Mexico

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 those which tax all or any part of the income or property, including taxes on profits arising from the disposal of movable or immovable property, as well as taxes on capital gains.

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

(a) In the case of the Kingdom of Spain:

The Income Tax of Physical Persons.

The Corporate Tax.

The Wealth Tax.

(hereinafter referred to as the ‘Spanish tax’).

(b) In the case of the United Mexican States:

Income tax.

The asset tax.

(hereinafter referred to as the ‘Mexican tax’).

4. The Convention shall also apply to taxes of an identical or similar nature which are established after the date of signature of the Convention and which are added to or replaced by existing taxes. 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 territory of the Spanish State, and used geographically to designate the territory of the Spanish State including areas outside its territorial sea in which, under international law and its domestic law, the Spanish State may exercise jurisdiction or rights of sovereignty over the marine soil and subsoil, its superjacent waters and its natural resources.

(b) The term “Mexico” means the territory of the United Mexican States, comprising the constituent parts of the Federation, the islands, including reefs and cays in the adjacent seas; the islands of Guadeloupe and Revillagigedo; the continental shelf and submarine sockets of the islands, cays and reefs; the waters of the territorial seas in the extent and terms of international law and internal maritime law; and the airspace over the national territory, with the extension and modalities established by international law.

(c) The words “one Contracting State” and “the other Contracting State” mean, as the case may be, the Kingdom of Spain and the United Mexican States respectively.

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

(e) the term ‘company’ means any legal or moral person or any entity that is considered a moral or legal person for tax purposes.

(f) The terms ‘undertaking 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.

(g) The term 'national' means:

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

(ii) Any legal person, association or entity constituted under the law in force in a Contracting State.

(h) “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, except where the ship or aircraft is operated only between two points located in the other Contracting State.

(i) ‘competent authority’ means:

(i) In the case of Spain, the Minister of Economy and Finance or his authorized representative; and

(ii) In the case of Mexico, the Ministry of Finance and Public Credit.

2. For the application of the Convention by a Contracting State, any expression not defined in the Convention shall have, unless its context is in conflict with a different interpretation, the meaning attributed to it by the law of that State concerning the taxes which are the subject of the 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 in that State by reason of his 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 or for the assets they possess 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 State where he or she has permanent housing at his or her disposal; if he or she has permanent housing at his or her disposal in both States, he or she shall be considered a resident of the State with which he or she has closer personal and economic relations (centre of vital interests).

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

(d) If it 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 other than a natural person is a resident of both Contracting States, he or she shall be considered a resident of the 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 undertaking carries out all or part of its activity.

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

(a) Management offices.

(b) Branches.

(c) Offices.

(d) Factories.

(e) Workshops.

(f) Mines, oil or gas wells, quarries or any other natural resource extraction site.

3. The term ‘permanent establishment’ also includes works, construction or installation or assembly project or inspection activities related thereto, but only where such works, construction or activities continue for a period exceeding six months.

4. Notwithstanding the provisions of this Article, it is considered that 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 maintenance of a deposit of goods or goods belonging to the undertaking for the sole purpose of their processing by another undertaking.

(d) The maintenance 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, preparing the placement of loans or carrying out other activities of a preparatory or auxiliary nature, provided that these activities are carried out for the enterprise.

(f) The maintenance of a fixed place of business for the sole purpose of the combined exercise of the activities referred to in subparagraphs (a) to (e), provided that the whole activity of the fixed place of business retains its auxiliary or preparatory character.

5. By way of derogation from paragraphs 1 and 2, where a person, other than an agent enjoying an independent status, to which paragraph 7 applies, acts on behalf of an undertaking and maintains and habitually exercises in a Contracting State powers to conclude contracts on behalf of the undertaking, that undertaking shall be deemed to have a permanent establishment in that State in respect of all activities carried out by that person on behalf of the undertaking, unless the activities of that person are limited to those referred to in paragraph 4 and if they have been carried out through a fixed place of business, this place would not have been considered as a permanent establishment, in accordance with the provisions of this paragraph.

6. Notwithstanding the provisions of this article, an insurance undertaking in one Contracting State is considered to have, except for reinsurance, a permanent establishment in the other State if it collects premiums in the territory of the other State or if it insures against risks situated therein through a person other than an agent enjoying an independent status to which the following paragraph applies.

