FRANCIS FRANCH BAHAMONDE
HEAD OF THE SPANISH STATE, GENERALISM OF NATIONAL ARRANGEMENTS
For what?
On 13 February 1974, the Plenipotentiary of Spain signed in Madrid, together with the Plenipotentiary of Japan, appointed in good and due form to that effect, an Agreement between the Spanish State and Japan to prevent double taxation in the matter of income taxes and annexed Protocol.
Having regard to
and examined the twenty-nine Articles of that Convention and its annexed Protocol;
Having heard
the Committee on Foreign Affairs of the Spanish Courts, pursuant to article 14 of its Constitution,
I'm coming
approving and ratifying what is provided for, as I hereby approve and ratify it, promising to comply with it, to observe it and to ensure that it is implemented and observed in a timely manner in all its parts, for the purpose of its further validation and firmness,
I order
issue this instrument of ratification signed by Me, duly sealed and endorsed by the undersigned Minister for Foreign Affairs.
Given in Madrid on July 13th, one thousand nine hundred and seventy-four.
FRANCE FRANCE
The Minister for Foreign Affairs,
PEDRO CORTINA MAURI
AGREEMENT BETWEEN THE SPANISH STATE AND JAPAN TO AVOID DOUBLE IMPOSITION IN RENT TAXES
The Government of Spain and the Government of Japan,
Desiring to conclude a convention to prevent double taxation of income taxes,
Have agreed as follows:
Article 1
This Convention applies to persons who are residents of one or both Contracting States.
Article 2
1. The taxes to which this Convention applies are:
(a) Japan:
(i) Income tax;
(ii) corporation tax; and
(iii) local taxes on persons (hereinafter referred to as the 'Japanese tax').
(b) In Spain:
(i) the General Personal Income Tax;
(ii) the General Income Tax on Companies and Other Legal Entities, including the special levy of 4 per 100 established by article 104 of Law 41/1964 of 11 June;
(iii) 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 Capital Income Tax and the Tax on Commercial and Industrial Activities and Benefits;
(iv) in Sahara, income taxes (on labour and property returns) and on the profits of enterprises;
(v) the area fee, the Gross Product Tax and the Special Profit Tax, regulated by the Act of 26 December 1958 (applicable to undertakings engaged in the research and exploitation of hydrocarbons), and
(vi) local income taxes (hereinafter referred to as the Spanish tax).
2. This Convention shall also apply to taxes of an identical or substantially similar nature which are added to or replaced by those referred to in the preceding paragraph after the signing of this Convention. The competent authorities of the Contracting States shall communicate any amendments to their respective tax laws within a reasonable period of time after such amendments have taken place.
Article 3
1. This Convention, unless otherwise interpreted:
(a) the term 'Japan', when used geographically, means the whole territory in which Japanese tax laws apply;
(b) the term 'Spain', when used geographically, means the whole territory in which Spanish tax laws apply;
(c) the words ‘one Contracting State’ and ‘the other Contracting State’ mean Japan and Spain, as derived from the text;
(d) the term 'tax' means Japanese tax or Spanish tax, as derived from the text;
(e) the term ‘person’ includes Companies and any other grouping of persons;
(f) the term ‘Society’ means any legal person or entity that is considered a legal person for tax purposes;
(g) the words ‘Company of one Contracting State’ and ‘Company of the other Contracting State’ mean, respectively, an Enterprise operated by a resident of a Contracting State and an Enterprise operated by a resident of the other Contracting State;
(h) the term 'national' means all natural persons who possess the nationality of any of the Contracting States and all Societies and other associations (with or without legal personality) who receive their status as such by application of the laws of any of the Contracting States;
(i) ‘competent authority’ means: in the case of Japan, the Minister of Finance or his authorised representative, and in the case of Spain, the Minister of Finance, the Director-General of Taxes or any other authority to which the Minister delegates.
