dtc agreement between spain and russian federation

8/3/2019 DTC agreement between Spain and Russian Federation

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CONVENTION BETWEEN THE GOVERNMENT OF THE KINGDOM OF SPAIN

AND THE GOVERNMENT OF THE RUSSIAN FEDERATION FOR THE

AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL

EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

The Government of the Kingdom of Spain and the Government of theRussian Federation desiring to conclude a Convention for the Avoidance of DoubleTaxation and the Prevention of Fiscal Evasion with respect to Taxes on Income andon Capital have agreed as follows:


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Article 1

PERSONS COVERED

This Convention shall apply to persons who are residents of one or bothof the Contracting States.

Article 2

TAXES COVERED

1. This Convention shall apply to taxes on income and on capital imposedon behalf of a Contracting State or of its political subdivisions or local authorities,irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxesimposed on total income, on total capital, or on elements of income or of capital,including taxes on gains from the alienation of movable or immovable property, as wellas taxes on capital appreciation.

3. The existing taxes to which the Convention shall apply are in particular:

a) in Spain:

(i) income tax on individuals;(ii) corporation tax;(iii) capital tax; and(iv) local taxes on income and on capital;

(hereinafter referred to as "Spanish Tax").

b) in Russia:(i) tax on profits or income of enterprises and organisations;(ii) income tax on individuals;(iii) tax on property of enterprises; and(iv) tax on property of individuals;

(hereinafter referred to as "Russian Tax").

4. This Convention shall also apply to any identical or substantially similartaxes which are imposed after the date of signature of this Convention in addition to,or in place of, the existing taxes.


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Article 3GENERAL DEFINITIONS

1. For the purposes of this Convention, unless the context otherwise

requires:

a) the term "Spain" means the Spanish State, and when used in ageographical sense means the territory of the Spanish state, as well as any maritimearea beyond and adjacent to the territorial sea upon which in accordance withinternational law and in application of its domestic legislation, the Spanish Stateexercises or may exercise jurisdiction or sovereign rights with respect to the seabed,its subsoil and superjacent waters, and their natural resources, as defined in the UNConvention on the Law of the Sea (1982);

b) the term "Russia" means the territory of the Russian Federation as wellas its exclusive economic zone and continental shelf as defined in its legislationsubject to the UN Convention on the Law of the Sea;

c) the terms "a Contracting State" and "the other Contracting State" meanSpain or Russia as the context requires;

d) the term "person" includes an individual, a company and any otherbody of persons;

e) the term "company" means any body corporate or any entity which istreated as a body corporate for tax purposes;

f) the terms "enterprise of a Contracting State" and "enterprise of the otherContracting State" mean, respectively, an enterprise carried on by a resident of aContracting State and an enterprise carried on by a resident of the other ContractingState;

g) the term "national" means:

(i) any individual possessing the nationality of a ContractingState;

(ii) any legal person, partnership or association deriving itsstatus as such from the laws in force in a Contracting State;

h) the term "international traffic" means any transport by a ship or aircraftoperated by an enterprise of a Contracting State, except when the ship or aircraft isoperated solely between places in the other Contracting State;

i) the term "competent authority" means:

(i) in Spain, the Minister of Economics and Finance or hisauthorised representative;

(ii) in Russia, the Ministry of Finance of the RussianFederation or its authorised representative.

2. As regards the application of this Convention by a Contracting State,any term not defined therein shall, unless the context otherwise requires, have themeaning which it has at that time under the law of that State for the purposes of the


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taxes to which the Convention applies, any meaning under the applicable tax laws ofthat State prevailing over a meaning given to the term under other laws of that State.

