Portugal

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

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

2. Income taxes are those that tax the entire income or any part thereof, 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 applies in particular are:

(a) In Spain: Personal Income Tax; Corporate Tax; and Local Income Tax (hereinafter referred to as the Spanish Tax).

(b) In the case of Portugal: the Income Tax for Physical Persons, the Income Tax for Legal Persons and the Derrama (hereinafter referred to as the Portuguese 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 communicate to each other any relevant amendments to their respective tax laws.

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

(a) The term ‘Spain’ means the Spanish State and, used geographically, designates the territory of the Spanish State including areas outside its territorial sea in which, under international law and under its domestic law, the Spanish State may exercise jurisdiction or rights of sovereignty over the seabed, its subsoil and superjacent waters, and its natural resources.

(b) The term 'Portugal' includes the territory of the Portuguese Republic situated on the European continent, the archipelagos of the Azores and Madeira, the respective territorial sea, as well as other areas where, in accordance with Portuguese law and international law, the Portuguese Republic has jurisdiction or rights of sovereignty over the exploration, search and exploration of the natural resources of the seabed, its subsoil and the superjacent waters.

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

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

(e) the term 'company' means any legal person or any entity that is considered a 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:

Any natural person possessing the nationality of a Contracting State.

Any legal person, association or entity incorporated under the law in force in a Contracting State.

(h) 'International traffic' means any transport 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 points located in the other Contracting State.

(i) ‘competent authority’ means:

In the case of Spain, the Minister of Economy and Finance or his authorised representative.

In the case of Portugal, the Minister of Finance, the Director-General of Contributions and Taxes or his authorised representatives.

2. For the purposes of the application of the Convention by a Contracting State, any term not defined in the Convention shall have, unless a different interpretation is given in its context, the meaning attributed to it by the law of that State concerning the taxes which are the subject of 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 that State solely on the income they obtain from sources located in that State.

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

(a) Such 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 he is a national of both States or is not a national of either 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 shall be considered a resident of the State in which his 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. A construction, installation or assembly work only constitutes a permanent establishment if its duration exceeds twelve 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 carrying out for the enterprise any other activity of an auxiliary or preparatory nature.

(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 6 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, they have not determined that such place is a permanent establishment in accordance with the provisions of that paragraph.

6. An undertaking is not considered to have a permanent establishment in a Contracting State merely because 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.

7. 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 it engages in activities in that other State (whether by permanent establishment or otherwise), does not in itself make any of those 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 goods in question are situated. In any event, that term includes accessories, livestock and equipment used on agricultural and forestry holdings, the rights to which the provisions of private law relating to real estate, the use of immovable property and the 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 the direct use, lease or 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 undertaking and from immovable property used for the provision of independent personal services.

1. The profits of an undertaking of one Contracting State may be taxed only in that State unless the undertaking carries out its business in the other Contracting State through a permanent establishment situated in that other State. If the company carries out its business in that way, the profits of the company may be taxed in the other State, but only to the extent that they can be attributed to that permanent establishment.

2. Without prejudice to paragraph 3, where an undertaking of a Contracting State carries out its activity in the other Contracting State through a permanent establishment situated therein, in each Contracting State the profits which it could have obtained from being a distinct and separate undertaking carrying out the same or similar activities under the same or similar conditions shall be attributed to that establishment and shall deal entirely independently with the undertaking 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 shall be permitted, including management and general administrative expenses for the same purposes, whether incurred in the State in which the permanent establishment is located or elsewhere.

4. No benefit shall be attributed to a permanent establishment merely because it buys goods or 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 covered separately by other articles of this Convention, the provisions of those articles shall not be affected by those of this Article.

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

2. The profits from the operation of inland waterway vessels may be taxed only in the Contracting State in which the place of effective management of the undertaking is situated.

3. If the place of effective management of a shipping undertaking or an undertaking engaged in inland navigation is on board a ship or vessel, it shall be deemed to be in the Contracting State where the base port of the ship or vessel is located, and if there is no such base port, in the Contracting State in which the person operating the vessel or vessel resides.

