FRANCIS FRANCH BAHAMONDE
HEAD OF SPANISH STATE
GENERALIZATION OF NATIONAL AFFAIRS
For what?
On 26 April 1966, the Plenipotentiary of Spain signed in Bern, together with the Plenipotentiary of the Swiss Federal Council, appointed in good and due form to that effect, an agreement to avoid double taxation on income and property taxes between the Spanish State and the Swiss Confederation, the certified text of which is inserted below:
The Spanish Head of State and the Swiss Federal Council, wishing to conclude an agreement to prevent double taxation on income and property taxes, have designated to effect as Plenipotentiaries:
The Spanish Head of State:
To His Excellency Mr. Juan Pablo de Lojendio and Irure, Marquis de Vellisca, Ambassador of Spain to Bern.
The Swiss Federal Council shall:
To Mr Willy Spühler, Federal Counsellor, Head of the Federal Political Department,
which, having exchanged their Plenipotentiaries and found them in good and proper form, have agreed as follows:
CHAPTER 1
Scope of the Convention
Article 1. Personal scope.
This Convention applies to persons resident in one or both Contracting States.
Article 2. Target area.
1. This Convention applies to income and property taxes payable by each Contracting State, its political subdivisions and local authorities, irrespective of the levy system.
2. Income and property taxes are defined as taxes on all or any part of the income or property, including taxes on profits resulting from the disposal of movable or immovable property, taxes on the amount of wages paid by enterprises (not including social security contributions), as well as taxes on capital gains.
3. The current taxes to which this Convention specifically applies are:
(a) In Spain:
(1) General Income Tax for Physical Persons;
(2) the general income tax on companies and other legal entities, including the special charge of 4 per 100 established by Article 104 of Law 41/1964 of 11 June;
3) the following taxes on account: the Territorial Contribution on Rustic and Pecuaria Wealth, the Territorial Contribution on Urban Wealth, the Income Tax on Personal Work, the Income Tax on Capital and the Tax on Commercial and Industrial Activities and Benefits;
4) in Fernando Poo, Río Muni, Sahara and Ifni, income taxes (on income from work and wealth) and on the profits of companies;
5. for undertakings governed by the Act of 26 December 1958 engaged in the investigation and exploitation of hydrocarbons, in addition to the other taxes listed in this Article, the area tax, gross product tax and excise duty on the profits of such companies:
6) local taxes on income or wealth.
(hereinafter referred to as ‘the Spanish tax’).
(b) In Switzerland:
federal, cantonal and communal taxes:
1) on income (total income, return on labour, return on assets, industrial and commercial profits, capital gains and other income);
2) on heritage (total heritage, movable and real estate, industrial and commercial heritage, capital and reserves and other elements of heritage).
(hereinafter referred to as ‘Swiss tax’).
4. This Convention shall also apply to future taxes of an identical or similar nature which are added to or replaced by existing taxes. Each year, the competent authorities of the Contracting States shall notify each other of any changes made to their respective tax laws.
5. This Convention does not apply to withholding taxes on lottery prizes
CHAPTER II
Definitions
Article 3. General definitions.
1. This Convention, unless otherwise interpreted:
(a) the term 'Spain' means the Spanish State (and when employed geographically, Peninsular Spain, the Balearic Islands and the Canary Islands, the Spanish squares and provinces in Africa and Equatorial Guinea, formed by the territories of Rio Muni and Fernando Poo, these two territories in the process of self-determination);
(b) the term ‘Switzerland’ means the Swiss Confederation;
(c) the words ‘one Contracting State’ and ‘the other Contracting State’ mean Spain or Switzerland as derived from the text;
(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 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 (including the State itself, its political subdivisions and local entities) and an undertaking operated by a resident of the other Contracting State (including the State itself, its political subdivisions and local entities);
(g) the expression ‘competent authority’ means:
(1) In Spain:
the Minister of Finance, the Director-General of Direct Taxes or any other Authority to which the Minister delegates.
(2) In Switzerland:
the Director of the Federal Contributions Administration or his authorized representative.
2. For the purposes of the application of this Convention by a Contracting State, any term not otherwise defined shall, unless the text requires a different interpretation, have the meaning attributed to it by the law of that Contracting State concerning taxes which are the subject of this Convention.
Article 4. Tax address.
1. For the purposes of this Convention, 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 is considered a ‘resident of a Contracting State’.
