DT17623 - Spain: double taxation agreement, Article 24: Elimination of double taxation
(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:
(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.
