CONVENTION BETWEEN THE KINGDOM OF SPAIN AND THE BOLIVIARY REPUBLIC OF VENEZUELA TO AVOID DOUBLE TRIBUTATION AND PREVENT EVASION AND TAX FRAUD IN RENT AND PATRIMONY TAX
The Kingdom of Spain and the Bolivarian Republic of Venezuela, wishing to conclude a convention with the aim of avoiding double taxation and preventing tax evasion and fraud in the area of income and property taxes, have agreed on the following provisions:
CHAPTER I
Scope of the Convention
Article 1. Personal scope.
This Convention applies to persons who are residents of one or both Contracting States.
Article 2. Taxes covered.
1. This Convention applies to income and property taxes payable by each Contracting State, irrespective of the system of its levy or the manner in which it is collected.
2. Income and property taxes are defined as taxes on all income or property or any part of income or property, including taxes on profits arising from the disposal of movable or immovable property, taxes on the total amount of wages or salaries paid by enterprises, whether natural or natural persons, companies or other entities, as well as taxes on capital gains.
3. This Convention applies to the following existing taxes:
(a) for the Government of the Bolivarian Republic of Venezuela:
(i) income tax; and
(ii) the corporate assets tax;
(b) in the case of the Kingdom of Spain:
(i) Personal Income Tax;
(ii) corporation tax;
(iii) non-resident income tax; and
(iv) Property Tax.
4. The Convention shall also apply to taxes of an identical or similar nature established after the signature of this Convention, which are added to or replaced by existing taxes. The competent authorities of the Contracting States shall communicate the significant changes made to their respective tax laws.
CHAPTER II
Definitions
Article 3. General definitions.
1. For the purposes of this Convention, unless its context requires a different interpretation:
(a) the term ‘Venezuela’ means the Bolivarian Republic of Venezuela;
(b) the term 'Spain' means the Kingdom of Spain;
(c) the terms ‘one Contracting State’ and ‘the other Contracting State’ mean Spain or Venezuela, depending on the context;
(d) the term ‘person’ includes natural or natural persons, companies and any other grouping of persons;
(e) the term ‘company’ means any legal person or entity that is considered as a legal person for tax purposes;
(f) the term ‘undertaking’ applies to the operation of any business;
(g) 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;
(h) the term 'international traffic' means any transport carried out by a ship or aircraft operated by an undertaking having its place of effective management in one Contracting State, except where the ship or aircraft is operated only between places situated in the other Contracting State;
(i) the term ‘competent authority’ means:
(i) in the case of Venezuela, the National Customs and Tax Superintendent of the National Integrated Customs and Tax Administration Service (SENIAT) or his authorized representative;
(ii) in the case of Spain, the Minister of Finance or his authorised representative;
(j) the term 'national' means:
(i) any natural or natural person possessing the nationality of a Contracting State;
(ii) any legal person, society of persons or association whose status as such derives from the law in force in a Contracting State;
(k) the term 'business' includes the provision of professional services as well as any other activity of an independent nature.
2. With regard to the application of the Convention by a Contracting State, any term which is not defined in the Convention shall, unless a different interpretation is required from its context, have the meaning attributed to it in the law of that State concerning the taxes to which the Convention applies, the meaning attributed by the tax law to which it would result from other branches of the law of that State prevails.
Article 4. Resident.
1. For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the laws of that State, is subject to taxation in that State on account of: his place of incorporation, his domicile, residence, seat of address or any other criterion of a similar nature and also includes the State itself and any political subdivision or local authority. 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 basis of their assets situated therein.
2. Where under the provisions of paragraph 1 a natural or 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 where he or she has permanent housing at his or her disposal; if he or she has permanent housing at his or her disposal in both States, he or she shall be considered a resident of the State with which he or she has closer personal and economic relations (centre of his or her 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 State in which he or she habitually lives;
(c) If he or she habitually lives in both States, or if he or she 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 both States, or if he is not a national of either State, the competent authorities of the Contracting States shall decide the case by mutual agreement.