Article 4

RESIDENT

1. For the purposes of this Convention, the term "resident of a ContractingState" means any person who, under the laws of that State, is liable to tax therein byreason of his domicile, residence, place of management, place of registration, or anyother criterion of a similar nature, and also includes that State and any politicalsubdivision or local authority thereof. This term, however, does not include any personwho is liable to tax in that State in respect only of income from sources in that State orcapital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is aresident of both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident of the State in which he has apermanent home available to him; if he has a permanent homeavailable to him in both States, he shall be deemed to be aresident of the State with which his personal and economicrelations are closer (centre of vital interests);

b) if the State in which he has his centre of vital interests cannot bedetermined, or if he has not a permanent home available to him in

either State, he shall be deemed to be a resident of the State inwhich he has an habitual abode;

c) if he has an habitual abode in both States or in neither of them, heshall be deemed to be a resident of the State of which he is anational;

d) if he is a national of both States or of neither of them, thecompetent authorities of the States shall settle the question bymutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than

an individual is a resident of both Contracting States, then it shall be deemed to be aresident of the State in which its place of effective management is situated.

Article 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Convention, the term "permanentestablishment" means a fixed place of business through which the business of anenterprise is wholly or partly carried on.

2. The term "permanent establishment" includes especially:


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a) a place of management;b) a branch;c) an office;d) a factory;

e) a workshop; andf) a mine, an oil or gas well, a quarry or any other place of extraction

of natural resources.

3. A building site or construction or installation project constitutes apermanent establishment only if it lasts for more than twelve months.

4. Notwithstanding the preceding provisions of this Article, the term"permanent establishment" shall be deemed not to include:

a) the use of facilities solely for the purpose of storage, display ordelivery of goods or merchandise belonging to the enterprise;

b) the maintenance of a stock of goods or merchandise belonging tothe enterprise solely for the purpose of storage, display or delivery;

c) the maintenance of a stock of goods or merchandise belonging tothe enterprise solely for the purpose of processing by anotherenterprise;

d) the maintenance of a fixed place of business solely for thepurpose of purchasing goods or merchandise or of collectinginformation, for the enterprise;

e) the maintenance of a fixed place of business solely for thepurpose of carrying on, for the enterprise, any other activity of a

preparatory or auxiliary character;f) the maintenance of a fixed place of business solely for anycombination of activities mentioned in sub-paragraphs a) to e),provided that the overall activity of the fixed place of businessresulting from this combination is of a preparatory or auxiliarycharacter.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -other than an agent of an independent status to whom paragraph 6 applies- is actingon behalf of an enterprise and has, and habitually exercises, in a Contracting State anauthority to conclude contracts in the name of the enterprise, that enterprise shall bedeemed to have a permanent establishment in that State in respect of any activities

which that person undertakes for the enterprise, unless the activities of such personare limited to those mentioned in paragraph 4 which, if exercised through a fixed placeof business, would not make this fixed place of business a permanent establishmentunder the provisions of that paragraph.

6. An enterprise shall not be deemed to have a permanent establishmentin a Contracting State merely because it carries on business in that State through abroker, general commission agent or any other agent of an independent status,provided that such persons are acting in the ordinary course of their business.

7. The fact that a company which is a resident of a Contracting Statecontrols or is controlled by a company which is a resident of the other Contracting

State, or which carries on business in that other State (whether through a permanentestablishment or otherwise), shall not of itself constitute either company a permanentestablishment of the other.


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Article 6

INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovableproperty (including income from agriculture or forestry) situated in the otherContracting State may be taxed in that other State.

2. The term "immovable property" shall have the meaning which it hasunder the law of the Contracting State in which the property in question is situated.The term shall in any case include property accessory to immovable property,livestock and equipment used in agriculture and forestry, rights to which the provisionsof general law respecting landed property apply, rights known as usufruct ofimmovable property and rights to variable or fixed payments as consideration for theworking of, or the right to work, mineral deposits, sources and other natural resources;ships and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from thedirect use, letting or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the incomefrom immovable property of an enterprise and to income from immovable propertyused for the performance of independent personal services.

