CONVENTION BETWEENJAPAN AND THE KINGDOM OF SPAIN
FOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME
AND THE PREVENTION OF TAX EVASION AND AVOIDANCEJapan and the Kingdom of Spain,
Desiring to further develop their economic
relationship and to enhance their co-operation in tax
matters,
Intending to conclude a Convention for the eliminationof double taxation with respect to taxes on income without
creating opportunities for non-taxation or reduced taxation
through tax evasion or avoidance (including through treatyshopping arrangements aimed at obtaining reliefs provided
in this Convention for the indirect benefit of residents ofthird States),
Have agreed as follows:
Article 1
PERSONS COVERED1.
This Convention shall apply to persons who areresidents of one or both of the Contracting States.
2.
For the purposes of this Convention, income derived byor through an entity or arrangement that is treated aswholly or partly fiscally transparent under the tax law ofeither Contracting State shall be considered to be incomeof a resident of a Contracting State but only to the extent
that:
(a)

the income is treated, for purposes of taxationby that Contracting State, as the income of aresident of that Contracting State; and(b)the entity or arrangement is established under
the law of:(i)either Contracting State; or(ii)

a third jurisdiction that:

(aa) has an agreement in force containing
provisions for the exchange of
information on tax matters with theContracting State from which the income
is derived; and(bb) treats the entity or arrangement as
wholly fiscally transparent under the
tax law of that third jurisdiction.
In no case shall the provisions of this paragraph beconstrued so as to affect a Contracting State’s right totax the residents of that Contracting State.
Article 2
TAXES COVERED1.
This Convention shall apply to taxes on income imposedon behalf of a Contracting State, irrespective of themanner in which they are levied.
2.
There shall be regarded as taxes on income all taxes
imposed on total income or on elements of income, including
taxes on gains from the alienation of any property, taxes
on the total amounts of wages or salaries paid byenterprises, as well as taxes on capital appreciation.
3.
The existing taxes to which this Convention shallapply are:(a)in Japan:(i)

the income tax;(ii)

the corporation tax;(iii)

the special income tax for reconstruction;
and

(iv)

the local corporation tax(hereinafter referred to as “Japanese tax”);(b)in Spain:(i)

the income tax on individuals;(ii)

the corporation tax; and(iii)

the income tax on non residents(hereinafter referred to as “Spanish tax”).

4.
This Convention shall apply also to any identical or
substantially similar taxes that are imposed after the dateof signature of the Convention in addition to, or in placeof, the existing taxes. The competent authorities of theContracting States shall notify each other of any
significant changes that have been made in their taxation
laws.
Article 3
GENERAL DEFINITIONS
1.
For the purposes of this Convention, unless thecontext otherwise requires:(a)the term “Japan”, when used in a geographicalsense, means all the territory of Japan,
including its territorial sea, in which the laws
relating to Japanese tax are in force, and all
the area beyond its territorial sea, including
the seabed and subsoil thereof, over which Japan
has sovereign rights in accordance withinternational law and in which the laws relating
to Japanese tax are in force;(b)

the term “Spain” means the Kingdom of Spain and,
when used in a geographical sense, means theterritory of the Kingdom of Spain, includinginternal waters, the air space, the territorial
sea and any area outside the territorial sea uponwhich, in accordance with international law andon application of its domestic legislation, theKingdom of Spain exercises or may exercise in the
future jurisdiction or sovereign rights withrespect to the seabed, its subsoil andsuperjacent waters, and their natural resources;(c)the terms “a Contracting State” and “the other
Contracting State” mean Japan or Spain, as thecontext requires;(d)the term “person” includes an individual, acompany 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 term “enterprise” applies to the carrying onof any business;(g)the terms “enterprise of a Contracting State” and“enterprise of the other Contracting State” mean
respectively an enterprise carried on by aresident of a Contracting State and an enterprise
carried on by a resident of the other Contracting
State;(h)the term “international traffic” means any
transport by a ship or aircraft except when theship or aircraft is operated solely between
places in a Contracting State and the enterprisethat operates the ship or aircraft is not anenterprise of that Contracting State;(i)the term “competent authority” means:

(j)

(i)

in Japan, the Minister of Finance or his
authorised representative;(ii)

in Spain, the Minister of Finance or his
authorised representative;

the term “national”, in relation to a Contracting
State, means:(i)

any individual possessing the nationality ofthat Contracting State; and(ii)

any legal person, partnership or association
deriving its status as such from the laws inforce in that Contracting State;(k)the term “business” includes the performance ofprofessional services and of other activities ofan independent character;(l)the term “recognised pension fund” of aContracting State means an entity or arrangement
established under the law of that Contracting
State that is treated as a separate person under
the taxation laws of that Contracting State and:(i)that is established and operated exclusively
or almost exclusively to administer orprovide retirement benefits and ancillary or
incidental benefits or other similar
remuneration to individuals and that isregulated as such by that Contracting Stateor one of its political subdivisions or
local authorities; or(ii)that is established and operated exclusively
or almost exclusively to invest funds forthe benefit of other recognised pension
funds of that Contracting State.

Where an entity or arrangement established under
the law of a Contracting State would constitute arecognised pension fund under clause (i) or (ii)
if it were treated as a separate person under the
taxation laws of that Contracting State, it shallbe considered, for the purposes of theConvention, as a separate person treated as such
under the taxation laws of that Contracting Stateand all the assets and income of the entity or
arrangement shall be treated as assets held andincome derived by that separate person and not byanother person.
2.
As regards the application of this Convention at any
time by a Contracting State, any term not defined thereinshall, unless the context otherwise requires or thecompetent authorities agree to a different meaning pursuant
to the provisions of Article 24, have the meaning that it
has at that time under the law of that Contracting Statefor the purposes of the taxes to which the Convention
applies, any meaning under the applicable tax laws of thatContracting State prevailing over a meaning given to theterm under other laws of that Contracting State.
Article 4
RESIDENT1.
For the purposes of this Convention, the term
“resident of a Contracting State” means any person who,
under the laws of that Contracting State, is liable to tax
therein by reason of his domicile, residence, place of heador main office, place of management or any other criterionof a similar nature, and also includes that Contracting
State and any political subdivision or local authority
thereof as well as a recognised pension fund of thatContracting State. This term, however, does not include
any person who is liable to tax in that Contracting Statein respect only of income from sources in that Contracting
State.
2.
Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, thenhis status shall be determined as follows:(a)he shall be deemed to be a resident only of theContracting State in which he has a permanent
home available to him; if he has a permanent homeavailable to him in both Contracting States, heshall be deemed to be a resident only of theContracting State with which his personal andeconomic relations are closer (centre of vitalinterests);(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 tohim in either Contracting State, he shall bedeemed to be a resident only 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 only of the Contracting State ofwhich he is a national;(d)

if he is a national of both Contracting States orof 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 aperson other than an individual is a resident of bothContracting States, the competent authorities of theContracting States shall endeavour to determine by mutual
agreement the Contracting State of which such person shallbe deemed to be a resident for the purposes of thisConvention, having regard to its place of head or main
office, its place of effective management, the place where
it is incorporated or otherwise constituted and any otherrelevant factors. In the absence of such agreement, such
person shall not be entitled to any relief or exemption
from tax provided by the Convention.
Article 5
PERMANENT ESTABLISHMENT
1.
For the purposes of this Convention, the term
“permanent establishment” means a fixed place of businessthrough 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; and(f)a mine, an oil or gas well, a quarry or any otherplace of extraction of natural resources.

