El Salvador

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

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

2. Income and property taxes are those that tax all or any part of the income or property, including taxes on profits arising from the disposal of movable or immovable property, taxes on the amount of wages or salaries paid by enterprises, as well as taxes on capital gains.

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

(a) in Spain:

(i) Personal Income Tax;

(ii) corporation tax;

(iii) non-resident income tax;

(iv) Property Tax; and

(v) Local income and property taxes;

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

(b) In El Salvador:

(i) Income Tax

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

4. The Convention shall also apply to taxes of an identical or similar nature which are established after the 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 amendments 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 Kingdom of Spain and, used geographically, means the territory of the Kingdom of Spain, including airspace, its internal waters, its territorial sea and areas outside its territorial sea in which, under international law and under its domestic law, the Kingdom of Spain exercises or may exercise in future jurisdiction or rights of sovereignty over the seabed, its subsoil and superjacent waters, and its natural resources;

(b) The term ‘El Salvador’ means the territory of the Republic of El Salvador, including the airspace, its internal waters, its territorial sea and those external to its territorial sea in which, under international law and under its domestic law, the Republic of El Salvador exercises or may exercise in the future jurisdiction or rights of sovereignty over the seabed, its subsoil and superjacent waters and their natural resources;

(c) the words ‘one Contracting State’ and ‘the other Contracting State’ mean Spain or El Salvador, 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 which is considered a legal person for tax purposes;

(f) the term ‘enterprise’ applies to the pursuit of any economic activity;

(g) the terms ‘undertaking of a Contracting State’ and ‘undertaking of the other Contracting State’ mean, respectively, an undertaking operated by a resident of a Contracting State and an undertaking operated by a resident of the other Contracting State;

(h) 'international traffic' means any transport carried out by a seaship or aircraft operated by a resident of a Contracting State, except where such transport takes place only between points situated in the other Contracting State;

(i) the expression ‘competent authority’ means:

(i) in Spain, the Minister of Economy and Finance or his authorised representative;

(ii) in El Salvador, the Minister of Finance or his authorized representative;

(j) the term 'national' means:

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

(ii) a legal person, partnership or association incorporated in accordance with the law in force in a Contracting State;

(k) the expression 'economic activity' also includes the provision of professional services, as well as the carrying out of any other activity of an independent nature.

2. For the purposes of the application of the Convention at any time by a Contracting State, any term or expression not defined in the Convention shall have, unless a different interpretation is in conflict with its context, the meaning attributed at that time to it by the law of that State concerning the taxes which are the subject of the Convention, the meaning attributed by the tax law to which it would result from other branches of the law of that State prevails.

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, seat of address or any other criterion of a similar nature, including also that State and its political subdivisions or local entities. This term does not, however, include persons who are subject to taxation in that State solely on the income they obtain from sources located in that State, or on the property situated therein.

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 only 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 only 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 only of the 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 a resident only 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 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, the competent authorities shall settle the matter by mutual agreement procedure, taking into account the place of effective management and administration of their economic activity or any other relevant economic factor.

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) the head offices;

(b) branches;

(c) Offices;

(d) factories;

(e) workshops; and

(f) mines, oil or gas wells, quarries or any other place of extraction of natural resources.

3. A construction or installation work or project or monitoring activities in connection with such construction or installation only constitute a permanent establishment if such work, project or monitoring activities exceed six months.

4. Notwithstanding the previous provisions of this Article, it is considered that the term ‘permanent establishment’ does not include:

(a) the use of installations for the sole purpose of storing, displaying or delivering goods or goods belonging to the undertaking, provided that the goods or goods are not disposed of from such installations in the Contracting State in which the installations are situated;

(b) the maintenance of a warehouse of goods or goods belonging to the undertaking for the sole purpose of storing, displaying or delivering them, provided that the goods or goods are not disposed of from that warehouse in the Contracting State in which the warehouse is situated;

(c) the maintenance of a deposit of goods or goods belonging to the undertaking for the sole purpose of processing by another undertaking;

(d) the maintenance of a fixed place of business for the sole purpose of buying 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 any other auxiliary or preparatory activity for the undertaking;

(f) the maintenance of a fixed place of business for the sole purpose of performing any combination of the activities referred to in subparagraphs (a) to (e), provided that the whole activity of the fixed place of business resulting from that combination retains its auxiliary or preparatory character, i.e. does not involve the disposal of goods or goods.

