JUAN CARLOS I
KING OF SPAIN
For what?
On 20 May 1991, the Plenipotentiary of Spain signed in Quito, together with the Plenipotentiary of Ecuador, the Agreement between the Kingdom of Spain and the Republic of Ecuador to Prevent Double Taxation and Tax Evasion in Tax Materials on Income and Heritage.
Viewed and examined
the thirty articles of the Convention,
Granted
by the Cortes Generale la
authorisation
as provided for in article 94.1 of the Constitution,
I come to approve and ratify
what it provides for, as I hereby approve and ratify it, promising to comply with it, observe it and ensure that it is fulfilled and observed in a timely manner in all its parts, to the end of which, for 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, 16 April, one thousand nine hundred and ninety-three.
JUAN CARLOS R.
The Foreign Minister.
JAVIER SOLANA MADARIAGA
AGREEMENT FOR AVOIDING DOUBLE IMPOSITION AND PREVENTING TAX EVASION ON RENT AND PATRIMONY TAX
The Government of the Kingdom of Spain, represented by its Minister for Foreign Affairs, Francisco Fernández Ordonez and the Government of the Republic of Ecuador, represented by its Minister for Foreign Affairs, Diego Cordóvez, agree to conclude the following Agreement to Prevent Double Taxation and Tax Evasion on Income and Heritage, in accordance with the following clauses:
Article 1
This Convention applies to persons resident in one or both Contracting States.
Article 2. Taxes covered.
1. This Convention shall apply to income and property taxes, which are payable by each Contracting State, irrespective of the system of its determination.
2. The current taxes to which this Convention will specifically apply are in particular:
(a) In Spain:
I. Personal income tax;
II. Corporate tax;
III. The property tax;
Hereinafter referred to as ‘Spanish tax’.
(b) In Ecuador:
I. Income tax on natural persons;
II. Income tax, corporate tax.
Hereinafter referred to as ‘Ecuadorian tax’.
3. This Convention shall also apply to taxes of an identical or similar nature which are established after the date of signature of the Convention and which are added or replaced to current taxes. The competent authorities of the Contracting States shall notify each other of any relevant amendments to their respective tax laws.
Article 3. General definitions.
1. For the purposes of the application of this Convention, unless different interpretations are given in its context:
(a) The term 'Spain' means the Spanish State and, geographically speaking, the territory of the Spanish State, including any area outside its territorial sea in which, in accordance with international law and under its domestic law, the Spanish State exercises or may exercise in the future jurisdiction or rights of sovereignty over the marine soil and subsoil and superjacent waters and their natural resources.
(b) The term “Ecuador” means the Republic of Ecuador in the form and with the territorial elements specified in its Constitution and Laws.
(c) The terms ‘one Contracting State’ and ‘the other Contracting State’ mean Spain and Ecuador, depending on the context.
(d) The terms ‘residency’ and ‘resident’ used in this Convention, as far as Ecuador is concerned, mean ‘domicile’ and ‘domiciliated’ respectively.
(e) The term ‘person’ includes natural persons, companies and any other grouping of persons.
(f) The term ‘natural person’ used in this Convention, as far as Ecuador is concerned, means ‘natural person’.
(g) the term 'company' means any legal person or any entity that is considered a legal person for tax purposes.
(h) The terms ‘undertaking of one Contracting State’ and ‘undertaking of the other Contracting State’ mean, respectively, an undertaking operated by a resident of one Contracting State and an undertaking operated by a resident of the other Contracting State.
(i) The term 'national' means:
I. Any natural person possessing the nationality of a Contracting State.
II. Any legal person, association of persons and association constituted in accordance with the law in force of a Contracting State.
(j) “International traffic” means any carriage by a ship or aircraft operated by an undertaking of a Contracting State in which the seat of management or effective administration of the undertaking is situated, except where the ship or aircraft operates exclusively between points located in the other Contracting State.
(k) ‘competent authority’ means:
I. In Spain, the Minister of Economy and Finance or his authorized representative.
II. In Ecuador, the Minister of Finance and Public Credit, the Director General of Revenues, or any other delegated authority.