3.
A building site or construction or installation
project constitutes a permanent establishment only if it
lasts more than twelve months.
4.
Notwithstanding the preceding provisions of this
Article, the term “permanent establishment” shall be deemed
not to include:(a)the use of facilities solely for the purpose ofstorage, display or delivery of goods ormerchandise belonging to the enterprise;(b)

the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of storage, display or delivery;(c)the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of processing by anotherenterprise;(d)the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;(e)the maintenance of a fixed place of businesssolely for the purpose of carrying on, for theenterprise, any other activity;(f)the maintenance of a fixed place of businesssolely for any combination of activities
mentioned in subparagraphs (a) to (e),provided that such activity or, in the case of subparagraph(f), the overall activity of the fixed place of business,is of a preparatory or auxiliary character.

5.
Paragraph 4 shall not apply to a fixed place ofbusiness that is used or maintained by an enterprise if thesame enterprise or a closely related enterprise carries on
business activities at the same place or at another placein the same Contracting State and:(a)that place or other place constitutes a permanentestablishment for the enterprise or the closely
related enterprise under the provisions of this
Article; or(b)the overall activity resulting from the
combination of the activities carried on by thetwo enterprises at the same place, or by the same
enterprise or closely related enterprises at thetwo places, is not of a preparatory or auxiliary
character,provided that the business activities carried on by the twoenterprises at the same place, or by the same enterprise or
closely related enterprises at the two places, constitutecomplementary functions that are part of a cohesive
business operation.
6.
Notwithstanding the provisions of paragraphs 1 and 2
but subject to the provisions of paragraph 7, where aperson is acting in a Contracting State on behalf of anenterprise and, in doing so, habitually concludes
contracts, or habitually plays the principal role leading
to the conclusion of contracts that are routinely concluded
without material modification by the enterprise, and thesecontracts are:(a)in the name of the enterprise; or(b)for the transfer of the ownership of, or for the
granting of the right to use, property owned bythat enterprise or that the enterprise has theright to use; or(c)for the provision of services by that enterprise,that enterprise shall be deemed to have a permanentestablishment in that Contracting State in respect of any
activities which that person undertakes for the enterprise,
unless the activities of such person are limited to thosementioned in paragraph 4 which, if exercised through afixed place of business (other than a fixed place ofbusiness to which paragraph 5 would apply), would not makethis fixed place of business a permanent establishment
under the provisions of paragraph 4.

7.
Paragraph 6 shall not apply where the person acting ina Contracting State on behalf of an enterprise of the other
Contracting State carries on business in the firstmentioned Contracting State as an independent agent andacts for the enterprise in the ordinary course of thatbusiness. Where, however, a person acts exclusively or
almost exclusively on behalf of one or more enterprises towhich it is closely related, that person shall not be
considered to be an independent agent within the meaning of
this paragraph with respect to any such enterprise.
8.
The fact that a company which is a resident of aContracting 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 Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.
9.
For the purposes of this Article, a person orenterprise is closely related to an enterprise if, based on
all the relevant facts and circumstances, one has controlof the other or both are under the control of the same
persons or enterprises. In any case, a person orenterprise shall be considered to be closely related to an
enterprise if one possesses directly or indirectly morethan 50 per cent of the beneficial interest in the other(or, in the case of a company, more than 50 per cent of theaggregate vote and value of the company’s shares or of thebeneficial equity interest in the company) or if anotherperson or enterprise possesses directly or indirectly morethan 50 per cent of the beneficial interest (or, in thecase of a company, more than 50 per cent of the aggregate
vote and value of the company’s shares or of the beneficial
equity interest in the company) in the person and theenterprise or in the two enterprises.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State
from immovable property (including income from agriculture
or forestry) situated in the other Contracting State may betaxed in that other Contracting State.

2.
The term “immovable property” shall have the meaning
which it has under the law of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovable
property, livestock and equipment used in agriculture andforestry, 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 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 otherform of immovable property.
4.
Where a resident of a Contracting State owns rights
which directly or indirectly entitle the owner of suchrights to the enjoyment of immovable property situated in
the other Contracting State, income derived by that
resident from the direct use, letting or use in any otherform of such entitlement to the enjoyment may be taxed inthat other Contracting State.
5.
The provisions of paragraphs 1, 3 and 4 shall also
apply to the income from immovable property of anenterprise.
Article 7
BUSINESS PROFITS
1.
Profits of an enterprise of a Contracting State shallbe taxable only in that Contracting State unless theenterprise carries on business in the other Contracting
State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, theprofits that are attributable to the permanentestablishment in accordance with the provisions ofparagraph 2 may be taxed in that other Contracting State.
2.
For the purposes of this Article and Article 22, theprofits that are attributable in each Contracting State to
the permanent establishment referred to in paragraph 1 are
the profits it might be expected to make, in particular inits dealings with other parts of the enterprise, if it werea separate and independent enterprise engaged in the sameor similar activities under the same or similar conditions,taking into account the functions performed, assets used
and risks assumed by the enterprise through the permanentestablishment and through the other parts of theenterprise.

3.
Where, in accordance with paragraph 2, a Contracting
State adjusts the profits that are attributable to apermanent establishment of an enterprise of one of theContracting States and taxes accordingly profits of theenterprise that have been charged to tax in the other
Contracting State, that other Contracting State shall, tothe extent necessary to eliminate double taxation on these
profits, make an appropriate adjustment to the amount of
the tax charged therein on those profits. In determining
such adjustment, the competent authorities of theContracting States shall if necessary consult each other.
4.
Where profits include items of income which are dealt
with separately in other Articles of this Convention, thenthe provisions of those Articles shall not be affected by
the provisions of this Article.
Article 8
INTERNATIONAL SHIPPING AND AIR TRANSPORT
1.
Profits of an enterprise of a Contracting State fromthe operation of ships or aircraft in international traffic
shall be taxable only in that Contracting State.
2.
Notwithstanding the provisions of Article 2, anenterprise of a Contracting State shall be exempt in
respect of its carrying on the operation of ships oraircraft in international traffic from, in the case of anenterprise of Spain, the enterprise tax of Japan and, inthe case of an enterprise of Japan, the tax on economic
activities of Spain (Impuesto sobre Actividades
Económicas).
3.
The provisions of paragraphs 1 and 2 shall also apply
to profits from the participation in a pool, a joint
business or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1.

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 capitalof 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 madebetween independent enterprises, then any profits which
would, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.
2.
Where a Contracting State includes in the profits ofan enterprise of that Contracting State - and taxes
accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other
Contracting State and the profits so included are profits
which would have accrued to the enterprise of the firstmentioned Contracting State if the conditions made between
the two enterprises had been those which would have been
made between independent enterprises, then that other
Contracting State shall make an appropriate adjustment tothe amount of the tax charged therein on those profits. In
determining such adjustment, due regard shall be had to theother provisions of this Convention and the competentauthorities of the Contracting States shall if necessary
consult each other.
Article 10
DIVIDENDS
1.
Dividends paid by a company which is a resident of aContracting State to a resident of the other Contracting
State may be taxed in that other Contracting State.
2.
However, dividends paid by a company which is a
resident of a Contracting State may also be taxed in thatContracting State according to the laws of that Contracting
State, but if the beneficial owner of the dividends is a
resident of the other Contracting State, the tax so charged
shall not exceed 5 per cent of the gross amount of thedividends.
3.
Notwithstanding the provisions of paragraph 2,
dividends paid by a company which is a resident of aContracting State shall be taxable only in the other
Contracting State if the beneficial owner of the dividends
is a resident of that other Contracting State and iseither:(a)a company which has owned directly or indirectly
at least 10 per cent of the voting power of thecompany paying the dividends throughout a twelve
month period that includes the date on which
entitlement to the dividends is determined (forthe purpose of computing that period, no accountshall be taken of changes of ownership that would
directly result from a corporate reorganisation,such as a merger or divisive reorganisation, of
the company that is the beneficial owner of thedividends or that pays the dividends); or(b)a recognised pension fund, provided that such
dividends are derived from the activities
referred to in clause (i) or (ii) of subparagraph(l) of paragraph 1 of Article 3, and, in the caseof a recognised pension fund of Spain,
contributions made by an individual who is a
resident of Spain thereto are deductible incomputing his taxable income in Spain.

