establishment in Spain shall remain subject to withholding tax in accordance with the provisions of Spanish law, but this charge shall not exceed 15 per 100.

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

2. However, these interests may be subject to taxation in the Contracting State from which they come and in accordance with the law of that State; but the tax thus required may not exceed 15 per 100 of the gross amount of these interests, provided that they are subject to taxation in the other Contracting State.

3. The term ‘interest’ used in this Article includes the income from claims of any kind, with or without a mortgage guarantee or entitled or not to participate in profits, and in particular the income from public debt, from bonds or bonds, including premiums and lots of these items, and all other benefits assimilated to the income from sums lent under the tax legislation of the State from which the returns come; but does not include the returns referred to in Article X.

4. The provisions of paragraph 2 do not apply if the beneficiary 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 or a liberal profession on a fixed basis, where the participation generated by the interest is effectively linked to the interest. In this case, the provisions of Article VII or Article XIV, as appropriate, apply.

5. Interests are considered to come from a Contracting State when the debtor is the State itself, one of its political subdivisions, one of its local authorities or a resident thereof. However, where the debtor of interest, whether or not resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which the debt giving rise to the interest has been incurred and such establishment or support base the payment thereof, interest shall be deemed to have come from the Contracting State where the permanent establishment or fixed base referred to above is located.

6. Where, due to special relationships between the debtor and the beneficiary of the interest or between the two and any other person, the amount of interest paid, having regard to the claim for which it is paid, exceeds the amount that would have been agreed by the debtor and the beneficiary 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 law of each Contracting State, taking into account the other provisions of this Convention.

7. Notwithstanding the provisions of paragraph 2:

(a) Interest from Spain and paid to a resident of Canada may only be taxed in Canada when it is paid on the basis of a loan made, guaranteed or insured, or an agreed credit, guaranteed or insured by the Export Expansion Corporation; and

(b) Interest from Canada and paid to a resident of Spain may be taxed in Spain only when it is paid on the basis of a loan made, guaranteed or insured, or of a credit agreed, guaranteed or insured by one of the Spanish institutions of Official Credit.

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

2. However, these fees may be taxed in the Contracting State from which they come and in accordance with the law of that State; but, in this case, the tax thus established may not exceed 10 per cent of the gross amount of such fees, provided that they are subject to taxation in the other Contracting State.

3. Notwithstanding the provisions of paragraph 2, royalties paid under copyright and other similar remuneration for the production or reproduction of a literary, dramatic, musical or artistic work (excluding royalties relating to cinematographic films and works recorded on films or tape intended for television purposes) from one Contracting State and paid to a resident of the other Contracting State subject to taxation on account of them may only be taxed in that other State.

4. The term ‘royalties’ used in this article includes remuneration of any kind paid for the use or grant of copyright, patents, trademarks, designs, plans, formulas or secret procedures, as well as for the use or granting of use of industrial, commercial or scientific equipment and amounts paid for information relating to commercial or scientific industrial experience; this term also includes quantities of any kind relating to cinematographic films and works recorded in films and tape recorders intended for television.

5. The provisions of paragraphs 2 and 3 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, or a liberal profession on a fixed basis, where the right generated by the royalties is effectively linked to them. In this case, the provisions of Article VII or Article XIV, as appropriate, apply.

6. The fees shall be deemed to come from a Contracting State where the debtor is the State itself, one of its political subdivisions, one of its local authorities or a resident of the same State. In any event, where the debtor of the royalties, whether or not he is a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which those royalties have been incurred and the payment of which they bear, such fees shall be deemed to have come from the Contracting State in which the permanent establishment or fixed base is located.

7. Where due to special relationships between the debtor and the beneficiary or between them and any other person, the amount of the fees paid, taking into account the benefit for which they are paid, exceeds the amount that would have been agreed by the debtor and the beneficiary 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. Gains from the disposal of immovable property may be taxed in the Contracting State in which they are located.

2. Gains arising from the disposal of immovable property forming part of the assets of a permanent establishment held by an Enterprise of one Contracting State in the other Contracting State, or movable property belonging to a fixed basis held by a resident of one Contracting State in the other Contracting State for the pursuit of a liberal profession, including gains accruing from the overall alienation of that permanent establishment (only or with the enterprise as a whole) or from the fixed base, may be taxed in that other State. In any event, profits arising from the disposal of vessels or aircraft operated in international traffic, as well as movable property connected with the operation of such vessels or aircraft, may be taxed only in the Contracting State to which the right to tax falls under article XXII, paragraph 3.

