Spain-Estonia MFN clauses under DTA activated

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The Spanish Ministry of Finance and Public Administration published a letter on 14 June 2016 addressed to the Estonian Minister of Finance. The letter activates the most-favoured-nation (MFN) clauses included in the Estonia – Spain Income and Capital Tax Treaty (2003) concerning articles 5(3), 11(2), 11(3), 12(2) and 12(3).

The applicable modifications are;

  • The term for constituting a permanent establishment in a construction project as described in article 5(3) will be extended from 9 months to 12 months
  • Royalties will be exempt at the level of the source state for purposes of articles 12(2) and 12(3) and the term “royalties” referred to in article 12(3) will no longer include the reference to the use of, or the right to use, industrial, commercial or scientific equipment.
  • The residence state will have exclusive taxing rights for interest paid to its residents for purposes of articles 11(2) and 11(3)

The modifications are effective as from 1 January 2016.

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