5. By way of derogation from paragraphs 1 and 2, where a person, other than an independent agent to which paragraph 6 applies, acts on behalf of an undertaking and has and exercises habitually 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 the activities carried out by that person for 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 the consideration of that fixed place of business as 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 in that State through a broker, a general commissioner or any other independent agent, provided that such persons act within the ordinary framework of their activity. However, where the activities of such agents are carried out exclusively, or almost exclusively, on behalf of that undertaking, and the conditions accepted or imposed between that undertaking and the agent in its commercial and financial relations differ from those which would be given between independent undertakings, that agent shall not be considered an independent agent in accordance with the meaning of this paragraph.

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 engages in economic activities in that other State (whether by permanent establishment or otherwise), does not in itself make 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 is situated. In any event, that term includes property attached to immovable property, livestock and equipment used on agricultural and forestry holdings, the rights to which private law provisions relating to real estate apply, the use of immovable property and the right to receive fixed or variable payments in exchange for exploitation, or the granting of exploitation, of mineral deposits, sources and other natural resources. Ships, vessels and aircraft shall not be considered 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. Where ownership of shares or other rights directly or indirectly confers on the owner of such shares or rights the right to the enjoyment of immovable property, income derived from the direct use, lease or use in any other form of such right of enjoyment may be subject to taxation in the Contracting State in which the immovable property is situated.

5. The provisions of paragraphs 1 and 3 also apply to income derived from the immovable property of an undertaking.

1. The profits of an undertaking in a 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 therein. If the undertaking does so, the profits of the undertaking may be taxed in the other State, but only to the extent that they are attributable to that permanent establishment.

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

3. For the purpose of determining the benefits of the permanent establishment, the deduction of expenses incurred for the purposes of the permanent establishment shall be permitted, including management and general administrative expenses for the same purposes, whether incurred in one or the other Contracting State.

4. As long as it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of a division of the total profits of the undertaking among its various parties, the provisions of paragraph 2 shall not prevent that Contracting State from determining the taxable profits in this way; 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 profits shall be attributed to a permanent establishment by reason of the mere purchase of goods or goods by that permanent establishment for the enterprise.

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

7. 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. The profits that a company of a Contracting State obtains from the operation of ships or aircraft in international traffic can only be taxed in that State.

2. The benefits referred to in paragraph 1 do not include:

(a) Those obtained from the provision of the hosting service;

(b) Those obtained from the use of any other means of transport, unless they are incidental in nature and are used for the commencement or completion of a journey in international traffic.

3. For the purposes of this Article, profits arising from the operation of maritime vessels or aircraft in international traffic by a resident of a Contracting State include profits arising from the lease on a full ship basis (by time or travel) of maritime vessels or aircraft. They also include profits arising from the leasing on an empty ship basis of seaships and aircraft provided that they are incidental in nature, if they are operated in international traffic by the lessee and the profits are obtained by a resident of a Contracting State engaged in the operation of seaships or aircraft in international traffic.

4. The profits referred to in paragraph 1 also include those arising from the use or lease of containers used in international traffic, provided that the use or lease is incidental to the operation of seagoing vessels or aircraft used in international traffic.

5. The provisions of paragraph 1 also apply to profits arising from participation in a pool, on a joint holding or in an international operating agency or body, but only to the part of the profits thus realized attributable to each shareholder in proportion to its participation in the joint venture.

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 undertakings 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 such conditions, and which in fact have not been made because of them, may be included in the profits of that undertaking and may be taxed 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 State has been taxed in that other Contracting State, and that other State recognizes that the profits thus included are profits which would have been realized by the undertaking of the State concerned in the first place if the terms agreed between the two companies had been those agreed between independent undertakings, then that other State, if it agrees to make such an adjustment, shall adjust, in accordance with article 26, to the amount of the tax which has imposed those profits. In determining such adjustment, account shall be taken of the other provisions of this Convention and the competent authorities of the Contracting States shall be consulted where 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 subject to taxation in the Contracting State in which the company paying the dividends resides and in accordance with the law of that State, but if the actual beneficiary of the dividends is a resident of the other Contracting State, the tax thus required may not exceed 12 per 100 of the gross amount of the dividends.

