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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 24

Avoidance of Double Taxation

(1) In Spain, double taxation shall be avoided in accordance with the tax provisions of its domestic law or in accordance with the following provisions, with due regard to Spanish domestic law:

  • (a) Where a resident of Spain derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in El Salvador, then Spain shall allow:
    • (i) a deduction from the income tax of that resident for an amount equal to the income tax paid in El Salvador;
    • (ii) a deduction from the capital tax of that resident for an amount equal to the tax paid in El Salvador upon the capital;
    • (iii) a deduction on the corporate tax duly paid by the company that distributes the dividends corresponding to the profits out of which the aforesaid dividends are paid, in accordance with its domestic law.
  • However, such deduction must not exceed that portion of the income tax or capital tax, calculated prior to the deduction was granted, corresponding to the income or the capital that may be taxable in El Salvador.
  • (b) Where according to any provision of this Convention, the income derived or capital owned by a resident of Spain, or the capital owned by the same, is tax exempt in Spain, Spain may, nevertheless, take into account the exempt income or capital to calculate the tax upon the remaining income or capital of this resident.

(2) In El Salvador, provided that its domestic law encumbers income arising from abroad, double taxation shall be avoided by compliance with its domestic law or in accordance with the following provisions, with due regard to Salvadorian domestic law:

  • (a) Where a resident of El Salvador derives income, according to the provisions of this Convention, which may be liable to be taxed in Spain, the aforesaid resident may deduct the tax paid in Spain from the Salvadorian income tax so charged, up to an amount which does not exceed the tax that would be paid in El Salvador for such income.
  • (b) Where, pursuant to any provision of this Convention, the income obtained by a resident of El Salvador, is tax exempt therein, El Salvador may, nevertheless, take into account the exempt income to calculate the tax upon the remaining income of this resident.