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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Spain: Notes

The treaty that entered into force in 2014 replaced that which had been in effect since 1976. Apart from a general updating to reflect changes in the OECD Model Tax Convention and the domestic laws and treaty preferences of both state, notable changes include:

Income from immovable property

The existing treaty allows Spain to tax income from time-share rights exceeding, in aggregate, four weeks in any calendar year. This period is reduced to two weeks by the new agreement.


The dividend withholding tax rate in the previous agreement was 15% for portfolio investors; with the exception of property income dividends, this reduces to 10% for portfolio investors and to zero for pension schemes. The zero available for direct investors under the EU Parent-Subsidiary Directive is also now confirmed by the new agreement.


For interest the rate of 12% in the previous agreement is reduced to zero.


For royalties the rate of 10% in the previous agreement is reduced to zero.


The previous agreement made provision for visiting teachers to be exempt from tax in the host state in certain circumstances. The new agreement contains no similar provision, but does allow for teachers benefiting from the provision of the previous agreement at the time the new agreement entered into force to continue to do so for as long as they would have done under the terms of the previous agreement.

Government service pensions

In a change from previous practice, all income received by a resident in Spain is now taken into account to calculate the applicable rate of income tax in Spain – regardless of whether the income itself is taxed in Spain. So a UK Government pension, although generally exempt from taxation in Spain, will be taken into account for the purposes of determining the tax rate which applies to other income which is taxable in Spain. This is common practice in other states around the world and, although confirmed by the text of the new agreement, it was always open to Spain to apply this treatment.


The new agreement includes an anti-treaty shopping provision in paragraph 2 of Article 23.


The new agreement provides for disputes on the application of the treaty under the Mutual Agreement Procedure process to be settled via arbitration (paragraph 5 of Article 25).