Double Tax Treaties in Spain
Double Tax Treaties in SpainUpdated on Tuesday 28th April 2020
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A foreign investor who is doing business in Spain, and comes from a country that Spain has signed a double tax treaty with, can benefit from the avoidance of double taxation. This is very important, especially on a long term basis for a business, because the investor can save a lot of money if he/she knows the local and international regulations related to taxation.
Double tax treaties are signed by a large number of countries all around the world and they allow a foreign investor to pay taxes in only one country and not in both – his/her residence country and the other one in which he/she opened a company. The only condition is that a double tax treaty to be signed between the two countries.
Spain has signed double tax treaties with 90 countries all over the world and, according to these treaties, certain types of incomes, such as dividends, capital gains and royalties, are exempt from taxation or benefit from low rates of taxes. Our team of lawyers in Spain can assist foreign businessmen with in-depth information on the provisions of the double tax treaties signed by the local authorities. Our lawyers can provide advice on the main benefits a company has if it is a tax resident of a country with which Spain has signed such an agreement.
The following video offers a short presentation on the double taxation treaties available in Spain:
The content of Spanish double tax agreements
All Spain’s double tax treaties establish the methods used to avoid double taxation. Among the most employed methods are tax credits against the taxes paid in the other contracting state or deductions. The agreements also contain special clauses related to permanent establishments and associated enterprises of foreign companies operating in Spain, taxable for their operations in the home country, as well as here. Most the Spain’s double taxation conventions cover the income and corporate taxes levied in the contracting states, as well as different components of the income, such as:
- • income derived from immovable property or parts of income obtained from immovable property;
- • income derived from the employment of citizens of one state in the other;
- • income obtained from capital gains and the manner in which such income is taxed;
- • income derived from air and maritime transportation activities.
Our lawyers in Spain can provide you with more information about the taxation of income under the country’s double tax agreements. Businessmen can request advice on the tax benefits that are available for the tax residents of the countries with which Spain signed double tax treaties. We can also advise on other taxes, such as the corporate tax or the VAT, or on how to receive the EORI in Spain.
Treaties signed by Spain
The double taxation treaties were signed by Spain with the following partner countries: Albania, Algeria, Andorra, Argentina, Armenia, Barbados, Australia, Austria, Cyprus, Belgium, Bolivia, Bosnia, Brazil, Bulgaria, Canada, Chile, China, Columbia, Costa Rica, Croatia, Cuba, Cyprus, Czech Republic, Dominican Republic, East Timor, Germany, Denmark, Kyrgyzstan, Ecuador, Egypt, El Salvador, Estonia, Finland, Romania, France, Georgia, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Latvia, Lithuania and Luxembourg.
Spain also signed treaties for the avoidance of double taxation with Macedonia, Malaysia, Malta, New Zealand, Mexico, Moldova, Morocco, the Netherlands, Norway, Pakistan, Panama, Philippines, Poland, Portugal, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia, South Africa, Sweden, Switzerland, Tajikistan, Thailand, Trinidad & Tobago, Tunisia, Turkey, Turkmenistan, United Arab Emirates, United Kingdom, USA, Uruguay, Uzbekistan, Venezuela and Vietnam.
What is a permanent establishment in Spain?
What are the rules for the taxation of business profits in Spain?
What is the OECD double tax treaty model?
- • the scope of the double tax treaty and the taxes applicable in the two contracting states;
- • the types of entities to which the respective double tax treaty is applicable (both natural persons and legal entities);
- • the general definitions, describing what a permanent establishment is, what is a tax resident and others;
- • the taxation of income, which can refer to income obtained from immovable property, from business activities, dividends, interest, royalties, employment, pensions and other types of income;
- • the main legal methods through which the contracting states participate in eliminating double taxation;
- • the obligations of each country in providing up-to-date information on any modifications of the national tax law.
In the next years, other double tax treaties are expected to be signed by Spain with other countries. If you come from a country that is not listed above, you should check if a treaty has been signed meanwhile. For details on the procedure of avoiding double taxation, you may contact our law firm in Spain. Our Spanish attorneys will also offer you advice about how you can benefit from the minimization of the taxes you must pay and they can also help you with VAT registration.