JUAN CARLOS I
KING OF SPAIN
Since on 14 June 1995 the Plenipotentiary of Spain signed in Brussels, together with the Plenipotentiary of Belgium, the Convention between Spain and Belgium aimed at preventing double taxation and preventing tax evasion and tax fraud in the field of income and property taxes and the Protocol,
Having regard to and examined the thirty articles of the Convention and the Protocol forming an integral part thereof,
Granted by the Cortes Generales the authorization provided for in article 94.1 of the Constitution,
I come to approve and ratify what is provided for in it, 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 which, for further validation and firmness, I command to issue this instrument of ratification signed by me, duly sealed and endorsed by the undersigned Minister for Foreign Affairs.
Given in Madrid on 18 December 1995.
JUAN CARLOS R.
The Minister for Foreign Affairs,
JAVIER SOLANA MADARIAGA
CONVENTION BETWEEN SPAIN AND BELGIUM TEMPENDENT TO AVOID DOUBLE IMPOSITION AND PREVENT EVASION AND TAX FRAUD IN THE FIELD OF TAX ON RENT AND PATRIMONY
His Majesty the King of Spain
and
His Majesty the King of the Belgians
looking forward to concluding a new convention to prevent double taxation and to prevent tax evasion and tax fraud in the area of income and property taxes.
To this end, they have appointed their Plenipotentiaries:
His Majesty the King of Spain
H.E. Sir. D. Joaquín Ortega Salinas
Ambassador of Spain to Brussels (Belgium)
His Majesty the King of the Belgians
H.E. Sir. D. Erik Derycke
Minister for Foreign Affairs and Development Cooperation
Those who, having exchanged their full powers in good and due form, have agreed on the following provisions:
CHAPTER I
Scope of the Convention
Article 1. Personal scope.
This Convention applies to persons resident in one or both Contracting States.
Article 2. Taxes covered.
1. This Convention applies to income and property taxes payable by each Contracting State, its political subdivisions or its local authorities, whatever the system of its levy.
2. Income and property taxes are those that tax 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 or salaries paid by enterprises, as well as taxes on capital gains.
3. The current taxes to which this Convention applies in particular are:
(a) in Spain:
(1) the Personal Income Tax;
2) Company Tax;
(3) The Wealth Tax; and
(4) local income and property taxes,
(hereinafter referred to as ‘the Spanish tax’);
(b) as regards Belgium:
1. the tax on natural persons;
2) Corporate tax,
(3) The Tax on Legal Persons,
(4) The non-resident tax,
(5) The special contribution equivalent to the tax of natural persons, including withholding taxes, additional surcharges on such taxes and early discounts, as well as additional taxes on natural persons.
(hereinafter referred to as the Belgian tax)
4. The Convention shall also apply to taxes of an identical or similar nature which are established after the date of signature of the Convention and which are added to or replaced by existing taxes. The competent authorities of the Contracting States shall communicate to each other the relevant amendments made to their respective tax laws.
CHAPTER II
Definitions
Article 3. General definitions.
1. For the purposes of this Convention, unless the context of the Convention is different:
(a) 1.o The term ‘Spain’ means the Kingdom of Spain; used geographically, it designates the territory of the Kingdom of Spain, including the territorial sea, as well as areas outside its territorial sea in which, under international law and under its domestic law, Spain may exercise jurisdiction or sovereignty rights.
2. The term ‘Belgium’ means the Kingdom of Belgium employed in a geographical sense, which designates the territory of the Kingdom of Belgium including the territorial sea, as well as areas outside its territorial sea in which, under international law and under its domestic law, Belgium may exercise jurisdiction or sovereignty rights.
(b) The terms ‘one Contracting State’ and ‘the other Contracting State’ mean Spain or Belgium, depending on the context;
(c) The term ‘person’ includes natural persons, companies and any other grouping of persons;
(d) the term 'company' means any legal person or any entity that is considered a legal person for tax purposes;
(e) The terms ‘undertaking of a Contracting State’ and ‘undertaking of the other Contracting State’ mean, respectively, an undertaking operated by a resident of a Contracting State and an undertaking operated by a resident of the other Contracting State;
(f) “International traffic” means any transport by a ship or aircraft operated by an undertaking whose effective headquarters are located in a Contracting State, except where the ship or aircraft is operated only between points located in the other Contracting State;
(g) The term 'national' means:
1. Any natural person possessing the nationality of a Contracting State; and
2. Any legal person, association or entity constituted under the law in force in a Contracting State;
(h) ‘competent authority’ means:
1. In the case of Spain, the Minister of Economy and Finance or his authorized representative; and
2. In the case of Belgium, the Director-General for Direct Taxes.
2. For the purposes of the application of the Convention by a Contracting State, any term not defined in the Convention shall have, unless a different interpretation is given in its context, the meaning attributed to it by the law of that State concerning the taxes which are the subject of the Convention.
Article 4. Resident.
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 on the basis of his domicile, residence, address or any other criterion of a similar nature. However, this term does not include persons who are subject to taxation in that State solely on the income they obtain from sources located in that State or on the assets they possess in that State.
2. Where, under the provisions of paragraph 1, a natural person is resident in both Contracting States, his or her situation shall be resolved as follows:
(a) Such person shall be considered a resident of the State in which he or she has permanent housing at his or her disposal; if he or she has permanent housing at his or her disposal in both States, he or she shall be considered a resident of the State with which he or she has closer personal and economic relations (centre of vital interests);
(b) If the State in which the person has the centre of his or her vital interests cannot be determined, or if he or she does not have permanent housing at his or her disposal in any of the States, he or she shall be considered a resident of the Contracting State in which he or she habitually lives.
