Yes. A Double Taxation Agreement (DTA) between Spain and the United Kingdom has been in force since 2014. This treaty is designed to prevent individuals—and particularly businesses with cross-border operations—from being taxed twice on the same income. Understanding and correctly applying the double taxation agreement UK Spain is essential to optimise tax liabilities, safeguard profits, and mitigate legal and financial risks.
Despite Brexit, the tax relationship between both countries remains supported by a solid legal framework. The Double Taxation Agreement (DTA) has not been modified following Brexit; rather, with the EU directives no longer applicable, the treaty has become even more relevant.
What is a Double Taxation Agreement?
A Double Taxation Agreement (DTA) is a bilateral treaty that governs how income is taxed when a taxpayer has tax obligations in both jurisdictions. In simple terms, it ensures that the same income (e.g., profits, dividends, royalties) is not taxed twice—once in the source country and again in the country of residence.
The DTA UK Spain: In force and updated
The Double Taxation Agreement (DTA) between the UK and Spain has been in place since 2014. The treaty outlines:
- Which country has taxing rights over each category of income.
- The method used to eliminate double taxation, typically via tax credit (foreign tax relief) in Spain.
- Mechanisms for administrative cooperation and dispute resolution between the tax authorities of both countries.
Why the Spain–UK DTA matters for businesses
For Spanish companies operating in the UK—or British businesses with a presence in Spain—the DTA:
Avoids double taxation on profits, interest, dividends, or royalties.
Provides legal certainty on which country has the primary taxing rights.
Reduces withholding tax on cross-border payments (e.g., from 19% to 5% in some dividend scenarios).
Facilitates international expansion by eliminating duplicate tax burdens.
This framework is particularly relevant for:
- Companies with subsidiaries or branches in the other country.
- Digital businesses delivering cross-border services.
- Entities paying royalties, interest, or dividends to related parties overseas.
Key provisions you should know
1. Business Profits
- If a company operates in the other country without a permanent establishment, its profits are taxable only in its country of residence.
2. Dividends
- 0% withholding tax if the recipient company holds, directly or indirectly, at least 10% of the capital of the paying company for an uninterrupted period of 12 months.
- In all other cases, the withholding tax cannot exceed 10%.
3. Interest
- Exempt from withholding tax in the source country, provided the recipient is the beneficial owner of the interest.
4. Royalties
- Also exempt from withholding tax in the source country, subject to the condition that the recipient is the beneficial owner of the royalties.
5. Capital Gains
- Capital gains arising from the sale of shares or participations are generally taxable in the seller’s country of residence, except in certain cases — such as when the value of the shares is derived primarily from real estate located in the other country, or when the assets are attributable to a permanent establishment.
FAQs: Double Taxation Agreement UK Spain
How do I benefit from the DTA?
To apply DTA benefits, companies must meet formal requirements with the relevant tax authority, such as:
- Providing proof of tax residency;
- Demonstrating beneficial ownership of the income;
- Meeting specific treaty conditions (e.g., minimum shareholding, holding period).
This is not automatic and requires strategic planning, documentation, and expert guidance.
If you’re considering setting up a company in Spain, we strongly recommend aligning your international tax strategy with the DTA from the start.
Is the DTA still valid after Brexit?
Yes. Brexit does not affect bilateral agreements like the Spain–UK DTA. The treaty remains in full force and its correct application has become even more crucial, especially since EU tax reliefs no longer apply.
What happens in the case of a tax dispute?
The DTA includes a Mutual Agreement Procedure (MAP), allowing tax authorities to resolve conflicts where double taxation arises or is likely. While not immediate, it provides a secure route for dispute resolution.
What are the risks of ignoring the DTA?
Failure to apply the DTA properly can lead to:
- Loss of international tax competitiveness;
- Unnecessary tax burdens or withholding taxes;
- Penalties or interest due to non-compliance;
- Strategic errors due to inaccurate tax assumptions.
How GCO can support your business
At GCO, we help international companies operate efficiently and compliantly in Spain. With over 25 years’ experience in cross-border tax, legal, and financial advisory, we support businesses with interests between Spain and the UK in:
- Analysing the DTA and how it applies to your operations;
- Reducing effective tax rates on cross-border income;
- Designing tax-efficient international structures;
- Assisting with residency certificates and documentation;
- Supporting MAP procedures or tax audits involving international elements.
If you’re already filing taxes in Spain, make sure you’re not missing out on treaty benefits.
In Summary
The Spain–UK DTA is more than a legal document—it’s a strategic tool. For companies engaged in cross-border trade, investment, or corporate structuring between the two countries, proper application of the treaty is critical to protect margins and reduce tax risks.
Want to assess your specific case?
Contact us and we’ll help you define the most tax-efficient path for your international operations.