4.
Notwithstanding the provisions of paragraphs 2 and 3,
dividends which are deductible in computing the taxable
income of the company paying the dividends in theContracting State of which that company is a resident may
be taxed in that Contracting State according to the laws ofthat Contracting State, but if the beneficial owner of thedividends is a resident of the other Contracting State, thetax so charged shall not exceed 10 per cent of the grossamount of the dividends.
5.
The provisions of paragraphs 2, 3 and 4 shall notaffect the taxation of the company in respect of the
profits out of which the dividends are paid.
6.
The term “dividends” as used in this Article means
income from shares, “jouissance” shares or “jouissance”
rights, founders’ shares or other rights, not being debtclaims, participating in profits, as well as income fromother rights which is subjected to the same taxation
treatment as income from shares by the laws of theContracting State of which the company making the
distribution is a resident.

7.
The provisions of paragraphs 1, 2, 3 and 4 shall not
apply if the beneficial owner of the dividends, being a
resident of a Contracting State, carries on business in theother Contracting State of which the company paying thedividends is a resident through a permanent establishment
situated therein and the holding in respect of which thedividends are paid is effectively connected with suchpermanent establishment. In such case the provisions ofArticle 7 shall apply.
8.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting
State, that other Contracting State may not impose any tax
on the dividends paid by the company, except insofar as
such dividends are paid to a resident of that other
Contracting State or insofar as the holding in respect ofwhich the dividends are paid is effectively connected witha permanent establishment situated in that other
Contracting State, nor subject the company’s undistributed
profits to a tax on the company’s undistributed profits,even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising insuch other Contracting State.
Article 11
INTEREST
1.
Interest arising in a Contracting State andbeneficially owned by a resident of the other Contracting
State shall be taxable only in that other Contracting
State.
2.
Notwithstanding the provisions of paragraph 1,
interest arising in a Contracting State that is determinedby reference to receipts, sales, income, profits or othercash flow of the debtor or a related person, to any change
in the value of any property of the debtor or a related
person or to any dividend, partnership distribution orsimilar payment made by the debtor or a related person, or
any other interest similar to such interest arising in aContracting State, may be taxed in that Contracting Stateaccording to the laws of that Contracting State, but if thebeneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 10
per cent of the gross amount of the interest.

3.
The term “interest” as used in this Article means
income from debt-claims of every kind, whether or notsecured by mortgage and whether or not carrying a right toparticipate in the debtor’s profits, and in particular,
income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures as well as other incomethat is subjected to the same taxation treatment as income
from money lent by the taxation laws of the Contracting
State in which the income arises. Income dealt with in
Article 10 and penalty charges for late payment shall not,however, be regarded as interest for the purposes of this
Article.
4.
The provisions of paragraphs 1 and 2 shall not apply
if the beneficial owner of the interest, being a residentof a Contracting State, carries on business in the other
Contracting State in which the interest arises through apermanent establishment situated therein and the debt-claim
in respect of which the interest is paid is effectively
connected with such permanent establishment. In such casethe provisions of Article 7 shall apply.
5.
Interest shall be deemed to arise in a Contracting
State when the payer is a resident of that Contracting
State. Where, however, the person paying the interest,
whether he is a resident of a Contracting State or not, hasin a Contracting State a permanent establishment inconnection with which the indebtedness on which theinterest is paid was incurred, and such interest is borneby such permanent establishment, then such interest shallbe deemed to arise in the Contracting State in which thepermanent establishment is situated.
6.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest, having
regard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to thelast-mentioned amount. In such case, the excess part ofthe payments shall remain taxable according to the laws ofeach Contracting State, due regard being had to the otherprovisions of this Convention.

Article 12
ROYALTIES
1.
Royalties arising in a Contracting State andbeneficially owned by a resident of the other Contracting
State shall be taxable only in that other Contracting
State.
2.
The term “royalties” as used in this Article means
payments of any kind received as a consideration for theuse of, or the right to use, any copyright including
cinematographic films and films and recordings for radio or
television broadcasting, or any patent, trade mark, design
or model, plan, or secret formula or process, or for
information concerning industrial, commercial or scientificexperience.
3.
The provisions of paragraph 1 shall not apply if thebeneficial owner of the royalties, being a resident of aContracting State, carries on business in the other
Contracting State in which the royalties arise through apermanent establishment situated therein and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
4.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the royalties, having
regard to the use, right or information for which they arepaid, exceeds the amount which would have been agreed uponby the payer and the beneficial owner in the absence ofsuch relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess 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 derived by a resident of a Contracting State
from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may
be taxed in that other Contracting State.

2.
Gains from the alienation of any property, other thanimmovable property referred to in Article 6, forming partof the business property of a permanent establishment which
an enterprise of a Contracting State has in the other
Contracting State, including such gains from the alienationof such a permanent establishment (alone or with the wholeenterprise), may be taxed in that other Contracting State.
3.
Gains that an enterprise of a Contracting State that
operates ships or aircraft in international traffic derives
from the alienation of such ships or aircraft, or of any
property, other than immovable property referred to in
Article 6, pertaining to the operation of such ships oraircraft, shall be taxable only in that Contracting State.
4.
Gains derived by a resident of a Contracting State
from the alienation of shares of a company or comparable
interests, such as interests in a partnership or trust, may
be taxed in the other Contracting State if, at any time
during the 365 days preceding the alienation, these sharesor comparable interests derived at least 50 per cent of
their value directly or indirectly from immovable property,
as defined in Article 6, situated in that other Contracting
State.
5.
Gains derived by a resident of a Contracting State
from the alienation of rights which directly or indirectly
entitle the owner of such rights to the enjoyment ofimmovable property referred to in Article 6 and situated in
the other Contracting State may be taxed in that other
Contracting State.
6.
Gains from the alienation of any property, other thanthat referred to in paragraphs 1, 2, 3, 4 and 5, shall betaxable only in the Contracting State of which thealienator is a resident.
7.
Where an individual ceased to be a resident of aContracting State and has become a resident of the other
Contracting State and where the unrealised capital
appreciation of that individual’s property was taxed in thefirst-mentioned Contracting State immediately before his
ceasing to be a resident of the first-mentioned Contracting
State, that other Contracting State shall, to the extent
necessary to eliminate double taxation between theContracting States on the capital appreciation of thatproperty, make an appropriate adjustment to the taxable
base of, or the amount of, tax charged therein on the gains
derived by that individual from the alienation of thatproperty.

Article 14
INCOME FROM EMPLOYMENT
1.
Subject to the provisions of Articles 15, 17 and 18,
salaries, wages and other similar remuneration derived by aresident of a Contracting State in respect of an employment
shall be taxable only in that Contracting State unless theemployment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as isderived therefrom may be taxed in that other Contracting
State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting Statein respect of an employment exercised in the other
Contracting State shall be taxable only in the firstmentioned Contracting State if:(a)the recipient is present in the other Contracting
State for a period or periods not exceeding in
the aggregate 183 days in any twelve month period
commencing or ending in the taxable year
concerned, and(b)

the remuneration is paid by, or on behalf of, anemployer who is not a resident of the other
Contracting State, and(c)the remuneration is not borne by a permanentestablishment which the employer has in the other
Contracting State.