3. Where under the provisions of paragraph 1, a person other than a natural or natural person is a resident of both Contracting States, he or she shall be considered a resident of the State where 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) a head office;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place related to the extraction of natural resources.
3. A construction, installation or assembly work or project and monitoring activities related to such a project constitute a permanent establishment only when its duration exceeds nine months.
4. Notwithstanding the previous 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 (provided that this does not constitute a sale) 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 (provided that this does not constitute a sale);
(c) the maintenance of a deposit of goods or goods belonging to the undertaking for the sole purpose of processing or processing by another undertaking;
(d) the maintenance of a fixed place of business for the sole purpose of buying goods or goods, or collecting information, for the enterprise;
(e) the maintenance of a fixed place of business for the sole purpose of carrying out any other auxiliary or preparatory activity for the undertaking;
(f) the maintenance of a fixed place of business for the sole purpose of carrying out any combination of the activities referred to in subparagraphs (a) to (e), provided that the whole activity of the fixed place of business resulting from that combination retains its auxiliary or preparatory character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person, other than an independent agent to which paragraph 7 applies, is acting in a Contracting State on behalf of an undertaking of the other Contracting State, that undertaking shall be deemed to have a permanent establishment in the first Contracting State referred to above in respect of the activities carried out by that person for the undertaking, if that person habitually has and exercises in a Contracting State powers enabling him to conclude contracts on behalf of the undertaking, unless the activities of that person are limited to those referred to in paragraph 4 and such activities, if carried out through a fixed business facility, cannot convert that installation into a permanent establishment in accordance with the provisions of that paragraph.
6. An enterprise shall not be considered to have a permanent establishment in a Contracting State simply because it carries out its commercial or industrial activities in that State 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. However, where that agent carries out all or almost all of his activities on behalf of that undertaking, he shall not be regarded as an independent agent within the meaning of this paragraph.
7. The fact that a company resident of one Contracting State controls or is controlled by a company resident of the other Contracting State, or that it engages in business activities in that other State (either through a permanent establishment or otherwise), does not in itself make either company a permanent establishment of the other.
CHAPTER III
Income taxation
Article 6. Income from immovable property.
1. Income from immovable property (including income from agricultural or forestry holdings) located in the other Contracting State may be taxed in that other State by a resident of one Contracting State.
2. The term ‘real estate’ shall have the meaning attributed to it by the law of the Contracting State where the goods in question are located. That term shall in any event include attachments to immovable property, livestock and equipment used on agricultural and forestry holdings, the rights to which the provisions of private law relating to real estate apply, the use of immovable property and the right to receive fixed or variable payments in exchange for the exploitation or concession of mineral deposits, sources and other natural resources. Ships and aircraft shall not be considered as immovable property.
3. The provisions of paragraph 1 shall apply to income from direct use, lease or shareholding, as well as any other form of use of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to income derived from the immovable property of an undertaking.
Article 7. Business profits.
1. The profits of an enterprise in one Contracting State may only be taxed in that State unless the enterprise carries out its business in the other Contracting State through a permanent establishment located in that State. If the undertaking carries out such activities, its profits may be subject to taxation in the other State, but only to the extent that they can be attributed to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an undertaking of one Contracting State carries out its activity in the other Contracting State through a permanent establishment situated therein, in each Contracting State, the profits which the permanent establishment would have been able to obtain if it were a distinct and separate undertaking engaged in the same or similar activities, under equal or similar conditions, relating entirely independently to the undertaking of which it is a permanent establishment, shall be attributed to that permanent establishment.
3. In order to determine the benefits of a permanent establishment, it shall be permitted to deduct the costs incurred in carrying out the commercial or industrial purposes of the permanent establishment, including management expenses and general administration expenses incurred in the State where the permanent establishment is located or elsewhere.
4. No benefit shall be attributed to a permanent establishment simply because it has purchased goods or goods for the undertaking.
5. For the purposes of the preceding paragraphs, the profits attributable to the permanent establishment shall be determined each year using the same method, unless there are valid and sufficient grounds for proceeding otherwise.