4. The provisions of paragraph 1 also apply to profits from participation in a pool, on a joint holding or on an international holding 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 undertaking of a 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 that differ from those that would be agreed by independent companies, the profits that would have been obtained by one of the companies in the absence of such conditions, and which in fact have not occurred because of them, may be included in the profits of that undertaking and subject to taxation accordingly.

2. Where a Contracting State includes in the profits of an undertaking of that State - and consequently subjects to taxation - the profits on which an undertaking of the other Contracting State has been taxed in that other State, and the profits thus included are profits which would have been realized by the undertaking of the State referred to first if the terms agreed between the two undertakings had been those agreed between two independent undertakings, that other State shall, if it considers it justified, adjust the corresponding amount of the tax it has received on those profits. In determining this adjustment, account shall be taken of the other provisions of this Convention, the competent authorities of the Contracting States being consulted if necessary.

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 its beneficial owner, the tax thus required may not exceed:

(a) 10 per cent of the gross amount of dividends if the beneficial owner is a company holding directly at least 25 per cent of the capital of the company paying the dividends;

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

The competent authorities of the Contracting States shall, by mutual agreement, determine how these limitations can be applied.

This paragraph does not affect the company's taxation of the profits from which dividends are paid.

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

4. Paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of a Contracting State, performs in the other Contracting State of which the company paying the dividends is resident, an industrial or commercial activity through a permanent establishment located in that other State, or provides independent personal services through a fixed base located in that other State, and the share generated by the dividends is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply, as appropriate.

5. Where a company resident of a Contracting State obtains profits or income from the other Contracting State, that other State may not require any tax on dividends paid by the company except to the extent that such 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, such interest may also be taxed in the Contracting State from which it comes, and in accordance with the law of that State, but if the recipient of the interest is its beneficial owner the tax thus required may not exceed 15 per cent of the gross amount of interest.

The competent authorities of the Contracting States shall, by mutual agreement, determine how these limitations can be applied.

3. The term ‘interest’ used in this Article means the income from claims of any kind, with or without a mortgage guarantee or a benefit-sharing clause of the debtor, and in particular income from public funds and bonds or bonds, including premiums and lots attached to such securities, and any other income subject to the same regime as the income from capital provided by the law of the Contracting State from which the income derives.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the interest, resident of one Contracting State, carries out in the other Contracting State, from which the interest derives, a business activity through a permanent establishment located in that other State or provides independent personal services through a fixed base situated in that other State, and the credit generated by the interest is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply, as appropriate.

5. Interest shall be deemed to be from a Contracting State where the debtor is either the State itself or one of its political or administrative subdivisions or 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 of the interest has been incurred, the interest shall be deemed to have come from the Contracting State where the permanent establishment or fixed base is situated.

6. Where, on account of the special relations between the debtor and the beneficial owner of the interest or of the interest between them and third parties, the amount of interest, having regard to the claim for which it is paid, exceeds that agreed between the debtor and the beneficial owner in the absence of such relations, the provisions of this article shall apply only to the latter amount. In such a 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. Fees from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such fees may also be subject to taxation in the Contracting State from which they come and in accordance with the law of that State, but if the recipient of the royalties is its beneficial owner the tax thus required may not exceed 5 per 100 of the gross amount of the royalties.

The competent authorities of the Contracting States shall, by mutual agreement, determine how these limitations can be applied.

3. The term ‘royalties’ used in this Article means quantities of any kind paid for the use or granting of copyright on literary, artistic or scientific works, including cinematographic films and films or tapes for radio and television, patents, trademarks, designs, drawings, formulas or secret procedures, 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.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the royalties, resident of one Contracting State, carries out in the other Contracting State, from which the royalties come, a business activity through a permanent establishment located in that other State or provides independent personal services through a fixed base located in that other State, and the right or for which the royalties are paid is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply, as appropriate.

5. The fees shall be deemed to come from a Contracting State where the debtor is the State itself or one of its political or administrative subdivisions local authorities, or a resident of that State. However, where the debtor of the royalties, whether or not he is a resident of a Contracting State, has in one of the Contracting States a permanent establishment or a fixed basis in respect of which the obligation to pay the royalties has been incurred and which bear the burden thereof, the royalties shall be deemed to be from the State where the permanent establishment or fixed base is situated.

