Wednesday, March 27, 2013
Spain's Ambassador to the UK Federico Trillo and UK Exchequer Secretary to the Treasury David Gauke have recently signed the new treaty between the two countries aimed at avoiding double taxation and preventing personal income and wealth tax evasion.
The treaty updates and replaces the agreement signed in London on October 21, 1975. The text has been adapted to meet the requirements of current economic and trade relations between Spain and the UK and to comply with the Organization for Economic Cooperation and Development's Model Convention on double taxation.
According to the Spanish Finance Ministry, the new agreement will lead to "a considerable reduction of source-based taxation," establishing exclusive residence-based taxation for those dividends derived from majority shareholdings, as well as for interest payments and fees. Furthermore, it includes an arbitration clause for the resolution of any conflict that may arise from applying the new agreement.
The Spanish Finance Ministry highlights Spain's commitment to renegotiating accords that need to be adapted to the new status quo. The Ministry explains that a new treaty was also signed recently between Spain and Argentina. The revised agreement aims to avoid both double taxation and tax evasion and replaces the existing text signed in 1992.
The new DTA between Spain and the UK is due to enter into force within three months of its ratification.