Article 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable onlyin that State unless the enterprise carries on business in the other Contracting Statethrough a permanent establishment situated therein. If the enterprise carries onbusiness as aforesaid, the profits of the enterprise may be taxed in the other State butonly so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of aContracting State carries on business in the other Contracting State through a

permanent establishment situated therein, there shall in each Contracting State beattributed to that permanent establishment the profits which it might be expected tomake if it were a distinct and separate enterprise engaged in the same or similaractivities under the same or similar conditions and dealing wholly independently withthe enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall beallowed as deductions expenses which are incurred for the purposes of the permanentestablishment, including executive and general administrative expenses so incurred,whether in the State in which the permanent establishment is situated or elsewhere.

4. No profits shall be attributed to a permanent establishment by reason of

the mere purchase by that permanent establishment of goods or merchandise for theenterprise.


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5. Where profits include items of income which are dealt with separately inother Articles of this Convention, then the provisions of those Articles shall not beaffected by the provisions of this Article.

Article 8

INCOME FROM INTERNATIONAL TRAFFIC

1. Profits from the operation of ships or aircraft in international trafficderived by an enterprise of a Contracting State shall be taxable only in that State.

2. The provisions of paragraph 1 shall also apply to profits from theparticipation in a pool, a joint business or an international operating agency.

Article 9

ADJUSTMENT TO PROFITS OFASSOCIATED ENTERPRISES

1. Where

a) an enterprise of a Contracting State participates directly orindirectly in the management, control or capital of an enterprise ofthe other Contracting State, or

b) the same persons participate, directly or indirectly, in themanagement, control or capital of an enterprise of a ContractingState and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises intheir commercial or financial relations which differ from those which would be madebetween independent enterprises, then any profits which would, but for thoseconditions, have accrued to one of the enterprises but, by reason of those conditions,have not so accrued, may be included in the profits of that enterprise and taxedaccordingly.

2. Where a Contracting State includes in the profits of an enterprise of that

State -and taxes accordingly- profits on which an enterprise of the other State hasbeen charged to tax in that other Contracting State and that other State agrees thatthe profits so included are profits which would have accrued to the enterprise of thefirst-mentioned State if the conditions made between the two enterprises had beenthose which would have been made between independent enterprises, then that otherState shall make an appropriate adjustment to the amount of the tax charged thereinon those profits. In determining such adjustment, due regard shall be had to the otherprovisions of this Convention and the competent authorities of the Contracting Statesshall if necessary consult each other.


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Article 10

DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting Stateto 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 ofwhich the company paying the dividends is a resident and according to the laws ofthat State, but if the recipient is the beneficial owner of the dividends the tax socharged shall not exceed:

a) 5 per cent of the gross amount of the dividends if:

(i) the beneficial owner is a company (other than apartnership) which has invested at least 100,000 ECU(one hundred thousand ECU) or the equivalent amount inany other currency in the capital of the company payingthe dividends; and

(ii) those dividends are exempt from tax in the otherContracting State;

b) 10 per cent of the gross amount of the dividends if only one of theconditions (i) or (ii) above is met;

c) 15 per cent of the gross amount of the dividends in all other cases.

The competent authorities of the Contracting States shall by mutualagreement settle the mode of application of these limitations.

This paragraph shall not affect the taxation of the company in respect ofthe profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares,founders' shares or other rights, not being debt-claims, participating in profits, as wellas income from other corporate rights which is subjected to the same taxationtreatment as income from shares by the laws of the State of which the companymaking the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficialowner of the dividends, being a resident of a Contracting State, carries on business inthe other Contracting State of which the company paying the dividends is a resident,through a permanent establishment situated therein, or performs in that other Stateindependent personal services from a fixed base situated therein, and the holding inrespect of which the dividends are paid is effectively connected with such permanentestablishment or fixed base. In such case the provisions of Article 7 or Article 14, asthe case may be, shall apply.

5. Where a company which is a resident of a Contracting State derivesprofits or income from the other Contracting State, that other State may not impose

any tax on the dividends paid by the company, except insofar as such dividends arepaid to a resident of that other State or insofar as the holding in respect of which thedividends are paid is effectively connected with a permanent establishment or a fixed


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base situated in that other State, not subject the company's undistributed profits to atax on the company's undistributed profits, even if the dividends paid or theundistributed profits consist wholly or partly of profits or income arising in such otherState.