6. Where, on the basis of the special relations between the debtor and the beneficial owner of the royalties or of those which both maintain with third parties, the amount of the royalties, having regard to the benefit for which they are paid, exceeds that for which the debtor and the beneficial owner would have agreed in the absence of such relationships, the provisions of this article apply only to the latter amount. In such a case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.

1. Profits 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 or shares in the capital of a company whose assets consist, directly or indirectly, mainly in immovable property situated in a Contracting State may be taxed in the Contracting State where the immovable property is situated.

3. Without prejudice to the provisions of paragraph 2, profits resulting from the disposal of shares or shares resulting from a substantial participation in a company resident in a Contracting State may be taxed in that State. A substantial holding shall be deemed to exist where the transferor, alone or with associated persons, has stopped, directly or indirectly, at any time during the twelve-month period preceding the disposal of at least 25 per cent of the capital of that company.

4. Gains from the disposal of movable property forming part of the assets of a permanent establishment held by an undertaking 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 that fixed basis, may be taxed in that other State.

5. Profits arising from the alienation of ships or aircraft operated in international traffic, vessels used in inland waterways or movable property affected by the operation of such vessels, aircraft or vessels may be taxed only in the Contracting State where the place of effective management of the undertaking is situated.

6. Profits arising from the disposal of assets other than those referred to in the preceding paragraphs of this Article may be taxed only in the Contracting State of which the transferor is resident.

1. Incomes that a resident of a Contracting State obtains from the provision of professional services or other activities of an independent nature may only be taxed in that State unless that resident normally has a fixed basis in the other Contracting State for the conduct of his or her activities. If it has such a fixed base, such income may be taxed in the other State, but only to the extent that it is attributable to that fixed base.

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

1. Without prejudice to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and similar remuneration obtained by a resident of a Contracting State on account of employment may be subject to taxation only in that State, unless the employment is exercised in the other Contracting State. If employment is exercised in that other State, such remuneration may be subject to taxation in that other State.

2. By way of derogation from paragraph 1, remuneration obtained by a resident of a Contracting State on account of employment in the other Contracting State may only be taxed in the State referred to first, if

(a) the recipient does not remain in total in the other State, in one or more periods, for more than one thousand nine hundred and eighty-three days in any twelve-month period beginning or ending in the tax period concerned;

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

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

3. Notwithstanding the foregoing provisions of this Article, remunerations obtained on account of employment on board a ship or aircraft operated in international traffic or on board a vessel engaged in inland navigation may be taxed in the Contracting State in which the place of effective management of the undertaking is situated.

4. By way of derogation from paragraphs 1 and 2, remunerations obtained on the basis of employment in a Contracting State by a frontier worker, i.e. his habitual residence in the other Contracting State to which he normally returns every day, may be subject to taxation only in that other State.

Participations, attendance allowances and similar remunerations obtained by a resident of a Contracting State as a member of a board of directors or supervisory board of a company resident of the other Contracting State may be taxed in that other State, provided that such remuneration is fixed and paid by the company for its participation in the activities of the board of directors or supervision. Otherwise the provisions of Article 15 shall apply.

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, film, radio or television actor, or musician, or as an athlete, may be subject to taxation in that other State.

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

3. The provisions of paragraphs 1 and 2 do not apply if the activities carried out in one Contracting State are financed mainly from public funds of another Contracting State or from one of its political or administrative subdivisions or local authorities. In such a case, income derived from such activities may only be taxed in that other State.

Without prejudice to Article 19(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 or administrative subdivisions or local entities to a natural person for services rendered to that State, subdivision or entity, may be subject to taxation only 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:

has the nationality of that State; or

has not acquired the status of resident of that State solely to provide the services.

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

(b) Such pensions may, however, 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 in the context of an industrial or commercial activity of a Contracting State or one of its political or administrative subdivisions or local authorities.

Teachers who are, or have been, immediately before residents of a Contracting State and who receive remuneration for education in a university, college, school or other educational establishment of the other Contracting State, for a period of temporary residence not exceeding two years, shall be exempt from taxation in that latter State for such remuneration, provided that such establishments belong to the State or to a non-profit-making legal person and if such remuneration is not subject to taxation in the first State.