2. For the purposes of the application of this Convention by a Contracting State, any expression not otherwise defined shall have, unless its context indicates a different interpretation, the meaning attributed to it by the law of that Contracting State with regard to the taxes which are the subject of this Convention.
Article 4. Residence or domicile.
1. For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the law of that State, is subject to taxation in that State by reason of his domicile, residence, place of address or effective administration or any other criterion of a similar nature.
2. Where a natural person is resident of both Contracting States under the provisions of paragraph 1 of this article, the case shall be settled according to the following rules:
(a) This person shall be considered a resident of the Contracting State in which he has permanent housing. If you have permanent housing in both Contracting States, you will be considered a resident of the Contracting State with which you have closer personal and economic relations (centre of vital interests).
(b) If it is not possible to determine the Contracting State in which that person has the centre of his or her vital interests or if he or she does not have permanent housing in any of the Contracting States, he or she shall be considered a resident of the Contracting State where he or she habitually lives.
(c) If he habitually lives 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 the residence cannot be determined by any of the above criteria, the competent authorities of the Contracting States shall decide the case by mutual agreement.
3. Where, under the provisions of paragraph 1 of this article, a corporation is resident of both Contracting States, it shall be considered a resident of the Contracting State in which its seat of address or effective administration is located.
Article 5. Permanent establishment.
1. For the purposes of this Agreement, the term ‘permanent establishment’ means a place of business in which an undertaking carries out all or part of its activity.
2. The term ‘permanent establishment’ includes in particular:
(a) A place of business management.
(b) A branch, agency or office.
(c) An industrial or assembly factory, plant or workshop.
(d) A mine, quarry or any other place of extraction or exploitation of natural resources.
3. Construction works or installation projects constitute a permanent establishment only if their duration exceeds twelve months.
4. The expression ‘permanent establishment’ shall be deemed not to include:
(a) The use of facilities for the sole purpose of storing, displaying or delivering goods or goods belonging to the enterprise.
(b) The maintenance of stocks of goods or goods belonging to the enterprise for the sole purpose of storing, displaying or delivering them.
(c) The maintenance of stocks 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 enterprise.
(e) The maintenance of a fixed place of business for the sole purpose of advertising, providing information, conducting scientific research or carrying out other similar activities that are preparatory or auxiliary to the enterprise.
5. 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, included in paragraph 6 of this article, shall be deemed to constitute a permanent establishment in the State first mentioned if he or she habitually has and exercises in that State powers to conclude contracts on behalf of the undertaking, unless his or her activities are limited to those referred to in paragraph 4 of this article.
6. An enterprise of one Contracting State shall not be considered as having 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 intermediary enjoying an independent status, provided that such persons act within the ordinary framework of their activity, without prejudice to the tax obligations of that broker, general commissioner or intermediary.
7. The fact that a company resident of a Contracting State controls or is controlled by a company resident of the other Contracting State or that carries out activities in that other State (either through a permanent establishment or otherwise) does not by itself render any such company permanent establishment of the other State.
Article 6. Income from immovable property.
1. Income of any kind from immovable property may be taxed in the Contracting State in which such property is situated, in accordance with the law of that Contracting State.
2. The term ‘real property’ shall be defined in accordance with the law of the Contracting State in which the property is situated. Ships, vessels and aircraft are not considered real property.
Article 7. Business profits.
1. The profits of an enterprise of one Contracting State may be taxed only in that State unless the enterprise engages in activities in the other Contracting State through a permanent establishment situated therein. If the company carries out its business in such a way, the profits of the company may be taxed in the other State but only to the extent that they are attributable to this permanent establishment.
2. Where an enterprise of one Contracting State carries out activities in the other Contracting State through a permanent establishment situated therein, in each Contracting State, the permanent establishment shall be charged with the benefits it would have obtained from being a separate and separate undertaking 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. The determination of the benefits of the permanent establishment shall allow the deduction of expenses incurred for the purpose of the permanent establishment, including management costs and general administration costs for those purposes, whether incurred in the State in which the permanent establishment is located or elsewhere. Such expenses must be justified in accordance with the law of the Contracting State in which the permanent establishment is situated.
