### Protocol to the convention between the United Kingdom of Great Britain and Northern Ireland and the Kingdom of Spain for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital
- At the moment of signing the Convention between the Kingdom of Spain and the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, the undersigned have agreed upon the following provisions which shall be an integral part of the Convention:
- I. With reference to subparagraph l) of paragraph 1 of Article 3 (General Definitions), paragraph 1 of Article 4 (Residence) and sub-subparagraph (ii) of subparagraph b) of paragraph 2 of Article 10 (Dividends)
- It is understood that the term ‘pension scheme’ includes:
- a) in the case of Spain,
- (i) any fund regulated under the Amended Text of the Law on pension funds and pension schemes (Texto refundido de la Ley sobre fondos y planes de pensiones), passed by Legislative Royal Decree 1/2002 of 29th November;
- (ii) any entity defined under Article 64 of the Amended Text of the Law on the regulation and monitoring of private insurances (Texto refundido de la Ley de ordenación y supervisión de los seguros privados) passed by Legislative Royal Decree 6/2004 of 29th October, provided that in the case of mutual funds all participants are employees; promoters and sponsoring partners are the companies, institutions or individual entrepreneurs to which the employees are engaged; and benefits are exclusively derived from the social welfare agreement between both parties, as well as any other comparable entity to them regulated within the scope of the political subdivisions (Comunidades Autónomas);
- (iii) insurance companies regulated under the Amended Text of the Law on the regulation and monitoring of private insurances passed by Legislative Royal Decree 6/2004 of 29th October whose activity is the coverage of the contingencies provided for in the Amended Text of the Law on pension funds and pension schemes;
- b) in the case of the United Kingdom, pension schemes (other than a social security scheme) registered under Part 4 of the Finance Act 2004, including pension funds or pension schemes arranged through insurance companies and unit trusts where the unit holders are exclusively pension schemes.
- The competent authorities may agree to include in the above, pension schemes of identical or substantially similar economic or legal nature which are introduced by way of statute or legislation in either State after the date of signature of the Convention.
- II. With reference to Article 3 (General definitions), paragraph 4 of Article 4 (Resident) and Article 20 (Other income)
- It is understood that the term ‘trust’ means a trust that is a resident of the United Kingdom under its domestic law.
- III. With reference to subparagraph a) (ii) of paragraph 2 of Article 10 (Dividends)
- It is understood that the term ‘investment vehicle’ means:
- (i) In Spain, any entity regulated under the Law 11/2009 of 26th October on Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario;
- (ii) In the United Kingdom, a real estate investment trust within the meaning of Part 12 of Corporation Tax Act 2010 and a property authorised investment fund within the meaning of Part 4A of the Authorised Investment Funds (Tax) Regulations 2006 (SI 2006/964).
- IV. With reference to paragraph 4 of Article 6 (Income from immovable property)
- No income derived from an immovable property shall be attributable to owners of rights to the enjoyment of such immovable property on a time-sharing agreement, when such enjoyment does not exceed two weeks in a calendar year.
- V. With reference to Articles 20 (Other income) and 22 (Elimination of double taxation)
- Residents of Spain who are beneficiaries of a United Kingdom trust will be taxed in Spain on the gross amount of income they receive or are entitled to receive from the trust.
- In such a case, Spain shall allow as a deduction from the tax on the income of that resident, an amount equal to the effective income tax paid in the United Kingdom by the beneficiary as a consequence of the income distribution after all relevant repayment claims have been made by the beneficiary. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in the United Kingdom.
In witness whereof the undersigned, duly authorised thereto, have signed this Protocol.
Done in duplicate at London this Fourteenth day of March 2013 in the English and Spanish languages, both texts being equally authoritative.
For the United Kingdom of Great Britain and Northern Ireland: David Gauke
For the Kingdom of Spain: H.E Mr Federico Trillo-Figueroa Martínez-Conde