who want to establish their business presence on the Spanish market
can benefit of the provisions stipulated in the agreement for the avoidance of double taxation
signed between Spain and United Kingdom (UK)
. The treaty
was signed in March 2013 and it entered into force starting with 12th of June 2014.
The agreement became effective in both contracting states from 12th of June 2014 in respect to withholding taxes.
The requirements for the collection of corporate tax
were enforced after 1st of April 2015. The stipulations of the contract
in terms of income tax and capital gains
became applicable after the date of 6 April 2015. Businessmen who are interested in receiving information on the main benefits deriving from the Spain-UK double tax treaty (DTA)
can receive an in-depth presentation on the matter from our team of Spanish company formation specialists
Taxes covered by the Spain-UK DTA
The agreement signed by the two contracting states is available for income and capital taxes available for natural persons and legal entities, which are tax-residents of Spain or the United Kingdom.
According to the treaty, the Spanish authorities will refer to the following taxes:
• the income tax on individuals;
• the corporation tax;
• the income tax applicable to nonresident persons;
• the capital tax;
• taxes on income;
• taxes on capital.
The convention is available in the United Kingdom for the below mentioned taxes:
• the income tax;
• the corporation tax;
• the capital gains tax.
Article 4 of the Spain-UK DTA
defines the term “resident
” (of one of the two contracting states) as being any person who is liable to taxation
in that country in terms domicile, residence, place of management and any other aspects through which that individual is legally obliged to pay taxes
; our team of company formation agents
can provide more details.
Taxation of the business profits
It is important to know that, when opening a company in Spain
, the local authorities will impose the income taxes
only for the profits obtained through the place of business established on the Spanish territory
, if that establishment is a permanent establishment. As a general rule, the profits of a British company
operating overseas will be taxed only in UK