UK Spain Double Taxation Treaty

The UK Spain Double Taxation Treaty was updated in March 2013 with changes effective from 12 June 2014.

The treaty ensures that tax is not paid twice on the same income.

The treaty covers the following items:

In Spain

  • Income Tax
  • Corporation Tax
  • Non-resident Income Tax
  • Capital Gains Tax
  • Local Income Taxes

In the UK

  • Income Tax
  • Corporation Tax
  • Capital Gains Tax

Where am I deemed resident?

The treaty outlines what is considered to be a resident. This issue is often a source of confusion and misinterpretation.

The treaty considers that a resident is a person/entity who is liable to taxation due to:

  • Domicile
  • Residence
  • Place of Management
  • Place of Incorporation

A person/entity who is based in one state but receives income or capital gains from a source in the other state, will not automatically be considered resident.

If there is a situation whereby a person/entity could be classed as being resident in both states, then the status will be determined by:

  1. location of permanent residence. If there is a residence in both states, the “centre of vital interests” shall apply (personal relations, economic situation)
  2. if the above cannot be determined, or there is no permanent address in either state, residency will apply to the estate where there is an habitual abode.
  3. if there is an habitual abode in either both or neither state, the nationality of the person/entity will take precedence.
  4. if the person/entity is a national of both or neither state, then the states will reach an agreement to determine residence.

The full treaty can be viewed here: UK – Spain Double Taxation Treaty

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