SPAIN - BRAZIL CONVENTION (Unofficial translation)

Date of Conclusion: 14 November 1974
Effective Date: 1 January 1976

CONVENTION BETWEEN THE FEDERATIVE REPUBLIC OF BRAZIL AND
THE SPANISH STATE FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME.

The Government of the Federative Republic of Brazil and the Government of the Spanish State,

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

Article 1
Personal scope

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

Article 2
Taxes covered

1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on items thereof, including taxes on gains from the alienation of movable or immovable property, taxes on the amounts of salaries paid by enterprises (not including Social Security contributions), as well as taxes on capital appreciation.

3. The taxes to which this Convention shall apply are:

  1. in Spain:

    i) the general income tax on individuals (el impuesto general sobre la renta de las personas físicas);

    ii) the general tax on companies and other legal entities (el impuesto general sobre la renta de sociedades y demás entidades jurídicas), including the special tax of 4% imposed by Article 104 of Law 41/1964 of 11 June;

    iii) the following prepayments: the contribution on rural land (la contribución territorial sobre la riqueza rústica y pecuaria), the contribution on urban land (la contribución territorial sobre la riqueza urbana), the tax on earned income (el impuesto sobre los rendimientos del trabajo personal), the tax on income from capital (el impuesto sobre las rentas del capital), and the tax on business activities and profits (el impuesto sobre actividades y beneficios comerciales e industriales);

    iv) in the Sahara, the taxes on income (on earned income and on income from capital) and on business income (los impuestos sobre la renta (sobre los rendimientos del trabajo y del patrimonio) y sobre los beneficios de las empresas);

    v) the surface royalty (el canon de superficie), the gross output tax (el impuesto sobre el producto bruto) and the special tax on profits (el impuesto especial sobre los beneficios) regulated by Law 21/1974 of 27 June 1974 concerning exploration for and exploitation of hydrocarbons;

    vi) the local taxes on income and capital (los impuestos locales sobre la renta)

    (hereinafter referred to as "Spanish tax").

  2. in Brazil:

- the federal income tax, excluding the tax on excess remittances and on activities of minor importance

(hereinafter referred to as "Brazilian tax").

4. The Convention shall also apply to any identical or substantially similar taxes that are subsequently imposed in addition to, or in place of, the above-mentioned taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.

Article 3
General definitions

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

a) the term "Spain" means the Spanish State;

b) the term "Brazil" means the Federative Republic of Brazil;

c) the terms "a Contracting State" and "the other Contracting State" mean Brazil or Spain, as the context requires;

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

e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;

f) 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;

g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when such transport is solely between places in the other Contracting State;

h) the term "competent authority" means:

i) - in Brazil: the Minister of Finance, the Secretary of Federal Revenue or their authorized representatives;

ii) – in Spain: the Minister of Finance, the General Director of Tax policy or their authorized representatives.

2. As regards the application of this Convention by a Contracting State, any term not defined therein shall have the meaning that it has under the law of that Contracting State relating to the taxes to which this Convention applies, unless the context otherwise requires.

Article 4
Fiscal domicile

1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

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

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 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 l 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
Permanent establishment

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

2. The term "permanent establishment" includes especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) a workshop;

f) a mine, quarry or any other place of extraction of natural resources; and

g) a building site or construction or assembly project which exists for more than six months.

3. The term "permanent establishment" shall be deemed not 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 of 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 of 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 paragraph 6 applies - 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 merchandise for the enterprise.

5. An insurance company of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State provided that, through a representative other than a person referred to in paragraph 6 below, it receives premiums or insures risks in that other State.

6. 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, 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 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
Income from immovable property

1. Income from immovable property may be taxed in the Contracting State in which such property is situated.

2. a) Subject to the provisions of sub-paragraphs "b" e "c" below, the term "immovable property" shall be defined in accordance with the laws of the Contracting State in which the property in question is situated;

    1. the term "immovable property" 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;
    2. ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 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 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
Business profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that 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 State but only so much of them as is attributable to that permanent establishment.

2. 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 determining 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.

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. 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
Shipping and air transport

1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

3. Profits from the operation of a ship or aircraft in international traffic derived by an entreprise of a Contracting State through participation in a pool or a joint business shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

Article 9
Associated enterprises

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
Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.