3. Proceeds from disposal:

(a) The shares of a corporation whose property is constituted primarily by immovable property situated in a Contracting State; or

(b) Shareholdings in a company of persons or in a trust (trust) whose property consists mainly of immovable property situated in a Contracting State may be subject to taxation in that State.

For this purpose, the term ‘real estate’ does not cover assets other than those intended for leasing, in which the Company, the Society of Persons or the Trust operates; however, the term includes the shares of a Company referred to in subparagraph (a) and the shares referred to in subparagraph (b) above.

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

5. Notwithstanding the provisions of paragraph 4, a Contracting State may, in accordance with its law, tax profits obtained by a natural person resident of the other Contracting State and derived from the disposition of an asset where the transferor:

(a) Owns the nationality of the first Contracting State or has been a resident of that State for at least 15 years prior to the disposition of the property; and

(b) Has been a resident of this Contracting State at some point in the five years prior to such disposal.

1. Income earned by a resident of a Contracting State for the provision of professional services or the pursuit of other independent activities of a similar nature may only be taxed in that State. In any event, such income may be taxed in the other Contracting State, in the following cases:

(a) If the person concerned normally has a fixed basis in the other Contracting State for the pursuit of such activities; in this case, only income attributable to such a base may be taxed in the other Contracting State; or

(b) If their stay in the other Contracting State is prolonged for a period or periods of total duration of one hundred and eighty-three days or more during the fiscal year; or

(c) If, during the fiscal year, the remuneration received from residents of the other Contracting State, on account of their services in the other Contracting State, exceeds:

(i) in the case of services provided in Spain of 100,000 pesetas (pesetas 100,000); and

(ii) In the case of services provided in Canada of two thousand Canadian dollars (Canadian dollars 2,000), although their stay in Canada for one or more periods represents less than one hundred and eighty-three days during the fiscal year.

2. The term ‘liberal professions’ includes, in particular, independent scientific, literary, artistic, educational or pedagogical activities, as well as independent activities of Physicians, Lawyers, Engineers, Architects, Dentists and Accountants.

1. Without prejudice to the provisions of articles XVI, XVIII and XIX, salaries, wages and similar remuneration obtained by a resident of a Contracting State on account of employment may be subject to taxation in that State only, unless the employment is exercised in the other Contracting State. If employment is exercised in the latter State, the remuneration derived from it may only be subject to taxation in that State.

2. Notwithstanding the provisions of paragraph 1, remuneration obtained by a resident of one Contracting State on the basis of employment in the other Contracting State may be subject to taxation in the first State only if the beneficiary lives in the other Contracting State for a total period or periods of less than one hundred and eighty-three days of the calendar year in question; and

(a) If the remuneration obtained in the other Contracting State in the course of that year does not exceed two thousand Canadian dollars (Canada dollars 2,000), if the employment is exercised in Canada, or one hundred thousand pesetas (pesetas 100,000), if the employment is exercised in Spain; or

(b) If the remuneration is paid by an employer or on behalf of an employer without residence in the other State and the remuneration is not paid by a permanent establishment or fixed base located in the other State.

3. Notwithstanding the provisions of this article, remunerations earned on account of employment on board a ship or aircraft in international traffic operated by an Enterprise of a Contracting State may only be subject to taxation in that State.

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

1. Notwithstanding the provisions of Articles VII, XIV and XV, the rents obtained by performing artists, such as theatre, cinema, radio or television artists and musicians, as well as by sportsmen, for their personal activities in this regard, may be subject to taxation in the Contracting State in which they operate.

2. The income from activities carried out personally by artists or sportsmen, and attributed to a person other than them, notwithstanding the provisions of articles VII, XIV and XV, may be taxed in the Contracting State where the artist or sportsman has carried out his activities.

3. The provisions of paragraph 2 do not apply where it is established that neither the artist nor the athlete, nor persons associated with them, participate directly or indirectly in the benefits of the other person referred to in that paragraph.

1. Pensions and annuities from one Contracting State and paid to a resident of the other Contracting State may be taxed in the latter State.

