The Diplomat
The Council of Ministers yesterday authorized the signing of the Agreement between Spain and Paraguay to avoid double taxation and prevent tax evasion or avoidance in income tax matters.
This Convention, according to the Government, “aims to promote economic relations, stimulate investments and strengthen bilateral cooperation in tax matters between both countries, without generating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including avoidance strategies through the abusive use of treaties by third parties”.
The Convention establishes the criteria for the taxation of real estate income, business profits, maritime and air transportation, associated companies, dividends, interest, royalties, capital gains, dependent personal services, remuneration as directors and officers, income of artists and sportsmen, pensions, public functions, students and other income. The text incorporates the standards of the Organization for Economic Cooperation and Development (OECD).
The negotiation of this Agreement began between 2013 and 2014 and the final agreement was reached in the third round of negotiations, held in Madrid on November 7, 2022, three days after the official visit to Spain of the President of Paraguay, Mario Abdo Benítez. During the lunch offered by the King and Queen, the Paraguayan President highlighted “the relevance of Spanish investments for the economic development” of his country and made reference, precisely, to “the forthcoming conclusion of a bilateral agreement to avoid double taxation” among “the competitive advantages” offered by Paraguay to investors.