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

3. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident a permanent establishment and the holding by virtue of which the dividends are paid is effectively connected with such permanent establishment. In such a case the provisions of Article 7 shall apply.

4. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the laws of the State of which the company making the distribution is a resident.

5. Where a company which is a resident of Spain has a permanent establishment in Brazil, that permanent establishment may be subject therein to a tax withheld at source in accordance with the taxation law of Brazil. However, such tax shall not exceed 15 percent of the gross amount of the profits of that permanent establishment after the corporate income tax attributable to such profits is paid.

Nevertheless, the tax shall be applicable only when the profits are effectively transferred abroad.

Article 11
Interest

1. Interest arising in a Contracting State and paid to 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 laws of that State, but the tax so charged shall not exceed 15 per cent of the gross amount of the interest.

3. The tax on interest paid to a financial institution of a Contracting State in respect of a loan or credit made for a minimum period of ten years for the purpose of financing the purchase of capital equipment, shall not exceed, in the other Contracting state, 10 percent of the gross amount of the interest.

4. Notwithstanding the provisions of paragraphs 1 and 2:

a) interest arising in a Contracting State and paid to the Government of the other Contracting State, a political subdivision thereof or any agency (including a financial institution) wholly owned by that Government or a political subdivision thereof shall be exempt from tax in the first-mentioned Contracting State;

b) interest from securities, bonds or debentures issued by the Government of a Contracting State, a political subdivision thereof or any agency (including a financial institution) wholly owned by that Government shall be taxable only in that State.

5. 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 the profits, and debt-claims of every kind as well as other income assimilated to income from money lent by the tax law of the Contracting State in which the income arises.

6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment to which the debt-claim is effectively connected. In such a case the provisions of Article 7 shall apply.

7. The tax rate limitation provided for in paragraph 2 shall not apply to interest arising in a Contracting State and paid to a permanent establishment of an enterprise of the other Contracting State which is situated in a third State.

8. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political division, 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 such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

9. 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 the interest, 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 such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12
Royalties

1. Royalties arising in a Contracting State and paid to 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 laws of that State, but the tax so charged shall not exceed:

a) 10 per cent of the gross amount of the royalties arising from the use or the right to use any copyright of literary, artistic or scientific works (including cinematograph films, films or tapes for television or radio broadcasting, provided they are produced by a resident of a Contracting State);

b)15 per cent in all other cases.

3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, films or tapes for television or radio 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. Royalties 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 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 such royalties are borne by such a permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, has in the other Contracting State in which the royalties arise a permanent establishment to which the right or property in respect of which the royalties are paid is effectively connected. In such a case the provisions of Article 7 shall apply.

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 the royalties, 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 such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 13
Capital gains

1. Gains from the alienation of immovable property referred to in Article 6, paragraph 2, may be taxed in the Contracting State in which such property is situated.

2. 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 with the whole enterprise) or of such a fixed base, may be taxed in that other State. However, gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

3. Gains from the alienation of any property or right other than those referred to in paragraphs 1 and 2 may be taxed in both Contracting States.

Article 14
Independent personal services

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 the remuneration for such services or activities is borne by a permanent establishment situated therein or a company resident of that other State. In such a case, the income may be taxed in that other State.

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

Article 15
Dependent personal services

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, remuneration derived by a resident of a Contracting State in respect of an employment exercised 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 calendar year concerned, and

b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

c) 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 derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

Article 16
Diretors' fees

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

Article 17
Artistes and sportmen

1. Notwithstanding the other provisions of the present Convention, income derived by public entertainers, such as theatre, motion picture, radio or television artistes, or musicians, or as sportsmen, from their personal activities as such, may be taxed in the Contracting State in which those activities are exercised.

2. Where the services mentioned in paragraph 1 of this Article are provided in a Contracting State by an enterprise of the other Contracting State, then the income derived by the enterprise from providing those services may, notwithstanding the other provisions of this Convention, be taxed in the first-mentioned Contracting State.

Article 18
Pensions and annuities

1. Subject to the provisions of Article 19, pensions and other similar remuneration not exceeding an amount equivalent to US$ 3,000.00 in the calendar year paid to a resident of a Contracting State, shall be taxable only in that other State. The excess part of the payments shall be taxed in both Contracting States.

