Does Spain have a double taxation agreement with the UK?

Key points for British expats and investors

• Tax residence. If both countries treat you as resident, the treaty decides using tie-breaker rules: permanent home, centre of vital interests, habitual abode and, finally, nationality.
• Private and occupational pensions, and the UK State Pension. These are taxed only in the country where you live. If you are resident in Spain, you pay tax in Spain at the general income tax scale, and you can ask HMRC to stop taxing them at source.
• Government service pensions. Pensions for civil servants, the armed forces, police, firefighters or local authorities are taxed only in the UK, unless you are resident in Spain and a Spanish national. They are exempt in Spain but count towards the rate applied to your other income.
• Salaries. These are taxed where the work is done, with the 183-day rule for temporary assignments.
• Rental income and property sales. Spain can tax property located in Spain. If you are a UK resident with a home in Spain, you file Modelo 210 in Spain and claim a credit for that tax in the UK.
• Dividends and interest. Withholding at source is capped. Dividends are generally limited to 10% (0% in certain cases involving parent companies or pension schemes). Interest and royalties are generally taxed only in the country of residence.
• Elimination of double taxation. Each country gives a credit for the tax paid in the other.

How to apply it. To benefit from the reduced rates you need a tax residence certificate from the country where you live. From Spain, this is issued by the Spanish Tax Agency (AEAT). In the UK, HMRC issues it. To stop the UK taxing a private pension at source, use HMRC’s Spain-Individual form.

Inheritance tax is not covered by the treaty, so leaving assets in the UK and Spain can still lead to double taxation.

At Taxmind we advise British residents in Spain and UK residents with assets in Spain on applying the UK–Spain treaty, from pensions to property sales.