3.
Notwithstanding the preceding provisions of this
Article, remuneration derived by a resident of aContracting State in respect of an employment, as a memberof the regular complement of a ship or aircraft, that is
exercised aboard a ship or aircraft operated ininternational traffic, other than aboard a ship or aircraft
operated solely within the other Contracting State, shallbe taxable only in the first-mentioned Contracting State.
Article 15
DIRECTORS’ FEES
Directors’ fees and other similar payments derived bya resident of a Contracting State in his capacity as amember of the board of directors, or of a similar organ, of
a company which is a resident of the other Contracting
State may be taxed in that other Contracting State.

Article 16
ENTERTAINERS AND SPORTSPERSONS
1.
Notwithstanding the provisions of Article 14, income
derived by a resident of a Contracting State as anentertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as a sportsperson,from that resident’s personal activities as such exercisedin the other Contracting State, may be taxed in that other
Contracting State.
2.
Where income in respect of personal activities
exercised by an entertainer or a sportsperson acting as
such accrues not to the entertainer or sportsperson but toanother person, that income may, notwithstanding theprovisions of Article 14, be taxed in the Contracting Statein which the activities of the entertainer or sportsperson
are exercised.
Article 17
PENSIONS
Subject to the provisions of paragraph 2 of Article
18, pensions and other similar remuneration beneficiallyowned by a resident of a Contracting State shall be taxable
only in that Contracting State.
Article 18
GOVERNMENT SERVICE
1.

(a)Salaries, wages and other similar remuneration
paid by a Contracting State or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State or political subdivisionor local authority shall be taxable only in thatContracting State.

(b)

However, such salaries, wages and other similar
remuneration shall be taxable only in the other
Contracting State if the services are rendered inthat other Contracting State and the individual
is a resident of that other Contracting State
who:
(i)

is a national of that other Contracting
State; or(ii)

did not become a resident of that other
Contracting State solely for the purpose of
rendering the services.

2.

(a)

Notwithstanding the provisions of paragraph 1,
pensions and other similar remuneration paid by,or out of funds which are created by or to which
contributions are made by, a Contracting State ora political subdivision or local authority
thereof to an individual in respect of services
rendered to that Contracting State or politicalsubdivision or local authority shall be taxable
only in that Contracting State.

(b)

However, such pensions and other similar
remuneration shall be taxable only in the other
Contracting State if the individual is a residentof, and a national of, that other Contracting
State.

3.
The provisions of Articles 14, 15, 16 and 17 shallapply to salaries, wages, pensions, and other similar
remuneration in respect of services rendered in connection
with a business carried on by a Contracting State or apolitical subdivision or local authority thereof.
Article 19
STUDENTS
Payments which a student or business apprentice who isor was immediately before visiting a Contracting State aresident 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 that Contracting State, provided that suchpayments arise from sources outside that Contracting State.
The exemption provided by this Article shall apply to abusiness apprentice only for a period not exceeding one
year from the date on which he first begins his training inthat Contracting State.
Article 20
SILENT PARTNERSHIP
Notwithstanding any other provisions of thisConvention, any income derived by a silent partner who is a
resident of Spain in respect of a silent partnership(Tokumei Kumiai) contract or another similar contract may
be taxed in Japan according to the laws of Japan, provided
that such income arises in Japan and is deductible incomputing the taxable income of the payer in Japan.

Article 21
OTHER INCOME
1.
Items of income beneficially owned by a resident of aContracting State, wherever arising, not dealt with in theforegoing Articles of this Convention shall be taxable onlyin that Contracting State.
2.
The provisions of paragraph 1 shall not apply toincome, other than income from immovable property as
defined in paragraph 2 of Article 6, if the beneficial
owner of such income, being a resident of a Contracting
State, carries on business in the other Contracting Statethrough a permanent establishment situated therein and theright or property in respect of which the income is paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
3.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the income referred to inparagraph 1 exceeds the amount which would have been agreed
upon by the payer and the beneficial owner in the absenceof such relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess part of the income shall remain taxable according to
the laws of each Contracting State, due regard being had tothe other provisions of this Convention.
Article 22
ELIMINATION OF DOUBLE TAXATION
1.
Subject to the provisions of the laws of Japan
regarding the allowance as a credit against Japanese tax oftax payable in any country other than Japan, where aresident of Japan derives income from Spain which may betaxed in Spain in accordance with the provisions of thisConvention, the amount of Spanish tax payable in respect ofthat income shall be allowed as a credit against theJapanese tax imposed on that resident. The amount ofcredit, however, shall not exceed the amount of theJapanese tax which is appropriate to that income.
2.
In Spain, double taxation shall be avoided following
either the provisions of the legislation of Spain or thefollowing provisions in accordance with the legislation of
Spain:

(a)Where a resident of Spain derives income which,in accordance with the provisions of thisConvention, may be taxed in Japan, Spain shallallow as a deduction from the tax on the incomeof that resident:(i)an amount equal to Japanese tax paid inrespect of that income in Japan;(ii)

in the case of dividends, an amount equal to
the tax effectively paid by the company
distributing the dividends, levied on those
profits out of which the dividends are paid,in accordance with the legislation of Spain.

Such deduction shall not, however, exceed thatpart of the tax on the income, as computed before
the deduction is given, which is attributable tothe income which may be taxed in Japan.
(b)

Where in accordance with any provision of theConvention income derived by a resident of Spainis exempt from tax in Spain, Spain may
nevertheless, in calculating the amount of tax on
the remaining income of such resident, take into
account the exempted income.
Article 23
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 moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the same
circumstances, in particular with respect to residence, areor may be subjected. The provisions of this paragraphshall, notwithstanding the provisions of Article 1, also
apply to persons who are not residents of one or both of
the Contracting States.

2.
The taxation on a permanent establishment which anenterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities. The provisions of this paragraph shallnot 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 responsibilities which it
grants to its own residents.
3.
Except where the provisions of paragraph 1 of Article
9, paragraph 6 of Article 11, paragraph 4 of Article 12 orparagraph 3 of Article 21 apply, interest, royalties andother disbursements paid by an enterprise of a Contracting
State to a resident of the other Contracting State shall,for the purpose of determining the taxable profits of suchenterprise, be deductible under the same conditions as if
they had been paid to a resident of the first-mentioned
Contracting State.
4.
Enterprises of a Contracting State, the capital ofwhich 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 firstmentioned Contracting State to any taxation or any
requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentioned
Contracting State are or may be subjected.
5.
The provisions of this Article shall, notwithstanding
the provisions of Article 2, apply to taxes of every kindand description imposed on behalf of a Contracting State orof its political subdivisions or local authorities.

Article 24
MUTUAL AGREEMENT PROCEDURE
1.
Where a person considers that the actions of one orboth 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 Contracting States,
present his case to the competent authority of theContracting State of which he is a resident or, if his casecomes under paragraph 1 of Article 23, to that of theContracting State of which he is a national. The case must
be presented within three years from the first notificationof the action resulting in taxation not in accordance withthe provisions of the Convention.
2.
The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Convention. Any agreement reachedshall be implemented notwithstanding any time limits in thedomestic law of the Contracting States.
3.
The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation orapplication of this Convention. They may also consult
together for the elimination of double taxation in cases
not provided for in the Convention.
4.
The competent authorities of the Contracting States
may communicate with each other directly, including througha joint commission consisting of themselves or theirrepresentatives, for the purpose of reaching an agreementin the sense of the preceding paragraphs of this Article.
5.

