Whether you are a tax resident in Spain or not, if you have foreign nationality and maintain economic interests in Spain, it is essential to understand what a double taxation agreement is and how it may affect you. Few legal instruments cause as much confusion — and have such practical impact — as these international treaties. In this article, we explain what they are, how they apply, and where to find the agreement relevant to your nationality.
Taxation in Spain for Foreigners.
Non-residents in Spain with economic interests here have clear tax obligations:
.- If they own real estate, they must file the Non-Resident Income Tax (IRNR). If the property is vacant, an imputed annual income must be declared. Conversely, if rented (main residence, tourist rental, seasonal lease, etc.), they must pay tax on the rental income.
.- Upon selling the property, capital gains tax on the profit must be declared.
.- When inheriting or receiving gifts of assets located in Spain, they are subject to Inheritance and Gift Tax (ITH) here.
On the other hand, any individual (Spanish or foreign) who is a tax resident in Spain must declare worldwide income.
However, these general rules may be modified if there is a double taxation agreement between Spain and your country of nationality.
What is a Double Taxation Agreement?.
It is a bilateral treaty signed by two states to coordinate their taxing rights over persons or entities linked to both countries. Its main purpose is to avoid taxing the same income twice — once where the income is generated and again where the recipient is tax resident.
To achieve this, these agreements establish:
.- Which country taxes each type of income: salaries, pensions, rents, dividends, capital gains, etc.
.- Mechanisms to prevent double taxation (exemptions or tax credits).
.- The taxes covered by the agreement.
.- And other provisions.
With Which Countries Does Spain Have Double Taxation Agreements?.
Spain has agreements with nearly one hundred countries. You can access the full list on the Spanish Tax Agency’s website. Below, you will find links to agreements signed with the UK, Germany, France, Ireland, the USA, Switzerland, and more.
Example of a singularity in double taxation treaties. The Spain–France case on inheritance of bank accounts.
When a foreign citizen dies leaving a bank account in Spain, usually the heir must pay Inheritance Tax in Spain. However, the double taxation agreement between France and Spain provides an exception: if the deceased was resident in France at death, the tax is paid to the French Tax Authority, meaning Spain has no taxing right. This example highlights the importance of knowing the particularities and exceptions each agreement may include.
Conclusions.
Understanding double taxation agreements is crucial for any foreigner with economic interests in Spain. While the general tax rules may seem clear, practical outcomes vary significantly depending on nationality and the applicable agreement. At White Baos Lawyers, we have extensive experience in international tax advice. Do not hesitate to contact us for a detailed analysis and specialized legal advice.
The information provided in this article is not intended to be legal advice but merely conveys information relating to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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