4. No benefit shall be attributed to a permanent establishment on the sole ground that it buys goods or goods for the undertaking.
5. 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 in international traffic may be taxed only in the Contracting State in which the head office or effective management of the company is located.
2. If the seat of effective direction or administration of a shipping undertaking is on board a ship, it shall be deemed to be situated in the Contracting State where the base port of that ship is located or, if there is no such base port, in the Contracting State where the person operating the ship is resident.
3. The provisions of paragraph 1 of this Article shall also apply to profits arising from participation in a pool, on a joint holding or in an international holding group.
4. The provisions of paragraphs 1 and 3 of this article shall apply mutatis mutandis to the profits that an Enterprise of a Contracting State obtains from the operation of aircraft in international traffic, provided that there is international reciprocity. It is understood that if Ecuador accepts as a result of a Convention with a third country, after the date of entry into force of this Instrument, a provision concerning the taxation of profits from the operation of aircraft in international traffic that does not contain an international reciprocity clause, the phrase “provided that there is international reciprocity” shall automatically be deleted.
Article 9. Associated enterprises.
When:
(a) An undertaking of a 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 undertaking of a Contracting State and of an undertaking of the other Contracting State.
And, in either case, the two companies are, in their commercial or financial relations, bound by accepted or imposed conditions that differ from those that would be agreed by independent companies, the profits that would have been obtained by one of the companies in the absence of these conditions, and which in fact did not occur because of them, will be included in the profits of this company and, consequently, will be subject to taxation, in accordance with the legislation of the relevant Contracting State.
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 that other State.
2. However, such dividends may also be taxed in the other 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 15 per cent of the gross amount of the dividends, provided that the recipient is the actual beneficiary of the dividends.
3. The competent authorities of the Contracting States shall decide, by mutual agreement, on the modalities for the application of the preceding paragraph.
4. The provisions of paragraph 2 of this article shall not affect the corporation's taxation of profits from which dividends are paid.
5. The term ‘dividends’ used in this Article includes the profits of shares or contributions or other rights, except credit rights, which allow participation in profits, as well as the income of other shareholdings which are subject to the same tax regime as income derived from shares under the tax law of the State in which the distribution company resides.
6. The provisions of paragraph 2 of this article shall not apply where the beneficial owner of the dividends, resident in one Contracting State, exercises in the other Contracting State, of which the corporation paying the dividends is resident, an industrial or commercial activity through a permanent establishment located in that other State, provided that the share generated by the dividends is effectively linked to that permanent establishment. In this case the provisions of Article 7 shall apply.
7. Where a company resident of one Contracting State obtains profits or income from the other Contracting State, that other State may not require any tax on dividends paid by the company, except to the extent that these dividends are paid to a resident of that other State or the share generated by the dividends is effectively linked to a permanent establishment situated therein, 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.
8. In the case of Ecuador, the limit set in paragraph 2 of this article applies to the global tax that affects profits or dividends referred to in article 39 of Law No. 56 of the Internal Tax Regime. The tax credit referred to in article 38 of the same legal text shall apply only up to the amount of the tax established by paragraph 2 of this article.
9. Paragraph 2 of this article does not apply, in the case of Spain, to income, whether distributed or not, attributed to shareholders of the companies and entities referred to in article 12.2 of Law 44/1978 of 8 September, and article 19 of Law 61/1978 of 27 December, as long as these income is not subject to the Spanish Company Tax. Such income is taxed in Spain in accordance with the provisions of its domestic legislation.
Article 11. Interest.
1. Interest from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State and under the law of that State.
2. These interests may also 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 may not exceed 10 per cent of the gross amount of interest.
3. However, the tax required in accordance with the preceding paragraph may not exceed 5 per 100, where such interest is paid under the credit arising from:
a.1. The sale of industrial, commercial or scientific equipment; or
a.2. The sale of goods delivered by one Company to another Company, or
a.3. The financing of construction, installation or assembly works.
