
1 
This Order may be cited as the 
Double Taxation Relief (Taxes on Income) (Spain) Order 1976.

2 
It is hereby declared—
(a) that the arrangements specified in the
Convention set out in the Schedule to this Order have been made with the Government
of Spain with a view to affording relief from double taxation in relation
to income tax, corporation tax or capital gains tax and taxes of a similar
character imposed by the laws of Spain; and
(b) that it is expedient that these arrangements
should have effect.
N. E. Leigh

SCHEDULE


CONVENTION
BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND SPAIN
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME AND CAPITAL 
The Government
of the United Kingdom of Great Britain and Northern Ireland and the Government
of Spain; 
Desiring to conclude a Convention for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and capital; 
Have agreed as follows:
 

ARTICLE 1 
This Convention shall apply to persons who are residents of one
or both of the Contracting States.

ARTICLE 2 

(1) The taxes which are the subject of this
Convention are:
(a) in the United Kingdom
of Great Britain and Northern Ireland: 
(i) 
the income tax;

(ii) the corporation tax; and

(iii) the capital gains tax;
 (hereinafter referred to as “United
Kingdom tax”);
(b) in Spain:
(i) the general income tax on individuals
(el impuesto general sobre la Renta de las personas
fisicas);
(ii) the general corporation tax (el impuesto general sobre la Renta de Sociedades y demás
entidades juridídicas);
(iii) the following prepayments: the tax
on rural land, the tax on urban land, the tax on earned income, the tax on
income from capital, the tax on business and industrial activities (los siguientes impuestos a cuenta: la Contribución Territorial
sobre la Riqueza Rústica y Pecuaria, la Contribución Territorial
sobre la Riqueza Urbana, el impuesto sobre los Rendimientos del Trabajo Personal,
el impuesto sobre las Rentas del Capital y el impuesto sobre Actividades y
beneficios comerciales e industriales);
(iv) In Sahara, the income taxes on earned
income and on income from capital and the taxes on profits of the enterprises
(en Sahara, los impuestos sobre la renta sobre los
rendimientos del trabajo y del patrimonio y sobre los beneficios de las empresas
);
(v) The “surface royalty” and
the tax on corporation profits, regulated by the Law of 27 June 1974 applicable
to enterprises engaged in prospecting and exploiting oil wells (el Canon de superficie y el impuesto sobre los beneficios, regulados
por la Ley de 27 de Junio de
1974 aplicable a las empresas que se dedican a la
investigación y explotación de hidrocarburos); and

(vi) the local taxes
on income and capital (los impuestos locales sobre
la renta y el partimonio); (hereinafter referred to as “Spanish tax”).
(2) This Convention shall also apply to any
identical or substantially similar taxes which are imposed by either Contracting
State after the date of signature of this Convention in addition to, or in
place of, the existing taxes. At the end of each year, the competent authorities
of the Contracting States shall notify to each other any changes which have
been made in their respective taxation laws.

ARTICLE 3 

(1) In this Convention, unless the context
otherwise requires:
(a) the term “United
Kingdom” means Great Britain and
Northern Ireland, including any area outside the territorial sea of the United
Kingdom which in accordance with international law has been or may hereafter
be designated, under the laws of the United Kingdom concerning the Continental
Shelf, as an area within which the rights of the United Kingdom with respect
to the sea bed and sub-soil and their natural resources may be exercised;

(b) the term “Spain”
 means the Spanish State and, when used
in a geographical sense, Peninsular Spain, the Balearic and Canary Islands,
and the Spanish towns and territories in Africa, including any area outside
the territorial sea of Spain which in accordance with international law has
been or may hereafter be designated, under the laws of Spain concerning the
Continental Shelf, as an area within which the rights of Spain with respect
to the sea bed and sub-soil and their natural resources may be exercised;

(c) the term “national”
 means : 
(i) 
in relation to the United Kingdom, any citizen of the United Kingdom and Colonies
who derives his status as such from his connection with the United Kingdom
and any legal person, association or other entity deriving its status as such
from the law in force in the United Kingdom;

(ii) in relation to Spain, any individual
possessing the nationality of Spain and any legal person, partnership or association
deriving its status as such from the law in force in Spain;
(d) the term “international
traffic” means any transport by
a ship or aircraft operated by an enterprise of a Contracting State, except
when the ship or aircraft is operated solely between places in the other Contracting
State;
(e) the terms 
“a Contracting State” and 
“the other Contracting State” mean the United Kingdom or Spain as the context requires;
(f) the term “person” comprises
an individual, a company and any other body of persons;
(g) the term “company”
 means any body corporate or any entity
which is treated as a body corporate for tax purposes;
(h) the terms 
“enterprise of a Contracting State” and “enterprise of the other Contracting State”
mean respectively an enterprise carried on by a resident
of a Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(i) the term “competent
authority” means, in the case of
the United Kingdom, the Commissioners of Inland Revenue or their authorised
representative and, in the case of Spain, the Minister of Finance, the Technical
General Secretary or any other authority to whom the Minister delegates.
(2) As regards the application of this Convention
by a Contracting State any term not otherwise defined shall, unless the context
otherwise requires, have the meaning which it has under the laws of that Contracting
State relating to the taxes which are the subject of this Convention.

