CONVENTION BETWEEN THE KINGDOM OF SPAIN AND ROMANIA ON THE ELIMINATION OF DOUBLE IMPOSITION IN RELATION TO RENT TAXES AND PREVENTING FISCAL EVASION AND ELIMINATION
The Kingdom of Spain and Romania,
Desiring to further develop its economic relations and to strengthen its cooperation in tax matters,
Intending to conclude a convention to eliminate double taxation in relation to income taxes and to prevent tax evasion and avoidance, without creating opportunities for non-taxation or reduced taxation through evasion or circumvention, including the practice of seeking the most favourable agreement aimed at obtaining the benefits provided for in this convention to indirectly favour residents of third States,
Have agreed as follows:
Article 1. Persons covered.
1. This Convention applies to persons resident in one or both Contracting States.
2. For the purposes of this Convention, income received by or through an entity or instrument considered wholly or partly transparent for tax purposes in accordance with the tax rules of any of the Contracting States shall be deemed to be received by a resident of a Contracting State, but only to the extent that that State treats it, for tax purposes, as income of a resident.
Article 2. Taxes covered.
1. This Convention applies to income taxes levied by each Contracting State, its political subdivisions or its administrative-territorial units, whatever the system of its levy.
2. Income taxes are those that tax the entire income or elements thereof, including taxes on profits arising from the disposal of movable or immovable property, as well as taxes on capital gains.
3. The current taxes to which this Convention applies are, in particular:
(a) in the case of Romania:
(i) income tax; and
(ii) the profit tax;
(b) in the case of Spain:
(i) the Personal Income Tax;
(ii) Company Income Tax; and
(iii) Non-Resident Income Tax.
4. The Convention shall also apply to taxes of an identical or similar nature which are established after the signature of the Convention and which are added to or replaced by existing taxes. The competent authorities of the Contracting States shall notify each other of any significant amendments to their tax laws.
Article 3. General definitions.
1. For the purposes of this Convention, unless otherwise determined by the context:
(a) the term ‘Romania’ means the territory of the State of Romania, including the territorial sea and airspace over which Romania exercises its sovereignty, as well as the adjacent area, continental shelf and exclusive economic zone over which Romania exercises rights of sovereignty and jurisdiction in accordance with its legislation and the rules and principles of international law;
(b) the term ‘Spain’ means the Kingdom of Spain and, used geographically, means the territory of the Kingdom of Spain, including inland waters, airspace, territorial sea and areas outside the territorial sea where, under international law and under its domestic law, the Kingdom of Spain exercises or may exercise in future jurisdiction or rights of sovereignty over the seabed, its subsoil and superjacent waters, and its natural resources;
(c) the words ‘one Contracting State’ and ‘the other Contracting State’ mean Romania or Spain, depending on the context;
(d) the term ‘person’ includes natural persons, companies and any other grouping of persons;
(e) the term 'company' means any legal person or any entity which is considered a legal person for tax purposes;
(f) the term 'enterprise' applies to the pursuit of any economic activity;
(g) 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;
(h) 'international traffic' means any transport carried out by a ship or aircraft operated by an undertaking whose effective head office is situated in a Contracting State, except where the ship or aircraft is operated only between points situated in the other Contracting State;
(i) the expression ‘competent authority’ means:
(i) in the case of Romania, the Minister of Public Finance or his authorised representative;
(ii) in the case of Spain, the Minister of Finance and Civil Service or his authorised representative;
(j) the term 'national' means:
(i) in the case of Romania, any natural person having the status of Romanian citizen in accordance with the legislation of Romania and any legal person, group of persons and any other entity constituted in accordance with the legislation in force in Romania;
(ii) in the case of Spain, any natural person possessing Spanish nationality and any legal person, a company of persons (
partnership
) an association or entity incorporated in accordance with the legislation in force in Spain;
(k) the term ‘economic activity’ includes the provision of professional services and the carrying out of other independent activities;
(l) the term ‘pension scheme’ means:
(i) in Romania, any plan or agreement formalised in Romania
(A) that it is generally exempt from income taxes in Romania; and
(B) the purpose of which is to administer or provide retirement pensions or benefits or to obtain income which increases one or more of those agreements.