(c) If he or she habitually lives in both States or does not live in either State, he or she shall be considered a resident of the State of which he or she is a national;
(d) If he is a national of either State or is not a national of either State, the competent authorities of the two Contracting States shall decide the case by mutual agreement.
3. Where under the provisions of paragraph 1 a person other than a natural person is a resident of both Contracting States, he or she shall be considered a resident of the State in which his or her 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 through which an undertaking carries out all or part of its activity.
2. The term ‘permanent establishment’ includes, in particular:
(a) the head offices;
(b) branches;
(c) Offices;
(d) factories;
(e) Workshops;
(f) mines, oil or gas wells, quarries or any other place of exploitation or extraction of natural resources.
3. A construction, installation or assembly work only constitutes a permanent establishment if its duration exceeds twelve months.
4. Notwithstanding the provisions of this Article, it is considered that the term ‘permanent establishment’ does not include:
(a) the use of facilities for the sole purpose of storing, displaying or delivering goods or goods belonging to the 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 carrying out any other auxiliary or preparatory activity for the undertaking;
(f) the maintenance of a fixed place of business for the sole purpose of the combined exercise of the activities referred to in subparagraphs (a) to (e), provided that the whole activity of the fixed place of business retains its auxiliary or preparatory character.
5. Notwithstanding paragraphs 1 and 2, where a person - other than an agent enjoying independent status to whom paragraph 6 applies - acts on behalf of an undertaking and habitually exercises and exercises in a Contracting State powers to conclude contracts on behalf of the undertaking, that undertaking shall be deemed to have a permanent establishment in that State in respect of all activities carried out by that person on behalf of the undertaking, unless the activities of that person are limited to those referred to in paragraph 4 and if they have been carried out through a fixed place of business, they have not determined that the place of business is a permanent establishment in accordance with the provisions of that paragraph.
6. An undertaking is not considered to have a permanent establishment in a Contracting State merely because it carries out its activities through a broker, a general commissioner or any other agent enjoying an independent status, provided that such persons act within the ordinary framework of their activity.
A staff member acting on behalf of an insurance undertaking who habitually signs contracts on behalf of the undertaking is not considered to be covered by this provision.
7. The fact that a company resident of a Contracting State controls or is controlled by a company resident of the other Contracting State, or that it carries out 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
Taxation of different income classes
Article 6. Income from immovable property.
1. Income from immovable property (including income from agricultural or forestry holdings) situated in the other Contracting State may be taxed in that other Contracting State.
2. The term ‘real property’ shall have the meaning attributed to it by the law of the Contracting State in which the property in question is situated. In any event, that term includes accessories, livestock and equipment used on agricultural and forestry holdings, the rights to which the provisions of private law relating to real estate, the use of immovable property and the rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources apply; vessels, vessels and aircraft are not regarded as immovable property.
3. The provisions of paragraph 1 apply to income derived from the use or direct enjoyment of the lease or shareholding, as well as from any other form of exploitation of the immovable property.
4. The provisions of paragraphs 1 and 3 also apply to income derived from the immovable property of an enterprise and from immovable property used for the provision of independent personal services.
5. Where ownership of shares, shares or other rights in a corporation or other legal person confers on its owner the right to the enjoyment of immovable property situated in a Contracting State and is held by the corporation or legal person, the income obtained by the owner from the direct use, lease or use in any other form of such right of enjoyment is subject to taxation in that State.
Article 7. Business profits.
1. The profits of an undertaking of one Contracting State may be taxed only in that State unless the undertaking carries out its business in the other Contracting State through a permanent establishment situated in that other State. If the company carries out its business in that way, the profits of the company may be taxed in the other State, but only to the extent that they can be attributed to that permanent establishment.
2. Without prejudice to paragraph 3, where an undertaking of a Contracting State carries out its activity in the other Contracting State through a permanent establishment situated therein, in each Contracting State the profits which it could have obtained from being a distinct and separate undertaking carrying out the same or similar activities under the same or similar conditions shall be attributed to that establishment and shall deal entirely independently with the undertaking from which it is a permanent establishment.
3. For the purpose of determining the benefit of the permanent establishment, the deduction of expenses incurred for the realization of the purposes of the permanent establishment shall be permitted, including management and general administrative expenses for the same purposes, whether incurred in the State in which the permanent establishment is located or elsewhere.
4. In the absence of sufficient accounting to determine the amount of profits of an undertaking in one Contracting State attributable to its permanent establishment situated in the other State, the tax may be established in that other State in accordance with its own legislation. The method applied should 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 otherwise.
7. Where profits include income covered separately by other articles of this Convention, the provisions of those articles shall not be affected by those of this Article.
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 company is located.
2. If the place of effective management of a shipping company is on board a ship, it shall be deemed to be in the contracting state where the base port of the ship is located, and if there is no such base port, in the Contracting State in which the person operating the ship resides.
3. The provisions of paragraph 1 also apply to profits from participation in a pool, on a joint holding or in an international exploitation agency.
Article 9. Associated enterprises.