4. Interest paid to a resident of one Contracting State on loans granted for a period of at least five years from the other Contracting State shall not be subject to taxation in that other Contracting State.
5. Interest from one Contracting State and paid to the other Contracting State, or to one of its political subdivisions, or to any financial institution wholly owned by that State or one of its political subdivisions, may be taxed only in the latter State.
6. The provisions of paragraphs 2, 3 and 4 of this article shall apply only if the recipient of the interest is the beneficial owner of the interest.
7. The competent authorities of the Contracting States shall decide by mutual agreement on the modalities of implementation of the preceding paragraphs.
8. The term ‘interest’ used in this Article includes income from claims of any kind, with or without a mortgage guarantee or a benefit-sharing clause of the debtor, and in particular income from public funds or bonds or bonds, including premiums and lots attached to such securities.
9. The provisions of paragraphs 2, 3 and 4 do not apply if the beneficiary of the interest, resident of one Contracting State, exercises in the other Contracting State from which the interest originates, a commercial or industrial activity through a permanent establishment there, with which the credit generated by the interest is effectively linked. In such cases the provisions of Article 7 shall apply.
10. Interests are considered to come from a Contracting State when the debtor is the State itself, a political subdivision, a territorial administrative subdivision, a local community or a resident of that State. However, where the debtor of interest is resident in a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which the debt giving rise to the payment of the interest and bearing the burden of the interest has been incurred, it shall be considered as originating in the Contracting State where the permanent establishment or fixed base is located.
11. Where due to special relations between the debtor and the creditor or between them and third parties, the amount of interest paid, taking into account the claim for which it is paid, exceeds that agreed upon by the debtor and the creditor, in the absence of such relations, the provisions of this article shall apply only to the latter amount. In this case, the excess may be imposed in accordance with the laws of each Contracting State and taking into account the other provisions of this Convention.
Article 12. Royalties.
1. Royalties or royalties from one Contracting State and paid to a resident of the other Contracting State may be subject to taxation in the latter State and under the law of the latter State.
2. However, these fees may also be taxed in the Contracting State from which they come and in accordance with the law of that State; but, in this case, the tax thus established may not exceed 10 per cent of the gross amount of such fees.
3. However, the provisions of paragraph 2 of this article, in the case of royalties paid under copyright and other similar remuneration for the production or reproduction of a literary, dramatic, musical or artistic work (excluding royalties relating to cinematographic films and works recorded in films or tapes intended for television purposes), the tax required in the Contracting State from which they originate may not exceed 5 per cent of the gross amount of such royalties.
4. The provisions of paragraphs 2 and 3 of this article shall apply only if the recipient of the fees is the beneficial owner of the fees.
5. The term ‘royalties’ used in this article includes remuneration of any kind paid for the use or grant of copyright, patents, trademarks, designs, drawings, formulas or secret procedures, as well as for the use or granting of use of industrial, commercial or scientific equipment and amounts paid for information relating to industrial, commercial or scientific experience; this term also includes quantities of any kind relating to cinematographic films and works recorded in films and tapes intended for television.
6. The competent authorities of the Contracting States shall decide by mutual agreement on the modalities for the application of paragraphs 2 and 3 of this Article.
7. The provisions of paragraphs 2 and 3 of this article shall not apply if the beneficiary of the royalties, resident of one Contracting State, exercises in the other Contracting State from which the royalties come a commercial or industrial activity through a permanent establishment there, with which the right or property for which the royalties are paid is effectively linked. In such cases the provisions of Article 7 shall apply.
8. The fees shall be deemed to come from a Contracting State where the debtor is the State itself, a political subdivision, a territorial administrative subdivision, a local community or a resident of that State. However, where the debtor of the royalties, whether resident or not of a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which the contract giving rise to the payment of the royalties and bearing the burden thereof has been concluded, they shall be considered as originating in the Contracting State where the permanent establishment or fixed base is situated.
9. Where due to special relationships between the debtor and the creditor or between them and third parties, the amount of royalties paid, taking into account the benefit for which they are paid, exceeds the amount that would have been 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 this case, the excess may be subject to taxation, in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.