2. Where, under the provisions of paragraph 1, a natural person is resident in both Contracting States, the case shall be settled in accordance with the following rules:
(a) This person shall be considered a resident of the Contracting State where he or she has a permanent dwelling at his or her disposal. If it has a permanent dwelling at its disposal in both Contracting States, it shall be considered a resident of the Contracting State with which it maintains closer personal and economic relations (centre of vital interests);
(b) If the Contracting State in which that 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 Contracting States, he or she shall be considered a resident of the Contracting State in which he or she normally lives;
(c) If he or she is habitually resident in both Contracting States or does not live in either Contracting State, he or she shall be considered a resident of the Contracting State of which he or she is a national;
(d) If he is a national of either Contracting State or is not a national of either Contracting State, the competent authorities of the Contracting States shall decide the case by mutual agreement.
3. Where under the provisions of paragraph 1, a company is resident of both Contracting States, it shall be considered a resident of the Contracting State in which its place of effective management is located.
Article 5. Permanent establishment.
1. For the purposes of this Agreement, the term ‘permanent establishment’ means a fixed place of business in which an undertaking carries out all or part of its activity.
2. The term ‘permanent establishment’ includes, in particular:
(a) the head offices;
(b) branches;
(c) Offices;
(d) factories;
(e) Workshops;
(f) mines, quarries or any other place of extraction of natural resources;
(g) construction or assembly works lasting more than 12 months.
3. The term ‘permanent establishment’ does not include:
(a) the use of facilities for the sole purpose of storing, displaying or delivering goods or goods belonging to the undertaking;
(b) the maintenance of a warehouse of goods or goods belonging to the undertaking 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 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 undertaking;
(e) the maintenance of a fixed place of business for the sole purpose of advertising, providing information, carrying out scientific research or carrying out other similar activities which are preparatory or auxiliary in nature, provided that such activities are carried out for the undertaking itself.
4. A person acting in a Contracting State on behalf of an undertaking of the other Contracting State, except in the case of an independent agent covered by paragraph 5, is considered to constitute a permanent establishment in the State referred to above if he habitually has and exercises in that State powers to conclude contracts on behalf of the undertaking, unless his activities are limited to the purchase of goods or goods for that undertaking.
5. It is not considered that an undertaking of one Contracting State has a permanent establishment in the other Contracting State merely because it engages in activities in that other State through a broker, a general commissioner or any other mediator enjoying an independent status, provided that these persons act within the ordinary framework of their activity.
6. The fact that a company resident of a Contracting State controls or is controlled by a company resident of the other Contracting State or engaged in 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.
CHAPTER III
Income taxation
Article 6. Real estate rents.
1. Income from immovable property may be taxed in the Contracting State in which such property is situated.
2. The term ‘real property’ shall be defined in accordance with the law of the Contracting State in which the property is situated. In any event, this term includes accessories, livestock and equipment used on agricultural and forestry holdings, rights to which the provisions of private law relating to territorial property, the use of immovable property and rights to variable or fixed fees for the exploitation or concession of the exploitation of mineral deposits, sources or other land wealth apply. Ships, vessels and aircraft are not considered real property.
3. The provisions of paragraph 1 apply to income derived from the direct use of the lease or from any other form of exploitation of immovable property.
4. The provisions of paragraphs I and 3 also apply to income derived from the real estate of enterprises and from immovable property used for the exercise of professional services.
Article 7. Benefits of Companies.
1. The profits of an undertaking in a Contracting State may be taxed only by that State, unless the undertaking carries out operations in the other State through a permanent establishment situated in that State. In the latter case, the profits of the company may be taxed in the other State, but only to the extent that they can be attributed to the permanent establishment.
2. Where an undertaking of one Contracting State engages in business in the other Contracting State by means of a permanent establishment situated therein, in each Contracting State the profits it would obtain from the permanent establishment if it were a separate undertaking carrying out the same or similar activities, under the same or similar conditions, and dealt entirely independently with the undertaking of which it is a permanent establishment.
3. For the purpose of determining the benefit of the permanent establishment, the deduction of expenses for the purposes of the permanent establishment shall be permitted, duly demonstrated, including management and general administrative expenses for the same purposes, equally demonstrated, whether incurred in the State in which the permanent establishment is located or elsewhere.