ARTICLE 4 

(1) For the purposes of this Convention,
the term “resident of a Contracting State”
 means, subject to the provisions of 
paragraphs (2) and (3)
of this Article, any person who, under the law of that State, is liable to
taxation therein by reason of his domicile, residence, place of management
or any other criterion of a similar nature; the term does not include any
individual who is liable to tax in that Contracting State only if he derives
income from sources therein.The terms “resident of the United Kingdom” and “resident of Spain” shall be construed
accordingly.
(2) Where by reason of the provisions of 
paragraph (1) of this Article an individual
is a resident of both Contracting States, then his status shall be determined
in accordance with the following rules:
(a) he shall be deemed to be a resident of
the Contracting State in which he has a permanent home available to him. If
he has a permanent home available to him in both Contracting States, he shall
be deemed to be a resident of the Contracting State with which his personal
and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he
has his centre of vital interests cannot be determined, or if he has not a
permanent home available to him in either Contracting State, he shall be deemed
to be a resident of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting
States or in neither of them, he shall be deemed to be a resident of the Contracting
state of which he is a national;
(d) if he is a national of both Contracting
States or of neither of them, the competent authorities of the Contracting
States shall settle the question by mutual agreement.
(3) Where by reason of the provisions of 
paragraph (1) of this Article a person other
than an individual is a resident of both Contracting States, then it shall
be deemed to be a resident of the Contracting State in which its place of
effective management is situated.

ARTICLE 5 

(1) For the purposes of this Convention,
the term “permanent establishment”
means a fixed place of business in which the business
of the enterprise is wholly or partly carried on.
(2) The term “permanent
establishment” shall include especially: 
(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, oil well, quarry or other
place of extraction of natural resources;

(g) a building site or construction
or assembly project which exists for more than twelve months.
(3) The term “permanent establishment”
 shall not be deemed to include:
(a) the use of facilities solely for the
purpose of storage, display or delivery of goods or merchandise belonging
to the enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage,
display or delivery;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing
by another enterprise;
(d) the maintenance of a fixed place of business
solely for the purpose of purchasing goods or merchandise, or for collecting
information, for the enterprise;
(e) the maintenance of a fixed place of business
solely for the purpose of advertising, for the supply of information, for
scientific research or for similar activities which have a preparatory or
auxiliary character, for the enterprise.
(4) A person acting in a Contracting State
on behalf of an enterprise of the other Contracting State—other than
an agent of an independent status to whom the provisions of 
paragraph (5) of this Article apply—shall
be deemed to be a permanent establishment in the first-mentioned State if
he has, and habitually exercises in that State, an authority to conclude contracts
in the name of the enterprise, unless his activities are limited to the purchase
of goods or merchandise for the enterprise.
(5) An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, general commission agent or any other agent of an independent status,
where such persons are acting in the ordinary course of their business.
(6) The fact that a company which is a resident
of a Contracting State controls 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 permanent establishment or otherwise), shall not
of itself constitute either company a permanent establishment of the other.


ARTICLE 6 

(1) Income from immovable property including
income from agriculture or forestry may be taxed in the Contracting State
in which such property is situated.
(2) The term “immovable
property” shall be defined in accordance
with 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 provisions of general law respecting landed property apply, usufruct
of immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources; ships, boats and aircraft shall not be regarded as immovable
property.
(3) The provisions of 
paragraph (1) of this Article shall apply to
income derived from the direct use, letting, or use in any other form of immovable
property.
(4) The provisions of 
paragraphs (1) and (3)
of this Article shall also apply to the income from immovable property of
an enterprise and to income from immovable property used for the performance
of professional services.