Where,(a)under paragraph 1, a person has presented a caseto the competent authority of a Contracting Stateon the basis that the actions of one or both of
the Contracting States have resulted for that
person in taxation not in accordance with theprovisions of this Convention, and(b)the competent authorities are unable to reach an
agreement to resolve that case pursuant toparagraph 2 within two years from the date when
all the information required by the competentauthorities in order to address the case has been
provided to both competent authorities,

any unresolved issues arising from the case shall be
submitted to arbitration if the person so requests inwriting. These unresolved issues shall not, however, be
submitted to arbitration if a decision on these issues has
already been rendered by a court or administrative tribunalof either Contracting State. Unless a person directly
affected by the case does not accept the mutual agreementthat implements the arbitration decision, that decision
shall be binding on both Contracting States and shall be
implemented notwithstanding any time limits in the domestic
laws of these Contracting States. The competentauthorities of the Contracting States shall by mutual
agreement settle the mode of application of this paragraph.
6.

(a)Where the competent authority of a Contracting
State has suspended the procedure for resolving acase by mutual agreement pursuant to paragraphs 1
and 2 (hereinafter in this Article referred to as
the “mutual agreement procedure”) with respect toa case because a case with respect to one or moreof the same issues is pending before a court oradministrative tribunal, the period provided insubparagraph (b) of paragraph 5 shall stoprunning until the case pending before the court
or administrative tribunal has been suspended orwithdrawn.

(b)

Where a person who presented a case and thecompetent authority of a Contracting State haveagreed to suspend the mutual agreement procedure,
the period provided in subparagraph (b) ofparagraph 5 shall stop running until thesuspension has been lifted.

7.

(c)

Where the competent authorities of theContracting States agree that a person directly
affected by the case has failed to provide in atimely manner any additional material information
requested by either competent authority after thestart of the period provided in subparagraph (b)of paragraph 5, that period shall be extended for
an amount of time equal to the period beginningon the date by which the information was
requested and ending on the date on which that
information was provided.

(a)

The following rules shall govern the appointmentof arbitrators:(i)

An arbitration panel shall consist of three
individual arbitrators with expertise or
experience in international tax matters.

(ii)

Each of the competent authorities of theContracting States shall appoint one
arbitrator. The two arbitrators so
appointed shall appoint the third arbitrator
who shall serve as Chair of the arbitration
panel. The Chair shall not be a national orresident of either Contracting State.

(iii)

Each arbitrator appointed to the arbitration
panel must be impartial and independent of
the competent authorities, tax
administrations, and ministries of financeof the Contracting States and of all persons
directly affected by the case (as well as
their advisors) at the time of accepting an
appointment, maintain his or her
impartiality and independence throughout thearbitration proceedings, and avoid any
conduct for a reasonable period of time
thereafter which may damage the appearanceof impartiality and independence of thearbitrators with respect to the arbitration
proceedings.

8.

9.

(b)

The competent authorities of the Contracting
States shall ensure that arbitrators and theirstaff agree in writing, prior to their acting in
the arbitration proceedings, to treat any
information relating to the arbitration
proceedings consistently with the confidentiality
and non-disclosure obligations provided for inparagraph 2 of Article 25 and the applicable lawsof the Contracting States.

(c)Solely for the purposes of the application of theprovisions of this Article and Article 25 and of
the domestic laws of the Contracting States
related to the exchange of information,
confidentiality, and administrative assistance,
arbitrators and a maximum of three staff per
arbitrator (and prospective arbitrators solely tothe extent necessary to verify their ability tofulfil the requirements of arbitrators) shall beconsidered to be persons or authorities to whom
information may be disclosed. Information
received by the arbitration panel or prospective
arbitrators and information that the competentauthorities of the Contracting States receivefrom the arbitration panel shall be consideredinformation that is exchanged under theprovisions of paragraph 1 of Article 25.

(a)

An arbitration decision shall be final.

(b)

The arbitration decision shall not be binding on
both Contracting States, if a final decision of
the courts of one of the Contracting States holds
that the arbitration decision is invalid. Insuch a case, the request for arbitration underparagraph 5 shall be considered not to have been
made, and the arbitration proceedings shall beconsidered not to have taken place (except forthe purposes of subparagraphs (b) and (c) of
paragraph 7, and paragraph 11). In such a case,a new request for arbitration may be made unlessthe competent authorities agree that such a new
request should not be permitted.

(c)

An arbitration decision shall have noprecedential value.

(a)

If a person directly affected by the case does
not accept the mutual agreement that implements
the arbitration decision, the case shall not be
eligible for any further consideration by thecompetent authorities of the Contracting States.

(b)The mutual agreement that implements thearbitration decision on the case shall beconsidered not to be accepted by a person
directly affected by the case if any person
directly affected by the case does not, within 60
days after the date on which notification of themutual agreement is sent to the person, withdraw
all issues resolved in the mutual agreement
implementing the arbitration decision fromconsideration by any court or administrative
tribunal or otherwise terminate any pending court
or administrative proceedings with respect tosuch issues in a manner consistent with thatmutual agreement.

10. For the purposes of this Article, the mutual agreement
procedure, as well as the arbitration proceedings, withrespect to a case shall terminate if, at any time after therequest for arbitration has been made and before thearbitration panel has delivered its decision to thecompetent authorities of the Contracting States:(a)the competent authorities of the Contracting
States reach a mutual agreement to resolve thecase pursuant to paragraph 2;(b)the person who presented the case withdraws therequest for arbitration or the request for themutual agreement procedure; or(c)a decision concerning the unresolved issues
arising from the case is rendered by a court oradministrative tribunal of one of the Contracting
States.

11. Each of the competent authorities of the Contracting
States shall bear its own expenses and those of its
appointed arbitrator. Unless otherwise agreed by thecompetent authorities of the Contracting States, the costof the Chair of the arbitration panel and other expenses
associated with the conduct of the arbitration proceedings
shall be borne by the competent authorities of theContracting States in equal shares.
12. The provisions of paragraphs 5 to 11 shall not apply
to the following cases:(a)cases falling within paragraph 3 of Article 4;(b)cases involving the application of paragraph 9 of
Article 28;

(c)cases involving the application of general antiabuse rules contained in Articles 15 and 16 of
the General Tax Law (Law No. 58 of 17th ofDecember of 2003) of Spain and any subsequent
rules replacing, amending or updating theserules;(d)cases involving the application of the provisionsof the law of Japan which is substantiallysimilar to the general anti-abuse rules of Spainreferred to in subparagraph (c);(e)

cases involving conduct for which a person
directly affected by the case has been subject,
by a final ruling resulting from legal oradministrative proceedings of either Contracting
State, to a penalty for tax fraud, wilful default
and gross negligence;(f)cases falling within the provision of paragraph 1
of Article 9 and concerning items of income thatare not taxed in a Contracting State because
those items of income are excluded in the taxable
base in that Contracting State or subject to an
exemption or zero tax rate provided that suchtreatments are specific to those items of income
under the tax law of that Contracting State; and(g)cases on which the competent authorities of theContracting States have agreed that the cases are
not suitable for resolution through thearbitration and have notified the person who haspresented the case within the period provided forin subparagraph (b) of paragraph 5 and, if
applicable, paragraph 6.
Article 25
EXCHANGE OF INFORMATION

1.
The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevant
for carrying out the provisions of this Convention or to
the administration or enforcement of the domestic laws
concerning taxes of every kind and description imposed onbehalf of the Contracting States, or of their politicalsubdivisions or local authorities, insofar as the taxation
thereunder is not contrary to the Convention. The exchange
of information is not restricted by Articles 1 and 2.