By way of derogation from the first subparagraph of this paragraph, the Contracting State in which the company paying the dividends resides shall waive those dividends if the beneficial owner is a company holding directly at least 50 per cent of the capital of the company paying the dividends and the latter has been taxed in respect of the profits from which the dividends are paid.

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

3. The term ‘dividends’ within the meaning of this Article means the returns on the shares, shares or enjoyment bonds, of the parties of founders or other rights, except credit rights, which permit participation in the profits, as well as the returns on other social shares subject to the same tax regime as the returns on the shares by the law of the State of which the distribution company is resident.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of one Contracting State, carries out in the other Contracting State, of which the company paying the dividends is resident, an economic activity through a permanent establishment located there, and the share of the dividends is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 apply.

5. 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 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 located in that other State, or subject the undistributed profits of the company to a tax on them, even if dividends paid or profits not distributed 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 beneficial owner of the interest is a resident of the other Contracting State, the tax thus required may not exceed 10 per cent of the gross amount of interest.

3. Notwithstanding the provisions of paragraph 2, interest from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State only if the recipient of the interest is its beneficial owner and

(a) is that other State or the Central Bank, a political subdivision, an administrative-territorial unit or a local entity thereof;

(b) the interest is paid by the State concerned in the first place or by one of its political subdivisions, administrative-territorial units or public or local entities;

(c) interest is paid on the basis of a loan or credit due, granted, granted, guaranteed or insured by one of the Contracting States or one of its political subdivisions, administrative and territorial units, local authorities or an export credit agency dependent on the State or its political subdivisions;

(d) is a financial institution dependent on the State or its political subdivisions;

(e) is a pension fund approved for tax purposes by that other State and the income of that fund is generally exempt from taxation in that State.

4. The term ‘interest’ within the meaning of this Article means income from claims of any kind, whether with or without a mortgage guarantee or a benefit-sharing clause of the debtor, and in particular income from public securities and income from bonds or bonds, including premiums and lots or prizes linked to such securities, as well as any other income subject to the same regime as income from capital provided by the tax legislation of the State from which the income comes. Penalizations for late payment are not considered interest for the purposes of this article.

5. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the interest, resident of one Contracting State, carries out an economic activity in the other Contracting State from which the interest derives, through a permanent establishment situated in that other State, and the credit generated by the interest is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 shall apply.

6. Interest is considered to come from a Contracting State where the debtor is a resident of that State. However, where the debtor of interest, whether or not resident of a Contracting State, has a permanent establishment in a Contracting State in respect of which the debt for which the interest is paid has been incurred, and the latter is borne by the said permanent establishment, those interest shall be deemed to have come from the Contracting State in which the permanent establishment is situated.

7. Where due to special relations between the debtor and the beneficial owner, or between them and third parties, the amount of interest in the light of the claim for payment exceeds that agreed by the debtor and the creditor in the absence of such relationships, the provisions of this article shall apply only to the latter amount. In 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. 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 subject to taxation in the Contracting State from which they come and in accordance with the law of that State, but, if the beneficial owner of the royalties or royalties is a resident of the other Contracting State, the tax thus required may not exceed 10 per cent of the gross amount of those royalties or royalties.

3. The term ‘royalties or royalties’ within the meaning of this Article means the quantities of any kind paid for the use, or the granting of use, of copyrights on literary, artistic or scientific works, including film or film, tapes and other means of reproduction of the image and sound, patents, trademarks, designs, designs, designs, plans, formulas or secret procedures, or for the use, or the granting of use, of industrial, commercial or scientific equipment, or 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 or royalties, resident of one Contracting State, carries out in the other Contracting State, from which the royalties or royalties come, an economic activity through a permanent establishment located in that other State, and the right or for which the royalties or royalties are paid is effectively linked to that permanent establishment. In such cases the provisions of Article 7 shall apply.