Article 13. Capital gains.
1. Profits that a resident of a Contracting State obtains from the disposal of immovable property, as defined in article 6, may be taxed in the Contracting State in which such property is located.
2. Gains from the disposal of movable property forming part of the assets of a permanent establishment held by an Enterprise of one Contracting State in the other Contracting State, including gains from the disposal of that permanent establishment (only or with the enterprise as a whole) may be taxed on this other list.
3. Profits arising from the alienation of ships operated in international traffic or from movable property affected by the operation of such vessels may be taxed only in the Contracting State where the seat of management or effective management of the enterprise is located.
4. Profits arising from the disposal of any property other than those referred to in paragraphs 1, 2 and 3 of this article may be subject to taxation only in the Contracting State in which the transferor resides.
Article 14. Independent jobs.
1. Income obtained by a natural person resident of a Contracting State for the provision of professional services and other independent activities of a similar nature may be taxed in that State only, unless that person for the purpose of carrying out such activity has remained one hundred and eighty-three days or more, during the relevant calendar year, in the other Contracting State. In this case, the income obtained may be taxed in the other Contracting State, but only to the extent that it is attributable to the activity carried out there.
2. The term ‘professional services’ includes, in particular, independent scientific, literary, artistic, educational or training activities, as well as independent activities of Physicians, Lawyers, Engineers, Architects, Dentists and Auditors.
Article 15. Dependent jobs.
1. Without prejudice to articles 16, 18 and 19 of this Convention, the salaries, salaries and other similar remuneration received by a resident of a Contracting State on account of employment may be subject to taxation in that State only, unless the employment is exercised in the other Contracting State, in which case the remuneration derived therefrom may be subject to taxation in that other State.
2. Notwithstanding the provisions of paragraph 1 of this article, remuneration received by a resident of a Contracting State on account of employment in the other Contracting State may be subject to taxation in the first State only if:
(a) The beneficiary remains in the other State for one or more periods not exceeding a total of one hundred and eighty-three days in the course of the calendar year concerned;
(b) Remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) Remuneration is not borne by a permanent establishment held by the employer in the other State.
3. Notwithstanding the preceding provisions of this article, remunerations obtained on account of employment on board a ship operated in international traffic may be taxed in the Contracting State where the place of management or effective administration of the undertaking is located.
Article 16. Members of Councils or Boards.
Similar participations and remunerations received by a resident of a Contracting State as a member of a Board of Directors, Board of Directors or of another similar body of a company resident of the other Contracting State may be taxed in that other State.
Article 17. Entertainers and sportspersons.
1. However, the provisions of Articles 14 and 15 of this Convention, the rents obtained by the professionals of the spectacle, such as theatre, cinema, radio or television artists, musicians and sportsmen, for their personal activities in that capacity, may be subject to taxation in the Contracting State where they engage in such activity.
2. Where the income derived from personal activities carried out by a professional of the spectacle or by an athlete personally and as such receives it, not from the professional of the spectacle or sportsman himself but from another person, such income may, however, be subject to taxation as provided for in Articles 7, 14 and 15 of this Convention, in the Contracting State in which the professional of the spectacle or sportsman acts.
Article 18. Pensions.
Pensions and other similar remuneration paid to a resident of a Contracting State for the performance of an earlier job may only be taxed in that State.
Article 19. Government service.
1. (a) Remuneration paid by a Contracting State or one of its political subdivisions or local entities to a natural person for services rendered to that State, political subdivision or local entity may only be subject to taxation in that State.
(b) However, such remuneration may only be taxed in the other Contracting State if the services are provided in that State and if the beneficiary of the remuneration is a resident of that State who:
(I) Possession of the nationality of that State; or
(II) It has not acquired the status of resident of that State for the sole purpose of providing such services.
2. (a) Without prejudice to article 18, pensions paid by a Contracting State or one of its political subdivisions or local entities to a natural person for services rendered to that State, political subdivision or local entity may only be subject to taxation in that State.
(b) However, such pensions may be subject to taxation only in the other Contracting State if the natural person is a resident and a national of that State.