2.
Any information received under paragraph 1 by aContracting State shall be treated as secret in the samemanner as information obtained under the domestic laws ofthat Contracting State and shall be disclosed only topersons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, theenforcement or prosecution in respect of, the determinationof appeals in relation to the taxes referred to inparagraph 1, or the oversight of the above. Such persons
or authorities shall use the information only for such
purposes. They may disclose the information in public
court proceedings or in judicial decisions.
Notwithstanding the foregoing, information received by aContracting State may be used for other purposes when suchinformation may be used for such other purposes under thelaws of both Contracting States and the competent authorityof the Contracting State supplying the information
authorises such use.
3.
In no case shall the provisions of paragraphs 1 and 2
be construed so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)to supply information which is not obtainable
under the laws or in the normal course of theadministration 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, orinformation the disclosure of which would becontrary to public policy (ordre public);(d)

to obtain or provide information that would
reveal confidential communications between aclient and an attorney, solicitor or otheradmitted legal representative where such
communications are:(i)

produced for the purposes of seeking orproviding legal advice; or(ii)produced for the purposes of use in existingor contemplated legal proceedings.

4.
If information is requested by a Contracting State inaccordance with this Article, the other Contracting State
shall use its information gathering measures to obtain therequested information, even though that other Contracting
State may not need such information for its own tax
purposes. The obligation contained in the preceding
sentence is subject to the limitations of paragraph 3 but
in no case shall such limitations be construed to permit aContracting State to decline to supply information solely
because it has no domestic interest in such information.
5.
In no case shall the provisions of paragraph 3 beconstrued to permit a Contracting State to decline tosupply information solely because the information is heldby a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it
relates to ownership interests in a person.
Article 26
ASSISTANCE IN THE COLLECTION OF TAXES
1.
The Contracting States shall lend assistance to eachother in the collection of revenue claims. This assistanceis not restricted by Articles 1 and 2. The competentauthorities of the Contracting States may by mutual
agreement settle the mode of application of this Article.
2.
The term “revenue claim” as used in this Article means
an amount owed in respect of the following taxes, insofar
as the taxation thereunder is not contrary to thisConvention or any other instrument to which the Contracting
States are parties, as well as interest, administrative
penalties and costs of collection or conservancy related tosuch amount:(a)in the case of Japan:(i)the taxes referred to in subparagraph (a) ofparagraph 3 of Article 2;(ii)

the special corporation tax forreconstruction;(iii)

the consumption tax;(iv)

the local consumption tax;(v)

the inheritance tax; and(vi)

the gift tax;

(b)in the case of Spain:(i)the taxes referred to in subparagraph (b) ofparagraph 3 of Article 2;(ii)

the wealth tax;(iii)

the value added tax;(iv)

the inheritance and gift tax;(v)

the general indirect tax for the CanaryIslands;(vi)

the tax on imports and deliveries of goodsin the Canary Islands; and(vii)

tax on production, services and imports inthe cities of Ceuta and Melilla;(c)any other tax as may be agreed upon from time totime between the Governments of the Contracting
States through an exchange of diplomatic notes;(d)any identical or substantially similar taxes thatare imposed after the date of signature of theConvention in addition to, or in place of, thetaxes covered by subparagraph (a), (b) or (c).

3.
When a revenue claim of a Contracting State isenforceable under the laws of that Contracting State and is
owed by a person who, at that time, cannot, under the lawsof that Contracting State, prevent its collection, thatrevenue claim shall, at the request of the competentauthority of that Contracting State, be accepted for
purposes of collection by the competent authority of theother Contracting State. That revenue claim shall becollected by that other Contracting State in accordancewith the provisions of its laws applicable to theenforcement and collection of its own taxes as if therevenue claim were a revenue claim of that other
Contracting State that met the conditions allowing that
other Contracting State to make a request under thisparagraph.

4.
When a revenue claim of a Contracting State is a claim
in respect of which that Contracting State may, under its
law, take measures of conservancy with a view to ensure its
collection, that revenue claim shall, at the request of thecompetent authority of that Contracting State, be acceptedfor purposes of taking measures of conservancy by thecompetent authority of the other Contracting State. Thatother Contracting State shall take measures of conservancy
in respect of that revenue claim in accordance with theprovisions of its laws as if the revenue claim were arevenue claim of that other Contracting State even if, at
the time when such measures are applied, the revenue claim
is not enforceable in the first-mentioned Contracting Stateor is owed by a person who has a right to prevent its
collection.
5.
Notwithstanding the provisions of paragraphs 3 and 4,
a revenue claim accepted by the competent authority of aContracting State for purposes of paragraph 3 or 4 shallnot, in that Contracting State, be subject to the time
limits or accorded any priority applicable to a revenue
claim under the laws of that Contracting State by reason of
its nature as such. In addition, a revenue claim acceptedby the competent authority of a Contracting State for the
purposes of paragraph 3 or 4 shall not, in that Contracting
State, have any priority applicable to that revenue claim
under the laws of the other Contracting State.
6.
Acts carried out by a Contracting State in thecollection of a revenue claim accepted by the competentauthority of that Contracting State for purposes ofparagraph 3 or 4 which if they were carried out by theother Contracting State would have the effect of suspending
or interrupting the time limits applicable to the revenue
claim in accordance with the laws of that other Contracting
State shall have such effect under the laws of that other
Contracting State. The competent authority of the firstmentioned Contracting State shall inform the competentauthority of the other Contracting State of having carriedout such acts.
7.
Proceedings with respect to the existence, validity or
the amount of a revenue claim of a Contracting State shallnot be brought before the courts or administrative bodiesof the other Contracting State.
8.
Where, at any time after a request has been made by
the competent authority of a Contracting State underparagraph 3 or 4 and before the other Contracting State hascollected and remitted the relevant revenue claim to thefirst-mentioned Contracting State, the relevant revenue
claim ceases to be(a)in the case of a request under paragraph 3, arevenue claim of the first-mentioned Contracting
State that is enforceable under the laws of thatContracting State and is owed by a person who, atthat time, cannot, under the laws of thatContracting State, prevent its collection, or(b)

in the case of a request under paragraph 4, arevenue claim of the first-mentioned Contracting
State in respect of which that Contracting State
may, under its laws, take measures of conservancy
with a view to ensure its collection

the competent authority of the first-mentioned Contracting
State shall promptly notify the competent authority of theother Contracting State of that fact and, at the option of
the competent authority of the other Contracting State, thecompetent authority of the first-mentioned Contracting
State shall either suspend or withdraw its request.
9.
In no case shall the provisions of this Article beconstrued so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)

to carry out measures which would be contrary to
public policy (ordre public);(c)

to provide assistance if the other Contracting
State has not pursued all reasonable measures ofcollection or conservancy, as the case may be,available under its laws or administrative
practice;(d)to provide assistance in those cases where theadministrative burden for that Contracting Stateis clearly disproportionate to the benefit to be
derived by the other Contracting State.

Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal
privileges of members of diplomatic missions or consular
posts under the general rules of international law or under
the provisions of special agreements.