5. Royalties or royalties are considered to come from a Contracting State when the debtor is a resident of that State. However, where the debtor of the royalties or royalties, whether or not he is a resident of a Contracting State, has in a Contracting State a permanent establishment in respect of which the obligation to pay the royalties or royalties has been incurred, and such permanent establishment bears the burden thereof, they shall be deemed to be from the Contracting State in which the permanent establishment is situated.

6. Where, by reason of the special relations between the debtor and the beneficial owner of the royalties or royalties, or of which both have with third parties, the amount of royalties or royalties, in view of the use, right or information for which they are paid, exceeds that for which the debtor and beneficial owner would have agreed in the absence of such relationships, 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. Income obtained by a person resident of a Contracting State for the provision of services performed in the other Contracting State may be taxed in the State referred to first.

2. Such services may, however, be subject to taxation in the Contracting State from which they come and in accordance with the law of that State, but the tax thus required shall not exceed 10 per 100 of the gross amount received for those services, except in the case where the person obtaining the income has a permanent establishment in that Contracting State for the purpose of carrying out his activities. In the latter case, such income shall be subject to taxation in that State in accordance with the provisions of Article 7.

3. The term ‘service provision’ used in this Article includes services of technical, legal, economic, financial, administrative or other similar content, including consultancy services.

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. 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, including gains from the disposal of that permanent establishment (either with the enterprise as a whole or with the enterprise as a whole), may be taxed in that other Contracting State.

3. Profits arising from the alienation of seagoing vessels or aircraft operated in international traffic or movable property affected by the operation of such seagoing vessels or aircraft may be taxed only in the Contracting State in which the company's residence is situated.

4. Profits that a resident of a Contracting State obtains from the disposal of shares or other rights of participation whose value is derived directly or indirectly from more than 50 per cent of immovable property located in the other Contracting State may be taxed in that other State.

5. Gains arising from the disposal of shares or other rights which, directly or indirectly, grant the owner of such shares or rights the right to the enjoyment of immovable property situated in a Contracting State, may be subject to taxation in that State.

6. Profits arising from the disposal of any property other than those referred to in paragraphs 1, 2, 3, 4 and 5 may be taxed only in the Contracting State in which the person concerned resides.

1. Without prejudice to articles 16, 18 and 19, salaries, wages and other similar remuneration obtained by a resident of a Contracting State on account of dependent work may be subject to taxation in that State only unless dependent work is performed in the other Contracting State. If dependent work is carried out in this way, the remuneration derived therefrom 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 the basis of dependent work carried out in the other Contracting State may be taxed only in the State referred to above if:

(a) the recipient remains in the other State for a period or periods of not more than 183 days together in any twelve-month period beginning or ending in the fiscal year concerned; and

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

(c) Remuneration is not borne by a permanent establishment held by the employer in the other State.

3. Notwithstanding the foregoing provisions of this article, remunerations obtained on account of dependent work performed on board a ship or aircraft operated by an undertaking of a Contracting State in international traffic may be subject to taxation in that State.

Shareholdings, 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 taxed in that other State.

1. By way of derogation from Articles 7 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 and 15, where the income derived from the personal activities of the performing artists or sportsmen, in that capacity, is attributed not to the performer himself or to another person, such income may be taxed in the Contracting State where the activities of the performing artist or sportsperson are carried out.

3. Notwithstanding paragraphs 1 and 2 of this article, income derived from the activities referred to in paragraph 1 shall be exempt from taxation in the Contracting State in which the activities are carried out, if the visit to that State is financed, in whole or in substance, by public or governmental funds from any of the Contracting States.

Without prejudice to Article 19(2), pensions and similar remuneration paid to a resident of a Contracting State on account of previous dependent work may only be taxed in that State.

1.

(a) Wages, salaries and other similar remuneration paid by a Contracting State or by one of its political subdivisions or local entities to a natural person for services rendered to that State or to that subdivision or entity may only be subject to taxation in that State.