7. An enterprise is not considered to have a permanent establishment in a Contracting State on the sole ground that it carries out its activities through a broker, a general commissioner or any other agent enjoying an independent status, provided that such persons act within the ordinary framework of their activity and that, in their commercial or financial relations with that undertaking, they are not bound by accepted or imposed conditions that differ from those generally agreed upon by independent agents.

8. The fact that a company resident of a Contracting State controls or is controlled by a corporation resident of the other Contracting State, or that it engages in activities in that other State (whether by permanent establishment or otherwise), does not by itself render any of these companies permanent establishment of the other State.

1. Income from immovable property (including income from agricultural or forestry holdings) situated in the other Contracting State may be taxed in that other Contracting State.

2. The term ‘real property’ shall have the meaning attributed to it by the law of the Contracting State in which the property in question is situated. In any event, that term includes accessories, livestock and equipment used on agricultural and forestry holdings, rights to which the provisions of private law relating to real estate, the use of immovable property and rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources apply; vessels, vessels and aircraft are not regarded as immovable property.

3. The provisions of paragraph 1 apply to income derived from direct use, lease or shareholding, 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 from immovable property used for independent work.

5. Where the participation, directly or indirectly, in the capital or assets of a company or other entity confers on its owner the enjoyment in any form, direct use, lease or any other form of use of immovable property held by the company or entity, the income derived from such enjoyment, direct use, lease or any other form of use of such rights may be taxed in the Contracting State in which the immovable property is situated.

1. The profits of an enterprise in one Contracting State may be taxed only in that State unless the enterprise carries out or has carried out its business in the other Contracting State through a permanent establishment situated therein. If the undertaking carries out or has carried out its business 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 this permanent establishment.

2. Without prejudice to paragraph 3, where an undertaking of one Contracting State carries out its activity in the other Contracting State through a permanent establishment situated therein, in each Contracting State the profits it could have derived from being one 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, the deduction of expenses incurred for the realization of the purposes of the permanent establishment, including management and general administrative expenses for the same purposes, shall be permitted, whether incurred in the State in which the permanent establishment is located or elsewhere. However, payments made, if any, by the permanent establishment (other than the facts of reimbursement of actual expenses) to the head office of the undertaking or to one of its other branches, by way of royalties, fees or similar payments, in exchange for the right to use patents or other rights, by way of commission, for specific services rendered or by arrangements made or, except in the case of a banking undertaking, by way of interest on the money lent to the permanent establishment, shall not be deductible. In order to determine the profits of a permanent establishment, account shall also not be taken of the amounts charged by that permanent establishment (other than reimbursement of actual expenses) by the head office of the undertaking or by any of its other branches, for royalties, fees or similar payments in exchange for the right to use patents or other rights, or for commission for specific services rendered or for dealings made or, except in the case of a banking undertaking, for interest on the money lent to the head office of the undertaking or to any of its other branches.

4. As long as it is customary in a Contracting State to determine profits attributable to permanent establishments on the basis of a sharing of the total profits of the enterprise among its various parties, the provisions of paragraph 2 shall not prevent that Contracting State from determining taxable profits in this manner; however, the method of distribution adopted shall be such that the result obtained is in accordance with the principles contained in this article.

5. No benefit shall be attributed to a permanent establishment merely because it buys goods or goods for the undertaking.

6. 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 otherwise proceeding.

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

2. If the place of effective management of a shipping company is on board a ship, it 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 in which the person operating the ship resides.

3. The provisions of paragraph 1 also apply to profits arising from participation in a consortium or an international operating agency.

When:

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

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

and in either case the two companies are, in their commercial or financial relations, bound by accepted or imposed conditions which differ from those which would be agreed by independent undertakings, the profits which would have been obtained by one of the undertakings in the absence of these conditions, and which in fact did not occur because of them, may be included in the profits of that undertaking 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 recipient of the dividends is the beneficial owner, the tax thus required may not exceed:

(a) 5 per 100 of the gross amount of dividends if the beneficial owner is a company (excluding companies of persons) holding directly at least 25 per 100 of the capital of the company that pays the dividends.

(b) 15 per 100 of the gross amount of dividends in all other cases.

3. The provisions of paragraphs 1 and 2 do not affect corporate taxation in respect of profits from which dividends are paid.

4. The term ‘dividends’ used in this Article means the income from 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 participations subject to the same tax regime as the income from shares under the law of the State in which the distribution company resides.

5. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of one Contracting State, exercises or has exercised in the other Contracting State, of which the corporation that pays the dividends is resident, an industrial or commercial activity through a permanent establishment located here, or provides or has provided independent work through a fixed base located here, with which the share generated by the dividends is effectively linked. In such cases, the provisions of article 7 or article 14 apply, as appropriate.

6. Where a company resident of one 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 recipient of the interest is the beneficial owner, the tax thus required may not exceed:

(a) 10 per cent of the gross amount of interest when collected by a bank which is its beneficial owner.

(b) 15 per 100 of the gross amount of interest in other cases.

3. Notwithstanding the provisions of the preceding paragraph, for a period of five years from the date on which the provisions of this Convention take effect, instead of the fee provided for in paragraph 2 (a) of this article, the rate of 15 per 100 shall apply.

4. Notwithstanding the provisions of paragraph 2, the interest referred to in paragraph 1 may be taxed in the Contracting State of which the beneficiary of the interest is resident only if it satisfies any of the following requirements:

(a) The beneficiary is one of the Contracting States, one of its political subdivisions or one of its local entities.

(b) The interest is paid by a person referred to in subparagraph (a) above.

(c) Interest is paid for loans of three years or more, granted or guaranteed by public financing or guarantee entities of that Contracting State, the purpose of which is to promote export by granting credits or guarantees on preferential terms.

5. The term ‘interest’, used in this Article, means the income from claims of any kind, with or without mortgage guarantees or a benefit-sharing clause of the debtor, and in particular income from public funds and bonds or bonds, including premiums and prizes linked to such securities, as well as any other income from which the tax legislation of the State from which the interest derives is equivalent to the income from the amounts lent.

6. The provisions of paragraphs 1, 2, 3 and 4 do not apply if the beneficial owner of the interest, resident of one Contracting State, exercises or has exercised in the other Contracting State, from which the interest is derived, an industrial or commercial activity through a permanent establishment situated in that other State or provides or has provided professional services through a fixed base situated therein, with which the claim generating the interest is effectively linked. In such cases, the provisions of article 7 or article 14 apply, as appropriate.

7. 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 entities 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 or a fixed basis in respect of which the debt giving rise to the payment of the interest and bearing the burden thereof has been incurred, the interest shall be deemed to have originated from the Contracting State where the permanent establishment or fixed base is situated.

8. Where, on account of the special relations between the debtor and the beneficial owner of the interest or the interest between them and third parties, the amount of interest paid, taking into account the claim for which it is paid, exceeds that agreed upon by the debtor and the creditor in the absence of such relations, the provisions of this article apply only to the latter amount. In this case, the excess may be subject to taxation, in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.

9. The provisions of this article shall not apply where the claim for which the interest is paid was concluded or allocated solely for the purpose of benefiting from this article and not for well-founded commercial reasons.

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

2. However, such royalties or royalties may be taxed in the Contracting State from which they come and in accordance with the law of that State, but if the recipient of the royalties or royalties is the beneficial owner, the tax thus required may not exceed 10 per cent of the gross amount of the royalties or royalties.

3. Notwithstanding the provisions of paragraph 2, royalties or royalties paid under copyright and other similar remunerations for the production of a literary, dramatic, musical or artistic work (excluding royalties or royalties relating to cinematographic films, recorded works in films, magnetoscopic tapes intended for television and to discs or tape recorders) from one Contracting State and paid to a resident of the other Contracting State subject to taxation on the basis of such royalties or royalties may only be subject to taxation in that other State.

4. The term ‘royalties or royalties’ used in this Article means the 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 or trade mark, design, plan, formula or secret procedure, as well as for the use or granting of use of industrial, commercial or scientific equipment, and for information relating to industrial, commercial or scientific experience. The term ‘royalties’ or ‘gifts’ also includes gains resulting from the disposal of the goods and rights referred to in this paragraph, to the extent that the amount obtained by such disposal is determined on the basis of productivity or use of such goods or rights.

5. The provisions of paragraphs 1, 2 and 3 do not apply if the beneficial owner of the royalties or royalties, resident of one Contracting State, exercises or has exercised in the other Contracting State from which the royalties or royalties originate an industrial or commercial activity through a permanent establishment located in that other State or provides or has provided professional services through a fixed base situated therein, with which the right or property for which the royalties or royalties are paid is effectively linked. In such cases, the provisions of article 7 or article 14 apply, as appropriate.

