Double taxation agreements
Application of a double taxation agreement
If an international double taxation agreement signed between Spain and another country is applicable, check the provisions of the agreement to obtain information on the taxation powers of each country and, where applicable, the measures for alleviating double taxation.
The agreements list types of income and contain provisions, with respect to each one, on the tax powers pertaining to each Contracting State:
-
In some cases, exclusive power for the country of residence of the taxpayer,
-
In others, exclusive power for the country of origin of the income, and lastly,
-
In certain situations, power shared by the two countries, whereby both can tax the same income but with the obligation, in general, for the country of residence of the taxpayer to decide on the measures for avoiding double taxation.
Resident natural persons and entities with a foreign income
Natural persons or entities resident for tax purposes in Spain are liable for:
-
personal income tax (IRPF), in the case of a natural person, or
-
corporation tax, in the case of a legal person or entity, and
-
they must pay tax in Spain on their worldwide income, i.e. they must declare in Spain income obtained in any part of the world,
-
without prejudice to the provisions of the international double taxation agreement between Spain and the country from which the income is received.
If the foreign income comes from a country with which Spain has signed an international double taxation agreement, check the provisions of the agreement to obtain information on the taxation powers with respect to that income and, where applicable, the measures applicable for alleviating double taxation.
Non-resident natural persons and entities with income in Spain
Non-resident natural persons and entities will be considered liable for Non-Resident Income Tax (IRNR) if they earn income in Spanish territory, as defined under that tax regime.
If the taxpayer is resident in a country with which Spain has signed a double taxation agreement, the provisions of that agreement will apply since, in some cases, the taxation is lower and, in others, if certain requirements are met, the income is not taxable in Spain.
If, in application of an agreement, the income:
-
is not taxable in Spain (is exempt pursuant to the agreement) or is taxable up to a limit (limited by the agreement),
-
non-resident taxpayers must prove that they are resident in the country with which Spain has signed the agreement. To this end, the corresponding certificate of residency issued by the tax authorities in the country in question is required. This certificate must expressly state that the taxpayer is a resident within the meaning of the agreement.
Appeals and complaints against tax assessments
The activity of the tax authorities is regulated. Tax legislation provides that tax assessments issued by the tax authorities may be challenged by the parties concerned in the event of a disagreement, pursuant to Articles 222 et seq. of the Spanish General Tax Law
, and the relevant implementing regulation on administrative review. The statements notifying the result of a tax assessment always state how to appeal and include the relevant deadline.
Anyone wishing to challenge the assessment must choose, within a maximum period of 1 month from the day following the date of notification, between:
-
An administrative appeal, filed in writing and addressed to the authority who issued the assessment, stating the arguments and attaching documents in support of the claims made, or
-
An economic-administrative claim before the corresponding Tax Disputes Board, which is independent of the Tax Office. With this latter option, the appeal will be filed with the authority who issued the assessment, who will forward the appeal to the competent court.
Both appeals may be filed via the Tax Office website , using the digital signature systems permitted.