(ii) in Spain, any plan, fund, mutual fund or other entity incorporated in Spain:
(a) the main purpose of which is to manage the right of persons in whose favour they are constituted to receive income or capital from retirement, survival, widowhood, orphanhood or disability, or to obtain income in respect of one or more of those entities; and
(B) whose contributions may be reduced from the personal tax base;
2. For the purpose of the application of the Convention at any time by a Contracting State, any term or expression not defined therein shall have, unless its context is affected by a different interpretation, the meaning attributed at that time to it by the law of that State concerning taxes which are the subject of the Convention, the meaning attributed by the tax legislation over which it would result from other branches of the law of that State.
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 by reason of his domicile, residence, seat of address, place of registration, or any other criterion of a similar nature, including also that State and its political subdivisions, local authorities or administrative-territorial units. This term does not, however, include persons who are subject to taxation in that State solely for the income they obtain from sources located 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) It shall be considered a resident exclusively of the State in which it has permanent housing at its disposal; if it has permanent housing at its disposal in both States, it shall be considered a resident exclusively of the State with which it has closer personal and economic relations (centre of vital interests);
(b) If it is not possible to determine the State in which the person has the centre of his or her vital interests, 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 exclusively of the 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 deemed to be a resident exclusively of the State of which he or she is a national;
(d) if he is a national of both States or 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 person is a resident of both Contracting States, he or she shall be deemed to be a resident exclusively 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 business.
2. The term ‘permanent establishment’ includes, in particular:
(a) the head offices;
(b) branches;
(c) Offices;
(d) factories;
(e) workshops; and
(f) mines, oil or gas wells, quarries or any other place of extraction of natural resources.
3. A work or construction, or an installation project, constitutes a permanent establishment only if its duration exceeds twelve 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 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 deposit of goods or goods belonging to the undertaking for exhibition at trade fairs or exhibitions, the sale of which is made by the undertaking within a maximum period of one month from the closure of that trade fair or exhibition;
(e) the maintenance of a fixed place of business for the sole purpose of purchasing goods or goods or collecting information for the undertaking;
(f) the maintenance of a fixed place of business for the sole purpose of carrying out any other auxiliary or preparatory activity for the undertaking;
(g) 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 (f), provided that the whole activity of the fixed place of business resulting from that combination retains its auxiliary or preparatory character.
5. By way of derogation from paragraphs 1 and 2, where a person, other than an independent agent to which paragraph 6 applies, acts on behalf of an undertaking and has and exercises habitually 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 the activities carried out by that person for the undertaking, unless the activities of that person are limited to those referred to in paragraph 4 which, if carried out through a fixed place of business, would not have determined that fixed place of business as 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 in that State through a broker, a general commissioner or any other independent agent, provided that such persons act within the ordinary framework of their activity.
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 business 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.
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 is situated. In any event, the term includes property attached to immovable property, livestock and equipment used on agricultural and forestry holdings, rights to which the private law provisions relating to real estate, the use of immovable property and the right to receive fixed or variable payments in exchange for exploitation, or the granting of exploitation, of mineral deposits, sources and other natural resources apply; ships and aircraft shall not be regarded as immovable property.
3. Paragraph 1 applies to income derived from the direct use, lease or shareholding and from any other form of exploitation of immovable property.
4. Where ownership of shares or shareholdings or other rights confers directly or indirectly on its owner the right to the enjoyment of immovable property, income derived from direct use, lease or shareholding, or use in any other form of such right of enjoyment, may be subject to taxation in the Contracting State in which the immovable property is situated.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to income derived from the immovable property of an undertaking.
Article 7. Business profits.
1. The profits of an undertaking of one Contracting State shall be taxable exclusively in that State, unless the undertaking carries out its business in the other Contracting State by means of a permanent establishment situated therein. If the company does so, the profits of the company may be taxed in the other State, but only to the extent that they are attributable to that permanent establishment.
2. Without prejudice to paragraph 3, where an undertaking of a Contracting State carries out its business 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 separate and independent undertaking carrying out the same or similar activities under the same or similar conditions and dealing entirely independently with the undertaking from which it is a permanent establishment shall be attributed to that permanent establishment.
3. For the purpose of determining the benefit of the permanent establishment, the deduction of expenses incurred for the purposes of the permanent establishment, including management and general administrative expenses for the same purposes, shall be permitted, whether incurred in the Contracting State in which the permanent establishment is located or elsewhere.