2. For the purposes of applying this Convention in 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
1. For the purposes of this Convention, ‘resident of a Contracting State’ means any person who, under the laws of that State, is subject to taxation in that State on the basis of his domicile, residence, head office, seat of address or any other criterion of a similar nature.
2. Where, under the provisions of paragraph 1, a natural person is resident in both Contracting States, the case shall be settled according to 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 he has a permanent dwelling at his disposal in both Contracting States, he shall be considered a resident of the Contracting State with which he has closer personal and economic relations (centre of vital interests);
(b) if the Contracting State in which that person has the centre of his vital interests cannot be determined, or if he does not have permanent housing at his disposal in any of the Contracting States, he shall be considered a resident of the Contracting State in which he normally lives;
(c) if he lives habitually 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 person, excluding natural persons, is resident in both Contracting States, the competent authorities shall decide by mutual agreement which Contracting State that person is considered resident in for the purposes of this Convention.
Article 5
1. For the purposes of this Agreement, the term ‘permanent establishment’ means a fixed place of business in which an Enterprise 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 Company;
(b) the maintenance of a warehouse of goods or goods belonging to the Company for the sole purpose of storing, displaying or delivering them;
(c) the maintenance of a deposit of goods or goods belonging to the Company for the sole purpose of their processing by another Company;
(d) the maintenance of a fixed place of business for the sole purpose of buying goods or goods or collecting information for the Company;
(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 to the Enterprise.
4. A person acting in a Contracting State on behalf of an Enterprise 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 first mentioned if he has and habitually exercises in that State powers to conclude contracts on behalf of the Enterprise, unless his activities are limited to the purchase of goods or goods for the Enterprise.
5. An Enterprise of one Contracting State is not considered to have a permanent establishment in the other Contracting State on the sole ground that 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 that it carries out activities in that other State (whether by permanent establishment or otherwise), does not in itself make any of these Societies permanent establishment of the other State.
Article 6
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 immovable property apply, the use of immovable property and the right to receive variable or fixed fees for the exploitation or concession of the exploitation of mineral deposits, sources or other land wealth. Ships, vessels and aircraft are not considered real 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 the Enterprises and from immovable property used for the exercise of professional services.
Article 7
1. The profits of an Enterprise of a Contracting State may only be taxed in that State unless the Enterprise carries out operations in the other State through a permanent establishment located in that State. In the latter case, the profits of the Enterprise may be taxed in the other State, but only to the extent that they can be attributed to the permanent establishment.
2. Where an Enterprise 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 and separate Enterprise carrying out the same or similar activities under the same or similar conditions and dealing entirely independently with the Enterprise from which it is a permanent establishment.
3. For the purpose of determining the benefit of the permanent establishment, the deduction of expenses incurred for the purposes of the permanent establishment, including management expenses and general administrative expenses incurred for the same purposes, shall be permitted, whether they are 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 profits attributable to permanent establishments on the basis of a distribution 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 Enterprise.
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 way.
7. Where the beneficiaries include separate income covered by other articles of this Convention, the provisions of those articles shall not be affected by those of this Article.
Article 8
1. Profits from operating ships or aircraft in international traffic by an Enterprise of a Contracting State may only be taxed in that Contracting State.
2. The provisions of paragraph 1 also apply to profits arising from participation in a pool, in a joint holding or in an international exploitation body.
Article 9
When
(a) an Enterprise of one Contracting State participates directly or indirectly in the direction, control or capital of an Enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the direction, control or capital of an Enterprise of one Contracting State and an Enterprise of the other Contracting State,
and in either case the two Companies are, in their commercial or financial relations, bound by terms, accepted or imposed, which differ from those agreed by independent Companies, the profits that one of the Companies 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 this Company and subject to taxation accordingly.
Article 10
1. Dividends paid by a Company resident of a Contracting State to a resident of the other Contracting State may be taxed in the latter State.