1. The amounts received to cover the costs of maintenance, study or training of a student or a person in training who is, or was immediately before arriving in a Contracting State, resident of the other Contracting State and who is in the State mentioned above in the first place 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.

2. Nor may the persons referred to in the preceding paragraph be subject to taxation in the State where they are for the above purposes, for the amounts they receive as remuneration for part-time activities carried out in that State so that they may continue their studies or vocational training, provided that they do not exceed 7,000 ECU per annum.

1. The income of a resident of a Contracting State which is of a nature, or comes from sources, not referred to in other articles of this Convention may be taxed only in that State.

2. Paragraph 1 shall not apply to income, excluding income derived from property defined as immovable in Article 6(2), where the beneficiary of such income, resident of a Contracting State, carries out an entrepreneurial activity in the other Contracting State through a permanent establishment situated in that other State, or provides independent personal services through a fixed base situated in that other State, and the right or for which the income is paid is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply as appropriate.

1. In the case of a resident of Spain, double taxation shall be avoided, in accordance with the applicable provisions of Spanish law (provided that they do not contradict the general principles set out in this subparagraph), as follows:

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

However, that deduction may not exceed the part of the income tax, calculated before the deduction, corresponding to the income that may be taxed in Portugal.

(b) In the case of dividends paid by a company resident in Portugal to a company resident in Spain which directly detains 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, in addition to the amount deductible under point (a) of this paragraph, shall be taken into account in the determination of the deduction, provided that that amount is included for this purpose in the taxable base of the company receiving the dividends.

This deduction, together with the deduction applicable to dividends pursuant to point (a) of this paragraph, may not exceed the part of the income tax, calculated before the deduction, corresponding to income subject to taxation in Portugal.

In order to apply the provisions of this subparagraph, participation in the company paying dividends shall be at least 25 per cent and shall be maintained continuously for the two years preceding the day of payment of the dividends.

2. In the case of a resident of Portugal, double taxation shall be avoided, in accordance with the applicable provisions of Portuguese legislation (provided that they do not affect the general principles laid down in this paragraph), as follows:

(a) Where a resident of Portugal obtains income which, under the provisions of this Convention, may be taxed in Spain, Portugal shall allow the tax on the income of that resident to be deducted from an amount equal to the tax paid in Spain.

Such deduction may not, however, exceed the part of the income tax, calculated before the deduction, corresponding to the income that may be taxed in Spain.

(b) Where a company resident in Portugal receives dividends from a company resident in Spain in which the former directly holds a shareholding of at least 25 per 100 of the capital, Portugal shall deduct, for the purpose of determining the taxable profit subject to the income tax of legal persons, 95 per 100 of such dividends, included in the taxable amount, in accordance with the terms and conditions laid down in Portuguese legislation.

3. Where under any provision of this Convention the income obtained by a resident of a Contracting State is exempt from taxation in that Contracting State, that State may, however, take into account the exempt income in calculating the tax on the rest of the income of that resident.

1. Nationals of a Contracting State shall not be subject in the other Contracting State to any tax or obligation relating thereto which is not or is more burdensome than those to which nationals of that other State who are under the same conditions, in particular with regard to residence, are or may be subject. Notwithstanding article 1, this provision shall also apply to nationals of any of the Contracting States, even if they are not residents of any of them.

2. Permanent establishments 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 that other State carrying out the same activities. This provision may not be interpreted as obliging a Contracting State to grant to residents of the other Contracting State the personal deductions, reliefs or tax reductions it grants to its own residents in view of their marital status or family burdens.

3. Unless the provisions of Article 9(1) of Articles 11(6) or 12(6) apply, interest, royalties or other expenses paid by an undertaking of a Contracting State to a resident of the other Contracting State shall be deductible, in order to determine the profits subject to taxation of that undertaking, under the same conditions as if they had been paid to a resident of the State referred to first.

4. Undertakings of a 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 shall not be subject in the State referred to above to any taxes or obligations relating thereto which are not or are more burdensome than those to which other similar undertakings of the State referred to in the first instance are or may be subject.

5. Notwithstanding the provisions of Article 2, the provisions of this Article shall apply to all taxes, whatever their nature or name.