2. Annuities shall be taxable only in the Contracting State of which the recipient is a resident.

3. As used in this Article:

a) the term "pensions and other similar remuneration" means periodic payments made after retirement in consideration of past employment or by way of compensation for injuries received in connection with past employment;

b) 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
Governmental service

1. a) Remuneration, other than a pension, paid by a Contracting State, a political subdivision or a local authority thereof to an individual in respect of services rendered to that State, subdivision or local authority, shall be taxable only in that State.

b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the beneficial owner of the remuneration 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. Any pension paid by, or out of funds created by, a Contracting State, a political subdivision or a local authority thereof to an individual in respect of services rendered to that State, political subdivision or local authority, shall be taxable only in that State.

However, such pension shall be taxable only in the other Contracting State if the beneficial owner is a resident of, and a national of, that other State.

3. The provisions of Articles 15, 16, and 18 shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by a Contracting State, a political subdivision or a local authority thereof.

4. Any pension paid out of the social security funds of a Contracting State to a resident of the other Contracting State shall be taxable only in that other State

Article 20
Teachers and researchers

An individual who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who, at the invitation of the Government of the first-mentioned State or of a university, college, school, museum or other cultural institution in that first-mentioned State or under an official programme of cultural exchange, is present in that State for a period not exceeding two consecutive years solely for the purpose of teaching, giving lectures or carrying out research at such institution shall be exempt from tax in that State on his remuneration for such activity.

Article 21
Students

1. An individual who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is temporarily present the first-mentioned Contracting State solely:

a) as a student at a university, college, or school in that first-mentioned Contracting State;

b) as a trainee, or

c) as the recipient of a scholarship, allowance or award granted by a religious, charitable, scientific or educational organization for the primary purpose of studying or carrying on research, shall be exempt from tax in the first-mentioned Contracting State in respect of remittances from abroad for the purpose of his maintenance, education or training.

2. A student or trainee 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 purposes of his education or training shall be exempt from tax in the first-mentioned Contracting State for a period not exceeding four consecutive calendar years in respect of remuneration from employment exercised in that State, for the purpose of his maintenance, education or training.

Article 22
Other income

Items of income of a resident of a Contracting State not expressly dealt with in the foregoing Articles of this Convention, may be taxed in both Contracting States.

Article 23
Methods for the elimination of double taxation

1. Where a resident of a Contracting State derives income which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow, subject to the provisions of paragraphs 2, 3 and 4, as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in the other Contracting State.

Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is appropriate to the income which may be taxed in the other Contracting State.

In Spain, the provisions of this paragraph shall apply in respect of both general taxes and prepayments.

2. For the deduction mentioned in paragraph 1, the tax on interest and royalties shall always be considered as having been paid at the rates of 20 per cent and 25 percent, respectively.

3. Where a resident of Spain derives dividends which, in accordance with the provisions of this Convention may be taxed in Brazil, Spain shall exempt such dividends from tax, but may, in calculating the tax on the remaining income of that resident, apply the rate of tax which would have been applicable if the exempted dividends had not been so exempted.

4. Where a resident of Brazil derives dividends which, in accordance with the provisions of this Convention may be taxed in Spain, Brazil shall exempt such dividends from tax.

Article 24
Non-discrimination

1. 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 connnected requirements to which nationals of that other State in the same circumstances are or may be subjected.

2. The term "national" means:

a) - any individual possessing the nationality of a Contracting State;

b)- any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

3. 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. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsabilities which it grants to its own residents.

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 State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State, are or may be subjected.

5. In this Article, the term "taxation" means taxes to which this Convention applies.

Article 25
Mutual agreement procedure

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 the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law 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 a satisfactory 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 which is not in accordance with this 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 this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this 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. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article 26
Exchange of information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in not contrary to the Convention. Any information so exchanged shall be treated as secret and shall only be disclosed to persons or authorities concerned with the assessment or collection of the taxes covered by this Convention.

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

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

b) to supply information which is 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.

Article 27
Diplomatic and consular officials

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

Article 28
Mode of application

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this Convention.

Article 29
Entry into force

1. This Convention shall be ratified in accordance with the repective constitutional formalities and the corresponding instruments of ratification shall be exchanged in Madrid as soon as possible.