1. When
(a) an undertaking of a Contracting State participates directly or indirectly in the direction, control or capital of an undertaking of the other Contracting State; or
(b) the same persons participate directly or indirectly in the direction, control or capital of an undertaking of a Contracting State and of an undertaking of the other Contracting State,
and in either case the two companies are, in their commercial or financial relations, bound by accepted or imposed conditions that differ from those that would be agreed by independent companies, the profits that would have been obtained by one of the companies in the absence of such conditions, and which in fact have not occurred because of them, may be included in the profits of that undertaking and subject to taxation accordingly.
2. Where a Contracting State includes in the profits of an undertaking of that State - and consequently subjects to taxation - the profits on which an undertaking of the other Contracting State has been taxed in that other State, and the profits thus included are profits which would have been realized by the undertaking of the State concerned in the first place if the terms agreed between the two companies had been those agreed between two independent undertakings, that other State shall, if it deems it appropriate, adjust the amount of the tax it has received on those profits. In determining this adjustment, account shall be taken of the other provisions of this Convention, the competent authorities of the Contracting States being consulted if necessary.
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.
(a) However, such dividends may also be taxed in the Contracting State in which the company paying the dividends resides and in accordance with the law of that State, but if the actual beneficiary of the dividends is a resident of the other Contracting State the tax thus required may not exceed 15 per cent of the gross amount of the dividends.
(b) However, where a company which is a resident of a Contracting State directly holds at least 25 per cent of the capital of a company which is a resident of the other Contracting State, the dividends paid by that company are exempt from tax in the State where the company which distributes them is resident if the domestic law of that State applicable to the case so permits and under the conditions laid down for exemption by this legislation.
(c) The provisions of subparagraphs (a) and (b) of this paragraph do not affect the company's taxation of profits from which dividends are paid.
3. The term ‘dividends’ used in this Article means the income from shares, shares or enjoyment bonds, parts of mines, parts of founders or other rights, except credit rights, which permit participation in profits, as well as income – including those paid in the form of interest – subject to the same tax regime as the income from shares under the law of the State in which the company that satisfies them resides.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of a Contracting State, performs in the other Contracting State of which the company paying the dividends is resident, an industrial or commercial activity through a permanent establishment located in that other State, or provides independent personal services through a fixed base located in that other State, and the share generated by the dividends is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply, as appropriate.
5. Where a company resident of a Contracting State obtains profits or income from the other Contracting State, that other State may not levy any tax on dividends paid by the company except to the extent that such dividends are paid to a resident of that other State or the share generated by the dividends is effectively linked to a permanent establishment or a fixed base situated in that other State, or subject the undistributed profits of the company to a tax on them, even if the dividends paid or the undistributed beneficiaries consist, in whole or in part, of profits or income from that other State.
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.
2. However, such interest may also be taxed in the Contracting State from which it comes, and in accordance with the law of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax thus required may not exceed 10 per cent of the gross amount of interest.
3. Notwithstanding the provisions of paragraph 2, interest is exempt from payment of the tax in the Contracting State from which it originates in the case of:
(a) interest on commercial claims, including those represented by commercial effects, arising from the deferred payment of supplies of equipment, goods, products or services by an undertaking of one Contracting State to an undertaking of the other Contracting State.
(b) interest paid on a loan or credit granted, guaranteed or insured by public bodies for the purpose of promoting exports;
4. The term ‘interest’ used in this Article means the income from claims of any kind, with or without a mortgage guarantee or benefit-sharing clause of the debtor, and in particular income from public funds and bonds or bonds, including premiums and lots attached to such securities, as well as any other income subject to the same tax regime as the income from capital provided by the law of the Contracting State from which the income derives. However, the term does not cover, within the meaning of this article, interest considered as dividends under article 10, paragraph 3.
5. The provisions of paragraphs 1, 2 and 3 do not apply if the beneficial owner of the interest, resident of one Contracting State, performs in the other Contracting State, from which the interest is derived, an industrial or commercial activity through a permanent establishment located in that other State or provides independent personal services through a fixed base located in that other State, and the credit generated by the interest is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply, as appropriate.
6. Interest shall be deemed to have come from a Contracting State where the debtor is the State itself or one of its political subdivisions or local entities, or a resident of that State. However, where the debtor of interest, whether or not resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which the debt giving rise to the payment of the interest and bearing the burden of the interest has been incurred, the interest shall be deemed to have come from the Contracting State where the permanent establishment or fixed base is situated.
7. Where, on account of the special relations between the debtor and the beneficial owner of the interest or of the interest between them and third parties, the amount of interest, having regard to the claim for which it is paid, exceeds that agreed between the debtor and the beneficial owner in the absence of such relations, the provisions of this article shall apply only to the latter amount. In such a case, the excess may be subject to taxation in accordance with the law of the Contracting State, from which the interest accrues.
Article 12. Royalties.
1. Fees from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such fees may also be subject to taxation in the Contracting State from which they come and in accordance with the law of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax thus required may not exceed 5 per cent of the gross amount of the royalties.
3. The term ‘royalties’ used in this Article means quantities of any kind paid for the use or granting of copyright on literary, artistic or scientific works, including cinematographic films and recorded films or tapes for radio and television, 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 for the provision of information relating to industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the royalties, resident of a Contracting State, performs in the other Contracting State from which the royalties come, an industrial or commercial activity through a permanent establishment located in that other State or provides independent personal services through a fixed base situated in that other State, and the right or for which the royalties are paid is effectively linked to that permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14 shall apply, as appropriate.
