Canada and Spain Sign New Tax Protocol

Agreement to prevent double taxation and international tax evasion

November 18, 2014 – Ottawa, Ontario – Department of Finance

Finance Minister Joe Oliver today announced the signing of a Protocol to amend the existing income tax convention between Canada and Spain. The Protocol was signed in Madrid by Canada’s Ambassador to Spain, Jon Allen, and Spain’s Minister of Finance and Public Administration, Cristóbal Montoro.

The Protocol will help eliminate tax barriers to trade and investment, and will enhance economic links between Canada and Spain. It will also create new trade and investment opportunities.

A Protocol to the Convention between Spain and Canada for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital (the “Protocol”) was signed in Madrid on November 18, 2014.

The Protocol reduces withholding tax rates applicable on payments of dividends and interest and exempts from withholding tax certain payments of interest, and dividends paid to certain pension plans. The Protocol also provides for assistance in the collection of taxes and includes provisions reflecting the standard developed by the Organisation for Economic Cooperation and Development for the exchange of tax information.

Canada and Spain will notify each other of the completion of their respective procedures which are necessary for the entry into force of the Protocol. The Protocol will enter into force after a period of three months following the date of receipt of the later of the notifications, and its provisions will have effect in accordance with Article 16 of the Protocol.

A further notice advising of the entry into force of the Protocol will be communicated at that time.

For further information contact:

Tax Legislation Division
Phone: (613) 369-3682

For information concerning the interpretation and application of Canada’s tax treaties, please contact the Canada Revenue Agency (CRA). Contact information is available on the CRA website. The CRA website has information concerning tax treaties and other information concerning international tax issues.

Quick Facts

  • The Canada-Spain Income Tax Convention was signed on November 23, 1976.
  • The opening round of negotiations for a revised tax treaty between Canada and Spain was held in April 2007 in Madrid. A second round of negotiations was held in October 2008 in Ottawa. Subsequent negotiations have resulted in the new Protocol being announced today.
  • The Protocol reduces withholding tax rates applicable on payments of dividends and interest and exempts from withholding tax certain payments of interest, and dividends paid to certain pension plans.
  • The Protocol also provides for assistance in the collection of taxes and includes provisions reflecting the Organisation for Economic Co-operation and Development standard for the exchange of tax information.
  • Canada and Spain will notify each other of the completion of their respective procedures, which are necessary for the entry into force of the Protocol.
  • The Protocol will enter into force after a period of three months following the date of receipt of the later of the notifications, and its provisions will have effect in accordance with Article 16 of the Protocol.
  • Canada has 92 tax treaties and 21 Tax Information Exchange Agreements in force, and has signed or is negotiating many more.

Quotes

“Bilateral tax agreements are fundamental to eliminating tax barriers to trade and investment. They provide greater certainty to taxpayers regarding their potential liability to tax in the other country; they allocate taxing rights between the two countries so that taxpayers are not subject to double taxation; they reduce the risk of burdensome taxation that may arise because of high withholding taxes; and they ensure that taxpayers will not be subject to discriminatory taxation in the foreign jurisdiction. By advancing these goals, today’s agreement will help keep Canada well positioned as a destination of choice to work, do business and invest.”

– Joe Oliver, Canada’s Minister of Finance

“The Protocol improves the provisions of the Canada-Spain Income Tax Convention and adapts them to reflect the current economic relationship between our two countries. It also updates the provisions of the Convention to reflect changes that were made to the Organisation for Economic Co-operation and Development’s Model Tax Convention. Furthermore, the Protocol will promote both Canadian investment in Spain and Spanish investment in Canada. The taxation of dividend and interest payments is reduced and certain tax exemptions are provided. This will help stimulate trade and investment between our two countries and provide new business opportunities.”

– Cristóbal Montoro, Spain’s Minister of Finance and Public Administration