(b) Such salaries, salaries and similar remuneration may, however, 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) is a national of that State; or

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

2.

(a) By way of derogation from paragraph 1, pensions and other similar remuneration paid by a Contracting State or one of its political subdivisions or local entities, either directly or from funds constituted, to a natural person on the basis of services provided to that State or to that subdivision or entity, may be subject to taxation only in that State.

(b) Such pensions and similar remuneration 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. The provisions of Articles 15, 16, 17 and 18 apply to salaries, salaries, pensions and other similar remuneration paid for services rendered in the context of an economic activity carried out by a Contracting State or by one of its political subdivisions or local authorities.

The amounts received to cover the costs of maintenance, study or practical training by a student or a trainees who is, or was, immediately before arriving in a Contracting State, resident of the other Contracting State and who is in the State referred to first for the sole purpose of continuing his studies or practical training, may not be subject to taxation in that State provided that they come from sources outside that State.

A natural person resident of a Contracting State at the beginning of his visit to the other Contracting State who is temporarily in that other Contracting State for the purpose of teaching or research in a recognized educational or research institution shall be exempt from taxation in that latter State for a period not exceeding two years from the date of his arrival in that State in respect of the remuneration he receives for such activities.

1. The income of a resident of a Contracting State, whatever its source, not referred to in the previous articles of this Convention, shall be subject to taxation only in that State.

2. Paragraph 1 does not apply to income, other than that derived from immovable property within the meaning of Article 6(2), where the beneficiary of such income, resident of a Contracting State, carries out an economic activity in the other Contracting State through a permanent establishment situated in that other State, and the right or for which the income is paid is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 apply.

3. By way of derogation from paragraph 1, income obtained by a resident of a Contracting State from lottery prizes, gambling or compensation for damage from the other Contracting State may be taxed in that other Contracting State.

1. Property constituted by immovable property within the meaning of Article 6, which has a resident of one Contracting State and is situated in the other Contracting State, may be taxed in that other State.

2. Property consisting 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 may be taxed in that other Contracting State.

3. Assets consisting of seagoing vessels or aircraft operated by an undertaking of a Contracting State in international traffic, as well as movable property affecting the operation of such seagoing vessels and aircraft, may only be subject to taxation in that State.

4. Assets consisting of shares or other rights which grant the owner of such shares or rights the right to the enjoyment of immovable property situated in a Contracting State may be subject to taxation in the Contracting State in which the immovable property is situated.

5. 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 either in accordance with the provisions of its domestic law or in accordance with the following provisions, subject to Spanish domestic law:

(a) Where a resident of Spain obtains income or possesses assets which, in accordance with the provisions of this Agreement, may be taxed in El Salvador, Spain shall permit:

(i) the deduction of the income tax of that resident in an amount equal to the income tax paid in El Salvador;

(ii) the deduction of the property tax of that resident in the amount equal to the tax paid in El Salvador on those assets;

(iii) the deduction of corporation tax actually paid by the company which distributes the dividends corresponding to the profits from which the dividends are paid, in accordance with its domestic law.

However, such deduction may not exceed the part of income tax or property tax, calculated prior to deduction, corresponding to the income or assets that may be taxed in El Salvador.

(b) Where, under any provision of this Agreement, the income obtained by a resident of Spain or the property he holds is tax-exempt in Spain, Spain may, however, take into account the income or wealth exempted in calculating the tax on the rest of the income or property of that resident.

2. In El Salvador, provided that its domestic legislation graves the income generated abroad, double taxation shall be avoided in accordance with its domestic legislation or in accordance with the following provisions, subject to El Salvador's domestic legislation:

(a) When a resident of El Salvador obtains income that, in accordance with the provisions of this Agreement, may be taxed in Spain, that resident may prove against the Salvadoran income tax at his or her expense, the tax paid in Spain, up to an amount not exceeding the tax that would be paid in El Salvador for the said income.

(b) When, in accordance with any provision of the Convention, income obtained by a resident of El Salvador is exempt from taxation in El Salvador, El Salvador may, however, take into account the exempt income for the purpose of calculating the amount of tax on the remaining income 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, in particular with regard to residence, are or may be subject. Notwithstanding Article 1, this provision shall also apply to persons who are not residents of one or any of the Contracting States.