5. Fees shall be deemed to come from a Contracting State where the debtor is the State itself or one of its political subdivisions or local entities, or a resident of that State. However, where the debtor of the royalties, whether or not resident of a Contracting State, has in one of the Contracting States a permanent establishment or a fixed basis for which the obligation to pay the royalties has been incurred and bears the burden thereof, the royalties shall be deemed to be from the State where the permanent establishment or fixed base is situated.
6. Where, on the basis of the special relations between the debtor and the beneficial owner of the royalties or of those which both maintain with third parties, the amount of the royalties, having regard to the benefit for which they are paid, exceeds that for which the debtor and the beneficial owner would have agreed in the absence of such relationships, the provisions of this article apply only to the latter amount. In such a case, the excess may be subject to taxation in accordance with the law of the Contracting State from which the fees come.
Article 13. Capital gains.
1. Profits that a resident of one Contracting State obtains from the disposal of immovable property, as defined in article 6, located in the other Contracting State, may be taxed in that other State.
2. Profits arising from the disposal of shares, shares or other rights in a corporation or other legal person whose assets consist mainly of immovable property located in or rights to a Contracting State may be taxed in the Contracting State where the immovable property is situated.
3. Gains from the disposal of movable property forming part of the assets of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or from movable property belonging to a fixed basis held by a resident of one Contracting State in the other Contracting State for the provision of independent personal services, including gains from the disposal of that permanent establishment (only or with the enterprise as a whole) or from that fixed basis, may be taxed in that other State.
4. Profits from the alienation of ships or aircraft operated in international traffic, or movable property affected by the operation of such vessels, or aircraft, may be taxed only in the Contracting State where the place of effective management of the undertaking is situated.
5. Without prejudice to the provisions of paragraph 2, profits resulting from the disposal of shares, shares or other rights constituting a substantial participation in a company which is resident in a Contracting State may be subject to taxation in that State. A substantial holding is considered to exist when the transferor alone, with associated or related persons, has directly or indirectly detained, at any time in the five years preceding the transfer, the shares, shares or other rights which together confer the right to at least 25 per cent of the profits of the company or represent at least 25 per 100 of the capital of that company.
6. Profits arising from the disposal of any property other than those referred to in paragraphs 1 to 5 may be taxed only in the Contracting State in which the transferor resides.
Article 14. Independent personal services.
1. Incomes that a resident of a Contracting State obtains from the provision of professional services or other activities of an independent nature may only be taxed in that State unless that resident normally has a fixed basis in the other Contracting State for the conduct of his or her activities. If it has such a fixed base, such income may be taxed in the other State, but only to the extent that it is attributable to that fixed base.
2. The term ‘professional services’ includes in particular independent scientific, literary, artistic, educational or pedagogical activities, as well as independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Article 15. Dependent jobs.
1. Without prejudice to the provisions of Articles 16, 18, 19 and 20, similar salaries, wages and salaries obtained by a resident of a Contracting State on account of employment may be subject to taxation only in that State, unless the employment is exercised in the other Contracting State. If employment is exercised in that other State, such remuneration may be subject to taxation in that other State.
2. By way of derogation from paragraph 1, remuneration obtained by a resident of a Contracting State on the basis of employment in the other Contracting State may be taxed in the State referred to above only if:
(a) the recipient remains in the other State for one or more periods not exceeding a total of one hundred and eighty-three days in any period of twelve months; and
(b) remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) Remuneration is not borne by a permanent establishment or a fixed basis which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remunerations earned on account of employment on board a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the effective head office of the undertaking is situated.
Article 16. Directors’ fees.
1. Participations, attendance allowances and other similar remunerations which a resident of a Contracting State obtains as a member of a board of directors or supervision or of a similar body of a company resident of the other Contracting State may be taxed in that other State.
This provision also applies to remunerations received for the performance of functions which, under the law of the Contracting State in which the company is resident, are regarded as functions of a nature similar to those performed by a person referred to in the above provision.
2. The remuneration that a person referred to in paragraph 1 receives from the company due to the exercise of a daily managerial or technical activity and the remuneration that a resident of a Contracting State obtains from his personal activity as a partner of a company, other than a share company, which is resident of the other Contracting State is subject to taxation in accordance with the provisions of article 15, as if it were the remuneration that an employee obtains from a salaried employment and the employer is the company.
Article 17. Entertainers and sportspersons.
1. Notwithstanding the provisions of Articles 14 and 15, any income which a resident of a Contracting State obtains from the exercise of his or her personal activity in the other Contracting State as a performer, theatre, film, radio or television actor, or musician, or as an athlete may be subject to taxation in that other State.
2. Where the income derived from the activities carried out by an artist or athlete personally and as such is attributed, not to the artist or athlete himself, but to another person, such income may be subject to taxation, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of the artist or athlete are carried out.
3. The provisions of paragraphs 1 and 2 do not apply if the activities carried out in one Contracting State are financed primarily from public funds of the other Contracting State or from one of its political subdivisions or local entities. In such a case, income derived from such activities may only be taxed in that other State.
Article 18. Pensions.
Without prejudice to article 19, paragraph 2, pensions, life income and other similar remuneration paid to a resident of a Contracting State on account of previous employment shall be subject to taxation in that State only.
Article 19. Government service.
(a) Remuneration, excluding 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, subdivision or entity, may be subject to taxation only in that State.