ARTICLE 7 

(1) The profits of an enterprise of a Contracting
State shall be taxable only in that Contracting State unless the enterprise
carries on business in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on business as aforesaid, the
profits of the enterprise may be taxed in the other Contracting State but
only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of 
paragraph (3) of this Article, where an enterprise
of a Contracting State carries on business in the other Contracting State
through a permanent establishment situated therein, there shall in each Contracting
State be attributed to that permanent establishment the profits which it might
be expected to make if it were a distinct and separate enterprise engaged
in the same or similar activities under the same or similar conditions and
dealing wholly independently with the enterprise of which it is a permanent
establishment.
(3) In the determination of the profits of
a permanent establishment, there shall be allowed as deductions expenses which
are incurred for the purposes of the permanent establishment (including executive
and general administrative expenses so incurred) whether in the Contracting
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 the enterprise.
(5) For the purposes of the preceding paragraphs,
the profits to be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and sufficient reason
to the contrary.
(6) Where profits include items of income
which are dealt with separately in other Articles of this Convention, then
the provisions of those Articles shall not be affected by the provisions of
this Article.

ARTICLE 8 

(1) A resident of a Contracting State shall
be exempt from tax in the other Contracting State on profits from the operation
of ships or aircraft other than profits from voyages of ships or aircraft
confined solely to places in the other Contracting State.
(2) The provisions of 
paragraph (1) shall also apply to profits derived
from a participation in a pool, a joint business or an international operating
agency.

ARTICLE 9 
Where
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital
of an enterprise of the other Contracting State; or
(b) the same persons participate directly
or indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State;
and in either case conditions are made or imposed between
the two enterprises in their commercial or financial relations which differ
from those which would be made between independent enterprises, then any profits
which would, but for those conditions, 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 taxed accordingly.

ARTICLE 10 

(1) Dividends derived from a company which
is a resident of Spain by a resident of the United Kingdom may be taxed in
the United Kingdom. Such dividends may also be taxed in Spain, and according
to the laws of Spain, but where such dividends are beneficially owned by a
resident of the United Kingdom the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company which controls directly or
indirectly at least 10 per cent of the voting power in the company paying
the dividends;
(b) in all other cases 15 per cent of the
gross amount of the dividends.
(2) Dividends derived from a company which
is a resident of the United Kingdom by a resident of Spain may be taxed in
Spain. Such dividends may also be taxed in the United Kingdom and according
to the laws of the United Kingdom, but where such dividends are beneficially
owned by a resident of Spain the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company which controls directly or
indirectly at least 10 per cent of the voting power in the company paying
the dividends;
(b) in all other cases 15 per cent of the
gross amount of the dividends.
(3) However, as long as an individual resident
in the United Kingdom is entitled to a tax credit in respect of dividends
paid by a company resident in the United Kingdom, the following provisions
of this paragraph shall apply instead of the provisions of 
paragraph (2) of this Article:
(a) 
(i) Dividends derived from a company which
is a resident of the United Kingdom by a resident of Spain may be taxed in
Spain.
(ii) Where a resident of Spain is entitled
to a tax credit in respect of such a dividend under 
sub-paragraph (b) of this paragraph, tax may
also be charged in the United Kingdom and according to the laws of the United
Kingdom, on the aggregate of the amount or value of that dividend and the
amount of that tax credit at a rate not exceeding 15 per cent.
(iii) Except as provided in 
sub-paragraph (a)(ii) of this paragraph, dividends
derived from a company which is a resident of the United Kingdom and which
are beneficially owned by a resident of Spain shall be exempt from any tax
in the United Kingdom which is chargeable on dividends.
(b) A resident of Spain who receives dividends
from a company which is a resident of the United Kingdom shall, subject to
the provisions of sub-paragraph (c)
of this paragraph and provided he is the beneficial owner of the dividends,
be entitled to the tax credit in respect thereof to which an individual resident
in the United Kingdom would have been entitled had he received those dividends,
and to the payment of any excess of such credit over his liability to United
Kingdom tax.
(c) The provisions of 
sub-paragraph (b) of this paragraph shall not
apply where the beneficial owner of the dividends is a company which either
alone or together with one or more associated companies controls directly
or indirectly at least 10 per cent of the voting power in the company paying
the dividends. For the purpose of this paragraph two companies shall be deemed
to be associated if one controls directly or indirectly more than 50 per cent
of the voting power in the other company, or a third company controls more
than 50 per cent of the voting power in both of them.
(4) The term “dividends”
 as used in this Article means income
from shares, or other rights, not being debt-claims, participating in profits,
as well as income from corporate rights assimilated to income from shares
by the taxation law of the State of which the company making the distribution
is a resident and also includes any other item (other than interest relieved
from tax under the provisions of Article 11
of this Convention) which, under the law of the Contracting State of which
the company paying the dividend is a resident, is treated as a dividend or
distribution of a company.
(5) The provisions of 
paragraph (1) or, as the case may be, 
paragraphs (2) and (3)
of this Article, shall not apply where the resident of one of the Contracting
States has in the other Contracting State a permanent establishment and the
holding by virtue of which the dividends are paid is effectively connected
with the business carried on through such permanent establishment. In such
a case the provisions of Article 7
shall apply.
(6) If the beneficial owner of a dividend
being a resident of a Contracting State owns 10 per cent or more of the class
of shares in respect of which the dividend is paid then 
paragraph (1) or, as the case may be, 
paragraphs (2) and (3)
of this Article shall not apply to the dividend to the extent that it can
have been paid only out of profits which the company paying the dividend earned
or other income which it received in a period ending 12 months or more before
the relevant date. For the purposes of this paragraph the term “relevant date” means 
the date on which the beneficial owner of the dividend became the owner of
10 per cent or more of the class of shares in question.Provided that this paragraph shall not apply if the beneficial
owner of the dividend shows that the shares were acquired for 
bona fide commercial reasons and not primarily for the purposes
of securing the benefit of this Article.
(7) Where a company which is a resident of
a Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company
and beneficially owned by persons who are not residents of the other State,
or 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 that other State;provided that where a company which is a resident of a
Contracting State has a permanent establishment in the other Contracting State
it may be subjected therein to any withholding tax provided by the internal
law of that other Contracting State but, such tax shall not exceed 15 per
cent of the distributed profits of the company attributable to the permanent
establishment after payment of corporation tax on its profits.