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 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(1) of Article 11(7) or Article 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 have the same tax treatment in respect of deductibility in determining the profits subject to taxation of that undertaking as if they had been paid to a resident of the State referred to first. Similarly, the debts of an undertaking of a Contracting State contracted with a resident of the other Contracting State shall be deductible for the determination of the assets subject to taxation of that undertaking under the same conditions as if they had been contracted with a resident of the State referred to in the first instance.

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

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

1. Where a person considers that the measures taken by one or both Contracting States imply 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. The case must arise 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 considers the complaint well founded and if it is not in itself able to reach a satisfactory solution, make every effort to resolve the matter by means of an amicable agreement with the competent authority of the other Contracting State, in order to avoid an imposition which does not comply with this Convention. The agreement shall apply irrespective of the time limits laid down by the national law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve any difficulties or 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 with each other in order to reach agreement within the meaning of the preceding paragraphs. Where it is considered that this agreement may be facilitated by an oral exchange of views, it may be carried out through a committee composed of representatives of the competent authorities of the Contracting States.

1. The competent authorities of the Contracting States shall exchange specific information which is likely to be relevant to the application of this Convention, or to the administration or application of national law relating to taxes of any kind or designations required by the Contracting States, their political subdivisions or local authorities, to the extent that such taxation is not contrary to the Convention. The exchange of information is not limited by Articles 1 and 2.

2. Information received by a Contracting State pursuant to paragraph 1 shall be kept secret in the same manner as information obtained under the domestic law of that State and shall only be communicated to the persons or authorities (including courts and administrative bodies) responsible for the management or collection of taxes referred to in paragraph 1 of the legal proceedings or procedures for the effective application of such taxes or for the resolution of appeals relating thereto or for the prosecution of offences. These persons or authorities shall use this information only for these purposes. They may disclose the information at public court hearings or in court judgements.

Notwithstanding the above, information received by a Contracting State may be communicated to the authorities responsible for combating money-laundering, where such use is permitted by the laws of the receiving State.

3. Under no circumstances may the provisions of paragraphs 1 and 2 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; and

(c) provide information revealing business, industrial, commercial or professional secrecy or an industrial process, or information the communication of which is contrary to public policy (ordre public).

4. If a Contracting State requests information pursuant to this Article, the other Contracting State shall use the measures to collect information available to it in order to obtain the information requested, even if that other State may not need such information for its own tax purposes. The above obligation is limited by paragraph 3 provided that this paragraph is not interpreted to prevent a Contracting State from providing information solely because of the absence of national interest in it.

5. In no case shall the provisions of paragraph 3 be interpreted as allowing a Contracting State to refuse to provide information solely because it is held by banks, other financial institutions, or by any person acting in a representative or fiduciary capacity or because it relates to property rights or participation in a person.

The provisions of this Convention shall not affect the tax privileges enjoyed by members of diplomatic missions or consular offices in accordance with the general principles and rules of international law or under the provisions of special agreements.

1. Each Government of the Contracting States shall notify the other, through diplomatic channels, that the internal procedures required in each Contracting State for the entry into force of this Convention have been complied with.

2. The Convention shall enter into force within three months of the date of receipt of the last notification referred to in paragraph 1 and its provisions shall take effect from 1 January of the calendar year following the entry into force of the Convention or for tax periods beginning on or after that date.

This Convention shall remain in force as long as it is not denounced by any of the Contracting States. Any Contracting State may denounce the Convention by diplomatic means by notification of denunciation at least six months before the end of any calendar year beginning after the expiry of the five-year period from the date on which the Convention enters into force. In such a case, the Convention shall cease to have effect on income and property taxes for the fiscal year beginning on 1 January of the calendar year following that in which the complaint is communicated.

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

Made in double copy in Madrid on 7 July of two thousand and eight in Spanish.