4. As long as it is customary in a Contracting State to determine the benefits attributable to permanent establishments on the basis of a division of the total profits of the enterprise 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 set out in this article.
5. No benefit shall be attributed to a permanent establishment merely because it buys goods or goods for the undertaking.
6. For the purposes of the preceding paragraphs, the profits attributable to the permanent establishment shall be calculated each year by the same method, unless there are valid and sufficient grounds for proceeding in another form.
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.
Article 8. Shipping and air transport.
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 undertaking is situated.
2. The provisions of paragraph 1 also apply to the profits of an enterprise of a Contracting State from a pool, from a joint holding or from an international exploitation agency.
Article 9. Associated enterprises.
When
(a) an undertaking of a Contracting State participates, directly or indirectly, in the direction, control or capital of an undertaking of the other Contracting State; or
(b) the same persons participate, directly or indirectly, in the direction, control or capital of an undertaking of one Contracting State and of an undertaking of the other Contracting State and, in either case, the two undertakings are, in their commercial or financial relations, bound by terms, accepted or imposed, which differ from those agreed by independent undertakings, the profits which one of the undertakings would have obtained if these conditions did not exist and which in fact did not occur because of them, may be included in the profits of that undertaking and subject to taxation accordingly.
Article 10. Dividends.
1. Dividends paid by a company resident of one Contracting State to a resident of the other Contracting State may be taxed in the latter State.
2. However, these dividends may be taxed in the Contracting State in which the company paying the dividends resides and in accordance with the laws of that State, but the tax thus required may not exceed:
(a) 10 per cent of the gross amount of dividends if the profit is a company (excluding companies of persons) holding directly at least 25 per cent of the capital of the company that pays them;
(b) 15 per 100 of the gross amount of dividends, in all other cases.
The competent authorities of the Contracting States shall, by mutual agreement, determine how these limits are to be applied.
This paragraph does not affect the company's taxation of profits from which dividends are paid.
3. The term ‘dividends’, used in this Article, includes the income from shares, shares or vouchers, parts of mines, shares of founders or other rights, except credit rights, which permit participation in the profits, so that the income of other social shares assimilated to the income of the shares by the tax legislation of the State in which the distributing company resides.
4. The provisions of paragraphs 1 and 2 do not apply if the dividend beneficiary, resident of one Contracting State, has, in the other Contracting State of which the company paying the dividends is resident, a permanent establishment with which the share generated by the dividends is effectively linked. In this 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 levy any tax on dividends paid by the company to persons who are not residents of the latter 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.
Article 11. Interest.
1. Interest from a Contracting State paid to a resident of the other Contracting State may be taxed in the latter State.
2. However, these interests may be taxed in the Contracting State from which they come and in accordance with the law of that State, but the tax thus required may not exceed 10 per cent of the amount of interest.
The competent authorities of the Contracting States shall, by mutual agreement, determine how this limit is to be applied.
3. Notwithstanding the provisions of paragraph 2, interest from Spain and paid to a bank resident in Switzerland for a long-term loan (not repayable in full or in part before five years) is subject to taxation in Switzerland only.
4. The term ‘interest’, used in this article, includes the income from the public debt, from bonds or bonds with or without mortgage guarantee and entitled or not to participate in profits, and from claims of any kind, as well as any other income that the tax legislation of the State from which the interest derives assimilates to the income from the amounts given to the loan.
5. The provisions of paragraphs 1, 2 and 3 do not apply if the beneficiary of the interest, resident of my Contracting State, has, in the other Contracting State from which the interest originates, a permanent establishment with which the credit generated by the interest is effectively linked. In this case, the provisions of Article 7 apply.
6. Interest shall be considered as originating in a Contracting State where the debtor is the State itself, one of its political subdivisions, one of its local entities or a resident thereof. However, where the debtor of the interest, whether or not he is resident of a Contracting State, has in a Contracting State a permanent establishment in respect of which the debt giving rise to the interest has been incurred and this establishment supports the payment of the interest, interest shall be deemed to have come from the Contracting State where the permanent establishment is located.
7. Where, due to special relationships between the debtor and the beneficiary of the interest or between the two and any other person, the amount of interest paid, having regard to the claim for which it is paid, exceeds the amount that would have been agreed by the debtor and the beneficiary in the absence of such relations, the provisions of this Article shall apply only to the latter amount. In this case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.
Article 12. Royalties.