Article 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the otherContracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State inwhich it arises and according to the laws of that State, but if the recipient is thebeneficial owner of the interest the tax so charged shall not exceed 5 per cent of thegross amount of the interest. The competent authorities of the Contracting States shallby mutual agreement settle the mode of application of this limitation.

3. Notwithstanding the provisions of paragraph 2, interest arising in aContracting State and paid to a resident of the other Contracting State shall be taxableonly in that other State if the recipient is the beneficial owner of the interest and

a) the interest is beneficially owned by a Contracting State, a politicalsubdivision or a local authority thereof; or

b) the interest is paid on a long-term loan (7 or more years) grantedby a bank or other credit institution, which is a resident of aContracting State.

4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carryinga right to participate in the debtor's profits, and in particular, income from governmentsecurities and income from bonds or debentures, including premiums and prizesattaching to such securities, bonds or debentures, as well as all other incomeassimilated to income from money lent by the taxation laws of the State in which theincome arises. Penalty charges for late payment shall not be regarded as interest forthe purpose of this Article.

5. The provisions or paragraphs 1, 2 and 3 shall not apply if the beneficialowner of the interest, being a resident of a Contracting State, carries on business inthe other Contracting State in which the interest arises, through a permanentestablishment situated therein, or performs in that other State independent personalservices from a fixed base situated therein, and the debt-claim in respect of which theinterest is paid is effectively connected with such permanent establishment or fixedbase. In such case the provisions of Article 7 or Article 14, as the case may be, shallapply.

6. Interest shall be deemed to arise in a Contracting State when the payeris a resident of that State. Where, however, the person paying the interest, whether he

is a resident of a Contracting State or not, has in a Contracting State a permanentestablishment or a fixed base in connection with which the indebtedness on which theinterest is paid was incurred, and such interest is borne by such permanent


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establishment or fixed base, then such interest shall be deemed to arise in the State inwhich the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and thebeneficial owner or between both of them and some other person, the amount of the

interest, having regard to the debt-claim for which it is paid, exceeds the amount whichwould have been agreed upon by the payer and the beneficial owner in the absenceof such relationship, the provisions of this Article shall apply only to the last-mentionedamount. In such case, the excess part of the payments shall remain taxable accordingto the laws of each Contracting State, due regard being had to the other provisions ofthis Convention.

Article 12

ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of theother Contracting State may be taxed in that other State.

2. However, such royalties may be taxed in the Contracting State in whichthey arise, and according to the laws of that State, but if the recipient is the beneficialowner of the royalties the tax so charged shall not exceed 5 per cent of the grossamount of the royalties. The competent authorities of the Contracting States shall bymutual agreement settle the mode of application of this limitation.

3. The term "royalties" as used in this Article means payments of any kindreceived as a consideration for the use of, or the right to use, any copyright of literary,

artistic or scientific work, including cinematographic films or films, tapes, and othermeans of image or sound reproduction, any patent, trade mark, design or model, plan,secret formula or process, or for the use of, or the right to use, industrial, commercialor scientific equipment, or for information concerning industrial, commercial orscientific experience.

4. The provisions or paragraphs 1 and 2 shall not apply if the beneficialowner of the royalties, being a resident of a Contracting State, carries on business inthe other Contracting State in which the royalties arise through a permanentestablishment situated therein, or performs in that other State independent personalservices from a fixed base situated therein, and the right or property in respect ofwhich the royalties are paid is effectively connected with such permanent

establishment or fixed base. In such case, the provisions of Article 7 or Article 14, asthe case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when thepayer is a resident of that State. Where, however, the person paying the royalties,whether he is a resident of a Contracting State or not, has in a Contracting State apermanent establishment or fixed base in connection with which the obligation to paythe royalties was incurred, and those royalties are borne by the permanentestablishment or fixed base, then such royalties shall be deemed to arise in theContracting State in which the permanent establishment or fixed base is situated.