ARTICLE 11 

(1) Interest arising in a Contracting State
which is derived and beneficially owned by a resident of the other Contracting
State may be taxed in that other State.
(2) However, such interest may also be taxed
in the Contracting State in which it arises, and according to the law of that
State, but the tax so charged shall not exceed 12 per cent of the gross amount
of the interest.
(3) The term “interest”
 as used in this Article means income
from Government securities, bonds or debentures, whether or not secured by
mortgage and whether or not carrying a right to participate in profits, and
other debt-claims of every kind as well as all other income assimilated to
income from money lent by the taxation law of the State in which the income
arises.
(4) The provisions of 
paragraphs (1) and (2)
of this Article shall not apply if the beneficial owner of the interest, being
a resident of a Contracting State, carries on in the other Contracting State
in which the interest arises a trade or business through a permanent establishment
situated therein or performs in that other State professional services from
a fixed base situated therein and the debt-claim in respect of which the interest
is paid is effectively connected with such permanent establishment or fixed
base. In such a case, the provisions of Article
7 or Article 14,
as the case may be, shall apply.
(5) Interest shall be deemed to arise in
a Contracting State when the payer is that State itself, a political subdivision,
a local authority or 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 permanent establishment in connection with which
the indebtedness on which the interest is paid was incurred, and such interest
is borne by that permanent establishment, then such interest shall be deemed
to arise in the Contracting State in which the permanent establishment is
situated.
(6) Any provisions of the law of one of the
Contracting States under which interest paid by one company to another would
be treated as a dividend or distribution to be left out of account in computing
the taxable profits of the paying company shall not operate where the interest
is paid to and beneficially owned by a company which is a resident of the
other Contracting State. The preceding sentence shall not apply where more
than 50 per cent of the voting power in the last-mentioned company in controlled,
directly or indirectly, by a person or persons resident in the first-mentioned
State.
(7) The relief from tax provided for in 
paragraph (2) of this Article shall not apply
to interest on any form of debt-claim dealt in on a stock exchange where the
beneficial owner of the interest:
(a) does not bear tax in respect thereof
in the Contracting State of which it is a resident; and
(b) sells (or makes a contract to sell) the
debt-claim from which such interest is derived within three months of the
date on which such beneficial owner acquired such debt-claim.
(8) Where, owing to a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the interest paid, having regard to the debt-claim
for which it is paid, exceeds the amount which would have been agreed upon
by the payer and the beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to the last-mentioned amount.
In that case, the excess part of the payments shall remain taxable according
to the law of each Contracting State, due regard being had to the other provisions
of this Convention.
(9) The provisions of this Article shall
not apply if the debt-claim in respect of which the interest is paid was created
or assigned mainly for the purpose of taking advantage of this Article and
not for bona fide commercial reasons.