4. No profits shall be attributed to a permanent establishment by reason of the mere acquisition of goods or goods by that permanent establishment for the enterprise.
5. For the purposes of the preceding paragraphs, the profits attributable to the permanent establishment shall be determined each year by the same method, unless there are valid and sufficient grounds for proceeding otherwise.
6. Where profits comprise 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 taxable exclusively in the Contracting State in which the place of effective management of the undertaking is situated.
2. If the place of effective management of a shipping undertaking is on board a ship, it shall be deemed to be located in the Contracting State where the base port of the ship is located, or if there is no such base port, in the Contracting State of which the person operating the ship 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.
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 undertakings are, in their commercial or financial relations, bound by accepted or imposed conditions which differ from those which would be agreed by independent undertakings, the profits which would have been obtained by one of the undertakings in the absence of such conditions, and which in fact have not been realized because of them, may be included in the profits of that undertaking and taxed accordingly.
2. Where a Contracting State includes in the profits of an undertaking of that State - and is therefore serious - those of an undertaking of the other Contracting State which have already been subject to taxation in that other Contracting State, and that other State recognizes that 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 upon by independent undertakings, that other State shall make such adjustment as may be appropriate to the amount of the tax which has taxed those profits. The other provisions of this Convention shall be taken into account in determining such adjustment.
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, dividends paid by a company resident in a Contracting State may also be subject to taxation in that State under its legislation, but if the actual beneficiary of dividends is a resident of the other Contracting State, the tax thus required shall not exceed 5 per cent of the gross amount of dividends.
3. By way of derogation from paragraph 2, the Contracting State of which the company paying the dividends is resident shall exempt dividends paid where the beneficial owner is:
(a) a company resident of the other Contracting State which holds, directly or indirectly, for more than one year, at least 10 per cent of the capital of the company paying the dividends;
(b) a resident pension scheme of the other Contracting State.
This paragraph does not affect the company's taxation of the profits from which dividends are paid.
4. 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 allowing participation in profits other than credit, as well as income from other social participations subject to the same tax regime as the income from shares under the law of the State of which the distribution company is resident.
5. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of one Contracting State, carries out in the other Contracting State, of which the company paying the dividends is resident, an economic activity through a permanent establishment located there, and the share generated by the dividends is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 shall apply.
6. Where a company resident of one Contracting State obtains profits or income from the other Contracting State, that other State may not require any tax on dividends paid by the company, except to the extent that 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 located in that other State, or subject the undistributed profits of the company to a tax on them, even if dividends paid or profits not distributed consist, in whole or in part, of profits or income from that other State.
Article 11. Interest.
1. Interest from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, interest from one Contracting State may also be subject to taxation in that State under its law, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax thus required shall not exceed 3 per cent of the gross amount of interest.
3. By way of derogation from paragraph 2, interests originating in a Contracting State shall be exempted in that State where their actual recipient and beneficiary is the other Contracting State, or one of its political subdivisions or administrative-territorial units, or a body, bank or institution of that State, political subdivision or administrative-territorial unit, or where the claims of a resident of the other Contracting State are secured, insured or financed by a financial institution of which that other State is wholly or partly owned.
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. Penalties for late payment are not considered interest for the purposes of this article.
5. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the interest, resident of one Contracting State, carries out an economic activity in the other Contracting State from which the interest derives, through a permanent establishment situated in that other State, and the credit generated by the interest is effectively 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 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 for which the interest is paid has been incurred and which bears the burden of the interest, such interest shall be deemed to have come from the Contracting State in which the permanent establishment is situated.
7. Where, on account of special relations between the debtor and the beneficial owner, or between them and third parties, the amount of interest, having regard to the claim for which it is paid, exceeds that agreed upon by 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 amount shall be taxable in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.
Article 12. Royalties.
1. Fees from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, royalties from one Contracting State may also be subject to taxation in that State under its legislation, but if the actual beneficiary of the royalties is a resident of the other Contracting State, the tax thus required shall not exceed 3 per cent of the gross amount of the royalties.