At the time of signing the Agreement between the Kingdom of Spain and the Republic of El Salvador to Prevent Double Taxation and Tax Evasion in the Field of Income and Property Taxes, the signatories have agreed on the following provisions which form an integral part of the Convention.

I. Where, pursuant to the provisions of Articles 6 to 22 of this Convention, a Contracting State has exclusive tax powers, although under its domestic law and because of its territorial taxation system the income is not subject to taxation, it may be subject to taxation in the other Contracting State as if the Convention had not entered into force.

II. Without prejudice to the content of this Protocol, the provisions of this Convention may be interpreted in accordance with the OECD Model Convention Commentary.

III. Considering that the main objective of this Convention is to avoid international double taxation, the Contracting States agree that, in the event that the provisions of the Convention are used in such a way as to confer benefits not contemplated or intended by it, the competent authorities of the Contracting States shall, in accordance with the mutual agreement procedure of Article 26, recommend specific amendments to the Convention. The Contracting States further agree that any such recommendation shall be considered and discussed expeditiously with a view to amending the Convention to the extent necessary.

IV. With regard to Articles 2, 4, 23, 24, 25, 29 and 30.–The provisions relating to property taxes shall apply only to the extent that both Contracting States apply a property tax (net worth tax).

V. With regard to Article 4.–The status of resident for the purposes of the agreement of a person of a Contracting State, shall be verified through a certificate issued by a competent authority.

VI. With regard to Articles 5 and 7.–For the purposes of the application of the Convention, permanent establishments shall be understood to be non-residents of the Contracting State in which they are located and shall be taxed in accordance with Article 7.1 of the Convention.

VII. With regard to Article 7(1) – The profits charged to a permanent establishment in the Contracting State in which it is situated are those derived from economic activities carried out directly by that permanent establishment; however, if the head office carries out economic activities in the other Contracting State using the means of the permanent establishment, the profits derived from such operations shall be charged to that permanent establishment in proportion to its participation in such activities.

VIII. With regard to Article 7(3).– With regard to the deduction of the costs incurred for the purposes of the permanent establishment, it shall be understood that for its determination and calculation, the deductibility requirements laid down in the legislation of the Contracting State in which the permanent establishment is situated shall be observed.

IX. With regard to Article 13(1) – The term ‘made in the other Contracting State’ shall be understood to require the physical presence of the subjects in the State where the income is obtained.

X. With regard to articles 10, 11, 12 and 13:

1. With regard to Articles 10, 11, 12 and 13, if, after the entry into force of this Convention, the Republic of El Salvador signs an Agreement or Convention to prevent double taxation with a third State that is a member of the European Union or OECD, and that Agreement or Convention establishes rates of retention lower (or zero rate) than those set out in this Convention, those percentages shall immediately replace those set out in this Convention as from the entry into force of the Convention or Agreement between El Salvador and that third State.

2. The provisions of articles 10, 11, 12 and 13 shall not apply if the principal purpose or one of the main purposes of any person who obtains these types of income, is to obtain the benefits of those articles in an improper manner.

XI. With regard to Article 15.–This Article shall include all persons engaged in dependent work, including management, for remuneration for such work. However, remuneration received as a member of a Board of Directors shall be taxed in accordance with Article 16.

XII. With regard to Article 16.–In the ‘other similar remuneration’ referred to in Article 16 of the Convention, it shall be understood that all benefits obtained as a member of a Board of Directors or supervisory body of a company, irrespective of its form of payment, are covered.

XIII. With regard to Article 17.–The income obtained by an artist or sportsman resident of a Contracting State from the personal activities of that resident related to his reputation as an artist or sportsman, exercised in the other Contracting State, is understood to include.

It will be understood that the visit of artists and athletes is substantially financed by public or government funds when they exceed 50 per cent of the total expenses.

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

Made in double copy in Madrid on 7 July of two thousand and eight in Spanish.

This Convention enters into force on 13 August 2009, three months after the date of receipt of the last notification of compliance with the required internal procedures, as set out in Article 29(2) thereof.

What is made public for general knowledge.

Madrid, May 27, 2009. –The Technical Secretary General of the Ministry of Foreign Affairs and Cooperation, Antonio Cosano Pérez.