ARTICLE 12 

(1) Royalties arising in a Contracting State
which are derived and beneficially owned by a resident of the other Contracting
State may be taxed in that other State.
(2) However, such royalties may also be taxed
in the Contracting State in which they arise and according to the law of that
State, but the tax so charged shall not exceed 10 per cent of the gross amount
of the royalties.
(3) The term “royalties”
 as used in this Article means payments
of any kind received as consideration for the use of, or the right to use,
any copyright of literary, artistic or scientific work (including cinematograph
films, and films or tapes for radio or television broadcasting), any patent,
trade mark, design or model, plan, secret formula or process, or for the use
of, or the right to use, industrial, commercial or scientific equipment, or
for information concerning industrial, commercial or scientific experience.

(4) The provisions of 
paragraphs (1) and (2)
of this Article shall not apply if the beneficial owner of the royalties,
being a resident of a Contracting State, carries on in the other Contracting
State in which the royalties arise a trade or business through a permanent
establishment situated therein or performs in that other State professional
services from a fixed base situated therein and the right or property in respect
of which the royalties are paid is effectively connected with such permanent
establishment or fixed base. In such a case, the provisions of 
Article 7 or Article 14,
as the case may be, shall apply.
(5) Royalties shall be deemed to arise in
a Contracting State where the payer is that State itself, a political subdivision,
a local authority or 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 a permanent establishment in connection with which
the obligation to pay the royalties was incurred and the royalties are borne
by that permanent establishment, then the royalties shall be deemed to arise
in the Contracting State in which the permanent establishment is situated.

(6) Where, owing to a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the royalties 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 beneficial owner in the absence
of such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In that case, the excess part of the payments shall
remain taxable according to the law of each Contracting State, due regard
being had to the other provisions of this Convention.
(7) The provisions of this Article shall
not apply if the right or property giving rise to the royalties was created
or assigned mainly for the purpose of taking advantage of this Article and
not for bona fide commercial reasons.

ARTICLE 13 

(1) Capital gains from the alienation of
immovable property, as defined in paragraph (2)
of Article 6, may be taxed in the Contracting
State in which such property is situated.
(2) Capital gains from the alienation of
movable property forming part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
or of movable property pertaining to a fixed base available to a resident
of a Contracting State in the other Contracting State for the purpose of performing
professional services, including such gains from the alienation of such a
permanent establishment (alone or together with the whole enterprise) or of
such a fixed base, may be taxed in the other State.
(3) Notwithstanding the provisions of 
paragraph (2) of this Article, capital gains
derived by a resident of a Contracting State from the alienation of ships
and aircraft operated in international traffic and movable property pertaining
to the operation of such ships and aircraft shall be taxable only in that
Contracting State.
(4) Capital gains from the alienation of
any property other than those mentioned in paragraphs
(1), (2) and 
(3) of this Article shall be taxable only in
the Contracting State of which the alienator is a resident.

ARTICLE 14 

(1) Income derived by a resident of a Contracting
State in respect of professional services or other independent activities
of a similar character shall be taxable only in that State unless he has a
fixed base regularly available to him in the other Contracting State for the
purpose of performing his activities. If he has such a fixed base, the income
may be taxed in the other Contracting State but only so much of it as is attributable
to that fixed base.
(2) The term “professional
services” includes especially independent
scientific, literary, artistic, educational or teaching activities as well
as the independent activities of physicians, lawyers, engineers, architects,
dentists and accountants.

ARTICLE 15 

(1) Subject to the provisions of 
Articles 16, 18, 
19, 20 and 
21, salaries, wages and other similar remuneration
derived by a resident of a Contracting State in respect of an employment shall
be taxable only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such remuneration as
is derived therefrom may be taxed in that other State.
(2) Notwithstanding the provisions of 
paragraph (1) of this Article, remuneration
derived by a resident of a Contracting State in respect of an employment exercise
in the other Contracting State shall be taxable only in the first-mentioned
State if:
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
fiscal year of that other State; and
(b) the remuneration is paid by, or on behalf
of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
(3) Notwithstanding the preceding provisions
of this Article, remuneration in respect of an employment exercised aboard
a ship or aircraft in international traffic may be taxed in the Contracting
State of which the person deriving the profits from the operation of the ship
or aircraft is a resident.

ARTICLE 16 
Directors' fees and similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors of
a company which is a resident of the other Contracting State may be taxed
in that other State.

ARTICLE 17 

(1) Notwithstanding the provisions of 
Articles 14 and 15,
income derived by entertainers, such as theatre, motion picture, radio or
television artistes, and musicians, and by athletes, from their personal activities
as such may be taxed in the Contracting State in which those activities are
exercised.
(2) Where income in respect of personal activities
as such of an entertainer or athlete accrues not to that entertainer or athlete
himself but to another person that income may, notwithstanding the provisions
of Articles 7, 
14 and 15,
be taxed in the Contracting State in which the activities of the entertainer
or athlete are exercised.

