DESIRING to amend the Convention between Canada and Spain for the Avoidance of double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, signed at Ottawa on 23 November 1976 (hereinafter referred to as the “Convention”),
HAVE AGREED as follows:
Paragraph 3 of Article II (Taxes Covered) of the Convention shall be deleted and replaced by the following paragraph:
“3 The existing taxes to which this Convention shall apply are in particular:
3 Article X (Dividends) of the Convention shall be amended by adding the following paragraphs:
“7 Nothing in this Convention shall be construed as preventing a Contracting State from imposing on the income from the alienation of immovable property situated in that State by a company that is a resident of the other Contracting State carrying on a trade in immovable property, a tax in addition to the tax that would be chargeable on the income of a company that is a resident of the first-mentioned State, but any additional tax so imposed shall not exceed 5 per cent of the amount of such income. For the purpose of this provision, the term income means the income from the alienation of such immovable property situated in a Contracting State as may be taxed by that State under the provisions of paragraph 1 of Article XIII, after deducting therefrom all taxes, other than the additional tax referred to herein, imposed on such income in that State.
8 Notwithstanding the provisions of paragraph 2, dividends arising in a Contracting State and paid to a pension or retirement plan of the other Contracting State shall be exempt from tax in the first-mentioned State if:
1 Article XIV (Independent Personal Services) shall be deleted and the subsequent Articles of the Convention shall not be renumbered, and the following consequential changes shall be made to the Convention:
5 Where a company is a resident of a Contracting State, the other Contracting State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.”
Article XXIII (Elimination of Double Taxation) of the Convention shall be deleted and replaced by the following Article:
1 In Spain, double taxation shall be avoided following either the provisions of its internal legislation or the following provisions in accordance with the internal legislation of Spain:
Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Canada.
2 In Canada, double taxation shall be avoided as follows:
Article XXV (Mutual Agreement Procedure) of the Convention shall be deleted and replaced by the following Article:
4 The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention.
Article XXVI (Exchange of Information) of the Convention shall be deleted and replaced by the following Article:
1 The competent authorities of the Contracting States shall exchange such information as is forseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles I and II.
2 Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.
3 In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
The following new Article XXVI-A (Assistance in the Collection of Taxes) shall be inserted into the Convention after Article XXVI:
2 The term revenue claim as used in this Article means an amount owed in respect of taxes of every kind and description collected by or on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs related to such amount.
3 When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. Where an application for collection of a revenue claim is accepted:
4 Notwithstanding the provisions of paragraph 3, a revenue claim accepted by a Contracting State shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State. A revenue claim of a Contracting State shall not be recovered by imprisonment of the debtor in the other Contracting State.
5 Nothing in this Article shall be construed as creating or providing any rights of administrative or judicial review of a revenue claim of a Contracting State in the other State.
7 In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
Article XXVIII (Miscellaneous Rules) of the Convention shall be deleted and replaced by the following Article:
2 Nothing in this Convention shall be construed as preventing Canada from imposing a tax on amounts included in the income of a resident of Canada with respect to a company or other entity in which that resident has an interest.
3 This Convention shall not apply to any company or other entity that is a resident of a Contracting State and is beneficially owned or controlled, directly or indirectly, by one or more persons who are not residents of that State, if the amount of the tax imposed on the income or capital of the company or other entity by that State is substantially lower than the amount that would be imposed by that State (after taking into account any reduction or offset of the amount of tax in any manner, including a refund, reimbursement, contribution, credit, or allowance to the company or to any other person) if all of the shares of the capital stock of the company or all of the interests in the entity, as the case may be, were beneficially owned by one or more individuals who were residents of that State.
4 For the purposes of paragraph 3 of Article XXII (Consultation) of the General Agreement on Trade in Services of the Marrakesh Agreement Establishing the World Trade Organization, the Contracting States agree that, notwithstanding that paragraph, any dispute between them as to whether a measure falls within the scope of this Convention may be brought before the Council for Trade in Services, as provided by that paragraph, only with the consent of both Contracting States. Any doubt as to the interpretation of this paragraph shall be resolved under paragraph 4 of Article XXV or, failing agreement under that procedure, pursuant to any other procedure agreed to by both Contracting States.”
3 The Protocol of the Convention shall be amended by adding the following paragraphs:
8 For greater certainty, it is understood that the term “recipient” in Articles X, XI and XII shall be read as “beneficial owner”.”