3. The term ‘royalties’ within the meaning of this article means the amounts of any kind paid for the use or granting of copyright on literary, artistic or scientific works (
software
and cinematographic films, including patents, trademarks, designs, drawings, formulas or secret procedures, or information relating to industrial, commercial or scientific experiences.
4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the royalties, resident of one Contracting State, carries out in the other Contracting State, from which the royalties come, an economic activity through a permanent establishment situated in that other State, and the right or for which the royalties are paid is effectively linked to that permanent establishment. In such a case, the provisions of Article 7 shall apply.
5. The fees are considered to come from a Contracting State where the debtor is a resident of that State. However, where the debtor of the royalties, whether or not he is a resident of a Contracting State, has in a Contracting State a permanent establishment in respect of which the obligation to pay the royalties has been entered into and which bears the burden thereof, such fees shall be deemed to have come from the Contracting State in which the permanent establishment is situated.
6. Where due to special relations between the debtor and the beneficial owner, or where both have with third parties, the amount of the royalties, in view of the use, right or information for which they are paid, exceeds the amount that 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 amount shall be taxable 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 as defined in article 6 located in the other Contracting State may be taxed in that other State.
2. 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, including gains from the disposal of such a permanent establishment (only 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 affected by the operation of such vessels or aircraft shall be taxable exclusively in the Contracting State in which the place of effective management of the undertaking is situated.
4. Profits obtained by a resident of a Contracting State from the disposal of shares, other than those which are traded substantially and regularly on a stock exchange, shares, or similar rights, the value of which derives from more than 50 per cent, directly or indirectly, of immovable property situated in the other Contracting State, may be taxed in that other State. Real estate used in the ordinary context of the company's economic activity shall not be taken into account for that purpose.
5. Earnings obtained from the disposal of shares, shares or other rights which directly or indirectly grant the owner of such shares, shares or rights the right to the enjoyment of immovable property situated in a Contracting State may be subject to taxation in that State.
6. The proceeds from the disposal of any property other than those referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable exclusively in the Contracting State in which the transferor resides.
Article 14. Income from employment.
1. Without prejudice to Articles 15, 17 and 18, salaries, wages and other similar remuneration obtained by a resident of a Contracting State on account of employment shall be taxable only in that State unless the employment is carried out in the other Contracting State. If the employment is carried out in this way, the remuneration derived therefrom 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 account of employment in the other Contracting State shall be taxable only in the State referred to above where:
(a) the recipient remains in the other State for a period or periods of not more than 183 days together in any period of twelve months beginning or ending in the calendar year concerned; and
(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State; and
(c) remuneration is not supported by a permanent establishment held by the employer in the other State.
3. Notwithstanding the foregoing provisions of this Article, remunerations obtained by a resident of a Contracting State on account of employment on board a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the undertaking is situated.
Article 15. Remuneration of counsellors.
The remuneration of directors and other similar remunerations which a resident of a Contracting State obtains as a member of a board of directors of a company resident of the other Contracting State may be taxed in that other State.
Article 16. Entertainers and sportspersons.
1. By way of derogation from Articles 7 and 14, any income which a resident of a Contracting State obtains from the exercise of his personal activity in the other Contracting State as an artist, as a theatre, film, radio or television actor, as a musician, or as an athlete, may be subject to taxation in that other State.
2. Notwithstanding Articles 7 and 14, where income derived from activities carried out by an artist or athlete personally and in that capacity is attributed not to the artist or athlete himself but to another person, such income may be taxed in the Contracting State in which the activities of the artist or athlete are carried out.
3. Notwithstanding paragraphs 1 and 2 of this Article, the income obtained by an artist or sportsman in the course of his activity shall be exempt in the Contracting State in which such activities are carried out when the visit to that State is financed by public funds of the other Contracting State, its political subdivisions or one of its administrative-territorial units, or by a public body of that other State or subdivision or unit and the activity is carried out for non-profit.
Article 17. Pensions.
Without prejudice to Article 18(2), pensions and similar remuneration paid to a resident of a Contracting State on account of previous employment shall be taxable only in that State.
Article 18. Civil service.
1.
(a) Salaries, salaries and other similar remuneration paid by a Contracting State or by one of its political subdivisions, local entities or by one of its administrative-territorial units to a natural person for services rendered to that State, subdivision, entity or unit shall be taxable exclusively in that State.