1. Fees from one Contracting State to a resident of the other Contracting State may be taxed in the latter State.
2. However, these fees may be taxed in the Contracting State from which they come and in accordance with the law of that State, but the tax thus required may not exceed 5 per 100 of the gross amount of the fees.
The competent authorities of the Contracting States shall, by mutual agreement, determine how this limit is to be applied.
3. The term 'royalties' used in this article includes quantities of any kind paid for the use or granting of copyright on literary, artistic or scientific works, including cinematographic films, patents, trademarks, designs, plans, formulas or secret procedures, as well as for the use or granting of use of industrial, commercial or scientific equipment, and amounts paid for information relating to industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficiary of the royalties, resident of one Contracting State, has, in the other Contracting State from which the royalties come, a permanent establishment with which the right or ownership for which the royalties are paid is effectively linked. In this case, the provisions of article 7 apply.
5. The fees are considered to come from a Contracting State where the debtor is the State itself, one of its political subdivisions, one of its local entities or a resident thereof. However, where the debtor of the royalties, whether or not he is resident of a Contracting State, has in a Contracting State a permanent establishment to which the benefit for which the royalties are paid is linked and this establishment supports the payment of the royalties, the fees shall be deemed to be from the Contracting State where the permanent establishment is located.
6. Where, due to special relations between the debtor and the beneficiary of the royalties or between the two and any other person, the amount of the fees paid, having regard to the benefit for which they are paid, exceeds the amount that would have been agreed by the debtor and the beneficiary in the absence of such relationships, the provisions of this Article shall apply only to the latter amount. In this case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.
Article 13. Capital gains.
1. Profits arising from the disposal of immovable property, as defined in article 6, paragraph 2, may be taxed in the Contracting State in which they are located.
2. Gains arising 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 base held by a resident of one Contracting State in the other Contracting State for the provision of professional services, including gains arising from the disposal of the permanent establishment (only or with the enterprise as a whole) or from the fixed base, may be taxed in that other State. However, the proceeds from the disposal of movable property referred to in article 22, paragraph 3, may be taxed only in the Contracting State to which, according to that article, the right to tax them belongs.
3. Profits arising from the disposal of any property other than those referred to in paragraphs 1 and 2 may be taxed only in the State in which the transferor resides.
Article 14. Independent professions.
1. Income obtained by a resident of a Contracting State through the provision of professional services or the pursuit of other independent activities of a similar nature may only be taxed in that State unless that resident normally has a fixed basis in the other Contracting State for the pursuit of his or her activity. In the latter case, such income may be taxed in the other State, but only to the extent that it is appropriate to attribute it to the fixed base.
2. The term “professional services” includes, in particular, scientific, literary, artistic, educational or educational activities, as well as independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Article 15. Dependent work.
1. Without prejudice to the provisions of Articles 16, 18 and 19, salaries, salaries and similar remuneration obtained by a resident of a Contracting State on account of employment may only be taxed in that State unless the employment is exercised in the other Contracting State. If employment is exercised in the latter State, the remuneration derived therefrom may be subject to taxation in that State.
2. Notwithstanding the provisions of paragraph 1, remuneration obtained by a resident of a Contracting State on the ground of employment in the other Contracting State may only be taxed in the former State if:
(a) The employee does not remain in the other State, for one or more periods, more than a total of 183 days during the fiscal year concerned;
(b) remuneration is paid for or on behalf of a person 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 person for whom work is performed has in the other State.
3. Notwithstanding the preceding provisions of this article, remunerations earned on the basis of employment on board a ship or aircraft in international traffic may be taxed in the Contracting State where the place of effective management of the undertaking is located.
Article 16. Directors’ fees.
Participations, attendance allowances and similar remunerations which a resident of a Contracting State obtains 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.
Article 17. Entertainers and sportspersons.
Notwithstanding the provisions of Articles 14 and 15, the rents obtained by the professionals of the spectacle, such as theatre, cinema and television artists and musicians, as well as by sportsmen, for their personal activities in this regard, may be subject to taxation in the Contracting State in which they act.
Article 18. Pensions.
Without prejudice to the provisions of Article 19, pensions and similar remuneration paid, in consideration of previous employment, to a resident of a Contracting State, may only be taxed in that State.
Article 19. Public remuneration.