6. Where, by reason of a special relationship between the payer and the

beneficial owner or between both of them and some other person, the amount of theroyalties paid, having regard to the use, right or information for which they are paid,exceeds the amount which would have been agreed upon by the payer and the


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beneficial owner in the absence of such relationship, the provisions of this Article shallapply only to the last mentioned amount. In that case, the excess part of the paymentsshall remain taxable according to the laws of each Contracting State, due regard beinghad to the other provisions of this Convention.

Article 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation ofimmovable property referred to in Article 6 and situated in the other Contracting Statemay be taxed in that other State.

2. Gains from the alienation of shares or other participation rights in acompany, the assets of which consist, directly or indirectly, mainly of immovableproperty situated in one of the Contracting States, may be taxed in that State.

3. Gains from the alienation of movable property forming part of thebusiness property of a permanent establishment which an enterprise of a ContractingState has in the other Contracting State or of movable property pertaining to a fixedbase available to a resident of a Contracting State in the other Contracting State forthe purpose of performing independent personal services, including such gains fromthe alienation of such a permanent establishment (alone or with the whole enterprise)or of such fixed base, may be taxed in that other Contracting State.

4. Gains from the alienation of ships or aircraft operated in internationaltraffic or movable property pertaining to the operation of such ships or aircraft derived

by an enterprise of a Contracting State shall be taxable only in that State.

5. Gains from the alienation of any property other than that referred to inparagraphs 1, 2 and 3 of this Article shall be taxable only in the Contracting State ofwhich the alienator is a resident.

Article 14

INCOME FROM INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a Contracting State in respect ofprofessional services or other activities of an independent character shall be taxableonly in that State unless he has a fixed base regularly available to him in the otherContracting State for the purpose of performing his activities. If he has such a fixedbase, the income may be taxed in the other State but only so much of it as isattributable to that fixed base.

2. The term "professional services" includes especially independentscientific, literary, artistic, educational or teaching activities as well as the independentactivities of physicians, lawyers, engineers, architects, dentists and accountants.


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Article 15

INCOME FROM EMPLOYMENT

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages andother similar remuneration derived by a resident of a Contracting State in respect of anemployment shall be taxable only in that State unless the employment is exercised inthe other Contracting State. If the employment is so exercised, such remuneration asis derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived bya resident of a Contracting State in respect of an employment exercised in the otherContracting State shall be taxable only in the first-mentioned State if:

a) the recipient is present in the other State for a period or periodsnot exceeding in the aggregate 183 days in any twelve monthperiod commencing or ending in the fiscal year concerned; and

b) the remuneration is paid by, or on behalf of, an employer who isnot a resident of the other State; and

c) the remuneration is not borne by a permanent establishment or afixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration

derived in respect of an employment exercised aboard a ship or aircraft operated ininternational traffic by an enterprise of a Contracting State, may be taxed in that State.

Article 16

DIRECTORS' FEES

Directors' fees and other similar payments derived by a resident of aContracting State in his capacity as a member of the board of directors of a companywhich is a resident of the other Contracting State may be taxed in that other State.

Article 17

INCOME OF ARTISTES AND SPORTSMEN

1. Notwithstanding the provisions of Articles 14 and 15, income derived bya resident of a Contracting State as an entertainer, such as a theatre, motion picture,radio or television artiste, or a musician, or as an sportsman, from his personalactivities as such exercised in the other Contracting State, may be taxed in that otherState.

2. Where income in respect of personal activities exercised by anentertainer or an sportsman in his capacity as such accrues not to the entertainer or


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sportsman himself but to another person, that income may, notwithstanding theprovisions of Articles 7, 14 and 15, be taxed in the Contracting State in which theactivities of the entertainer or sportsman are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2, income derivedfrom activities referred to in paragraph 1 performed under a cultural agreement orarrangement between the Contracting States shall be exempt from tax in theContracting State in which the activities are exercised if the visit to that State is whollyor substantially supported by public funds of the other Contracting State or of apolitical subdivision or local authority thereof.

Article 18

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and othersimilar remuneration paid to a resident of a Contracting State in consideration of pastemployment shall be taxable only in that State.