3. The provisions of articles 15, 16 and 18 shall apply to remuneration and pensions for services rendered within the framework of an industrial or commercial activity carried out by a Contracting State or one of its political subdivisions or local entities.
Article 20. Students.
Amounts for the maintenance of studies or training, a student or a traineeship person, who are temporarily in a Contracting State for the sole purpose of continuing their studies or training and who are or were immediately prior to that visit resident of the other Contracting State, may not be subject to taxation in the Contracting State referred to first, provided that such amounts paid come from sources outside that State.
Article 21. Teachers.
1. Any remuneration other than that covered by article 14, paragraph 2, which is received by teachers and other members of teaching staff resident in a Contracting State, at the beginning of their stay in the other Contracting State, and which remain temporarily in the latter State for the purpose of teaching or engaging in scientific research at an officially recognized university or other educational institution, for a period not exceeding two years, may be subject to taxation only in the first Contracting State.
2. The provision of paragraph 1 of this article does not apply to remuneration received for the conduct of investigative work, if such work is carried out primarily in the particular interest of one or more persons.
Article 22. Other income.
1. The income of a resident of a Contracting State whatever the source of the income, not mentioned in the preceding articles of the Convention, may be taxed only in that State.
2. The provisions of paragraph 1 of this article shall not apply to income other than that derived from immovable property as defined in article 6, paragraph 2, where the beneficiary of such income, resident of a Contracting State, engages in industrial or commercial activity in the other Contracting State through a permanent establishment located in that other State, with which the right or property for which the income is paid is effectively linked. In this case, the provisions of Article 7 shall apply.
Article 23. Capital.
1. Property consisting of immovable property covered by article 6 owned by a resident of one Contracting State and situated in the other Contracting State may be subject to taxation in that other State.
2. Property consisting of movable property forming part of the assets of a permanent establishment held by an enterprise of one Contracting State in the other Contracting State may be taxed in that other State.
3. Assets made up of ships operated in international traffic, as well as movable property affected by the operation of such vessels, may be taxed only in the Contracting State in which the seat of management or effective administration 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.
Article 24. Method to avoid double taxation.
1. Where a resident of Spain obtains income or possesses assets which, in accordance with the provisions of this Agreement, may be taxed in Ecuador, Spain shall deduct:
(a) The income tax received by this resident is equal to the income tax paid in Ecuador; and
(b) Tax on the property of this resident shall be equal to the property tax paid in Ecuador.
2. Where the resident of Ecuador obtains income or possesses assets that, in accordance with the provisions of this Agreement, may be taxed in Spain, Ecuador shall deduct:
(a) the amount of income tax paid to the resident in Spain; and
(b) The tax on the assets of this resident shall be equal to the tax on the assets paid in Spain.
3. However, in either case, this deduction may not exceed the part of the income or property tax, calculated before the deduction, corresponding, as the case may be, to the income or assets that may be taxed in the other State.
4. Where, in accordance with any provision of the Convention, the income received by a resident of a Contracting State or the property held by him is exempt from tax in that State, the latter may, however, take into account the exempt income or wealth for the purpose of calculating the amount of tax on the rest of the income or property of that resident.
Article 25. Non-discrimination.
1. Nationals of one Contracting State shall not be subject in the other Contracting State to any tax or obligation relating thereto which is different or more burdensome than those to which the nationals of the latter State are or may be subject in the same circumstances.
2. A permanent establishment held by an undertaking of one Contracting State in the other Contracting State shall not be subject to taxation in that Contracting State in a less favourable manner than undertakings of the latter 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 applies to its own residents on account of their marital status or family burdens.
3. Enterprises of one Contracting State, whose assets, in whole or in part, are 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 other than or more burdensome than those to which similar undertakings of the State referred to in the first instance are or may be subject.