6. Where profits include income regulated separately in 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 shall be taxed only in the Contracting State where the effective headquarters 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 located in the Contracting State where the port of registration of the ship is located or, if there is no such port of registration, in the Contracting State of which the ship operator is resident.
3. The provisions of paragraph 1 also apply to profits from participation in a pool, on a joint holding or on an international operating body.
4. Notwithstanding paragraph 1 of this article, the profits that the resident of a Contracting State obtains from the operation of ships used in the carriage of hydrocarbons may be taxed in the other Contracting State.
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 one Contracting State and of an undertaking of the other Contracting State,
and, in either case, the commercial or financial relations between the two companies are subject to accepted or imposed conditions which differ from those to be agreed by independent companies, the profits that one of the companies would have obtained if there were no such conditions but which did not occur because of them, may be included in the income of this company and may be taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State - and accordingly subjects to taxation - the profits on which an enterprise of the other State has been taxed in that other Contracting State, and that other State recognizes that the profits thus included are profits that would have been realized by the enterprise of the State concerned in the first place if the terms agreed between the two companies had been those agreed between independent companies, that other State shall endeavour to make the adjustment that would result in the amount of the tax that has taxed those profits. In determining such adjustment, account shall be taken of the other provisions of this Convention and the competent authorities of the Contracting States shall be consulted 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.
2. However, such dividends may also be taxed in the Contracting State in which the company paying the dividends resides and in accordance with the laws of that State; but if the recipient of the dividends is the beneficial owner, the tax thus required may not exceed 10 per cent of the gross amount of the dividends.
Notwithstanding the provisions of the preceding paragraph, the Contracting State from which the corporation paying the dividends is resident shall exempt dividends paid to a company resident of the other Contracting State whose capital is divided wholly or partly into shares and which controls at least 25 per cent (25 per cent) of the capital of the corporation paying the dividends.
The provisions of this paragraph do not affect the company's taxation of profits from which dividends are paid.
3. The term ‘dividends’ within the meaning of this Article means the income from shares, shares or enjoyment bonds, parts of mines, parts of founders or other rights, except credit rights, which allow participation in profits, as well as income from other social shares subject to the same tax regime as the income from shares under the law of the State of which the distribution company is resident.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of one Contracting State, is resident in the other Contracting State of which the company paying the dividends is resident, a business activity through a permanent establishment located there, and the share of the dividends is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 apply.
5. Where a company resident of one Contracting State obtains profits or income from the other Contracting State, that other Contracting State may not establish 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 to the extent that the share in respect of which such dividends are paid is effectively linked to a permanent establishment located in the other State, nor may it tax the undistributed profits of the company, even if the dividends paid or the undistributed profits 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 interests may also be subject to taxation in that other Contracting State from which they are derived in accordance with the law of that State, but if the beneficial owner of those interests is resident of the other Contracting State, the tax thus established may not exceed:
(a) 4.95 per 100 of the gross amount of interest in the case of financial institutions;
(b) 10 per cent of the gross amount of interest, in all other cases.
3. Notwithstanding the provisions of paragraph 2, interest from a Contracting State shall be exempt from tax in that State if:
(a) the interest is paid by the Government of a Contracting State, the Central Bank of a Contracting State or a political subdivision or local entity thereof;
(b) the beneficial owner of the interest is one of the persons mentioned in sub-paragraph (a);
(c) interest is paid in respect of a loan granted or guaranteed by a public financial institution for the purpose of promoting exports and development;
(d) the beneficial owner of the interest is a recognised pension or retirement fund, provided that his or her income is not actually taxed in the other Contracting State; or
(e) interest is paid in connection with the sale on credit of industrial, commercial or scientific equipment to an enterprise of a Contracting State.
4. The term ‘interest’ within the meaning of this Article means 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 securities and income from bonds or bonds, including premiums and lots attached to such securities, as well as any other income subject to the same regime as income from capital provided by the tax legislation of the State from which the income comes. Penalizations for late payment are not considered interest for the purposes of this article.