Article 19

REMUNERATION FOR GOVERNMENT SERVICE

1. a) Salaries, wages and other similar remuneration, other than a

pension, paid by a Contracting State or a political subdivision or a local authoritythereof to an individual in respect of services rendered to that State or subdivision orauthority shall be taxable only in that State.

b) However, such salaries, wages and other similar remunerationshall be taxable only in the other Contracting State if the services are rendered in thatState and the individual is a resident of that State who:

(i) is a national of that State; or(ii) did not become a resident of that State solely for the

purpose of rendering the services.

2. a) Any pension paid by, or out of funds created by, a ContractingState or a political subdivision or a local authority thereof to an individual in respect ofservices rendered to that State or subdivision or authority shall be taxable only in thatState.

b) However, such pension shall be taxable only in the otherContracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries,wages and other similar remuneration, and to pensions in respect of servicesrendered in connection with a business carried on by a Contracting State or a political

subdivision or a local authority thereof.


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3. Capital represented by ships and aircraft operated in internationaltraffic, and by movable property pertaining to the operation of such ships and aircraftowned by an enterprise of a Contracting State, shall be taxable only in that State.

4. All other elements of capital of a resident of a Contracting State shall betaxable only in that State.

Article 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

1. In Spain:In accordance with the provisions and subject to the limitations of the laws of Spain(as may be amended from time to time without changing the general principle thereof):

a) Where a resident of Spain derives income or owns capital which, inaccordance with the provisions of this Convention, may be taxed in Russia, Spainshall allow as deduction from the tax on the income or on the capital of that resident,an amount equal to the tax effectively paid in Russia.

Such deduction shall not, however, exceed that part of the income tax orcapital tax, as computed before the deduction is given, which is attributable, as thecase may be, to the income or to the capital which may be taxed in Russia.

b) In the case of a dividend paid by a company which is a resident ofRussia to a company which is a resident of Spain and which holds at least 25 per cent

of the capital of the company paying the dividend, or which holds the percentageestablished by the relevant Spanish legislation where such percentage is lower than25 per cent, in the computation of the credit there shall be taken into account, inaddition to the tax creditable under subparagraph a) of this paragraph, that part of thetax effectively paid by the first-mentioned company on the profits out of which thedividend is paid, which relate to such dividend, provided that such amount of tax isincluded, for this purpose, in the taxable base of the receiving company.

Such deduction, together with the deduction allowable in respect of thedividend under subparagraph a) of this paragraph, shall not exceed that part of theincome tax or capital tax, as computed before the deduction is given, which isattributable to the income subject to tax in Russia.

For the application of this subparagraph it shall be required that theparticipation in the company paying the dividend is held on a continuous bases atleast during the year preceding the date of payment of the dividend.

c) Where in accordance with any provision of this Convention incomederived or capital owned by a resident of Spain is exempt from tax in Spain, Spainmay nevertheless, in calculating the amount of tax on the remaining income or capitalof such resident, take into account the exempted income or capital.

2. In Russia:

Where a resident of Russia derives income or owns capital which, inaccordance with the provisions of this Convention is taxed in Spain, the amount of taxpayable in Spain on that income or capital shall be credited against the tax imposed in


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Russia. The amount of credit, however, shall not exceed the amount of the tax on thatincome or capital computed in accordance with the laws and regulations of Russia.

Article 24

NON-DISCRIMINATION

1. The nationals of a Contracting State shall not be subjected in the otherContracting State to any taxation or any requirement connected therewith which isother or more burdensome than the taxation and connected requirements to whichnationals of that other State in the same circumstances, in particular with respect toresidence, are or may be subjected. This provision shall, notwithstanding theprovisions of Article 1, also apply to persons who are not residents of one or both ofthe Contracting States.

2. The taxation on a permanent establishment which an enterprise of aContracting State has in the other Contracting State shall not be less favourably leviedin that other State than the taxation levied on enterprises of that other State carryingon the same activities.