4. Except where the provisions of articles 9, 11, 11 and 12, paragraph 9, apply, interest, royalties or other payments paid by an enterprise of one Contracting State to a resident of the other Contracting State shall be deductible, for the purpose of determining the taxable profits of that enterprise, on the same terms as if they had been paid to a resident of the State referred to first. Similarly, the debts of an enterprise of one Contracting State, contracted with a resident of the other Contracting State, shall be deductible for the purpose of determining the taxable assets of that enterprise under the same conditions as if they had been contracted with a resident of the State referred to in the first instance.
5. However, the provisions of Article 2 shall apply to all taxes irrespective of their nature or name.
Article 26. Mutual agreement procedure.
1. Where a resident of a Contracting State considers that the measures taken by one or both Contracting States involve or may entail for him a charge that does not comply with 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 a resident, or in the case of the case referred to in article 25, paragraph 1, to the competent authority of the Contracting State of which he is a national. The request must be made within the period of three years following the first notification of the measure involving a charge not in accordance with the Convention.
2. This competent authority, if it finds the complaint well founded but is not in a position to adopt a satisfactory solution, shall make every effort to resolve the matter through an amicable agreement with the competent authority of the other State in order to avoid an imposition not in conformity with this Convention.
3. The competent authorities of the Contracting States shall endeavour to resolve, by amicable agreements, difficulties or to dispel doubts arising from the interpretation or application of this Convention. Where both competent authorities consider it appropriate to facilitate the application of the Convention, they may meet within a Commission formed for that purpose by those authorities or their authorised representatives.
Article 27. Exchange of information.
1. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention and of the domestic law of the Contracting States relating to taxes covered by the Convention, to the extent that the taxation required by domestic law is not contrary to the Convention. The exchange of information shall not be limited by Article 1. Information received by a Contracting State shall be kept secret in the same way as information obtained under the domestic law of that State, and shall be communicated only to persons or authorities (including courts and administrative bodies) responsible for the management or collection of taxes covered by the Convention, to declaratory or executive procedures relating to such taxes or to the resolution of appeals relating to such taxes. These persons or authorities will only use these reports for these purposes. They may disclose such information in public hearings of the courts or in court judgements.
2. In no case can the provisions of paragraph 1 of this article be interpreted as obliging a Contracting State to:
(a) Take administrative measures contrary to its legislation or administrative practice or those of the other Contracting State.
(b) Provide information that cannot be obtained on the basis of its own legislation or in the exercise of its normal administrative practice or that of the other Contracting State; and
(c) Provide information revealing a commercial, industrial or professional secret or a commercial procedure, or information whose communication is contrary to public policy.
Article 28. Diplomatic agents and consular officials.
The provisions of this Convention shall not affect the tax privileges enjoyed by diplomatic or consular officials in accordance with the general rules of international law or under special agreements.
Article 29. Entry into force.
1. The Convention shall be ratified in accordance with their respective domestic laws and shall enter into force from the date of the exchange of instruments of ratification and its provisions shall apply in both Contracting States:
(a) With regard to taxes withheld from the source on income paid or credited from 1 January of the calendar year following the year in which the instruments of ratification are exchanged; and
(b) For other taxes, from the fiscal period beginning on 1 January of the calendar year following the year in which the instruments of ratification are exchanged.
Article 30. Termination.
This Convention shall remain in force until it is denounced by a Contracting State. Each Contracting State may denounce the Convention by diplomatic means at least six months prior to the end of each calendar year, beginning in the fifth year following its entry into force. In such a case, the Convention shall cease to have effect in both Contracting States:
(a) In relation to taxes withheld from the source on income paid or credited, from 1 January of the calendar year following that of notification; and
(b) With regard to other taxes, for the tax period beginning on 1 January of the calendar year following that of the notification.
In faith, they sign this Convention, in two equally authentic copies in Spanish, in Quito, on the twentieth day of May 1991.
For the Government of Ecuador,
For the Government of Spain,
Diego Córdovez,
Minister for Foreign Affairs
Francisco Fernández Ordonez,
Minister for Foreign Affairs
This Convention entered into force on 19 April 1993, the date on which the Exchange of Ratification Instruments took place, as provided for in Article 29 thereof.
What is made public for general knowledge.
Madrid, April 27, 1993.–The Technical Secretary General, Antonio Bellver Manrique.