ARTICLE 18 

(1) Subject to the provisions of 
Article 19 pensions and other similar remuneration
paid in consideration of past employment to a resident of a Contracting State
and any annuity paid to such a resident shall be taxable only in that State.

(2) The term “annuity”
 means a stated sum payable periodically
at stated times during life or during a specified or ascertainable period
of time under an obligation to make the payments in return for adequate and
full consideration in money or money's worth.

ARTICLE 19 

(1) Remuneration, other than a pension, paid
out of public funds of the United Kingdom or Northern Ireland or of the funds
of any local authority in the United Kingdom to any individual in respect
of services rendered to the Government of the United Kingdom or Northern Ireland
or a local authority in the United Kingdom, shall be taxable only in the United
Kingdom. However, such remuneration shall be taxable only in Spain if the
services are rendered in Spain and the recipient is a resident of Spain who:

(a) is a national of Spain; or
(b) did not become a resident of Spain solely
for the purpose of performing the services.
(2) Remuneration, other than a pension, paid
by Spain or a political subdivision or a local authority thereof to any individual
in respect of services rendered to the Government of Spain or a political
subdivision or a local authority thereof, shall be taxable only in Spain.
However, such remuneration shall be taxable only in the United Kingdom if
the services are rendered in the United Kingdom and the recipient is a resident
of the United Kingdom who:
(a) is a national of the United Kingdom;
or
(b) did not become a resident of the United
Kingdom solely for the purpose of performing the services.
(3) Any pension paid by, or out of funds
created by, the United Kingdom or Northern Ireland or a local authority in
the United Kingdom to any individual in respect of services rendered to the
Government of the United Kingdom or Northern Ireland or a local authority
in the United Kingdom shall be taxable only in the United Kingdom. However,
such pensions shall be taxable only in Spain if the recipient is a national
of and a resident of Spain.
(4) Any pension paid by, or out of funds
created by, Spain or a political subdivision or a local authority thereof
to any individual in respect of services rendered to Spain or a political
subdivision or a local authority thereof shall be taxable only in Spain. However,
such pensions shall be taxable only in the United Kingdom if the recipient
is a national of and a resident of the United Kingdom.
(5) The provisions of 
Articles 15, 16
and 18 shall apply to remuneration
and pensions in respect of services rendered in connection with any business
carried on by a Contracting State (including in the case of the United Kingdom,
any business carried on by the Government of Northern Ireland) or a political
subdivision or a local authority thereof.

ARTICLE 20 
Payments which a student or business apprentice who is or was immediately
before visiting a Contracting State a resident of the other Contracting State
and who is present in the first-mentioned Contracting State solely for the
purpose of his education or training receives for the purpose of his maintenance,
education or training shall not be taxed in the first-mentioned State, provided
that such payments are made to him from sources outside that State.

ARTICLE 21 
An individual who, at the invitation of a university, college,
school or other similar recognised educational institution in one of the Contracting
States, visits that Contracting State for a period not exceeding two years
solely for the purpose of teaching at such educational institution and who
is, or was immediately before that visit, a resident of the other Contracting
State shall be exempt from tax in the first-mentioned Contracting State on
any remuneration for such teaching.

ARTICLE 22 

(1) Items of income of a resident of a Contracting
State, wherever arising, being income of a class or from sources not expressly
mentioned in the foregoing Articles of this Convention shall be taxable only
in that State.
(2) The provisions of 
paragraph (1) of this Article shall not apply
if the recipient of the income, being a resident of a Contracting State, carries
on business in the other Contracting State through a permanent establishment
situated therein, or performs in that other State professional services from
a fixed base situated therein, and the right or property in respect of which
the income is paid is effectively connected with such permanent establishment
or fixed base. In such a case, the provisions of 
Article 7 or Article 14,
as the case may be, shall apply.

ARTICLE 23 

(1) Capital represented by immovable property,
as defined in paragraph (2) of Article 6,
may be taxed in the Contracting State in which such property is situated.

(2) Capital represented by movable property
forming part of the business property of a permanent establishment of an enterprise,
or by movable property pertaining to a fixed base used for the performance
of professional services, may be taxed in the Contracting State in which the
permanent establishment or fixed base is situated.
(3) Notwithstanding the provisions of 
paragraph (2) of this Article, ships and aircraft
operated in international traffic and movable property pertaining to the operation
of such ships and aircraft shall be taxable only in the Contracting State
of which the operator is a resident.
(4) All other elements of capital of a resident
of a Contracting State shall be taxable only in that State.