1. Where a person considers that the measures taken by one or both Contracting States entail or may entail for him an imposition which 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(1) applies, to that of the Contracting State of which he is a national. The case must be brought within two years of the first notification of the measure involving an imposition not in accordance with the provisions of the Convention.

2. That 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 the 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. They may also agree to try to avoid double taxation in cases not covered by the Convention.

4. The competent authorities of the Contracting States may communicate directly in order to reach agreement within the meaning of the preceding paragraphs of this Article. Where it is considered that such an agreement may be facilitated by 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 national law of the Contracting States relating to taxes covered by the Convention to the extent that the taxation required by that Convention is not contrary to the Convention. The exchange of information shall not be 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 the persons or authorities (including courts and administrative bodies) responsible for the management or collection of taxes covered by the Convention, to the declaratory or executive procedures relating to such taxes or to the resolution of appeals relating thereto. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public hearings of the courts or in court judgements.

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

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

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

(c) provide information revealing trade, industrial or professional secrets, or commercial procedures 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 and instruments of ratification shall be exchanged as soon as possible.

2. The Convention shall enter into force on the basis of the exchange of instruments of ratification and its provisions shall apply for the first time:

(a) in Spain:

to taxes payable at the source for which the taxable act is made on or after 1 January of the calendar year following the entry into force of the Convention;

other taxes relating to income from tax periods beginning on or after 1 January of the year following the entry into force of the Convention;

(b) in Portugal:

to taxes payable at the source, the operative event of which is effected from 1 January of the year immediately following the entry into force of this Convention;

other taxes relating to income earned in tax periods beginning on or after 1 January of the year immediately following the entry into force of the Convention.

3. The provisions of the Convention between Spain and Portugal on the avoidance of double taxation on income taxes signed in Madrid on 29 May 1968 shall cease to apply when the provisions of this Convention become effective.

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

(a) in Spain:

to taxes payable at the source for which the taxable act is made from 1 January of the calendar year following that in which the complaint is notified;

other income taxes for tax periods beginning on or after 1 January of the year following the notification of the complaint;

(b) in Portugal:

the taxes payable at the source whose operative event is effected from 1 January immediately after the date on which the said period of notification of the complaint expires;

the other taxes relating to income obtained in the tax periods beginning on 1 January immediately after the date on which the said period of notification of the complaint expires.

In faith, the signatories, duly authorized for this purpose by their respective Governments, have signed this Convention.

Done in duplicate in Madrid on 26 October 1993 in the Spanish and Portuguese languages, both texts being equally authentic.

At the time of signing the Convention between the Kingdom of Spain and the Portuguese Republic on the avoidance of double taxation and the prevention of tax evasion in respect of income taxes, the signatories have agreed on the following provisions which form an integral part of the Convention:

1. With regard to Article 6, its provisions shall also apply to income derived from movable property which, in accordance with the tax law of the Contracting State in which such property is situated, is treated as income from immovable property.

2. (a) In relation to Article 10(3), the term ‘dividends’ shall mean the liquidation profits of a company.

(b) The term ‘dividends’ is understood to include the returns of the participating accounts or associations.

3. With regard to Articles 10, 11, 12 and 13, the tax reductions or exemptions provided for in the Convention as regards dividends, interest, royalties and capital gains shall not apply where such income is obtained in a Contracting State by a company resident of the other Contracting State in whose capital they participate, directly or indirectly, in more than 50 per cent, non-resident members of that other State. The provisions of this number shall not apply where such company engages in substantive commercial or industrial activities other than the simple management of securities or other assets in the Contracting State of which it is resident.

4. With regard to Article 24, the provisions of the Convention shall be understood as not impeding the application by a Contracting State of its domestic rules on undercapitalization or excessive indebtedness.

5. With regard to Article 28, the provisions of Article 11 shall apply from 1 January 1993.

Done in duplicate in Madrid on 26 October 1993 in the Spanish and Portuguese languages, both texts being equally authentic.

This Convention entered into force on 28 June 1995, the date on which the exchange of the respective instruments of ratification took place in Lisbon, as provided for in Article 28 thereof.

What is made public for general knowledge.

Madrid, October 25, 1995. –The Technical Secretary General of the Ministry of Foreign Affairs, Antonio Bellver Manrique.