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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 23

Methods to Eliminate Double Taxation

Double taxation will be avoided in the following manner:

(1) In Spain, double taxation shall be avoided in accordance with the tax provisions of the domestic laws of the Contracting State or in accordance with the following provisions:

  • (a) Where a resident of Spain derives income or owns capital which, in accordance with the provisions of this Convention may be taxed in the Islamic Republic of Iran, then Spain shall allow:
    • (i) a deduction from the income tax of that resident, an amount equal to the income tax paid in the Islamic Republic of Iran;
    • (ii) a deduction from the capital tax of that resident, an amount equal to the capital tax paid in the other Contracting State on the capital items;
    • (iii) a deduction of tax of subsidiary companies in order to conform with the domestic laws of Spain.
  • However, such a deduction shall not exceed that portion of the income tax or capital tax, calculated according to the Spanish law prior to the deduction, corresponding to the taxable items of income or capital which may be taxed in the Islamic Republic of Iran.
  • (b) Where according to any provision of this Convention, income derived or capital owned by a resident of Spain is exempt from tax in Spain, then Spain shall, when calculating the amount of tax on the remaining income or capital of such resident take into account the exempted income or capital.

(2) In the Islamic Republic of Iran:

  • (a) Where a resident of the Islamic Republic of Iran derives income or owns capital which is in accordance with the provisions of this Convention may be subject to tax in Spain, then Iran shall allow:
    • (i) a deduction from the income tax of that resident, an amount equal to the income tax paid in Spain;
    • (ii) a deduction from the capital tax of that resident for an amount equal to the capital tax paid in Spain.  
  • However, such deduction shall not exceed in either of the two cases that portion of the tax, calculated prior to the deduction, corresponding to the taxable items of income or capital which may be taxed in the Islamic Republic of Iran.
  • (b) Where according to any provision of this Convention, income derived or capital owned by such resident of Islamic Republic of Iran is exempt from tax in the Islamic Republic of Iran, then the Islamic Republic of Iran shall, when calculating the amount of tax on the remaining income or capital of such resident take into account the exempted income or capital.