5. The provisions of paragraphs 1, 2 and 3 do not apply if the beneficial owner of the interest, resident of one Contracting State, carries out in the other Contracting State, from which the interest derives, a business activity through a permanent establishment located in that other State, and the credit generated by the interest is indeed linked to that permanent establishment. In such a case, the provisions of Article 7 shall apply.
6. Interest is considered to come from a Contracting State where the debtor is the State itself, a political subdivision, a local entity 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 in respect of which the debt giving rise to the payment of the interest and bearing the burden thereof has been incurred, the interest shall be deemed to have originated from the Contracting State where the permanent establishment is located.
7. Where due to special relations between the debtor and the beneficial owner, or between them and third parties, the amount of interest in the light of the claim for payment exceeds that agreed upon by the debtor and the creditor in the absence of such relationships, the provisions of this article shall apply only to the latter amount. In such a case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.
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 that other State.
2. However, such royalties or royalties 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 recipient of the royalties or royalties is its beneficial owner, the tax shall not exceed 5 per cent of the gross amount of the royalties or royalties.
3. The term “royalties or royalties”, as used in this article, means remuneration of any kind received in exchange for the use or right to use patents, designs or models, plans, formulas or secret processes, information concerning industrial, commercial or scientific experiences, trademarks or trade names, and copyrights of literary, artistic or scientific works, including film films and tapes for radio or television broadcasting.
4. Paragraph 1 does not apply if the beneficial owner of the royalties or royalties, resident of one Contracting State, carries out in the other Contracting State, from which the royalties or royalties come, an industrial or commercial activity through a permanent establishment located in that other State, and the right or for which the royalties or royalties are paid is indeed linked to that permanent establishment. In such cases the provisions of Article 7 shall apply.
5. Royalties or royalties 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 or royalties, whether or not resident of a Contracting State, has in one of the Contracting States a permanent establishment in respect of which the obligation to pay the royalties or royalties has been entered into and which bear the burden thereof, the royalties or royalties shall be deemed to come from the State in which the permanent establishment is situated.
6. Where, by reason of the special relations between the debtor and the beneficial owner of the royalties or royalties, or of which both have with third parties, the amount of royalties or royalties, in view of the use, right or information for which they are paid, exceeds that for which the debtor and beneficial owner would have agreed in the absence of such relationships, the provisions of this article shall apply only to the latter amount. In such a case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.
Article 13. Capital gains.
1. Profits that a resident of one Contracting State obtains from the disposal of immovable property referred to in article 6 of this Convention which is situated in the other Contracting State may be subject to taxation in that other State.
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 such a permanent establishment (either with the enterprise as a whole or with the enterprise as a whole), may be taxed in that other Contracting State.
3. Profits from the disposal of ships or aircraft operated in international traffic or movable property intended for the operation of such vessels or aircraft shall be subject to taxation only in the Contracting State where the effective headquarters of the undertaking is located.
4. Gains from the disposal of capital shares or other rights in a company whose assets consist primarily, directly or indirectly, of immovable property not affected by its business activity located in a Contracting State or rights inherent in such immovable property may be subject to taxation in that State.
5. Proceeds from the disposal of assets other than those mentioned in the preceding paragraphs shall be subject to taxation only in the Contracting State of which the alienator is resident.
Article 14. Independent personal services.
(Deleted)
Article 15. Dependent personal services.
1. Subject to the provisions of articles 16, 18, 19 and 20, wages, salaries and other similar remuneration received by a resident of a Contracting State for employment shall be subject to taxation in that State only, unless the employment is exercised in the other Contracting State. If the employment is exercised in the other Contracting State, the remuneration received for that purpose may be subject to taxation in that other State.
2. Notwithstanding paragraph 1, remunerations obtained by a resident of a Contracting State on account of employment in the other Contracting State may be taxed only in the State referred to above if:
(a) the recipient remains in the other State for a period or periods of not more than one hundred and eighty-three days in any twelve-month period beginning or ending in the fiscal year concerned; and
(b) remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) Remuneration is not borne by a permanent establishment held by the employer in the other State.
