28 November 1990 Ruling HBW4125S1 F - Taxation by Spain of Fees Earned by Canadian Firm

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

November 28, 1990

Dear   19(1)

This is in reply to your letter of November 21, 1990, concerning taxation by Spain of fees earned by your company with respect to a contract to be entered into by your firm to provide  24(1)

We are not aware of any special tax concessions adopted by the Spanish Government with respect to foreign companies performing work for the 24(1) However, Article 7 of the Canada-Spain Income Tax Convention (copy attached) does provide that the business profits of a Canadian enterprise are only taxable in Canada unless the enterprise has a permanent establishment in Spain. As you state that your company 24(1) we presume that the Spanish tax authorities would exempt the fees earned by your firm on the basis of this provision.

Article 1 of the Convention (copy attached) provides that the Convention shall apply only to residents of one or both of the Contracting States. In as much as a resident of a Contracting State is defined in the Convention as being any person liable to tax in that State by reason of residence, place of management, etc., the Spanish tax authorities have the right to ask that the Canadian tax authorities confirm that your company is a resident of Canada and liable to tax here prior to granting any relief provided for in the Convention.

We have therefore forwarded a copy of your letter to Mr. Don Regimbald, Chief of Taxroll, (613) 954-9868, with a request that a certificate be issued to your company on an urgent basis.

Yours sincerely,

Christine SavageActing DirectorProvincial and International Relations Division

c.c.      Mr. Douglas ForsytheInternational Financial and Investment Affairs Division External Affairs and InternationalTrade Canada

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