Remuneration, including pensions, paid, directly or from a special fund, by a Contracting State, one of its political subdivisions or local entities, an autonomous body or a legal person under public law of that State, to a natural person possessing the nationality of that State, in consideration of services currently or previously provided, may be subject to taxation only in the Contracting State from which such remuneration comes.
Article 20. Students.
The amounts which a student or a trainees, who is or has previously been a resident of a Contracting State and who is in the other Contracting State for the sole purpose of continuing his studies or completing his training, receive to cover his costs of maintenance, studies or training, shall not be subject to taxation in the latter State, provided that such amounts come from sources outside that State.
Article 21. Incomes not expressly mentioned.
The income of a resident of a Contracting State not expressly mentioned in the preceding articles may only be taxed in that State.
CHAPTER IV
Imposition on assets
Article 22. Capital.
1. Property constituted by immovable property, as defined in article 6, paragraph 2, may be taxed in the Contracting State in which the property is situated.
2. Property consisting of movable property forming part of the assets of a permanent establishment of an undertaking, or of movable property belonging to a fixed base used for the pursuit of a professional activity, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.
3. Ships and aircraft engaged in international traffic and assets, other than immovable property, having an interest in their operation, may be subject to taxation only in the Contracting State in which the place of effective management of the undertaking is situated.
4. All other assets of a resident of a Contracting State may be subject to taxation only in that State.
CHAPTER V
Provisions to prevent double taxation
Article 23
1. Where a resident of a Contracting State obtains income or possesses property which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first State may, except as provided for in the following paragraphs, exempt such income or property, but in order to calculate the tax corresponding to the remaining income or property of that resident, apply the tax rate which would correspond without such exemption.
2. Where a resident of Spain obtains income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Switzerland, Spain shall deduct from the income tax of that resident an amount equal to the tax paid in Switzerland; however, this deduction may not exceed the part of the tax, corresponding to the income obtained in Switzerland, calculated prior to the deduction.
The provisions of this paragraph apply to both general and account taxes.
3. Where a resident of Switzerland obtains income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Spain, Switzerland, at the request of that resident, he or she shall grant a relief which may consist of:
(a) deduct the tax paid in Spain, in accordance with the provisions of Articles 10, 11 and 12, from the Swiss tax levied on the income of this resident, without the amount deducted exceeding the part of the Swiss tax corresponding to the income tax levied in Spain, calculated before deduction; or
(b) an increased reduction in Swiss tax; or
(c) partially exempt the said income from Swiss tax. This exemption shall consist, at least, of deducting from the gross amount of income obtained in Spain the tax paid in Spain.
Switzerland shall determine the type of relief and regulate the procedure in accordance with the provisions relating to the application of international conventions to prevent double taxation concluded by the Confederation.
4. A company resident of a Contracting State receiving dividends from a subsidiary company resident of the other Contracting State enjoys, in respect of the tax of the first State relating to these dividends, the same advantages as if the subsidiary company paying the dividends were resident of the first State.
5. For the purposes of applying the provisions of paragraph 3, interest on amounts borrowed from 1 January 1966 which enjoy a reduction in the Spanish tax, in accordance with the Decree-Law of 19 October 1961 or rules supplementing or replacing it, shall be deemed to have paid the Spanish tax at the rate set out in article 11, paragraph 2.
CHAPTER VI
Special provisions
Article 24. Non-discrimination.
1. Nationals of a 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 Contracting State who are or may be subject under the same conditions are subject.
2. In particular, nationals of one Contracting State who are subject to taxation in the other Contracting State shall be entitled to the same exemptions and tax reductions granted, in consideration of family burdens, to nationals of the other Contracting State.
3. The term ‘national’ means:
(a) all natural persons possessing the nationality of a Contracting State;
(b) all legal persons, companies of persons and associations established under the laws in force in a Contracting State.
4. A permanent establishment which an undertaking of one Contracting State has in the other Contracting State shall not be subject to taxation in that State in a less favourable manner than undertakings of the latter State carrying out the same activities.
This provision does not oblige 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.
5. 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 Contracting State referred to above to any tax or obligation relating thereto which is not or is more burdensome than those to which the like undertakings of the first Contracting State are or may be subject.
6. This Article applies to all taxes irrespective of their nature and name.
Article 25. Mutual agreement procedure.
1. Where a resident of a Contracting State considers that the measures taken by one or both Contracting States entail or may entail for him a charge that is not in conformity with this Convention, irrespective of the remedies provided for by the national law of the States, he may submit his case to the competent authority of the Contracting State of which he is a resident.