(b) However, such salaries, salaries and similar remuneration shall be taxable only in the other Contracting State where 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 for the purpose of providing the services.
2.
(a) Notwithstanding paragraph 1, pensions and other similar remuneration paid by a Contracting State or by one of its political subdivisions, local authorities or administrative-territorial units, either directly or from constituted funds, to a natural person on account of services rendered to that State, subdivision, entity or unit, shall be taxable exclusively in that State.
(b) However, such pensions and similar remuneration shall be taxable only in the other Contracting State where the natural person is a resident and a national of that State.
3. The provisions of Articles 14, 15, 16 and 17 apply to salaries, salaries, pensions and other similar salaries paid for services rendered in the context of an economic activity carried out by a Contracting State or by one of its political subdivisions, local authorities, or administrative-territorial units.
Article 19. Students and trainees.
The amounts received to cover the costs of maintenance, study or practical training by a student or a trainees who is or has been immediately before arriving in a Contracting State resident of the other Contracting State, and who is in the State mentioned first for the sole purpose of continuing his studies or practical training, may not be subject to taxation in that State, provided that such amounts come from sources outside that State.
Article 20. Other income.
1. The income of a resident of a Contracting State, regardless of its origin, not mentioned in the previous articles of this Convention, shall be taxable exclusively in that State.
2. Paragraph 1 does not apply to income, other than income derived from immovable property within the meaning of Article 6(2), where the recipient of such income, resident of a Contracting State, carries out an economic 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 shall apply.
Article 21. Elimination of double taxation.
It is agreed to avoid double taxation as follows:
1. In the case of Romania:
Where a resident of Romania obtains income which, in accordance with the provisions of this Convention, may be taxed in Spain, Romania shall allow that resident's income tax to be deducted from an amount equal to the income tax paid in Spain.
However, this deduction may not exceed the part of the income tax, calculated before the deduction, corresponding to the income that may be taxed in Spain.
2. In the case of Spain, double taxation shall be avoided in accordance with the provisions of its domestic legislation or in accordance with the following provisions in accordance with Spanish domestic law:
(a) Where a resident of Spain obtains income which, under the provisions of this Convention, may be taxed in Romania, Spain shall permit:
(i) the deduction in the income tax of that resident from an amount equal to the income tax paid in Romania;
(ii) the deduction of corporation tax actually paid by the company distributing the dividends, corresponding to the profits from which those dividends are paid, in accordance with Spain's domestic law.
However, such deduction may not exceed the part of the income tax, calculated before the deduction, corresponding to the income that may be taxed in Romania.
(b) Where, under any provision of the Convention, income obtained by a resident of Spain is exempt from taxes in Spain, Spain may, however, take into account the exempt income in calculating the tax on the rest of the income of that resident.
Article 22. 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 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 and tax reductions it grants to its own residents in view of their marital status or family burdens.
3. Unless the provisions of Article 9(1) of Article 11(7) or Article 12(6) apply, interest, royalties and other expenses paid by an undertaking of a Contracting State to a resident of the other Contracting State shall be deductible to determine 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.
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 Contracting 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. The provisions of this Article apply only to taxes falling within the scope of this Convention.
Article 23. 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 not in accordance 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 22 (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 conformity with the provisions of the Convention.
2. The competent authority shall, if it finds the complaint well founded and if it cannot in itself 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 which does not comply with this Convention. The agreement reached shall apply irrespective of the time limits provided for by the domestic 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 the Convention.
4. The competent authorities of the Contracting States may communicate directly with each other in order to reach agreement within the meaning of the preceding paragraphs. Where it is considered that such an agreement may be facilitated by an oral exchange of views, it may be carried out through a joint committee composed of representatives of the competent authorities of the Contracting States.
Article 24. Exchange of information.
1. The competent authorities of the Contracting States shall exchange information which is likely to be of interest to the implementation of this Convention or to the administration or application of national law relating to taxes of any kind or designation required by the Contracting States, their political subdivisions, their local entities or their administrative-territorial units, to the extent that the imposition thus required is not contrary to the Convention. The exchange of information is not limited by Articles 1 and 2.