2. However, such dividends may be taxed in the Contracting State in which the company that pays the dividends resides, and in accordance with the laws of that State, but the tax, thus required, may not exceed:
(a) Ten per 100 of the gross amount of dividends, if the beneficiary is a company holding directly at least 25 per 100 of the voting capital of the paying company, provided that that capital has been held for the period of six months immediately preceding the end of the financial year from which the distribution of profits takes place;
(b) Fifteen 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 against which dividends are paid.
3. The term ‘dividends’, used in this Article, means the returns on shares, shares or enjoyment bonds, shares of founders or other rights, except credit rights, which allow participation in the profits, as well as the income from other shareholdings assimilated to the income of the shares, lays down fiscal legislation of the State in which the distribution company resides.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficiary of the dividends, 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 resident in 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
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 gross amount of interest. The competent authorities of the Contracting States shall, by mutual agreement, determine how this limit is to be applied.
3. The term ‘interest’, used in this article, means the income from the Public Debt, from bonds or obligations with or without mortgage guarantee and entitled or not to participate in profits and from credits of any kind, as well as from 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.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficiary of the interest, resident of one Contracting State, has in the other Contracting State, from which the interest derives, a permanent establishment with which the claim generating the interest is effectively linked. In this case, the provisions of article 7 apply.
5. Interest is considered to come from a Contracting State where the debtor is the Contracting State itself, one of its local Entities or a resident thereof. However, where the debtor of interest, whether or not 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, the interest shall be deemed to have come from the Contracting State where the permanent establishment is located.
6. 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
1. Fees from one Contracting State paid 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 10 per cent 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, means quantities of any kind paid for the use or granting of copyright on literary, artistic or scientific works, including cinematographic films, patents, trademarks or trade marks, designs, plans, formulas or secret procedures, or for the use or 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 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 when the debtor is the State itself, one of its local entities or a resident thereof. However, where the debtor of the royalties, whether or not he is a 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 royalties paid, taking into account the use, right or information 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
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 resulting from the disposal of any other property, other than immovable property, forming part of the assets of a permanent establishment held by an Enterprise of one Contracting State in the other Contracting State or of other property, which are not immovable property, and which belong to a fixed basis 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 entire Enterprise) or from the fixed base, may be subject to taxation in that other State. However, the profits obtained by a resident, a Contracting State from the alienation of ships, vessels or aircraft operated in international traffic and any property other than immovable property affecting the operation of such vessels, vessels or aircraft may only be subject to taxation in that Contracting State.
3. Profits obtained by a resident of a Contracting State from the disposal of any property other than those referred to in paragraphs 1 and 2 may only be taxed in that Contracting State.
Article 14
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 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, independent scientific, literary, artistic, educational or teaching activities, as well as independent activities of Physicians, Lawyers, Engineers, Architects, Dentistry and Accountants.
Article 15
1. Without prejudice to the provisions of Articles 16, 18, 19 and 20, salaries, wages and other 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 one hundred and eighty-three days during the calendar year concerned;
(b) remuneration is paid for or on behalf of a person who is not a resident of the other State; and
(e) Remuneration is not borne by a permanent establishment or a fixed basis which the person for whom the work is carried out has in the other State.
3. Notwithstanding the preceding provisions of this Article, remunerations earned by employment on board a ship or aircraft operated in international traffic by an Enterprise of a Contracting State may be subject to taxation in that Contracting State.
Article 16
Remunerations obtained by a resident of a Contracting State as a member of a Board of Directors of a Company resident of the other Contracting State may be subject to taxation in that other State.
Article 17
1. Notwithstanding the provisions of Articles 14 and 15, income earned by performing professionals, such as theatre, film, radio or television artists, and musicians, as well as sportsmen, for their personal activities in this regard, may be subject to taxation in the Contracting State in which they operate.
2. By way of derogation from this Convention, where the services of a performing or sports professional, referred to in paragraph 1, are provided in a Contracting State by an Enterprise of the other Contracting State, the income derived from the provision of such services by such an Enterprise may be taxed in the first said Contracting State, if the performing professional or the sportsman acting directly or indirectly controls such Enterprise.