Article 28
ENTITLEMENT TO BENEFITS
1.
Except as otherwise provided in this Article, aresident of a Contracting State shall not be entitled to abenefit that would otherwise be accorded under theprovisions of paragraph 3 of Article 10, paragraph 1 of
Article 11 or paragraph 1 of Article 12 unless such
resident is a qualified person, as defined in paragraph 2,
at the time when the benefit would otherwise be accorded.
2.
A resident of a Contracting State shall be a qualified
person at a time when a benefit would otherwise be accorded
under the provisions of paragraph 3 of Article 10,paragraph 1 of Article 11 or paragraph 1 of Article 12 if,
at that time, the resident is:(a)an individual;(b)that Contracting State, a political subdivisionor local authority thereof, the central bank ofthat Contracting State, or an agency or
instrumentality of that Contracting State orpolitical subdivision or local authority;(c)a company or other entity, if the principal classof its shares is regularly traded on one or more
recognised stock exchanges;(d)a recognised pension fund, if, at the beginningof the taxable year for which the claim to thebenefit is made, at least 50 per cent of its
beneficiaries, members or participants areindividuals who are residents of either
Contracting State; or(e)a person other than an individual, if, at thattime and on at least half of the days of a twelve
month period that includes that time, persons
that are residents of that Contracting State andthat are qualified persons under subparagraph(a), (b), (c) or (d) own, directly or indirectly,
at least 50 per cent of the shares of the person.

3.

(a)

(b)

A resident of a Contracting State shall beentitled to a benefit that would otherwise beaccorded under the provisions of paragraph 3 ofArticle 10, paragraph 1 of Article 11 orparagraph 1 of Article 12 with respect to an itemof income described in the respective paragraphthat is derived from the other Contracting State,
regardless of whether the resident is a qualified
person, if the resident is engaged in the active
conduct of a business in the first-mentioned
Contracting State, and the income derived fromthe other Contracting State emanates from, or isincidental to, that business. For purposes ofthis paragraph, the term “active conduct of abusiness” shall not include the following
activities or any combination thereof:(i)

operating as a holding company;(ii)

providing overall supervision oradministration of a group of companies;(iii)

providing group financing (including cash
pooling);(iv)

making or managing investments, unless these
activities are carried on by a bank,insurance enterprise or registeredsecurities dealer in the ordinary course ofits business as such; or(v)

holding or managing intangible property
without producing or developing it.

If a resident of a Contracting State derives anitem of income from a business activity conductedby that resident in the other Contracting State,or derives an item of income arising in the other
Contracting State from a connected person, theconditions described in subparagraph (a) shall beconsidered to be satisfied with respect to suchitem of income only if the business activity
carried on by the resident in the first-mentioned
Contracting State to which the item of income isrelated is substantial in relation to the same orcomplementary business activity carried on by theresident or such connected person in the other
Contracting State. Whether a business activity
is substantial for the purposes of this paragraphshall be determined based on all the facts andcircumstances.

(c)For purposes of applying this paragraph, businessactivities conducted by connected persons withrespect to a resident of a Contracting State
shall be deemed to be conducted by such resident.

4.
A resident of a Contracting State that is not aqualified person shall nevertheless be entitled to abenefit that would otherwise be accorded under theprovisions of paragraph 3 of Article 10, paragraph 1 of
Article 11 or paragraph 1 of Article 12 with respect to an
item of income described in the respective paragraph if:

5.

(a)

in the case of a recognised pension fund, at the
beginning of the taxable year for which the claim
to the benefit is made, at least 75 per cent of
its beneficiaries, members or participants areindividuals who are equivalent beneficiaries; or(b)in all other cases, at the time when the benefit
would otherwise be accorded and on at least halfof the days of a twelve month period that
includes that time, persons that are equivalentbeneficiaries own, directly or indirectly, atleast 75 per cent of the shares of the resident.

(a)

A company that is a resident of a Contracting
State that functions as a headquarters company
for a multinational corporate group consisting ofsuch company and its direct and indirect
subsidiaries shall be entitled to a benefit thatwould otherwise be accorded under the provisionsof paragraph 3 of Article 10, paragraph 1 of
Article 11 or paragraph 1 of Article 12 withrespect to an item of income described in therespective paragraph that is derived from theother Contracting State, regardless of whether
the resident is a qualified person, if the income
derived from that other Contracting Stateemanates from, or is incidental to, the businessreferred to in clause (ii) of subparagraph (b).

(b)

A company, being a resident of a Contracting
State, shall be considered a headquarters company
for a multinational corporate group for the
purpose of subparagraph (a) only if:(i)such company provides a substantial portionof the overall supervision andadministration of the group or provides
financing for the group;

(c)

(ii)

the group consists of companies which areresidents of, and are engaged in the active
conduct of a business in, at least fourstates, and the businesses carried on ineach of the four states (or four groupingsof states) generate at least 5 per cent of
the gross income of the group;(iii)

the businesses of the group that are carriedon in any one state other than thatContracting State generate less than 50 per
cent of the gross income of the group;(iv)

no more than 50 per cent of such company’s
gross income is derived from the other
Contracting State;(v)

such company has, and exercises, independent
discretionary authority to carry out thefunctions referred to in clause (i); and(vi)such company is subject to the same income
taxation rules in that Contracting State aspersons described in paragraph 3.

For the purposes of subparagraph (b), therequirements of clause (ii), (iii) or (iv) ofthat subparagraph shall be deemed to be fulfilled
for the taxable period in which the item ofincome is derived if the required ratios are met
when averaging the gross income of the preceding
four taxable periods.

6.
If a resident of a Contracting State is neither aqualified person, nor entitled to a benefit under paragraph
3, 4 or 5, the competent authority of the Contracting Statein which a benefit is denied under the preceding paragraphsof this Article may, nevertheless, grant a benefit thatwould otherwise be accorded under the provisions ofparagraph 3 of Article 10, paragraph 1 of Article 11 orparagraph 1 of Article 12 with respect to an item of income
described in the respective paragraph, taking into accountthe object and purpose of this Convention, but only if such
resident demonstrates to the satisfaction of such competentauthority that neither its establishment, acquisition or
maintenance, nor the conduct of its operations, had as oneof its principal purposes the obtaining of such benefit.
The competent authority of the Contracting State to which arequest has been made under this paragraph by a resident of
the other Contracting State shall consult with thecompetent authority of that other Contracting State before
either granting or denying the request.

7.

For the purposes of this Article:(a)the term “principal class of shares” means theclass or classes of shares of a company or entity
which represents the majority of the aggregate
vote and value of the company or entity;(b)with respect to entities that are not companies,
the term “shares” means interests that arecomparable to shares;(c)

the term “recognised stock exchange” means:

(d)

(i)

any stock exchange established and regulated
as such under the laws of either Contracting
State; and(ii)

any other stock exchange agreed upon by thecompetent authorities of the Contracting
States;two persons shall be “connected persons” if one
owns, directly or indirectly, at least 50 per
cent of the beneficial interest in the other (or,in the case of a company, at least 50 per cent of
the aggregate vote and value of the company’s
shares) or another person owns, directly or
indirectly, at least 50 per cent of thebeneficial interest (or, in the case of acompany, at least 50 per cent of the aggregate
vote and value of the company’s shares) in each
person; in any case, a person shall be connected
to another if, based on all the relevant facts
and circumstances, one has control of the otheror both are under the control of the same person
or persons;

8.

(e)

the term “equivalent beneficiary” means any
person who would be entitled to a benefit withrespect to an item of income accorded by aContracting State under the domestic law of thatContracting State, this Convention or any otherinternational agreement which is equivalent tothe benefit to be accorded to that item of income
under the provisions of paragraph 3 of Article
10, paragraph 1 of Article 11 or paragraph 1 of
Article 12; for the purposes of determining
whether a person is an equivalent beneficiarywith respect to dividends received by a company,
the person shall be deemed to be a company and to
hold the same voting power of the company paying
the dividends as such voting power which thecompany claiming the benefit with respect to thedividends holds; and(f)the term “gross income” means gross receipts of aperson as determined in the Contracting State ofwhich the person is a resident for the taxable
period that includes the time when the benefit
would otherwise be accorded, reduced by the
direct costs of generating such receipts.