3. Nothing contained in this Article shall be interpreted as obliging aContracting State to grant to residents of the other Contracting State any personalallowances, reliefs and reductions for tax purposes on account of civil status or familyresponsibilities which it grants to its own residents.

4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of

Article 11, or paragraph 6 of Article 12, apply, interest, royalties and otherdisbursements paid by an enterprise of a Contracting State to a resident of the otherContracting State shall, for the purpose of determining the taxable profits of suchenterprise, be deductible under the same conditions as if they had been paid to aresident of the first-mentioned State. Similarly, any debts of an enterprise of aContracting State to a resident of the other Contracting State shall, for the purpose ofdetermining the taxable capital of such enterprise, be deductible under the sameconditions as if they had been contracted to a resident of the first-mentioned State.

5. Enterprises of a Contracting State, the capital of which is wholly orpartly owned or controlled, directly or indirectly, by one or more residents of the otherContracting State, shall not be subjected in the first-mentioned Contracting State to

any taxation or any requirement connected therewith which is other or moreburdensome than the taxation and connected requirements to which other similarenterprises of that first-mentioned State are or may be subjected.

6. The provisions of this Article shall, notwithstanding the provisions ofArticle 2, apply to taxes of every kind and description.

Article 25MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the

Contracting States result or will result for him in taxation not in accordance with thisConvention, he may, notwithstanding the remedies provided by the national laws ofthose States, present his case to the competent authority of the Contracting State of


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which he is a resident, or, if his case comes under paragraph 1 of Article 24, to that ofthe Contracting State of which he is a national. The case must be presented withinthree years from the first notification of the action resulting in taxation not inaccordance with the provisions of the Convention.

2. The competent authority shall endeavour, if the objection appears to itto be justified and if it is not itself able to arrive at an appropriate solution, to resolvethe case by mutual agreement with the competent authority of the other ContractingState, with a view to the avoidance of taxation not in accordance with the Convention.Any agreement reached shall be implemented notwithstanding any time limits in thedomestic law of the Contracting State.

3. The competent authorities of the Contracting States shall endeavour toresolve by mutual agreement any difficulties or doubts arising as to the interpretationor application of the Convention. They may also consult together for the elimination ofdouble taxation in cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicatewith each other directly, including through a joint commission consisting of themselvesor their representatives, for the purpose of reaching an agreement in the sense of thepreceding paragraphs.

Article 26

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchangesuch information as is necessary for carrying out the provisions of this Convention orof the domestic laws of the Contracting States concerning taxes covered by theConvention insofar as the taxation thereunder is not contrary to the Convention. Theexchange of information is not restricted by Article 1. Any information received by aContracting State shall be treated as confidential in the same manner as informationobtained under the domestic laws of that State and shall be disclosed only to personsor authorities (including courts and administrative bodies) involved in the assessmentor collection of, the enforcement or prosecution in respect of, or the determination ofappeals in relation to, the taxes covered by the Convention. Such persons orauthorities shall use the information only for such purposes. They may disclose the

information in public court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as toimpose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws orthe administrative practice of that or of the other Contracting State;

b) to supply information which is not obtainable under the laws or inthe normal course of the administration of that or of the otherContracting State;

c) to supply information which would disclose any trade, business,industrial, commercial or professional secret or trade process, or


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information, the disclosure of which would be contrary to the vitalinterests of that State.

Article 27

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR OFFICES

Nothing in this Convention shall affect the fiscal privileges of members ofdiplomatic missions or consular offices under the general rules of international law orunder the provisions of special agreements.

Article 28

ENTRY INTO FORCE

1. The Governments of the Contracting States shall notify to each otherthat the internal procedures required by the law of each Contracting State for the entryinto force of this Convention have been complied with.

2. The Convention shall enter into force on the date of the later of thenotifications referred to in paragraph 1 and its provisions shall have effect in respect oftaxes on income or on capital relating to any tax year beginning on or after the first dayof January in the calendar year next following that in which the Convention enters intoforce.

3. From the date on which this Convention enters into force in accordancewith paragraph 2 of this Article, the Convention between the Government of Spain andthe Government of the Union of Soviet Socialist Republics for the avoidance of doubletaxation on income and on capital, signed at Madrid on 1st March 1985, shall cease tohave effect in relations between Spain and Russia.