(b) However, if the payee is a resident of the other Contracting State and possesses the nationality of that other State without at the same time possessing the nationality of the State referred to in subparagraph (a) above, such remuneration may be subject to taxation in the other Contracting State.
(a) Pensions paid by a Contracting State or one of its political subdivisions or local entities, either directly or from constituted funds, to a natural person on account of services rendered to that State, subdivision or entity, may only be taxed in that State.
(b) Such pensions may, however, be subject to taxation in the other Contracting State only if the natural person is a resident and a national of that State.
3. Articles 15, 16 and 18 apply to remuneration and pensions paid for services rendered in the context of an industrial or commercial activity of a Contracting State or one of its political subdivisions or local authorities.
Article 20. Teachers and students.
1. A natural person who is or has been, immediately prior to his arrival in a Contracting State, resident of the other Contracting State, and who, at the invitation of the Government of the first State, of a university or other institution of higher education or research, located and officially recognized in the first State, remains in that State for the sole purpose of carrying out education or research, or both, may be subject to taxation in the other Contracting State only in respect of remuneration for such activities for a period not exceeding two years from the date of his first arrival in that State.
The provisions of this paragraph shall not apply to remuneration for investigative work if such work is carried out primarily for the particular benefit of a particular person or persons.
2. The amounts, which a student or a trainees who is, or was immediately before arriving in a Contracting State a resident of the other Contracting State and who remains in the first State for the sole purpose of continuing his studies or training, shall receive to cover the costs of maintenance or training may not be subject to taxation in that State provided they come from sources outside that State.
Article 21. Other income not expressly mentioned.
1. The income of a resident of a Contracting State which is of a nature or comes from sources not mentioned in the preceding articles of this Convention and which are subject to taxation in that State may only be taxed in that State.
2. Paragraph 1 does not apply to income, excluding income derived from property defined as immovable in article 6, paragraph 2, where the beneficiary of such income, resident of a Contracting State, engages in an industrial or commercial activity in the other Contracting State through a permanent establishment situated therein, or provides independent personal services through a fixed base equally situated therein, and the right or for which the income is paid is effectively linked to such permanent establishment or fixed base. In such cases, the provisions of article 7 or article 14 apply, as appropriate.
CHAPTER IV
Taxes on Heritage
Article 22. Capital.
1. Property constituted by immovable property covered by Article 6 owned by a resident of a Contracting State and situated in that other Contracting State may be taxed in that other State.
2. Assets consisting of shares, shares or other rights in a corporation or other legal person whose assets consist mainly of immovable property situated in a Contracting State or rights in such property are subject to taxation in that Contracting State.
3. Property consisting of movable property forming part of the assets of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or of movable property belonging to a fixed basis held by a resident of one Contracting State in the other Contracting State for the provision of independent personal services, may be taxed in that other State.
4. Assets made up of ships or aircraft operated in international traffic, as well as movable property affected by the operation of such vessels or aircraft, may be taxed only in the Contracting State in which the place of effective management of the undertaking is situated.
5. Property consisting of shares, shares or other rights forming part of a substantial participation in a company resident in a Contracting State may be taxed in that State. A substantial holding shall be deemed to exist where a person, alone or with associated or related persons, stops, directly or indirectly, shares, shares or other rights which together confer the right to at least 25 per cent of the profits of the company or represent at least 25 per cent of the capital of that company.
6. The other assets of a resident of a Contracting State may be subject to taxation only in that State.
CHAPTER V
Methods for elimination of double taxation
Article 23
1. As regards Spain, double taxation is avoided as follows:
(a) Without prejudice to the provisions of Spanish law relating to the charging of taxes paid abroad in the Spanish tax, where a resident of Spain receives income or possesses assets which, in accordance with the provisions of this Convention, may be taxed in Belgium, Spain shall allow the deduction of the tax he receives on the income or on the assets of that resident of an amount equal to the tax paid in Belgium. The amount thus deducted may not exceed the fraction of the tax, calculated before the deduction, which would correspond, as the case may be, to the income or assets subject to taxation in Belgium.
(b) In the case of dividends in accordance with Article 10(3) paid by a company resident in Belgium to a company resident in Spain and holding a direct shareholding of at least 25 per 100 of the capital of the company paying the dividends, Spain shall, in addition to the deduction provided for in paragraph (a) above, allow the deduction, under the conditions and limits provided for in its domestic law, of the part of the tax actually paid by the paying company corresponding to the profits from which the dividends are paid.
(c) Where under any provision of this Convention the income obtained by a resident in Spain or the property held by him is exempt from
taxes in Spain, Spain may, however, take into account the exempt income or assets in order to calculate the amount of tax on the rest of the income or assets of that resident.
2. As regards Belgium, double taxation is avoided as follows:
(a) Where a resident of Belgium receives income or possesses assets that may be taxed in Spain in accordance with the provisions of the Convention, with the exception of those corresponding to articles 10, paragraph 2, 11, paragraphs 2 and 7, and 12, paragraphs 2 and 6, Belgium shall exempt from tax such income or assets, but may, in order to calculate the amount of its taxes on the rest of the income or property of that resident, apply the rate of taxation that would be applicable if the income or assets in question were not exempt.