6. Royalties or royalties are considered to come from a Contracting State when the debtor is the State itself, or one of its political subdivisions, one of its local entities, or a resident of that State. However, where the person who pays the royalties or 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 the obligation to pay the royalties or royalties has been incurred, and which bear the burden thereof, they are deemed to be from the Contracting State in which the permanent establishment or fixed base is situated.

7. Where, by reason of the special relations between the debtor and the beneficial owner of the royalties or royalties or of which both maintain with third parties, the amount of royalties or royalties paid, taking into account the benefit for which they are paid, exceeds that agreed upon by the debtor and the beneficial owner in the absence of such relationships, the provisions of this article apply only to the latter amount. In this case, the excess may be subject to taxation, in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.

8. The provisions of this article shall not apply where the right or property for which the royalties or royalties are paid was agreed upon or allocated solely for the purpose of benefiting from this article and not for well-founded commercial reasons.

1. Profits that a resident of one Contracting State obtains from the disposal of immovable property, as defined in article 6, located in the other Contracting State, may be taxed in that other State.

2. Profits arising from the disposal of shares, social parties or other rights of a corporation or other moral or legal person whose assets are principally constituted, directly or indirectly, by immovable property located in a Contracting State or by rights relating to such immovable property, may be subject to taxation in that State. For these purposes, no account shall be taken of immovable property which that company, or a moral or legal person, affects its industrial, commercial or agricultural activity or the provision of professional services.

3. Profits resulting from the disposal of shares representing a shareholding of at least 25 per cent in the capital of a company resident in a Contracting State, held for at least the twelve-month period preceding the disposal, may be taxed in that State.

4. Gains 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 independent personal services, including gains from the disposal of that permanent establishment (only or with the enterprise as a whole) or from this fixed basis, may be subject to taxation in that other State.

5. Profits arising from the alienation of ships or aircraft operated in international traffic, or from movable property affected by the operation of such vessels or aircraft, may be taxed only in the Contracting State where the effective headquarters of the company is located.

6. Profits arising from the disposal of property or rights referred to in Article 12 of this Convention shall be subject to taxation in accordance with the provisions of that Article.

7. Profits arising from the disposal of any property other than those referred to in the preceding paragraphs of this article may be taxed only in the Contracting State in which the alienator resides.

1. An income obtained by a resident of a Contracting State through the provision of professional services or other activities of an independent nature may only be taxed in that State, except in the following circumstances where such income may also be taxed in the other Contracting State:

(a) Where such a resident has in the other Contracting State a fixed basis of which he or she regularly has for the performance of his or her activities; in that case, only that part of the income attributable to that fixed base may be taxed in that other Contracting State; or

(b) If their stay in the other Contracting State is for a total period or periods of one hundred and eighty-three days in any continuous period of twelve months; in that case, only the part of the income obtained from the activities carried out by him in that other State may be taxed in that other State.

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, accountants 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 account of employment may only be taxed in that State unless the employment is exercised in the other Contracting State. If the employment is exercised here, the remuneration received for this purpose may be subject to taxation in this other State.

2. Notwithstanding paragraph 1, remunerations obtained by a resident of a Contracting State on the basis of employment in the other Contracting State may be subject to taxation in the former State only if:

(a) The recipient does not remain in total in the other State, in one or more periods, more than one hundred and eighty-three days in any continuous period of twelve months;

(b) Remuneration is paid for 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 preceding provisions of this article, remunerations earned on the basis 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 undertaking 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 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 14 and 15, any income which a resident of a Contracting State obtains from the exercise of his personal activity in the other Contracting State, as a performer, theatre, cinema, radio and television actor, or musician, or as an athlete, may be subject to taxation in that other State.

2. Notwithstanding Articles 7, 14 and 15, where the income derived from the activities of an artist or athlete personally and as such is attributed, not to the artist or athlete himself, but to another person, such income may be taxed in the Contracting State in which the activities of the artist or athlete are carried out.

3. Notwithstanding the provisions of paragraphs 1 and 2, income earned by a resident of a Contracting State as an artist or an athlete shall be exempt from taxation in the other Contracting State if the visit to that other State is substantially financed by public funds of the State first mentioned or of one of its political subdivisions or local entities.