ARTICLE 24 

(1) Subject to the provisions of the law
of the United Kingdom regarding the allowance as a credit against United Kingdom
tax of tax payable in a territory outside the United Kingdom (which shall
not affect the general principle hereof):
(a) Spanish tax payable under the laws of
Spain, and in accordance with this Convention, whether directly or by deduction,
on profits, income or chargeable gains from sources within Spain (excluding,
in the case of a dividend, tax payable in respect of the profits out of which
the dividend is paid) shall be allowed as a credit against any United Kingdom
tax computed by reference to the same profits, income or chargeable gains
by reference to which the Spanish tax is computed.
(b) In the case of a dividend paid by a company
which is a resident of Spain to a company which is a resident of the United
Kingdom and which controls directly or indirectly at least 10 per cent of
the voting power in the company paying the dividend, the credit shall take
into account (in addition to any Spanish tax creditable under the provisions
of sub-paragraph (a)
of this paragraph) the Spanish tax payable by the company in respect of the
profits out of which such dividend is paid.
(2) In the case of Spain:
(a) Where a resident of Spain derives income
which, in accordance with the provisions of this Convention, may be taxed
in the United Kingdom, Spain shall allow as a deduction from the tax on the
income of that person an amount equal to the tax paid in the United Kingdom;
such deduction shall not, however, exceed that part of the tax, as computed
before the deduction is given, which is appropriate to the income derived
from the United Kingdom. The tax paid in the United Kingdom shall also be
allowed as a deduction against the corresponding Spanish prepayment taxes,
in accordance with the provisions of this paragraph.
(b) Where the profits of a company which
is a resident of Spain include dividends from a company which is a resident
of the United Kingdom, the first-mentioned company shall be entitled to the
same relief as would have been applicable if both companies were residents
of Spain.
(c) In the case of a dividend paid by a company
which is a resident of the United Kingdom to a company which is a resident
of Spain, in respect of which, in accordance with the provisions of 
sub-paragraph (c) of paragraph (3) of Article 10,
the last-mentioned company is not entitled to the tax credit referred to in 
sub-paragraph (b) of that paragraph, such dividends
shall, for the purposes of this paragraph, be deemed to have borne United
Kingdom tax of an amount equal to fifteen eighty-fifths of that dividend.

(3) For the purposes of 
paragraph (1) of this Article, the term 
“Spanish tax payable” shall be deemed to include any amount
which would have been payable as Spanish tax for any year but for a reduction
of tax granted for that year or any part thereof under:
(a) paragraph
(2)A of Article 20 or Article 31
of the Decree 3357/67 of 23 December 1967, so far as they were in force and
have not been modified since the date of signature of this Convention or have
been modified only in minor respects so as not to affect their general character;
or
(b) any other provision which may subsequently
be made granting an exemption or reduction of tax which is agreed by the competent
authorities of the Contracting States to be of a substantially similar character,
if it has not been modified thereafter or has been modified only in minor
respects so as not to affect its general character.Provided that:
(i) in determining
the “amount which would have been payable
as Spanish tax” referred to in this paragraph, the provisions
of paragraph (2) of Article 11
and paragraph (2) of Article 12
shall be taken into account;and
(ii) relief from United Kingdom tax shall
not be given by virtue of this paragraph in respect of income from any source
if the income arises in a period starting more than 10 years after the exemption
from, or reduction of, Spanish tax was first granted in respect of that source.

(4) For the purposes of 
paragraphs (1) and (2)
of this Article profits, income and capital gains owned by a resident of a
Contracting State which may be taxed in the other Contracting State in accordance
with this Convention shall be deemed to arise from sources in that other Contracting
State.

ARTICLE 25 

(1) The nationals of a Contracting State
shall not be subjected in the other Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State
in the same circumstances are or may be subjected.
(2) Stateless persons who are residents of
one of the Contracting States shall not be subjected in either Contracting
State to any taxation or any requirement connected therewith which is other
or more burdensome than the taxation and connected requirements to which nationals
of the State concerned in the same circumstances are or may be subjected.

(3) Subject to the provisions of 
paragraph (7) of Article 10, the taxation on
a permanent establishment which an enterprise of a Contracting State has in
the other Contracting State shall not be less favourably levied in that other
State than the taxation levied on enterprises of that other State carrying
on the same activities.
(4) Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or indirectly,
by one or more residents of the other Contracting State, shall not be subjected
in the first-mentioned Contracting State to any taxation or any requirement
connected therewith which is other or more burden-some than the taxation and
connected requirements to which other similar enterprises of the first-mentioned
State are or may be subjected.
(5) Nothing in this Article shall be construed
as obliging either Contracting State to grant to individuals not resident
in that State any of the personal allowances, reliefs and reductions for tax
purposes which are granted to individuals so resident.
(6) In this Article the term “taxation” means 
taxes of every kind and description.