2. Pensions from one Contracting State and paid to a resident of the other Contracting State may be taxed in the State from which they come and in accordance with the law of that State. In any event, for periodic payments of a pension, the tax thus established may not exceed the lesser of the following two amounts:

(a) 15 per 100 of the gross amount of payment; or

(b) The percentage calculated on the basis of the amount of tax that the beneficiary would have to pay per year, if he had been a resident of the Contracting State from which the payment came, taking into account the total pensions received during that period.

3. Annuities from one Contracting State and paid to a resident of the other Contracting State may be taxed in the State from which they come and in accordance with the law of that State, but the tax thus established may not exceed 15 per cent of the income that is subject to taxation in that State. In any event, this limitation does not apply to lump-sum payments arising from abandonment, cancellation, redemption, sale or other disposal of income, or payments of any kind under a fixed-income contract.

4. Notwithstanding any other provision of this Convention:

(a) Social security pensions and other similar allowances, whether periodic or not, as well as pensions for former combatants, paid by one Contracting State, one of its political subdivisions or local authorities, or by a legal person of public law to an effective beneficiary who is resident of the other Contracting State, are exempt from taxation in the other State, as long as they are also exempt in the former State.

(b) Maintenance and other similar payments from one Contracting State and paid to a resident of the other Contracting State who is the beneficial owner may be subject to taxation only in that other State.

1. (a) Remuneration, other than pensions, paid by a Contracting State or one of its political subdivisions or local authorities to a natural person, in consideration of services rendered to that State, subdivision or authority, may be subject to taxation only in that State.

(b) Such remuneration may, however, be subject to taxation in the Contracting State of which the beneficiary is resident only if the services have been provided in that State and if the beneficiary of the remuneration has not become a resident of that State solely for the purpose of providing the services.

2. The provisions of paragraph 1 do not apply to remuneration paid in consideration of services rendered in the context of a commercial or industrial activity carried out by one of the Contracting States or one of its political subdivisions or local authorities.

The amounts that a student, trainees or apprentice, who is or has been immediately before visiting a Contracting State, resident of the other State and who is in the first State for the sole purpose of continuing his studies or completing his training, receives to cover his costs of maintenance, studies or training, shall not be subject to taxation in the first State, provided that such amounts come from sources outside that State.

The income of a resident of a Contracting State is not expressly mentioned in the earlier articles of this Convention and may be taxed in this Contracting State. However, they may be subject to taxation in the Contracting State from which they come and in accordance with the law of that State.

1. Property constituted by immovable property may be taxed in the Contracting State in which the property is located.

2. Property consisting of movable property forming part of the assets of a permanent establishment of an undertaking, or of movable property belonging to a fixed base used for the pursuit of a professional activity, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.

3. Ships and aircraft operated in international traffic by an enterprise of a Contracting State, as well as movable property linked to their operation, may only be subject to taxation in that State.

4. All other assets of a resident of a Contracting State may be subject to taxation only in that State.

1. With regard to Canada, double taxation is avoided as follows:

(a) Without prejudice to existing provisions of Canadian law relating to the charging of taxes paid in a territory outside Canada on Canadian taxes, and to any subsequent modification of these provisions which does not affect the general principle, and without prejudice to further deductions or reliefs provided for by Canadian law, the tax due in Spain on the basis of profits, income or profits from Spain shall be deducted from any Canadian tax due, by virtue of the above profits, income or profits.

(b) Without prejudice to existing provisions in Canadian law relating to the determination of the reserves exempted from a foreign subsidiary and any subsequent modification of these provisions which do not affect the general principle, a Canadian resident company may, for the purposes of Canadian tax, deduct for the calculation of its taxable income dividends received from the reserves exempted from a foreign subsidiary resident of Spain.

2. For the purposes of paragraph 1(a), the tax due in Spain by a resident of Canada:

(a) On the basis of profits attributable to an undertaking or trade operated in Spain.

(b) On the basis of dividends, interest or royalties received from a company resident in Spain.