2. Information received by a Contracting State pursuant to paragraph 1 shall be kept secret in the same way as information obtained under the domestic law of that State and shall be communicated only to the persons or authorities (including courts and administrative bodies) responsible for the determination or collection of taxes referred to in paragraph 1 of their effective application, the prosecution of non-compliance with such taxes, the determination of remedies relating thereto, or the supervision of such activities. Such persons or authorities shall use this information only for those purposes. They may disclose the information at public court hearings or in court judgements. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes where, under the law of the requesting State, it may be used for such other purposes and the competent authority of the State providing the information authorizes such use.
3. In no case may the provisions of paragraphs 1 and 2 be interpreted as obliging a Contracting State to:
(a) take administrative measures contrary to its legislation and 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) providing information revealing business, industrial, commercial or professional secrecy, or an industrial procedure, or information the communication of which is contrary to public policy (ordre public).
4. Where a Contracting State requests information under this Article, the other Contracting State shall use the measures to collect information at its disposal in order to obtain the information requested, even if that other State may not need such information for its own tax purposes. The above obligation is limited by paragraph 3, but in no case may Contracting States interpret such limitations as a basis for refusing the exchange of information solely because of the absence of national interest in it.
5. In no case shall the provisions of paragraph 3 be interpreted as allowing a Contracting State to refuse the exchange of information solely because it is held by banks, other financial institutions or any person acting in a representative or fiduciary capacity, including designated agents, or because it relates to shares or shares in a person.
Article 25. Assistance in collection.
1. Contracting States shall assist each other in the collection of their tax claims. This assistance is not limited by Articles 1 and 2. The competent authorities of the Contracting States may, by mutual agreement, determine how this Article is to be applied.
2. The term ‘tax credit’ within the meaning of this Article means an amount due in respect of taxes of any kind or designation payable on behalf of the Contracting States, their political subdivisions, their local entities or their administrative-territorial units, to the extent that such taxation is not contrary to this Convention or to any other instrument to which the Contracting States are party; the expression also covers interests, administrative penalties and costs of collection or establishment of precautionary measures related to that amount.
3. Where a tax claim of a Contracting State is enforceable under the law of that State and the debtor is a person who, under the law of that State, cannot at that time prevent recovery, at the request of the competent authorities of that State, the competent authorities of the other Contracting State shall accept such tax claim for the purpose of collection. That other State shall collect the tax claim in accordance with its legislation on the enforceability and collection of its own taxes as if it were a tax claim of its own.
4. Where a tax claim of a Contracting State is of a nature such that that State may, under its domestic law, take precautionary measures to ensure its recovery, at the request of the competent authorities of that State, the competent authorities of the other Contracting State shall accept such debt for the purpose of adopting such precautionary measures. That other State shall take interim measures in accordance with the provisions of its law as if it were a tax claim of its own, even if at the time of application of such measures the tax claim was not enforceable in the State referred to first or its debtor was a person entitled to prevent its collection.
5. Notwithstanding paragraphs 3 and 4, a tax claim accepted by a Contracting State for the purposes of those paragraphs shall not be subject in that State to the requirement or priority applicable to tax claims under its domestic law on account of their nature. Similarly, a tax claim accepted by a Contracting State for the purposes of paragraphs 3 or 4 shall not enjoy in that State the prelations applicable to tax claims under the law of the other Contracting State.
6. Proceedings concerning the existence, validity or amount of the tax claim of one Contracting State may not be initiated before the courts or administrative bodies of the other Contracting State.
7. Where at a time after the request for recovery made by a Contracting State pursuant to paragraphs 3 or 4, and prior to its recovery and referral by the other Contracting State, the tax claim ceases to be
(a) in the case of an application under paragraph 3, a claim of the first Contracting State enforceable under its domestic law and the debtor of which was a person who at that time and under the law of that State could not prevent its recovery; or
(b) in the case of a request under paragraph 4, a claim from the first Contracting State in respect of which that State, under its domestic law, may take interim measures to ensure its recovery shall be notified promptly by the competent authorities of the State referred to above to the competent authorities of the other State and, as decided by that other State, the State concerned shall first suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed 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 take measures contrary to public order
(ordre public);
(c) to provide assistance where the other Contracting State has not applied all the precautionary measures or recovery measures, as the case may be, available to it under its legislation or administrative practice;
(d) provide assistance in cases where the administrative burden on that State is clearly disproportionate to the benefit to be obtained by the other Contracting State.