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

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

(b) However, such remuneration may be subject to taxation in the other Contracting State only if the services are provided in that State and the natural person is a resident of that State who:

(i) possesses the nationality of this State; or

(ii) 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 subdivisions or local entities, either directly or from constituted funds, to a natural person for services rendered to that State, subdivision or entity, may only be subject to taxation in that State.

(b) However, such pensions may be subject to taxation in the other Contracting State only if the natural person is a resident and a national of that State.

3. Articles 15, 16 and 18 apply to remuneration and pensions paid for services rendered within the framework of an industrial or commercial activity carried out by a Contracting State or one of its political subdivisions or local entities.

The amounts received to cover the costs of maintenance, study or training of a student or a trainees who is or has been immediately before arriving in a Contracting State resident of the other Contracting State and who is in the first State for the sole purpose of continuing his studies 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, not mentioned in the previous articles of this Convention, may only be taxed in that State.

2. Paragraph 1 does not apply to income, excluding income derived from property defined as immovable in article 6, paragraph 2, 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 in it or provides professional services through a fixed base equally situated in it, with which the right or ownership for which the income is paid is effectively linked. In such cases, the provisions of article 7 or article 14 apply, as appropriate.

3. Notwithstanding paragraphs 1 and 2, the income of a resident of a Contracting State not mentioned in the preceding articles and originating in the other Contracting State may also be taxed in that other State.

1. Property consisting of immovable property covered by article 6 owned by a resident of one Contracting State and situated in the other Contracting State may be taxed in that other State.

2. Property consisting of shares, social partners or other rights of a corporation or other moral or legal person whose assets are principally constituted, directly or indirectly, by immovable property located in a Contracting State or by rights related to such immovable property, may be subject to taxation in that State. For these purposes, no account shall be taken of immovable property which that company, or a moral or legal person, affects its industrial, commercial or agricultural activity or the provision of professional services.

3. Assets consisting of shares representing a shareholding of at least 25 per cent in the capital of a company resident in a Contracting State may be taxed in that State.

4. Property consisting 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 movable property belonging to a fixed basis held by a resident of one Contracting State in the other Contracting State for the purpose of providing independent work, may be subject to taxation in that other State.

5. Assets constituted by ships or aircraft operated in international traffic, as well as movable property affected by the operation of such vessels or aircraft, may be taxed only in the Contracting State in which the place of effective management of the undertaking is situated.

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

1. In Spain double taxation shall be avoided, in accordance with the applicable provisions contained in Spanish legislation, as follows:

(a) (i) Where a resident of Spain obtains income or possesses assets which, under the provisions of this Agreement, may be taxed in Mexico, Spain shall allow the deduction of the income tax or assets of that resident from an amount equal to the tax actually paid in Mexico.

(ii) Dividends paid to a company resident in Spain, which is the actual beneficiary of such dividends, by a company resident in Mexico that does not directly or indirectly control a company resident in a third State or is controlled by such a company, shall be deemed to have satisfied a 5 per cent tax in Mexico in the event of Article 10 (2) (a).

However, deductions made in accordance with the preceding sub-arrangements of this paragraph may not exceed the part of the income or property tax, calculated prior to the deduction, corresponding to the income obtained in Mexico.

(b) In the case of dividends paid by a company resident in Mexico to a company resident in Spain and directly detaining at least 25 per cent of the capital of the company paying the dividends, the tax actually paid by the company in question in respect of the profits from which the dividends are paid shall be taken into account for the determination of the tax credit [in addition to the amount deductible under subparagraph (a) of this paragraph], provided that that amount is included for this purpose in the taxable basis of the company receiving the dividends.

Such deduction, together with the deduction applicable in respect of dividends under subparagraph (a) of this paragraph, may not exceed the part of the income tax, calculated before the deduction, attributable to income subject to taxation in Mexico.

For the implementation of this subparagraph, the shareholding in the paying company of dividends shall be at least 25 per cent and shall be maintained continuously for the two years preceding the date of payment of the dividend.

2. As far as Mexico is concerned, double taxation shall be avoided, in accordance with the applicable provisions contained in Mexican law, as follows:

(a) Residents of Mexico may prove income tax paid in Spain up to an amount not exceeding the tax to be paid in Mexico for the same income.

(b) Companies that are resident in Mexico may prove against income tax on their charge derived from obtaining dividends, the income tax paid in Spain for the profits from which the company resident in Spain paid the dividends.