3. Notwithstanding the above provisions of this article, remunerations received for employment on board a ship or aircraft operated in international traffic by an undertaking of a Contracting State may be subject to taxation in the Contracting State where the effective head office of the undertaking is located.
Article 16. Participations of Councillors and Remunerations of members of Boards.
Participations, attendance allowances, fees, remuneration or other similar remuneration, which a resident of a Contracting State receives in his capacity as a member of a board of directors, a board of directors and any undertaking performing the same functions as a company resident of the other Contracting State, may be subject to taxation in that other State.
Article 17. Entertainers and sportspersons.
1. Notwithstanding articles 7 and 15, any income earned by a resident of a Contracting State in 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 personal activities carried out by a professional of the spectacle or an athlete as such is not attributed to the professional or sportsman himself but to another person, such income, notwithstanding the provisions of Articles 7 and 15, may be subject to taxation in the Contracting State where the activities of the professional of the spectacle or sportsman are carried out.
3. The provisions of paragraphs 1 and 2 shall not apply to income from activities carried out in a Contracting State by performing professionals or sportsmen, if the visit to that State is wholly or substantially financed by public funds from one or both of the Contracting States or from one of their political subdivisions or local authorities. In such a case, the income will be taxed only in the Contracting State in which the artist or athlete is resident.
Article 18. Pensions.
Subject to the provisions of article 19, paragraph 2, pensions and other similar remuneration paid to a resident of a Contracting State in exchange for previous employment shall be subject to taxation only in that State.
Article 19. Government services or public functions.
1. (a) Salaries, wages and other similar remuneration, excluding pensions, paid by a Contracting State or by one of its political subdivisions or local entities to a natural or natural person for services rendered to that State or to that subdivision or entity, may only be subject to taxation in that State.
(b) Such salaries, salaries and similar remuneration may, however, be subject to taxation in the other Contracting State only if the services are provided in that State and the natural person is a resident of that State who:
(i) is a national of that State; or
(ii) has not acquired the status of resident of that State solely to provide the services.
2. (a) Pensions paid by a Contracting State or by one of its political subdivisions or local entities, either directly or from funds constituted, to a natural or natural person for services rendered to that State or to that subdivision or entity, may be subject to taxation only in that State.
(b) Such pensions may, however, be subject to taxation in the other Contracting State only if the natural or natural person is a resident and national of that State.
3. Articles 15, 16, 17 and 18 apply to salaries, salaries and other similar remunerations, and pensions, paid for services rendered in the context of an entrepreneurial activity carried out by a Contracting State or by one of its political subdivisions or local authorities.
Article 20. Students, Apprentices, Teachers and Researchers.
1. A natural person who is or has been a resident of one Contracting State immediately before visiting the other Contracting State and who is temporarily present in the other Contracting State for the main purpose of:
(a) To study in that other Contracting State, at a university or other educational institute approved by the relevant educational authorities of that Contracting State;
(b) obtain the necessary training to qualify him to pursue a profession or to acquire a vocational, professional or technical specialty; or
(c) To study, teach or conduct research as a recipient of a scholarship, stipend or award from a governmental, religious, charitable, scientific, literary or educational organization or as a participant in other programmes sponsored by such an agency, shall be exempt from taxation in that other Contracting State with respect to:
(i) amounts sent from abroad for maintenance, education, training or practice;
(ii) remuneration for personal services provided in that other Contracting State for practical training, it being understood that this benefit shall in no case exceed a period of two (2) consecutive years;
(iii) the amount of such scholarship, stipend or award.
The total amount of the amounts referred to in sub-paragraphs (ii) and (iii) shall be exempted up to an amount not exceeding twenty thousand (20,000) euros per year or its equivalent in bolívars.
2. The provisions of this Article shall not apply to income derived from research activities whose purpose is not in the public interest, but primarily the private benefit of one or more specific persons.
Article 21. Other income.