(b) Without prejudice to the provisions of Belgian law relating to the charging in Belgian tax of taxes paid abroad, where a resident of Belgium receives income which is included in his overall income subject to Belgian tax and consists of dividends subject to the scheme provided for in Article 10(2) and not exempt from Belgian tax under subparagraph (c) below, in interest subject to taxation pursuant to Article 11(2) or (7), or in royalties subject to taxation pursuant to Article 12(2) or (6), the Spanish tax paid for such income shall be charged on the Belgian tax relating to such income.
(c) Dividends in accordance with Article 10(3), which a Belgian resident company receives from a Spanish resident company and which are subject in Spain to the scheme provided for in Article 10(2), are exempt from corporation tax in Belgium, under the conditions and limits provided for by Belgian law.
(d) Where under Belgian law losses suffered by a company operated by a resident of Belgium in a permanent establishment situated in Spain have actually been deducted from the profits of that company for the purposes of taxation in Belgium, the exemption provided for in paragraph (a) shall not apply in Belgium to the profits from other tax periods attributable to that establishment, in so far as those profits have also been exempt from taxation in Spain for their compensation for such losses.
(e) For the purposes of applying subparagraph (b) above, interest on borrowings and loans granted before 1 January 1992 and benefiting from a reduction in Spanish tax pursuant to article 1 of the Decree-Law of 19 October 1961, as subsequently amended, which allows for reductions in certain taxes applicable to loans issued by Spanish companies and loans granted by foreign financial institutions to finance new investments, is considered to have borne a tax of 10 per cent until the original agreed maturity of these loans or loans, but not more than two tax periods from the first tax period in which the agreement has its effects in accordance with the provisions of article 29 paragraph 2 (b).
CHAPTER VI
Special provisions
Article 24. 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 not or is more burdensome than those to which nationals of that other State who are under the same conditions, in particular as regards residence, are or may be subject. Notwithstanding Article 1, this provision shall also apply to persons who are not residents of one or both Contracting States.
2. Permanent establishments held by an undertaking of one Contracting State in the other Contracting State shall not be subject to taxation in that State in a less favourable manner than undertakings of that other State carrying out the same activities.
This provision may not be interpreted as obliging a Contracting State to grant to residents of the other Contracting State the personal deductions, reliefs or tax reductions it grants to its own residents in view of their marital status or family burdens.
3. Unless the provisions of article 9, paragraph 1, article 11, paragraph 7, or article 12, paragraph 6, apply, interest, royalties or other expenses paid by an enterprise of one Contracting State to a resident of the other Contracting State shall be deductible, in order to determine the profits subject to taxation of that enterprise, under the same conditions as if they had been paid to a resident of the State referred to first. Similarly, the debts of an undertaking of a Contracting State contracted with a resident of the other Contracting State shall be deductible for the determination of the assets subject to taxation of that undertaking under the same conditions as if they had been contracted with a resident of the State referred to first.
4. Undertakings of a Contracting State whose capital is, in whole or in part, directly or indirectly detained or controlled by one or more residents of the other Contracting State shall not be subject in the State referred to above to any taxes or obligations relating thereto which are not or are more burdensome than those to which other similar undertakings of the State referred to in the first instance are or may be subject.
5. Notwithstanding the provisions of Article 2, the provisions of this Article shall apply to all taxes, whatever their nature or name.
Article 25. Mutual agreement procedure.
1. Where a person considers that the measures taken by one or both Contracting States imply or may entail for him an imposition that is not in conformity with the provisions of this Convention, irrespective of the remedies provided for by the domestic law of those States, he may submit his case to the competent authority of the Contracting State of which he is resident or, if article 24, paragraph 1, to that of the Contracting State of which he is a national. The case shall be brought within three years of the first notification of the measure involving an imposition not in accordance with the provisions of the Convention.
2. The competent authority shall, if it finds the complaint well founded and if it is not in a position to adopt a satisfactory solution, make every effort to resolve the matter through an amicable agreement with the competent authority of the other Contracting State in order to avoid an imposition not in conformity with the Convention.
3. The competent authorities of the Contracting States shall endeavour to resolve difficulties or to dispel doubts arising from the interpretation or application of the Convention by means of an amicable agreement. Where it is considered that such an agreement may be facilitated by personal contacts, the exchange of views may take place within a committee composed of representatives of the competent authorities of the Contracting States.
4. The competent authorities of the Contracting States shall jointly agree on the measures necessary for the implementation of the provisions of the Convention and for the prevention of its abuse. They shall lay down, in particular, the formalities to be fulfilled and the supporting documents to be provided by the residents of each Contracting State in order to benefit in the other Contracting State from the tax exemptions or reductions provided for in the Convention.
5. The competent authorities of the Contracting States shall communicate directly between themselves for the implementation of the Convention.
Article 26. Exchange of information.
1. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention or of the national law of the Contracting States relating to taxes covered by the Convention to the extent that the taxation required by that Convention is not contrary to the Convention. The exchange of information is not 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) who are responsible for the establishment or collection of taxes covered by the Convention, for declaratory or executive procedures relating to such taxes or for the resolution of appeals relating thereto. Such persons or authorities shall use the information only for such purposes. They may disclose such information in public hearings of the courts or in court judgements.
Information shall be exchanged either on request on a case-by-case basis or automatically in respect of one or more categories of income, or spontaneously when it relates to income the knowledge of which is of interest to a Contracting State.