2. This 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 by amicable agreement with the Competent Authority of the other Contracting State in order to avoid the imposition not in accordance with this Convention.
3. The competent authorities of the Contracting States shall endeavour to resolve difficulties by amicable agreement or to dispel doubts arising from the interpretation or application of this Convention. They may also agree to try to avoid double taxation in cases not provided for therein.
4. The competent authorities of the Contracting States may communicate directly with each other in order to achieve the agreements referred to in the preceding paragraphs. Where it is considered that such agreements can be facilitated through personal contacts, the exchange of views may take place within a Commission composed of representatives of the competent authorities of both Contracting States.
Article 26. Diplomatic and consular officials.
1. The provisions of this Convention do not affect the tax privileges enjoyed by diplomatic or consular officials in accordance with the general principles of international law or under provisions of special agreements.
2. For the purposes of this Convention, members of a Diplomatic or Consular Mission of a Contracting State accredited in the other Contracting State or in a third State possessing the nationality of the sending State are considered residents of the sending State if they are subject in that State to the same obligations in respect of income and property taxes as residents of that State.
3. The Convention does not apply to international organizations, their organs or officials, or to persons who are members of a diplomatic or consular mission of a third State, when they are in the territory of a Contracting State and are not considered residents of either Contracting State for the purpose of income and property taxes.
CHAPTER VII
Final provisions
Article 27. Entry into force.
1. This Convention shall be ratified and the instruments of ratification shall be exchanged in Madrid as soon as possible.
2. This Convention shall enter into force on the basis of the exchange of the Ratification Instruments and its provisions shall apply:
(a) in Spain:
to taxes accrued in the year 1967 and as follows:
(b) in Switzerland:
for fiscal years beginning on or after 1 January 1967.
3. The Agreement between the Swiss Federal Council and the Spanish Government of 21 November 1963 concerning the taxation of air navigation undertakings is deemed to have been repealed as from the entry into force of this Agreement and shall last apply to taxes levied in 1966.
Article 28. Termination.
This Convention shall remain in force until it is denounced by any of the Contracting States. Any Contracting State may denounce the Convention by diplomatic means at least six months in advance before the end of each calendar year. In this case, the Convention shall cease to apply:
(a) In Spain:
taxes incurred in the calendar years following the reporting period;
(b) In Switzerland:
for fiscal years beginning on or after 1 January of the calendar year following the reporting date.
In faith which the appointed Plenipotentiaries have signed and sealed this Convention.
Done at Bern, in duplicate, in the Spanish and French languages, both texts being equally authentic, on 26 April, one thousand nine hundred and sixty-six.
For the Spanish State:
For the Swiss Confederation:
Signed: J. P. de Lojendio
Signed: Spühler
THE HEAD OF THE FEDERAL POLITICAL DEPARTMENT
Berne, 26 April 1966.
Ambassador,
I acknowledge receipt of your letter dated today which, translated, reads as follows:
"With regard to the Convention between Spain and the Swiss Confederation on the avoidance of double taxation on income and property taxes, signed today, it is understood that Article 2 of that Convention refers to taxes on both ordinary and extraordinary income and wealth.
I would ask you, Mr Federal Counsellor, to express to me your Government's agreement with the above.'
I have the honour, Mr. Ambassador, to convey to you the agreement of my Government on the foregoing.
I take this opportunity, Ambassador, to assure you of my high consideration.
Signed: Spühler
H.E. Sir. D. Juan Pablo de Lojendio, Marquis de Vellisca, Ambassador Extraordinary and Plenipotentiary of Spain.–Berna.
Therefore, having seen and examined the twenty-eight articles that make up the said Convention, having heard the Commission on Treaties of the Spanish Courts, in compliance with article 14 of its Organic Law, I come to approve and ratify what is provided for, as I hereby approve and ratify it, promising to comply with it, observe it and ensure that it is implemented and observed in a timely manner in all its parts, for the purpose of its further validation and firmness, Command to issue this Instrument of Ratification, signed by Me, duly sealed and endorsed by the undersigned Minister of Foreign Affairs.
Done at 26 January 1967
FRANCE FRANCE
The Minister for Foreign Affairs,
FERNANDO M. CASTIELLA
The exchange of instruments of ratification was verified in Madrid on February 2, 1967.