1. The income of a resident of a Contracting State, whatever its source, not referred to in the previous articles of this Convention, shall be subject to taxation only in that State.
2. Paragraph 1 does not apply to income, other than income derived from immovable property within the meaning of Article 6, paragraph 2, where the beneficiary of such income, resident of a Contracting State, carries out an entrepreneurial activity in the other Contracting State through a permanent establishment situated in that other State, and the right or for which the income is paid is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 apply.
CHAPTER IV
Imposition of Heritage
Article 22. Capital.
1. Property constituted by immovable property within the meaning of article 6, which is owned by a resident of one Contracting State and situated in the other Contracting State, may be taxed in that other State.
2. Property consisting of movable property forming part of the assets of a permanent establishment held by an enterprise of one Contracting State in the other Contracting State may be taxed in that other Contracting State.
3. Assets consisting of ships or aircraft operated in international traffic, as well as movable property affected by the operation of such vessels and aircraft, may be taxed only in the Contracting State in which the place of effective management of the undertaking is located.
4. All other assets of a resident of a Contracting State may be subject to taxation only in that State.
CHAPTER V
Methods of eliminating double taxation
Article 23. Elimination of double taxation.
Double taxation shall be avoided as follows:
1. In Venezuela:
Persons resident in Venezuela who receive income that, in accordance with the provisions of this Agreement, may be taxed in Spain, may prove against the Venezuelan taxes corresponding to those income the taxes applied in Spain, in accordance with the provisions applicable in Venezuelan law.
However, such proof may not exceed the part of the income tax or property tax calculated prior to the credit attributable to the income or property, which may be subject to taxation in Venezuela; and
When, in accordance with any provision of this Agreement, the income obtained by a resident of Venezuela is exempt from tax in Venezuela, Venezuela may, however, take into account the exempt income to calculate the amount of the remaining income tax of that resident.
2. In Spain:
In accordance with the provisions, and without prejudice to the limitations imposed by Spanish law:
(a) Where a resident of Spain obtains income or possesses assets which, in accordance with the provisions of this Agreement, may be taxed in Venezuela, Spain shall permit:
(i) the deduction of the income tax of that resident in an amount equal to the income tax paid in Venezuela;
(ii) the deduction of the property tax of that resident in an amount equal to the tax paid in Venezuela on those assets;
(iii) the deduction of corporation tax actually paid by the company which distributes the dividends corresponding to the profits from which the dividends are paid, in accordance with its domestic law.
However, such deduction may not exceed the part of the income tax or property tax, calculated before the deduction, corresponding to the income or assets that may be taxed in Venezuela.
(b) Where, under any provision of this Agreement, the income obtained by a resident of Spain or the property he holds is tax-exempt in Spain, Spain may, however, take into account the income or wealth exempted in calculating the tax on the rest of the income or property of that resident.
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 taxes or obligations relating thereto which are not or are more burdensome than those to which nationals of that other State who are under the same conditions, in particular with regard to residence, are or may be subject. Notwithstanding article 1, this provision shall also apply to persons who are not residents of one or any of the Contracting States.
2. Taxes applicable to a permanent establishment held by an undertaking of one Contracting State in the other Contracting State shall not be less favourable in that other Contracting State than those applicable to undertakings of that other State engaged in the same activities. This provision shall not oblige a Contracting State to grant residents of the other Contracting State any personal deduction, tax benefit or tax relief that it grants to its own residents on the basis of their marital status or family charges.
3. Unless the provisions of article 9, paragraph 1, of article 11, paragraph 7, or article 12, paragraph 6, apply, interest, royalties and other expenses paid by an undertaking of one Contracting State to a resident of the other Contracting State shall be deductible for determining the profits subject to taxation of that undertaking, under the same conditions 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 to a resident of the other Contracting State shall be deductible for the determination of the assets subject to taxation of that enterprise 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 wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State shall not be subject in the State referred to above to any tax or obligation relating thereto which is not or is more burdensome than those to which other similar undertakings of the State referred to in the first instance are or may be subject.