Article 18
Without prejudice to the provisions of article 19, paragraph 1, pensions and other similar remuneration paid, in consideration of previous employment, to a resident of a Contracting State, may only be taxed in that State.
Article 19
1. Remunerations, including pensions, paid directly or from the funds to which a Contracting State or one of its local entities has contributed to a natural person, by virtue of services provided to that State or those Entities, in the exercise of public functions, may only be subject to taxation in this Contracting State. However, such remuneration may be taxed in the other Contracting State only if the person receiving it is a national of that other Contracting State.
2. The provisions of Articles 15, 16, 17 and 18 apply to remunerations and pensions paid in the name of services rendered in connection with the pursuit of commercial or industrial activity for profit by one of the Contracting States or one of its Local Entities.
3. The provisions of this Article shall apply notwithstanding Article 1.
Article 20
A Professor or Professor who temporarily visits a Contracting State for a period not exceeding two years, for the purpose of teaching or conducting scientific research at a University, College, School or other educational establishment, and who is, or was, immediately prior to such a visit resident of the other Contracting State, may only be subject to taxation in that Contracting State for the remuneration he receives for such teaching or research activities.
Article 21
The amounts that a student or a traineeship who is in a Contracting State for the sole purpose of continuing his studies or completing his training, receives to cover his costs of maintenance, studies or training, and who was immediately resident of the other Contracting State, shall not be subject to taxation in the Contracting State referred to above, provided that such amounts come from sources outside that State.
Article 22
The income of a resident of a Contracting State not expressly mentioned in the preceding articles may be taxed only in that Contracting State.
Article 23
1. According to the provisions of the Japanese Laws concerning the charging in Japan of taxes paid in a country other than Japan, the Spanish tax due on the basis of income obtained in Spain will be deducted from the Japanese tax corresponding to such income. Where such income is dividends paid by a Spanish resident company to a Japanese resident company holding at least 25 per cent of the eligible shares or of the total shares issued by the company that pays the dividends, the Spanish tax due on the income of the company first mentioned shall be taken into account in making the charge.
2. Where a resident of Spain obtains income which, in accordance with the provisions of this Convention, may be taxed in Japan, Spain, except as provided in paragraph 3, shall exempt such income, but in order to calculate the tax corresponding to the remaining income of this person may apply the tax rate which would correspond to it without this exemption.
3. Where a resident of Spain obtains income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Japan and is not exempt from the Spanish tax, Spain shall deduct from the person's income tax an amount equal to the tax paid in Japan. However, this deduction may not exceed the part of the tax on income earned in Japan, calculated before the deduction. In these cases, the tax paid in Japan will also be deductible from the corresponding Spanish account taxes, in accordance with the provisions of this paragraph.
4. For the purposes of paragraph 1, the term ‘due Spanish tax’ refers, in the case of dividends, interest or royalties, to the amount of the Spanish tax which would have been paid if it had not been reduced or exempted by special measures, aimed at promoting the economic development of Spain and which are in force at the date of signature of this Convention or which may be introduced in the future in Spanish tax laws, as an amendment or addition to the current measures, provided that the Governments of both Contracting States agree on the extent of the benefits granted to the taxpayer by such measures.
For the purposes of determining the amount of Spanish tax that would have been paid as referred to in this paragraph, the provisions of article 10, paragraph 2, article 11, paragraph 2, and article 12, paragraph 2, shall not apply.
Article 24
1. Nationals of a Contracting State, whether or not they are residents of one of the Contracting States, 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 the latter State are or may be subject under the same conditions.
2. A permanent establishment held by an Enterprise of one Contracting State in the other Contracting State shall not be subject to taxation in that other Contracting State in a less favourable manner than the Companies of that other Contracting 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.
3. 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 Enterprises of the first Contracting State are or may be subject.
4. In this Article the term ‘tax’ or ‘tax’ means all taxes irrespective of their nature and designation.
Article 25
1. Where a resident of a Contracting State considers that the measures taken by one or both Contracting States imply or may entail for him a charge that is not in conformity with this Convention, irrespective of the remedies provided for by the 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 through an amicable agreement with the competent authority of the other Contracting State, in order to avoid the imposition not in conformity with this Convention.