They shall comprise the total amount that should have been paid as a Spanish tax for the financial year in question, in the event that there was no exemption or reduction from the tax applicable for that period or part thereof under:

(c) Some of the following provisions: paragraphs 2 and 3 of article 6; paragraphs 1, 2, 3, 4 and 5 of article 7; article 20, paragraph 2, A, and articles 29, 31 and 32 of Decree 3357/1967, dated 23 December, to the extent that they are in force on the date of signature of this Convention and have not been amended, or have been so in areas not affecting their general character; and except in the case where one of those provisions (except articles 7, 29 and 31 of Decree 3357/1967) removes a category of income or minimizes taxation for a period exceeding 10 years.

(d) Any other subsequent provision granting exemption or reduction of taxes which is, according to the competent authorities of the Contracting States, of a similar nature, if it has not been subsequently amended or has not been modified in such a way as to affect its general character.

3. As far as Spain is concerned, double taxation is avoided as follows:

(a) Where a resident of Spain receives income which, under this Agreement, may be taxed in Canada, Spain shall deduct from the income tax of that resident an amount equal to the tax paid in Canada. However, this deduction may not exceed the part of the tax, calculated before the deduction, corresponding to income received from Canada, applied to both general and account taxes. The provisions of this paragraph shall not apply to income taxes paid in Canada in accordance with the provisions of Article XIII:5.

(b) Where the income of a company resident in Spain comprises dividends received from a company resident in Canada, the first company shall have the right to make an identical deduction to that which would result if the two companies were resident in Spain.

4. For the purposes of this article, the profits, income or profits of a resident of a Contracting State charged by the tax of the other Contracting State in accordance with this Convention shall be deemed to be derived from sources located in that other State.

1. Nationals of one Contracting State 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 the latter State who are under the same conditions are or may be subject.

2. A permanent establishment held by an undertaking of one Contracting State in the other Contracting State shall not be subject to taxation in that State in a less favourable manner than undertakings of the latter State carrying out the same activities.

3. Nothing in this Convention obliges a Contracting State to grant to residents of the other Contracting State the personal deductions, reliefs and tax reductions it grants to its own residents in view of their marital status or family burdens.

4. Companies of a Contracting State whose capital is, in whole or in part, 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 obligation relating thereto which is not or is more burdensome than those to which similar undertakings of the first Contracting State are or may be subject, in whole or in part, directly or indirectly, owned or controlled by one or more residents of a third State.

5. The term ‘tax’ means, for the purposes of this Article, the taxes covered by this Convention.

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, irrespective of the remedies provided for by the national law of the States, he may submit his case to the competent authority of the Contracting State of which he is resident, by sending a written and reasoned request for review of such an imposition; in order for such a request to be admissible, it must be submitted within two years of the first notification of the measure involving a charge not in accordance with the Convention.

2. The Competent Authority referred to above, if the claim appears to it to be well founded and if it is not in a position to adopt a satisfactory solution, shall endeavour to resolve the matter by amicable agreement with the Competent Authority of the other Contracting State, in order to avoid the imposition not in conformity 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 amicable agreement. In particular, the competent authorities of the Contracting States may consult with a view to reaching an agreement:

(a) To ensure that the benefits of a resident of one Contracting State and of its permanent establishment in the other Contracting State are charged in an identical manner.

(b) In order to ensure that the income of a resident of a Contracting State and any associated person, in accordance with article IX, is attributed in an identical manner.

4. In cases not provided for in this Convention, the competent authorities of the Contracting States may agree to avoid double taxation.

1. The competent authorities of the Contracting States shall exchange the information necessary for the application of the provisions of this Convention and of the domestic laws of the Contracting States relating to taxes covered by this Convention which are required in accordance with it. Such information shall be kept secret and shall not be disclosed to any person or authorities who are not responsible for the settlement or collection of taxes covered by this Agreement.

2. In no case may the provisions of paragraph 1 oblige a Contracting State:

(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 their own legislation or normal administrative practice or that of the other Contracting State.

(c) To transmit information revealing a commercial, industrial, professional or commercial secret or information whose communication is contrary to public policy

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

2. Without prejudice to article IV of this Convention, a natural person, member of a diplomatic, consular or permanent mission of a Contracting State, established in the other Contracting State or in a third State, shall, for the purposes of this Convention, be regarded as a resident of the sending State, provided that he is subject to the same income-tax obligations as other residents of that State.

3. This Convention shall not apply to international organizations, their corporations or their officials, nor to persons who are members of a diplomatic, consular or permanent mission in a third State, when they are in the territory of a Contracting State and are not subject in one or other Contracting State to the same obligations, in respect of income taxation, as other residents of those States.