3. Where, in accordance with any provision of the Convention, the income received by a resident of a Contracting State or the property he holds is exempt from tax in that State, the latter may, however, take into account the income or wealth exempted for the purpose of calculating the amount of tax on the rest of the income or property of that resident.

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 that other State who are under the same conditions, particularly as regards residence, are or may be subject.

2. Permanent establishments held by an enterprise 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 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, allowances and tax reductions it grants to its own residents in view of their marital status or family burdens.

3. Unless the provisions of article 9, article 11, paragraph 8, or article 12, paragraph 7, apply, interest, royalties or other expenses paid by an enterprise of one Contracting State to a resident of the other Contracting State are deductible to determine the profits subject to taxation of that enterprise under the same conditions as if they had been paid to a resident of the first State. Similarly, the debts of an enterprise of one Contracting State relating to a resident of the other Contracting State are deductible for the determination of the taxable assets of that enterprise under the same conditions as if they had been contracted with a resident of the former State.

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

5. Notwithstanding the provisions of Article 2, the provisions of this Article apply to all taxes, whatever their nature or name, established by the Contracting States.

1. Where a person considers that the measures taken by one or both Contracting States imply or may entail 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 resident or, if article 24, paragraph 1, applies to that of the Contracting State of which he is a national. The case shall be brought within three years of the first notification of the measure involving an imposition not in accordance with the provisions of the Convention.

2. The competent authority shall, if it finds the complaint well founded and if it is not in a position to adopt a satisfactory solution, make every effort to resolve the matter through an amicable agreement with the competent authority of the other Contracting State in order to avoid an 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 the Convention by means of an amicable agreement. In particular, the competent authorities shall endeavour to reach agreement for the purposes of Article 9 of 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. The competent authorities may, through consultations, develop appropriate unilateral procedures, conditions, methods and techniques to facilitate the application of the Convention and the mutual agreement procedure. Where it is considered that this agreement can be facilitated through personal contacts, the exchange of views 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 domestic law of the Contracting States relating to taxes covered by the Convention, in so far as the taxation required by that Convention is not contrary to the Convention. The exchange of information is not limited by Article 1. Information received by a Contracting State shall be kept secret in the same way as information obtained under the domestic law of that State and shall be communicated only to persons or authorities (including courts and administrative bodies) responsible for the management or collection of taxes established by the Contracting States, to declaratory or executive procedures relating to such taxes or to the resolution of appeals relating to such taxes. These 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. In no case can 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 do not affect the tax privileges enjoyed by diplomatic agents or consular officials, in accordance with the general principles of international law or under special agreements.

1. This Convention shall be ratified in accordance with their respective domestic laws and shall enter into force from the date of exchange of instruments of ratification.

2. The provisions of this Convention shall take effect:

(a) In respect of taxes withheld at source, for amounts paid or assigned from the first day of January following the date on which the Convention enters into force.

(b) In respect of other taxes, for fiscal years beginning on the first day of January following the date on which the Convention enters into force.

This Convention shall remain in force until it is denounced by one of the Contracting States. Any Contracting State may denounce the Convention by communicating it through diplomatic channels at least six months before the end of each calendar year after a period of five years from the date of entry into force of the Convention. In such a case, the Convention shall cease to have effect:

(a) In respect of taxes withheld at source, for amounts paid or assigned from the first day of January following the date of expiry of the six-month period referred to above.

(b) In respect of other taxes, for fiscal years beginning on the first day of January following the date of expiry of the six-month period referred to above.

Done at Madrid on 24 July 1992 in two originals, in English, both texts being equally authentic.

[heading] PROTOCOL

1. The benefits referred to in article 8, paragraph 1, are understood as not to include profits derived from the operation of hotels or from a transport activity other than the operation of ships or aircraft in international traffic, unless such activity is carried out by a third party other than the undertaking.

The benefits referred to in article 8, paragraph 1, include those arising from the lease of containers and bareboat vessels or aircraft, provided that they are supplementary income or ancillary to the main operation.

2. For the purposes of article 7, paragraph 1, where a company resident of one Contracting State has a permanent establishment in the other Contracting State and disposes of goods to persons in that other State of a type identical or similar to those it disposes of through the permanent establishment, the profits derived from such disposals shall be attributable to that permanent establishment, unless the enterprise demonstrates that such disposals were carried out in that way for valid economic reasons, and not for the sole purpose of obtaining the benefits of the Convention. For the purposes of applying this number, the competent authorities shall consult each other on the identical or similar nature of the goods.