3. The competent authorities of the Contracting States shall endeavour to resolve, by amicable agreement, any difficulties or to dispel any 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.
Article 26
1. The competent authorities of the Contracting States shall exchange the information necessary for the application of this Convention and of the domestic laws of the Contracting States relating to taxes covered by this Convention which are required in accordance with it. The information thus exchanged shall be kept secret and shall not be disclosed to any person or authority which is not responsible for the settlement or collection of the taxes covered by this Agreement.
2. Under no circumstances do the provisions of paragraph 1 require 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 normal administrative practice or that of the other Contracting State;
(c) to transmit information revealing a commercial, industrial, business or professional secret or a commercial procedure, or information whose communication is contrary to public policy.
Article 27
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.
Article 28
1. This Convention shall be ratified and the instruments of ratification shall be exchanged in Tokyo as soon as possible.
2. This Convention shall enter into force thirty days after the date of the exchange of instruments of ratification and its provisions shall apply in both Contracting States to income earned in tax years beginning on or after 1 January of the calendar year following the entry into force of the Convention.
Article 29
This Convention shall remain in force indefinitely, but any Contracting State may denounce the Convention by diplomatic means, by giving it in writing on or before 30 June of the calendar year beginning after the expiration of a period of five years from the date of its entry into force, and, in that case, this Convention shall cease to apply in both Contracting States to income obtained in the fiscal year beginning on or after 1 January of the calendar year following that in which the denunciation is communicated.
In faith of which,
the undersigned, duly authorized by their respective Governments, have signed this Convention.
Done
in Madrid on 13 February 1974, in six originals, two in each of the Spanish, Japanese and English languages, all of which have faith equally, except in the case of differences of interpretation between the Spanish and Japanese texts, in which case the English text will prevail.
For the Government of the Spanish State,
For the Government of Japan,
Pedro Cortina Mauri
Shoji Sato
PROTOCOL
At the time of signature of the Agreement between the Spanish State and Japan to Prevent Double Taxation of Income, the undersigned have agreed on the following provisions which form part of the said Convention:
1. It is understood that income obtained by a resident of a Contracting State from activities related to the exploration or exploitation of mineral resources of the continental shelf of the other Contracting State, carried out in accordance with international law, may be subject to taxation in that other Contracting State in accordance with the provisions of this Convention.
2. With regard to Article 2 of this Convention, it is understood that the Spanish ‘arbitrium of residence’ is covered by local income taxes.
3. With regard to Article 8 of this Convention, it is understood that Spanish companies engaged in the operation of ships or aircraft in international traffic shall be exempt, in relation to such activities, from corporate tax in Japan.
4. With regard to Articles 12 and 13 of this Convention, it has been agreed that the term “royalties” includes an amount received by reason of the use or right of use of the rights or property referred to in paragraph 3 of Article 12, but that the benefits derived from a genuine alienation of such rights or property shall be governed by the provisions of Article 13.
5. By way of derogation from article 28, paragraph 2, of this Convention, the provisions of article 8 of the Convention shall apply to income earned during fiscal years beginning on or after 1 January 1968. The provisions of this paragraph do not oblige Contracting States to pay back taxes already satisfied.
Done
in Madrid on 13 February 1974, in six originals, two in each of the Spanish, Japanese and English languages, all of which are equally true, except in the case of differences of interpretation between the Spanish and Japanese texts, in which case the English text shall prevail:
For the Government of the Spanish State,
For the Government of Japan,
Pedro Cortina Mauri
Shoji Sato
The instruments of ratification were exchanged in Tokyo on 21 October 1974.
The Convention entered into force on 20 November 1974.
What is made public for general knowledge.
Madrid, November 20, 1974. –The Technical Secretary General of the Ministry of Foreign Affairs, Enrique Thomas de Carranza.