In the absence of an Agreement, how would non-residents in Spain who obtain earnings from liquid capital in Spain, such as dividends or interests, be taxed?
In general, non-residents that earn interest or dividends in Spain must pay tax at the rate applicable in the year in which the income is earned (see table).
The taxable base is, in general, the total amount received.
However, if taxpayers are resident in another Member State of the European Union, in order to determine the taxable base of income earned since 01/01/2010 the expenses stipulated in the Income Tax Act (Ley del IRPF) may be deducted, provided it can be shown that these expenses are directly related to the income).
Year of return
Nevertheless, numerous exemptions apply in these circumstances, including:
- Interest from National Debt or that of Autonomous Communities in Book Entries that are subject to a special payment, refund or tax withholding procedure.
- Interests earned by residents of other States of the European Union.
- Interest received by residents of other EU Member State.
- Dividends held at Spanish subsidiaries on behalf of a parent company based in another EU Member State.
- The dividends obtained since 1-1-2007 by individuals resident in another Member State of the European Union or in countries or territories with which there exists effective exchange of tax information, with a limit of €1,500 and applicable to the total income obtained during the calendar year. This exemption is not applicable if the dividends are obtained through countries or territories considered tax havens.