3. For the purposes of Article 11(2)(a), the term ‘bank’ shall be understood to include, in the case of Spain, savings banks.

4. If during the five years from the date of entry into force of this Convention, Mexico concludes, for the first time, an agreement to avoid double taxation with a country that is a member of the European Communities, in which it limits its taxation at the source on interest or royalties or royalties, or on certain categories of such income, at a rate lower, including exemption from taxation, than that provided for in article 11, paragraph 2, or in article 12, paragraph 2, of this Convention, respectively, such reduced rate or exemption, it shall automatically apply, in respect of the relevant concepts, to interest and royalties or royalties from the date of entry into force of the Convention containing it, provided that the higher rate provided for in that Convention is identical to the corresponding rate established by this Convention.

5. The provisions of the Convention do not prevent Contracting States from implementing the provisions of their domestic legislation relating to sub-capitalization.

6. With regard to article 11, paragraph 7, and article 12, paragraph 6, it is agreed that Contracting States shall apply these provisions in accordance with the commentaries to the 1977 Model Double Taxation Convention on Income and Heritage by the Tax Affairs Committee of the Organization for Economic Cooperation and Development, extending its application to the case provided for in paragraph 25 (c) of those commentaries to article 11, to the extent that the relevant concepts are deductible for the determination of the benefits of permanent establishment.

7. For the purposes of Articles 13(2) and 22(2), “rights relating to such immovable property” are those rights which confer the power to dispose of such property.

8. (a) In relation to article 13, paragraph 3, profits in the disposal of shares of companies resident in Mexico are determined without including capital contributions made during the holding period of the shares and profits generated during the same period for which the income tax has already been paid by the issuing company.

(b) The tax payable under article 13, paragraph 3, in the State of residence of the company whose shares are disposed of may not exceed 25 per cent of the taxable profit.

(c) Where, on the occasion of a reorganization of companies owned by the same group of shareholders, a resident of a Contracting State disposes of assets in connection with a merger or division of companies or an exchange of shares, the recognition of the gain arising from the disposition of such assets for the purposes of income taxes in the other Contracting State shall be deferred until such time as a subsequent disposition is made that does not meet the requirements of this paragraph for the deferment of profit.

9. Article 16 also applies, in the case of Mexico, to participations, attendance allowances and other remunerations that a resident of Spain obtains in his capacity as administrator or commissioner of a company resident of Mexico.

10. The rents referred to in article 17, paragraph 1, include those of an accessory nature derived from benefits related to the personal notoriety of an artist or sportsman resident of a Contracting State, provided that they are obtained by reason of their presence in the other Contracting State and come from that other State.

11. The provisions of Article 22 shall apply, in the case of Mexico, only to property taxes, if any, established after the date of signature of the Convention.

12. (a) With regard to article 23, paragraph 1 (a) (ii), if any Convention concluded by Mexico with a third State belonging to the European Communities subsequent to the signature of this Convention containing a clause similar to that contained in paragraph 4 of this Protocol does not establish a fictitious credit regime, or is established in terms that limit its duration, such regime shall be abolished or applied in the same more restrictive terms, automatically, as regards income covered by this Convention, from the date of entry into force of the Convention concluded by Mexico with that third State.

(b) For the application of fictitious credit, direct or indirect control shall be deemed to exist where the shareholding exceeds, directly or indirectly, 50 per 100 of the capital. Direct control is not understood to have occurred, in cases where a company resident in Mexico directly holds more than 50 per cent of the capital of a company resident in a third State engaged in an economic activity preparatory to or complementary to the main activity of the company resident in Mexico.

13. The provisions of article 24 are without prejudice to the application by each Contracting State of its legislation on tax havens.

The provisions contained in this Protocol form an integral part of the Agreement between the Kingdom of Spain and the United Mexican States to prevent double taxation of income and property taxes and to prevent tax evasion and evasion.

In faith, the signatories, duly authorized to do so, have signed this Protocol.

Done at Madrid, 24 July 1922, in two originals in English, both texts being equally authentic.

This Convention entered into force on 6 October 1994, the date of the Exchange of Instruments of Ratification, as provided for in Article 28.1.

What is made public for general knowledge.

[ignore]Madrid, October 10, 1994.— Technical Secretary General Antonio Bellver Manrique.