The income tax treaty between Cape Verde and Spain was signed on 5 June 2017. The treaty is the first of its kind between the two countries.
The treaty covers Cape Verde income tax, capital tax, and fire duty, and covers Spanish individual income tax, corporate income tax, non-resident income tax, and local taxes on income.
The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services in a Contracting State through employees or other engaged personnel if the activities continue for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation. Spain also provides an indirect credit for underlying corporation tax in accordance with Spanish domestic law. Further, Spain will provide a sparing credit in respect of tax that is otherwise payable in Cape Verde but has been reduced or waived by Cape Verde in accordance with the provisions of Law 89/IV/93 of 13 December 1993, as amended. The sparring credit will apply for a period of five years from the date the treaty enters into force.
The treaty will enter into force three months after the exchange the of the ratification instruments and will apply for any fiscal year beginning on or after the date of its entry into force.
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