1. The provisions of this Convention may not in any case limit exemptions, exemptions, deductions, credits or other reliefs that have been or are agreed upon:

(a) By the law of a Contracting State for the determination of the tax imposed by that State; or

(b) By any agreement signed by a Contracting State.

2. The competent authorities of the Contracting States may communicate directly with each other for the implementation of this Convention.

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

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

(a) With regard to tax withheld from the source on amounts paid or credited to non-residents, from 1 January of the calendar year in which the instruments of ratification are changed; and

(b) In respect of other taxes, from the fiscal year beginning on 1 January of the calendar year in which the instruments of ratification are exchanged.

This Convention shall remain in force indefinitely, but any Contracting State may, up to and including 30 June of each calendar year after the year of the exchange of instruments of ratification, denounce it to the other Contracting State and, in this case, the Convention shall cease to have effect:

(a) With regard to tax withheld from the source on amounts paid or credited to non-residents, from 1 January of the calendar year following that of notification; and

(b) With regard to other taxes, for the fiscal year beginning on 1 January of the calendar year following that of the notification.

In faith of which, the undersigned, duly authorized to do so, have signed this Convention.

Done in double copies in Ottawa on 23 November 1976, in English, French and Spanish, all texts being equally reliable.

In witness whereof the undersigned, duly authorized to that effect, have signed this Convention.

Done in duplicate at Ottawa, this 23rd day of November, 1976, in the English, French and Spanish languages, each version being equally authentic.

En foi de quoi The undersigned, duly authorised for this purpose, have signed this Convention.

Done In duplicate at Ottawa on 23 November 1976, in the French, English and Spanish languages, each version being equally authentic.

At the time of signing the Agreement between Spain and Canada, to prevent double taxation and to prevent tax evasion in the area of income and property taxes, the undersigned have agreed on the following provisions which form an integral part of the Convention:

1. With regard to article IX, paragraph 3, it had been agreed that a Contracting State was not obliged to apply it in the event of fraud, voluntary omission or negligence.

2. In relation to Article XI, the Spanish institutions of the Official Credit referred to in paragraph 7 (b) of this Article are:

The Foreign Bank of Spain.

The Industrial Credit Bank.

The Construction Credit Bank.

It has also been agreed that the provisions of article XI, paragraph 7, shall apply to any other financial institution, designated and accepted by means of a change of letters between the competent authorities of the Contracting States.

3. With regard to article XIV, it has been agreed that the provisions of paragraphs 1 (b) and (c) shall not apply to income received by a broker, a general commissioner or any other intermediary enjoying independent status.

4. With regard to articles XVIII and XIX, it has been agreed that pensions paid by the Spanish State, its political subdivisions or local authorities, either directly or from funds made up of them, to a natural person in consideration of services provided to that State, subdivision or authority, may only be subject to taxation in Spain.

5. With regard to Article XXI, it has been agreed that the income that a resident of Spain receives from a trust or inheritance resident of Canada may be taxed in Canada, in accordance with its legislation; but if such income is taxed in Spain, the tax thus required may not exceed 15 per cent of its gross amount.

6. It is agreed that no provision of this Convention should be interpreted as preventing Canada from imposing taxes on amounts included in the income of a resident of Canada under section 91 of the Canadian Income Tax Act.

In faith of which, the undersigned, duly authorized to do so, have signed this Protocol.

Done in double copies in Ottawa on 23 November 1976, in English, French and Spanish, all texts being equally reliable.

In witness whereof the undersigned, duly authorized to that effect, have signed this Protocol.

Done in duplicate at Ottawa, this 23rd day of November, 1976, in the English, French and Spanish languages, each version being equally authentic.

En foi de quoi The undersigned, duly authorised for this purpose, have signed this Protocol.

Done In duplicate at Ottawa on 23 November 1976, in the French, English and Spanish languages, each version being equally authentic.

This Convention entered into force on 26 December 1980, in accordance with Article XXIX.2. The Exchange of Appropriate Instruments of Ratification took place in Madrid on 26 December 1980.

What is communicated for general knowledge.

Madrid, January 20, 1981. –The Technical Secretary General of the Ministry of Foreign Affairs, José Cuenca Anaya.