2. The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect for the first time:

a) in Brazil:

I) in respect of taxes withheld at source, on amounts paid on or after the first day of January of the calendar year immediately following that in which the Convention enters into force;

II) in respect of other taxes on income, to amounts arising in the fiscal year beginning on or after the first day of January of the calendar year immediately following that in which the Convention enters into force.

b) in Spain:

I) in respect of taxes withheld at source, to taxes chargeable on or after the first day of January of the calendar year immediately following that in which the Convention enters into force;

II) in respect of other taxes on income, to income arising in the fiscal year beginning on or after the first day of January of the calendar year immediately following that in which the Convention enters into force.

Article 30
Termination

Either Contracting State may terminate this Convention after a period of three years from the date on which the Convention enters into force, by giving a written notice of termination to the other Contracting State, through diplomatic channels, provided that any such notice shall be given only on or before the thirtieth day of June in any calendar year. In such a case the Convention shall cease to have effect:

a) in Brazil :

I) in respect of taxes withheld at source, to amounts paid before the expiration of the calendar year in which the notice of termination is given;

II) in respect to the other taxes covered by this Convention, for any fiscal year beginning in the calendar year in which the notice of termination is given.

b) in Spain:

  • I) in respect of taxes withheld at source, to taxes chargeable before the expiration of the calendar year in which the notice of termination is given;

  • II) in respect to the other taxes covered by this Convention, for any fiscal year beginning in the calendar year in which the notice of termination is given.

  • In witness whereof the undersigned, duly authorized thereto, have signed this Convention.

    Done, in duplicate, at Brasília on 14 November 1974, in the Spanish and Portuguese languages, both texts being equally authentic.

    For the Government of For the Government of Spain

    the Federative Republic of Brazil

    PROTOCOL

    At the moment of the signature of the Convention for the avoidance of double taxation with respect to taxes on income between the Federative Republic of Brazil and the Spanish State, the undersigned, duly authorized thereto, have agreed upon the following provisions which constitute an integral part of the Convention.

    1. Ad/Article 2, paragraph 3 "b", 6

    The tax on location ("el arbitrio de radicación") shall be deemed to be included therein.

    2. Ad/Article 6, paragraph 1

    Income from agriculture or forestry shall be deemed to be included therein.

    3. Ad/Article 10, paragraph 2

    In the event that Brazil, after the signature of this Convention, reduces the tax on dividends referred to in paragraph 2 of Article 10 paid by a company which is a resident of Brazil to a resident of a third State which is not situaed in Latin America and which holds at least 25 percent of the voting stock of the company which is a resident of Brazil, then an equal reduction shall automatically be applied to the tax on dividends paid to a company which is a resident of Spain under similar conditions.

    4. Ad/Article 12, paragraph 2

    In the event that Brazil, after the signature of this Convention, reduces the tax on royalties referred to in paragraph 2 "b", of Article 12, paid by a resident of Brazil to a resident of a third State which is not situated in Latin America, then an equal reduction shall automatically be applied to the tax on royalties paid to a resident of Spain under similar conditions.

    5. Ad/Article 12, paragraph 3

    The expression "for information concerning industrial, commercial or scientific experience" mentioned in paragraph 3 of Article 12 includes income derived from technical assistance and technical services.

    6. Ad/Article 14

    The provisions of Article 14 shall apply even if the activities mentioned in that Article are exercised by a company.

    7. Ad/Article 24, paragraph 4

    The provisions of the Brazilian law which do not allow that royalties as defined in paragraph 3 of Article 12, paid by a company resident of Brazil to a resident of Spain which holds at least 50 per cent of the voting capital of that company, be deductible in the determination of the taxable profits of the company which is a resident of Brazil, shall be applicable notwithstanding the provisions of paragraph 4 of Article 24 of this Convention.

    In the event that Brazil, after the signature of the present Convention, would allow, that royalties referred to in paragraph 3 of Article 12 paid by a company which is a resident of Brazil to a resident of a third State which is not situated in Latin America, and which holds at least 50 per cent of the voting capital of the company which is a resident of Brazil, be deductible in the determination of the taxable profits of that company, then the same deduction will be automatically applicable, under similar conditions, to a company which is a resident of Brazil paying royalties to a resident of Spain.

    In witness whereof the Plenipotentiairies of the two Contracting States have signed and sealed this Protocol.

    Done in duplicate at Brasilia on 14 November 1974, in the Spanish and Portuguese languages, both texts being equally authentic.

        For the Government of                                  For the Government of Spain
    the Federative Republic of Brazil