Article 26. Members of diplomatic missions and consular posts.
The provisions of this Convention shall not affect the tax privileges enjoyed by members of diplomatic missions or consular offices in accordance with the general principles of international law or under the provisions of special agreements.
Article 27. Entry into force.
1. The Contracting States shall notify each other, through diplomatic means, of the completion of the internal procedures required in each of them for the entry into force of this Convention.
2. This Convention shall enter into force within three months of the date of receipt of the last of the notifications referred to in paragraph 1 and shall take effect in respect of income obtained from the first day of January of the calendar year following that in which the Convention enters into force.
3. The Convention between the Government of the Kingdom of Spain and the Government of the Socialist Republic of Romania on the avoidance of double taxation on income and property taxes, signed at Madrid on 24 May 1979, shall be deemed to have been terminated on the date of entry into force of this Convention and shall cease to have effect from the date on which this Convention takes effect.
4. By way of derogation from paragraph 2, the provisions of Articles 23, 24 and 25 shall take effect from the date of entry into force of this Convention, without taking into account the tax period concerned.
Article 28. Termination.
This Convention shall remain in force indefinitely. Any Contracting State may denounce it, through diplomatic means, by written notification to that effect at least six months before the end of any calendar year beginning after a period of five years from the date of its entry into force. In such a case, the Convention shall cease to have effect in respect of income obtained from the first day of January of the calendar year following that in which the denunciation is notified.
In faith, the signatories, duly authorized to do so, have signed this Convention.
Done in duplicate in Bucharest on 18 October 2017, in the English, Romanian and Spanish languages, all texts being equally authentic. In the event of a divergence in the interpretation of the texts, the text shall be settled in accordance with the English text.
For the Kingdom of Spain
For Romania
Alfonso María Dastis Quecedo
Theodor Viorel Meleşcanu
Minister for Foreign Affairs and Cooperation
Minister for Foreign Affairs
PROTOCOL
At the time of signing the Convention between the Kingdom of Spain and Romania on the elimination of double taxation in relation to income taxes and the prevention of tax evasion and avoidance, the signatories have agreed on the following provisions which form an integral part of the Convention:
I. Right to benefit from the Convention:
(a) The provisions of this Convention are without prejudice to the right of Contracting States to apply their rules of domestic law in respect of abuses of the norm, explicitly defined as such or not, to the extent that they do not result in an imposition contrary to the Convention.
(b) This Convention does not prevent Contracting States from applying their internal rules on international tax transparency Controlled Foreign Company Rules (CFCs).
(c) Notwithstanding the other provisions of this Convention, the benefits granted under this Convention shall not be granted in respect of an income element where it is reasonable to conclude, taking into account all relevant facts and circumstances, that the agreement or operation which directly or indirectly generates the right to receive such benefit has as its main objectives the acquisition of such benefit, except where it is determined that the granting of the benefit in such circumstances is in conformity with the object and purpose of the relevant provisions of this Convention.
II. With regard to article 11:
By way of derogation from paragraph 2, to the extent that, under domestic law, interest from a Contracting State is exempt from taxation in that State, the tax rate provided for in paragraph 2 shall be reduced to zero.
III. With regard to Articles 6(4) and 13(5):
Income or benefits derived from immovable property may not be attributed to those who are holders of shares or other rights of enjoyment of such immovable property under a multi-proprietary contract, where their enjoyment does not exceed two weeks per calendar year.
In faith, the signatories, duly authorized to do so, have signed this Protocol.
Done in duplicate in Bucharest on 18 October 2017, in the English, Romanian and Spanish languages, all texts being equally authentic. In the event of a divergence in the interpretation of the texts, the text shall be settled in accordance with the English text.
For the Kingdom of Spain
For Romania
Alfonso María Dastis Quecedo
Theodor Viorel Meleşcanu
Minister for Foreign Affairs and Cooperation
Minister for Foreign Affairs
This Convention shall enter into force on 14 January 2021, within three months of the date of receipt of the last of the notifications from the Parties reporting compliance with their domestic requirements, as set out in its Article 27.
Madrid, November 25, 2020.–Technical Secretary General José María Muriel Palomino.