Entry into force of the New Tax Convention between Japan and Spain
On February 12, Japan received from Spain the notification confirming that its internal procedures necessary for the entry into force of the “Convention between Japan and the Kingdom of Spain for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance” (hereinafter referred to as the New Convention) (signed on October 16, 2018) were completed. Thus, all the necessary procedures for the entry into force of the New Convention have been completed.
The New Convention, therefore, will enter into force on May 1, 2021, on the first day of the third month following the month of receipt of the latter notification and will have effect:
- (1) with respect to taxes levied on the basis of a taxable year, for taxes for any taxable years beginning on or after January 1, 2022; and
- (2) with respect to taxes levied not on the basis of a taxable year, for taxes levied on or after January 1, 2022.
The provisions concerning the exchange of information and the assistance in the collection of taxes will have effect from May 1, 2021, the date of entry into force of the New Convention, without regard to the date on which the taxes are levied or the taxable year to which the taxes relate.
The New Convention will replace the current Tax Convention (Convention between Japan and the Spanish State for the Avoidance of Double Taxation with respect to Taxes on Income) which entered into force in 1974. It is expected that the New Convention promotes further mutual investments and economic exchanges between the two countries by eliminating double taxation and preventing international tax evasion and tax avoidance.