2. Under no circumstances may the provisions of paragraph 1 be interpreted as obliging a Contracting State to:
(a) take administrative measures contrary to its legislation or administrative practice or those of the other Contracting State;
(b) to provide information which cannot be obtained on the basis of their own legislation or in the exercise of their normal administrative practice or that of the other Contracting State;
(c) provide information revealing trade, industrial or professional secrets, or commercial procedures or information whose communication is contrary to public policy.
Article 27. Assistance to the collection.
1. The Contracting States shall provide each other with assistance and assistance for the purpose of notifying and collecting the taxes covered by this Convention, as well as all non-criminal surcharges, increments, interest, expenses and fines relating to such taxes, where the tax debt is the subject of a title permitting the continuation of recovery in the State requiring assistance and are enforceable and not subject to appeal under the laws or regulations of that State.
2. At the request of the requesting State, the requested State shall notify and collect the tax debt of that State in accordance with the law and administrative practice applicable to the notification and collection of its own tax debts, unless otherwise provided for in the Convention.
3. The requested State shall not be obliged to process the request of the requesting State if the requesting State has not exhausted in its own territory all means of collecting its tax debt.
4. The demand for assistance in the collection of a tax debt shall be accompanied by:
(a) a certification specifying that the conditions provided for in paragraph 1 are met;
(b) an official copy of the title permitting enforcement in the requesting State;
(c) an official copy of any other document required in the requesting State for collection; and
(d) where appropriate, a certified copy corresponding to any final decision and issued by an administrative body or a court.
5. The title permitting enforcement in the requested State shall, where appropriate and in accordance with the provisions in force in the requested State, be admitted, approved, completed or replaced within the shortest time after the date of receipt of the request for assistance, by a title permitting enforcement in the requested State.
6. Questions relating to the limitation periods for the tax debt shall be governed solely by the law of the requesting State.
7. The acts of recovery carried out by the requested State as a result of a request for assistance and which, under the law of that State, may have the purpose of suspending or interrupting the limitation period have the same effect with respect to the law of the requesting State. The requested State informs the requesting State of the measures taken for this purpose.
8. Tax debts for which assistance is sought do not enjoy any privileges in the requested State.
9. The requested State shall not be obliged to apply enforcement measures that are not authorized by the laws or regulations of the requesting State.
10. The requested State may grant a deferment in payment or a staggered payment, if its legislation or administrative practice so permits in similar circumstances; it shall so inform the requesting State in advance.
11. The provisions of article 26, paragraph 1, also apply to any information which, pursuant to this article, is brought to the attention of the competent authority of a Contracting State.
12. With regard to tax debts of a Contracting State which are subject to appeal or still subject to appeal, the competent authority of that State may, in order to safeguard its rights, request the competent authority of the other Contracting State to take the precautionary measures provided for in the law of that State. The provisions of the preceding paragraphs apply ‘mutatis mutatis mutandis’ to these measures.
13. The competent authorities of the Contracting States shall agree on arrangements for the transfer of the quantities collected by the requested State on behalf of the requesting State.
Article 28. Diplomatic agents and consular officials.
The provisions of this Convention do not affect the tax privileges enjoyed by members of diplomatic missions or consular posts in accordance with the general principles of international law or under special agreements.
CHAPTER VII
Final provisions
Article 29. Entry into force.
1. This Convention shall be ratified, and the instruments of ratification shall be exchanged in Madrid as soon as possible.
2. The Convention shall enter into force on the fifteenth day following the exchange of instruments of ratification, and its provisions shall apply:
(a) taxes withheld from the source on income earned or collected from 1 January 1996.
(b) other income or property taxes relating to tax periods ending on 31 December 1996.
3. The provisions of the Convention between Spain and Belgium in order to avoid double taxation and to regulate certain matters relating to income and property taxes and the Additional Protocol signed in Brussels on 24 September 1970 shall cease to apply to any Spanish or Belgian tax in respect of which this Convention and the annexed Protocol have effect in accordance with the provisions of paragraph 2.
Article 30. Termination.
This Convention shall remain in force as long as it is not denounced by one of the Contracting States, but each of these Contracting States may denounce it in writing or through diplomatic channels to the other Contracting State until 30 June, including any calendar year, from the fifth year following the year of the exchange of instruments of ratification. In the event of denunciation before 1 July of that year, the Convention shall last apply:
(a) taxes withheld from the source on income earned or collected until 31 December of the year of the complaint.
(b) other taxes on income or property relating to tax periods ending before 31 December of the year immediately following the year of the complaint.
In faith, the above-mentioned Plenipotentiaries sign and seal this Convention.
Done in Brussels on 14 June 1995, in the Dutch, French and Spanish languages, the three texts being equally authentic.
BY SPAIN
BY BELGIUM
PROTOCOL
At the time of signing the Convention between Spain and Belgium to Prevent Double Taxation and to Prevent Tax Evasion and Fraud in the Field of Income and Property Taxes, the undersigned Plenipotentiaries have agreed on the following provisions which form an integral part of the Convention:
1. With regard to articles 6, 13 and 22.
Notwithstanding the provisions of Articles 6, 13 and 22, the income and profits obtained by a resident of a Contracting State from a multi-ownership right, in which the duration does not exceed one month per calendar year and the assets of that resident constituted by that right, shall only be subject to taxation in that State.