ARTICLE 26 

(1) Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result
or will result for him in taxation not in accordance with this Convention,
he may, notwithstanding the remedies provided by the national laws of those
States, present his case to the competent authority of the Contracting State
of which he is a resident.
(2) The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able
to arrive at an appropriate solution, to resolve the case by mutual agreement
with the competent authority of the other Contracting State, with a view to
the avoidance of taxation not in accordance with the Convention.
(3) 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 the Convention.

(4) The competent authorities of the Contracting
States may communicate with each other directly for the purpose of reaching
an agreement in the sense of the preceding paragraphs.

ARTICLE 27 

(1) The competent authorities of the Contracting
States shall exchange such information as is necessary for carrying out the
provisions of this Convention or for the prevention of fraud or for the administration
of statutory provisions against legal avoidance in relation to the taxes which
are the subject of this Convention. Any information so exchanged shall be
treated as secret and shall not be disclosed to any persons other than persons
(including a court or administrative body) concerned with the assessment or
collection of, or prosecution in respect of, or the determination of appeals
in relation to, the taxes which are the subject of the Convention.
(2) In no case shall the provisions of 
paragraph (1) be construed so as to impose
on the competent authority of either Contracting State the obligation:
(a) to carry out administrative measures
at variance with the laws or administrative practice prevailing in either
Contracting State;
(b) to supply particulars which are not obtainable
under the laws or in the normal course of the administration of that or of
the other Contracting State;
(c) to supply information which would disclose
any trade, business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which would be contrary to public
policy (ordre public).

ARTICLE 28 
Nothing in this Convention shall affect the fiscal privileges of
diplomatic or consular officials under the general rules of international
law or under the provisions of special agreements.

ARTICLE 29 

(1) This Convention may be extended, either
in its entirety or with modifications, to any territory for whose international
relations either Contracting State is responsible and which imposes taxes
substantially similar in character to those to which this Convention applies.
Any such extension shall take effect from such date and subject to such modifications
and conditions, including conditions as to termination, as may be specified
and agreed between the Contracting States in Notes to be exchanged through
diplomatic channels.
(2) Unless otherwise agreed by both Contracting
States, the termination of this Convention shall terminate the application
of this Convention to any territory to which it has been extended under the
provisions of this Article.

ARTICLE 30 

(1) This Convention shall be ratified and
the instruments of ratification shall be exchanged at Madrid as soon as possible.

(2) This Convention shall enter into force
on the thirtieth day following the date on which the instruments of ratification
are exchanged and shall thereupon have effect:
(a) in the United Kingdom:
(i) as respects income tax and capital gains
tax, for any year of assessment beginning on or after the sixth day of April
in the calendar year in which this Convention enters into force;
(ii) as respects corporation tax, for any
financial year beginning on or after the first day of April in the calendar
year in which this Convention enters into force;
(b) in Spain:as respects Spanish tax, for any year beginning on or after the
first day of January in the calendar year in which this Convention enters
into force.
(3) The Agreement
between the Contracting States constituted by Exchange of Notes dated 21 December
1968 for the reciprocal exemption from tax of air
transport undertakings, shall cease to have effect in relation to any tax
for any period for which the present Convention has effect as respects that
tax.

ARTICLE 31 
This Convention shall remain in force until denounced by one of
the Contracting States. Either Contracting State may denounce the Convention,
through diplomatic channels, by giving notice of termination at least six
months before the end of any calendar year. In such event, the Convention
shall cease to have effect:
(a) in the United Kingdom:
(i) as respects income tax and capital gains
tax, for any year of assessment beginning on or after the sixth day of April
in the calendar year next following that in which the notice is given;
(ii) as respects corporation tax, for any
financial year beginning on or after the first day of April in the calendar
year next following that in which the notice is given:
(b) in Spain:as respects Spanish tax, for any year beginning on or after the
first day of January in the calendar year next following that in which the
notice is given.
In witness whereof the undersigned, duly authorised thereto
by their respective Governments, have signed this Convention.
Done in duplicate at London this 21st day of October 1975, in the
English and Spanish languages both texts being equally authoritative.

For the Government of the United Kingdom of Great Britain and
Northern Ireland:
ROY HATTERSLEY
For the Government of Spain:
MANUEL FRAGA IRIBARNE

