Finland

Madrid, 27 April 1990.

Sir,

I have the honour to acknowledge receipt to your Excellency of your today's date note, which, duly translated, reads as follows:

<Excellence,

I have the honour to refer to the Convention between the Republic of Finland and the Kingdom of Spain on the Prevention of Double Taxation of Income and Property Tax, signed at Helsinki on 15 November 1967 as amended by the Exchanges of Letters of 18 and 24 August 1970 and 22 February 1973, and to propose on behalf of the Republic of Finland that the Convention be amended as follows:

I. Article 2, paragraph 3, of the Convention shall be deleted to be replaced by the following:

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

(a) In Spain:

I. The Income Tax of Physical Persons;

II. Corporate Tax;

III. The Wealth Tax; and

IV. Local taxes on income and wealth;

(hereinafter referred to as 'Spanish tax');

(b) In Finland:

I. State income and wealth tax (valtion tulo-ja varallisuusvero);

II. Local tax (kunnallisvero);

III. The religious tax (kirkollisvero); and

IV. The tax withheld from the source on the income of non-residents (lähdevero);

(hereinafter referred to as 'Finnish tax').''

II. A new paragraph 6 shall be inserted immediately after paragraph 5 of Article 10 of the Convention, as follows:

''6. Paragraph 2 of this article does not apply, in the case of Spain, to the income, whether distributed or not, attributed to the shareholders of the companies and entities referred to in article 12.2 of Law 44/1978 of 8 September, and article 19 of Law 61/1978 of 27 December 1978, as long as such income is not subject to the Spanish Company Tax. Such income may be taxed in Spain under its domestic law.''

III. Article 23, paragraph 4, of the Convention, which was incorporated into the Convention by the Exchange of Letters of 18 and 24 August 1970, shall be deleted and replaced by the following:

''4. Notwithstanding the provisions of paragraph 2 of this article, dividends paid by a Spanish resident company to a Finnish resident company directly controlling at least 10 per 100 of the voting rights in the company paying the dividends shall be exempt from Finnish tax. This paragraph does not apply to income referred to in article 10, paragraph 6."

If the foregoing seems acceptable to the Kingdom of Spain, I have the honour to propose further that this Note and your response to it be considered to constitute an Agreement between Finland and Spain in this matter, and that such an Agreement enter into force 30 days after the date on which the Contracting Parties notify each other of the fulfilment of the constitutional requirements for the entry into force of the Agreement and having effect:

(a) With regard to Article 10 (6), in respect of income relating to the Company's tax periods beginning on the first day of January of the year in which this Agreement enters into force;

(b) With regard to article 23, paragraph 4, in respect of dividends paid from the first day of January 1990.

Please accept your excellence the assurance of my highest consideration.>

At the same time, I have the honour to confirm, on behalf of the Kingdom of Spain, that the Note of Your Excellence and the present reply thereto shall be deemed to constitute an Agreement between the Kingdom of Spain and the Republic of Finland, as specified in your Note.

I take this opportunity to express to your excellence the assurances of my highest consideration.

The Minister of Foreign Affairs, Francisco Fernández Ordonez.

H.E. Sir. Ambassador Extraordinary and Plenipotentiary of Finland, Heikki Kalha.

This Exchange of Letters, establishing the Agreement, entered into force on 27 December 1991, 30 days after the date of the last of the Cross Notices between the Parties, informing each other of the fulfilment of their respective constitutional requirements, as set out in the text of the Notes.

What is made public for general knowledge.

Madrid, 14 July 1992. The Technical Secretary General, Aurelio Pérez Giralda.