2. With regard to articles 10, 11, 12 and 13.
Notwithstanding the provisions of the preceding articles, tax reductions or exemptions which would otherwise be applicable to dividends, interest, royalties and capital gains are not such where such income is obtained from a Contracting State by a company which is a resident of the other Contracting State in which persons who are not residents of that other State hold a shareholding directly or indirectly representing more than 50 per cent of the capital of that company. This provision shall not apply where the company demonstrates that it carries out important industrial or commercial activities other than those consisting primarily of holding or administering shares or other assets in the Contracting State of which it is a resident.
3. With regard to Article 10(3).
It is understood that the term ‘dividends’ includes the liquidation profits of a company.
4. By way of derogation from Article 12(3):
(a) The term 'royalties' means remuneration paid for the use or grant of use of a computer program.
5. Notwithstanding article 24.
It is understood that the provisions of article 24 do not prevent:
(a) Contracting States to apply the provisions of their domestic law relating to subcapitalization; (b) a Contracting State to tax the rate of taxation provided for in its domestic law, the benefits of a permanent establishment available in that State to a company that is resident of the other Contracting State provided that the rate does not exceed the maximum rate applicable to the profits of companies that are residents of the first State.
(c) Belgium to deduct, under the conditions laid down in its legislation, the withholding tax on dividends corresponding to a shareholding of less than 25 per cent and which effectively applies to a permanent establishment available to a company resident in Spain in Belgium.
In faith, the undersigned Plenipotentiaries sign and seal this Protocol.
Done in Brussels on 14 June 1995, in the Dutch, French and Spanish languages, the three texts being equally authentic.
BY SPAIN
BY BELGIUM
JUAN CARLOS I
KING OF SPAIN
Since on 22 June 2000 the Plenipotentiary of Spain signed in Madrid, together with the Plenipotentiary of Belgium, both appointed in good and due form to that effect, the Additional Act amending the Convention between the Kingdom of Spain and the Kingdom of Belgium aimed at avoiding double taxation and preventing tax evasion and fraud in the field of income and property taxes, and the Protocol, signed in Brussels on 14 June 1995,
Having regard to and examined the two articles of the Act, granted by the Cortes Generale the authorization provided for in Article 94.1 of the Constitution,
I come to approve and ratify what is provided for in it, 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 which, for further validation and firmness, I command to issue this instrument of ratification signed by me, duly sealed and endorsed by the undersigned Minister for Foreign Affairs.
Given in Madrid to four of March of two thousand three.
JUAN CARLOS R.
The Minister for Foreign Affairs,
ANA PALACIO VALLELERSUNDI
ADDITIONAL RECORD AMENDING THE CONVENTION BETWEEN THE KINGDOM OF SPAIN AND THE KINGDOM OF BELGIUM TEMPENDING TO AVOID DOUBLE IMPOSITION AND PREVENT EVASION AND TAX FRAUD IN RENT AND PATRIMONY TAX, AND THE PROTOCOL FINISHED IN BRUSSELS ON 14 JUNE 1995
His Majesty the King of Spain
and
His Majesty the King of the Belgians
wishing to conclude an Additional Act amending the Convention between the Kingdom of Spain and the Kingdom of Belgium aimed at preventing double taxation and preventing tax evasion and tax fraud in the field of income and property taxes, and the Protocol signed in Brussels on 14 June 1995 (hereinafter referred to as the Convention) have designated to that effect Plenipotentiaries:
His Majesty the King of Spain
H.E. Sir. D. Enrique Giménez-Reyna,
State Secretary for Finance
His Majesty the King of the Belgians
H.E. Sir. D. Xavier L. Demoulin,
Ambassador of Belgium to Spain
Those who, having exchanged their plenipotentiaries and found them in good and proper form, have agreed as follows:
Article I
Article 29 of the Convention shall be deleted and replaced by the following:
‘1. This Convention shall be ratified and the instruments of ratification shall be exchanged in Madrid as soon as possible.
2. The Convention shall enter into force on the fifteenth day following the exchange of instruments of ratification and its provisions shall apply:
(a) taxes withheld from the source on income earned or collected from 1 January of the year following the entry into force of the Convention;
(b) other taxes on income or property relating to tax periods ending on 31 December of the year of entry into force of the Convention.
3. The provisions of the Convention between Spain and Belgium in order to avoid double taxation and to regulate certain matters relating to income and property taxes and the Additional Protocol signed in Brussels on 24 September 1970 shall cease to apply to any Spanish or Belgian tax in respect of which this Convention and the annexed Protocol have effect in accordance with the provisions of paragraph 2.’
Article II
‘1. This Additional Act shall be ratified and the instruments of ratification shall be exchanged in Madrid as soon as possible together with the instruments of ratification of the Convention.
2. The Additional Act shall enter into force on the fifteenth day following the exchange of instruments of ratification.'
In faith, the undersigned Plenipotentiaries have signed and sealed the present Additional Act.
Done at Madrid on 22 June 2000, in duplicate, in the Spanish, French and Dutch languages, bearing in mind the three texts as well.
For the Kingdom of Spain,
H.E. Sir. D. Enrique Giménez-Reyna,
State Secretary for Finance
For the Kingdom of Belgium,
H.E. Sir. D. Xavier L. Demoulin
Ambassador of Belgium to Spain
This Convention and the Additional Act amending it enter into force on 25 June 2003, 15 days after the exchange of instruments of ratification, as provided for in Article 29 of the Convention and Article II of the Additional Act.
What is made public for general knowledge.
Madrid, June 18, 2003. –The Technical Secretary General of the Ministry of Foreign Affairs, Julio Núñez Montesinos.