5. Notwithstanding Article 2, the provisions of this Article apply to all taxes irrespective of their nature or name.
Article 25. Mutual agreement procedure.
1. Where a person considers that the measures taken by one or both Contracting States involve 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(1) applies, to that of the Contracting State of which he is a national. The case must arise within three years of the first notification of the measure involving an imposition not in accordance with the provisions of the Convention.
2. The competent authority shall, if it finds the complaint well founded and if it is not in itself able to reach 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 this Convention. The agreement shall apply irrespective of the time limits laid down by the national law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve any difficulties or doubts arising from the interpretation or application of the Convention by means of an amicable agreement. They may also agree to try to avoid double taxation in cases not covered by this Convention.
4. The competent authorities of the Contracting States may communicate directly with each other in order to reach the agreements referred to in the preceding paragraphs. Where an oral exchange of views is considered desirable in order to reach an agreement, such an exchange may take place through a commission composed of representatives of the competent authorities of the Contracting States.
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 domestic law of the Contracting States with respect to the taxes covered by this Convention, to the extent that the taxes required by this Convention are not contrary to this Convention, in particular in order to prevent fraud and tax evasion. The exchange of information is not restricted 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 disclosed only to persons or authorities (including courts and administrative bodies) responsible for the management or collection of taxes covered by this Convention, for ensuring compliance with such taxes or for deciding remedies relating to such taxes. Such persons or authorities shall use the information only for such purposes. Such persons may disclose such information in public hearings of the courts or in court judgements.
2. Paragraph 1 in no case obliges a Contracting State to:
(a) To take administrative measures contrary to the laws or administrative practices of that or other Contracting State;
(b) to provide information that cannot be obtained under its laws or in the exercise of its normal administrative practice, from that or from the other Contracting State;
(c) provide information that would reveal a commercial, industrial or professional secret or a commercial procedure, or information the disclosure of which would be contrary to public policy.
Article 27. Members of diplomatic missions and consular posts.
Nothing in this Convention shall affect the tax privileges of diplomatic and consular officials who are members of diplomatic missions or consular offices in accordance with the general principles of international law or under the provisions of special agreements.
CHAPTER VII
Final provisions
Article 28. Entry into force.
1. Each Government of the Contracting States shall notify the other, in writing and through diplomatic channels, that the constitutional and legal procedures provided for in its legal system for the adoption of this Convention have been complied with.
2. The Convention shall enter into force on the date of receipt of the last notification referred to in paragraph 1 and its provisions shall take effect with respect to income or property taxes for the fiscal year beginning on or after 1 January of the calendar year following the entry into force of the Convention.
Article 29. Termination.
This Convention shall remain in force indefinitely, unless one of the Contracting States, five (5) years after its entry into force, expresses in writing and through diplomatic channels its decision to denounce it at least six (6) months before the end of any calendar year. In such a case, the Convention shall cease to have effect with respect to income and property taxes for the fiscal year beginning on or after 1 January of the calendar year following that in which the complaint is communicated.
In faith, the signatories, duly authorized to do so, have signed this Convention.
Done in duplicate in Madrid on 8 April 2003 in the Spanish language, both texts being equally authentic.
For the Kingdom of Spain,
For the Bolivarian Republic of Venezuela,
Ana Palacio Vallelersundi
Minister for Foreign Affairs
Roy Chaderton Matos
Minister for Foreign Affairs
PROTOCOL
At the time of the signing of the Convention between the Bolivarian Republic of Venezuela and the Kingdom of Spain to Prevent Double Taxation and Tax Evasion and Tax Fraud on Income and Property Taxes, the signatories have agreed on the following provisions which form an integral part of the Convention:
I. With reference to Article 4:
In order to justify residence in a Contracting State for the purposes of this Convention, a residence certificate shall be issued stating expressly that the person is resident in the Contracting State for the purposes of the Convention. The competent authority for issuing such certificates shall be:
In the case of Venezuela, the National Customs and Tax Superintendent of the National Integrated Customs and Tax Administration Service (SENIAT) or person to whom he delegates.