Article 29

TERMINATION

This Convention shall remain in force until denounced by one of theContracting States. Either Contracting State may terminate the Convention by giving,through diplomatic channels, notice of termination at least six months before the endof any calendar year following after the period of five years from the date on which theConvention enters into force. In such event, the Convention shall cease to have effectin respect of taxes on income or on capital relating to any tax year beginning on orafter the first day of January in the calendar year next following that in which the noticeof termination is given.

In witness whereof the undersigned, duly authorised thereto, have signedthis Convention.


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Done in duplicate at ... this ... day of ...in the Spanish, Russian andEnglish languages, each text being equally authentic. In case of any divergence ofinterpretation, it shall be resolved in accordance with the English text.

For the Government of For the Government of thethe Kingdom of Spain Russian Federation


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PROTOCOL

At the moment of signing the Convention between the Government of theKingdom of Spain and the Government of the Russian Federation for the Avoidance ofDouble Taxation and the Prevention of Fiscal Evasion with respect to Taxes onIncome and on Capital, the undersigned have agreed upon the following provisionswhich shall be an integral part of the Convention:

I. a) In Spain, it is understood that the reference to politicalsubdivisions is made to "Comunidades Autnomas"; the referenceto local authorities corresponds to "Entidades Locales"; as definedunder the Spanish Constitution of 27th December 1978 andrelevant laws.

b) In Russia, it is understood that political subdivisions meansSubjects of Federation as defined under the Constitution of theRussian Federation of 12th December 1993.

II. Payments received in consideration for the use of, or the right to use,ships or aircraft on a bare boat basis or containers, in international traffic, shall betaxable only in the Contracting State of which the recipient is a resident.

III. Ad Article 10, paragraph 2, a) (ii)

In the case of Spain, it is understood that dividends are exempted fromtax when a deduction of the total amount of the Spanish tax corresponding to suchdividends is provided by the Spanish law now in force or by any other provision whichcould be adopted in the future establishing a substantially similar regime.

IV. Ad Article 10, paragraph 3

It is understood that the term "dividends" includes revenue on theliquidation of a company.

V. Ad Articles 10, 11, 12 and 13

a) Notwithstanding the provisions of this Convention, a companyresident in a Contracting State in which persons who are notresidents of that State hold, directly or indirectly, a participation ofmore than 50 per cent of the share capital, shall not be entitled tothe reliefs provided for by the Convention in respect of dividends,interests, royalties and capital gains arising in the otherContracting State. This provision shall not apply where the saidcompany is engaged in substantive business operations, otherthan the mere holding of shares or property, in the ContractingState of which it is a resident.

b) A company which under the preceding subparagraph would not beentitled to the benefits of the Convention in respect of the


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aforementioned items of income, could still be granted suchbenefits if the competent authorities of the Contracting Statesagree under article 25 of this Convention that the establishment ofthe company and the conduct of its operations are founded on

sound business reasons and thus do not have as its primarypurpose the obtaining of such benefits.

VI. Ad Article 17, paragraph 3

It is understood that the visit of artistes and sportsmen is "substantially"supported by public funds when 75% or more of the total expenses on transport,accommodation and daily allowance are financed by funds of such nature.

VII. Ad Article 24, paragraph 5

It is understood that the provisions of Article 24 shall not prevent theapplication by a Contracting State of its domestic law concerning thin capitalization.

VIII. Ad Article 24, paragraph 6

In the case of Russia, it is understood that the expression "taxes of everykind and description" does not include customs duties.

In witness whereof the undersigned, duly authorised thereto, have signedthis Protocol.

Done in duplicate at ... this ... day of ... in the Spanish, Russian andEnglish languages, each text being equally authentic. In case of any divergence ofinterpretation, it shall be resolved in accordance with the English text.

For the Government of For the Governmentthe Kingdom of Spain of the Russian Federation

dtc agreement between spain and russian federation

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