(a)Where:(i)an enterprise of a Contracting State derives
income from the other Contracting State andthe first-mentioned Contracting State treatssuch income as attributable to a permanentestablishment of the enterprise situated ina third jurisdiction; and(ii)

the profits attributable to that permanentestablishment are exempt from tax in thefirst-mentioned Contracting State,

the benefits under this Convention shall not
apply to any item of income on which the tax inthe third jurisdiction is less than 60 per centof the tax that would be imposed in the firstmentioned Contracting State on that item ofincome if that permanent establishment weresituated in the first-mentioned Contracting
State. In such a case, any income to which theprovisions of this paragraph apply shall remaintaxable according to the domestic law of theother Contracting State, notwithstanding anyother provisions of the Convention.

(b)The provisions of subparagraph (a) shall not
apply if the income derived from the other
Contracting State described in that subparagraphis derived in connection with or is incidental tothe active conduct of a business carried on
through the permanent establishment (other thanthe business of making, managing or simply
holding investments for the enterprise’s own
account, unless these activities are banking,insurance or securities activities carried on bya bank, insurance enterprise or registeredsecurities dealer, respectively).

(c)

If the benefits under the Convention are denied
pursuant to the provisions of subparagraph (a)with respect to an item of income derived by aresident of a Contracting State, the competentauthority of the other Contracting State may,nevertheless, grant these benefits with respect
to that item of income if, in response to arequest by such resident, such competentauthority determines that granting such benefits
is justified in light of the reasons such
resident did not satisfy the requirements of
subparagraphs (a) and (b). The competentauthority of the Contracting State to which arequest has been made under the preceding
sentence by a resident of the other Contracting
State shall consult with the competent authorityof that other Contracting State before either
granting or denying the request.

9.
Notwithstanding the other provisions of thisConvention, a benefit under the Convention shall not be
granted in respect of an item of income if it is reasonable
to conclude, having regard to all relevant facts andcircumstances, that obtaining that benefit was one of theprincipal purposes of any arrangement or transaction that
resulted directly or indirectly in that benefit, unless it
is established that granting that benefit in thesecircumstances would be in accordance with the object andpurpose of the relevant provisions of the Convention.

10. Where under any provisions of this Convention income
derived by a resident of a Contracting State is relieved or
exempted from tax in the other Contracting State and, under
the law of the first-mentioned Contracting State, that
resident is subjected to tax by reference to the amountthereof which is remitted to or received in thatContracting State and not by reference to the full amountthereof, then the relief or exemption provided under theConvention in the other Contracting State shall apply only
to so much of such income as is taxed in the firstmentioned Contracting State.
Article 29
HEADINGS
The headings of the Articles of this Convention are
inserted for convenience of reference only and shall notaffect the interpretation of the Convention.
Article 30
ENTRY INTO FORCE
1.
Each of the Contracting States shall send in writing
and through diplomatic channels to the other Contracting
State the notification confirming that its internal
procedures necessary for the entry into force of thisConvention have been completed. The Convention shall enter
into force on the first day of the third month following
the month of receipt of the latter notification.
2.

This Convention shall have effect:(a)with respect to taxes levied on the basis of ataxable year, for taxes for any taxable years
beginning on or after 1 January in the calendar
year next following that in which the Convention
enters into force; and(b)with respect to taxes levied not on the basis ofa taxable year, for taxes levied on or after 1
January in the calendar year next following thatin which the Convention enters into force.

3.
Notwithstanding the provisions of paragraph 2, theprovisions of Articles 25 and 26 shall have effect from thedate of entry into force of this Convention without regard
to the date on which the taxes are levied or the taxable
year to which the taxes relate.

4.
The Convention between Japan and the Spanish State for
the Avoidance of Double Taxation with respect to Taxes on
Income, with Protocol, signed at Madrid on 13 February,
1974 (hereinafter referred to as “the prior Convention”)
shall cease to be applicable from the date upon which thisConvention applies in respect of the taxes to which thisConvention applies in accordance with the provisions ofparagraphs 2 and 3.
5.
Notwithstanding the entry into force of thisConvention, an individual who is entitled to the benefitsof Article 20 of the prior Convention at the time of theentry into force of this Convention shall continue to beentitled to such benefits until such time as the individual
would have ceased to be entitled to such benefits if theprior Convention had remained in force.
6.
The prior Convention shall terminate on the last dateon which it applies in accordance with the provisions of
the preceding paragraphs of this Article.
Article 31
TERMINATIONThis Convention shall remain in force until terminatedby a Contracting State. Either Contracting State may
terminate the Convention, through diplomatic channels, bygiving written notice of termination to the other
Contracting State at least six months before the end of any
calendar year beginning on or after the expiration of aperiod of five years from the date of entry into force of
the Convention. In such event, the Convention shall ceaseto have effect:(a)with respect to taxes levied on the basis of ataxable year, for taxes for any taxable years
beginning on or after 1 January in the calendar
year next following that in which the notice isgiven; and(b)with respect to taxes levied not on the basis ofa taxable year, for taxes levied on or after 1
January in the calendar year next following thatin which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Convention.

DONE in duplicate at Madrid this sixteenth day ofOctober, 2018 in Japanese, Spanish and English languages,
all texts being equally authentic. In case of any
divergence of interpretation among the texts, it shall be
resolved in accordance with the English text.

For Japan:
Shinzo Abe

For the Kingdom of Spain:
Pedro Sánchez

PROTOCOLAt the moment of signing the Convention between Japanand the Kingdom of Spain for the Elimination of Double
Taxation with respect to Taxes on Income and the Preventionof Tax Evasion and Avoidance (hereinafter referred to as“the Convention”), Japan and the Kingdom of Spain haveagreed upon the following provisions, which shall be an
integral part of the Convention.
1.

With reference to Article 2 of the Convention:

For the purposes of that Article, in the case of
Spain, the term “a Contracting State” referred to inparagraph 1 of that Article shall include the Regions of
Spain (“Comunidades Autónomas” and “Ciudades Autónomas”).
2.
It is understood that nothing in the Convention shallbe construed as restricting, in any manner, the applicationof any provisions of the law of a Contracting State which
are designed to prevent the avoidance or evasion of taxes
unless the application of those provisions results intaxation not in accordance with the provisions of theConvention.
3.
It is understood that nothing in the Convention shallbe construed as restricting the application of any of thefollowing provisions:(a)in the case of Japan, Section 4-3 of Chapter II
and Sections 7-4 and 24 of Chapter III of the Law
on Special Measures Concerning Taxation (Law
No. 26 of 1957);(b)in the case of Spain, Article 100 of the
Corporate Income Tax Law (Law No. 27 of 27th ofNovember of 2014),

including those as may be amended from time to time withoutchanging the general principle thereof.
IN WITNESS WHEREOF the undersigned, being duly
authorised thereto by their respective Governments, havesigned this Protocol.

DONE in duplicate at Madrid this sixteenth day ofOctober, 2018 in Japanese, Spanish and English languages,
all texts being equally authentic. In case of any
divergence of interpretation among the texts, it shall be
resolved in accordance with the English text.

For Japan:
Shinzo Abe

For the Kingdom of Spain:
Pedro Sánchez