In the case of Spain, the Delegate of the State Agency of the Tax Administration (AEAT) competent by reason of the territory or person to whom he delegates. The tax domicile of the person shall determine the territorial competence.
II. With reference to Article 5, paragraph 2 (f):
The exploration activity of natural resources shall be deemed to constitute a permanent establishment where the undertaking has as its usual and principal activity the exploration.
III. With reference to Article 7, paragraph 3:
In order to determine the benefits of a permanent establishment, no deduction shall be allowed for fictitious expenses, which do not constitute a consideration for services actually received.
IV. With reference to Article 8:
Since the entry into force of this Convention, the Convention between the Government of the Republic of Venezuela and the Government of Spain to Prevent International Double Taxation in relation to the Exercise of Maritime and Air Navigation, signed at Caracas on 6 March 1986, is hereby repealed.
V. With reference to Article 10:
Permanent establishments in one Contracting State belonging to an enterprise resident in the other Contracting State shall not be subject to:
(a) In the case of Spain: the supplementary tax referred to in Article 18(2) of Law 41/1998 of 9 December 1998 on non-resident income tax and tax rules (BOE of 10 December) or the similar tax created or replaced.
(b) In the case of Venezuela: the Capital Gains Tax referred to in article 72 of the Income Tax Law, published in the Official Gazette of the Bolivarian Republic of Venezuela Special No. 5,390 of 22 October 1999, or the similar tax that is created or replaced.
VI. With reference to Article 10, paragraph 3:
The exemption contained in paragraph 3 of Article 10 of the Convention shall not apply where the company distributing the dividends has been incorporated in that State for the sole purpose of benefiting from that exemption.
It shall not be understood that a company has been incorporated in a State for the sole purpose of benefiting from the exemption referred to in the preceding paragraph where the shareholding in the capital required for its application has been held continuously during the year preceding the day on which the benefit is distributed or, failing that, maintained for as long as is necessary to complete one year.
VII. With reference to Article 11:
If, after signature of this Convention, a Contracting State concludes a Double Taxation Convention with a Member State of the European Union, in which taxation is agreed to be lower than that provided for in Article 11, the provisions of the Convention signed subsequently shall also apply, from the date of its entry into force, to this Convention.
VIII. With reference to Article 11, paragraph 3(c):
The institutions of a public nature referred to are:
In Spain:
ICO: Official Credit Institute.
CESCE: Spanish Export Credit Insurance Company.
COFIDES: Spanish Development Finance Company.
In Venezuela:
Development Bank.
Foreign Trade Bank.
Bank of the Sovereign People.
Women's Bank.
IX. With reference to Article 12:
With regard to paragraph 3 of Article 12, remuneration for special analyses or studies of a scientific, geological or technical nature, or for special engineering services or consultancy or consultancy services, shall not be considered to be received in exchange for information concerning industrial, commercial or scientific experience. In such cases, the provisions of article 7 apply.
X. With reference to Article 19:
The provisions of this Article shall not apply to workers whose contract has been concluded prior to the entry into force of this Article.
XI. With reference to Article 22:
It shall be understood that it shall enter into force as soon as a property tax is established in Venezuela.
XII. With reference to Articles 2 and 23:
It is understood that, in the case of Venezuela, the tax on business assets should be considered, for the purposes of this Agreement, as an income tax.
In faith, the signatories, duly authorized to do so, have signed this Protocol.
Done in duplicate in Madrid on 8 April 2003 in the Spanish language, both texts being equally authentic.
For the Kingdom of Spain,
For the Bolivarian Republic of Venezuela,
Ana Palacio Vallelersundi
Minister for Foreign Affairs
Roy Chaderton Matos
Minister for Foreign Affairs
This Convention and its Protocol entered into force on 29 April 2004, the date of receipt of the last notification of compliance with the respective domestic procedures, as set out in its Article 28.
What is made public for general knowledge.
Madrid, May 26, 2004. – Technical Secretary General Ignacio Matellanes Martínez.