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Double Taxation Agreement Spain Usa 2019

The U.S.-Spain tax agreement was originally signed in 1990, with an additional protocol signed in 2013, but only ratified in 2019, reducing withholding taxes on dividends, interest and royalties and increasing the exchange of tax information between the two countries. The protocol is expected to have a significant impact on investment between the two countries due to reduced taxation and enhanced security. On July 16, 2019, the U.S. Senate ratified a new protocol amending the double taxation treaty signed in 2013 between the United States and Spain. The approval and ratification of the protocol had already been completed in Spain. However, the United States still has pending procedural requirements before the protocol comes into force. Other updates to the protocol include the cross-border dividends, interest and royalties paid from November 27, 2019, as well as the capital gains generated from that date on the share transfer. In general, the new tax treaty significantly reduces taxation in the country of origin, which amounts to the taxation of dividends, interest, royalties and capital gains collected by US residents in the United States in Spain, which in many cases would be borne by residents of the European Union (EU). 2 For previous coverage, see GMS Flash Alert 2019-107 (June 26, 2019).

The new protocols will reduce confusion, security and often less tax for investors between Spain and the United States, which will facilitate bilateral foreign direct investment. In particular, the new agreement reduces withholding tax on dividends, interest and profits and allows tax-free transfer of pension plans. The main changes to the official text are summarized below: On 14 January 2013, Spain and the United States signed the protocol amending the agreement between the United States and Spain to avoid double taxation and prevent tax evasion with regard to income taxes, as well as its protocol (protocol). More than six years later, on July 16, 2019, the U.S. Senate ratified the protocol. Once the two countries have completed their internal proceedings, the updated contract will come into effect on November 27, 2019. Elimination of capital income taxation The new treaty eliminates the taxation of capital gains at the source of capital. However, an exception applies to shares of holding companies in real estate assets that remain subject to capital gains tax at source.

The U.S.-Spain tax contract provides for double taxation on income and capital gains taxes, but benefits are limited for most U.S. expatriates living in Spain. The double taxation contract between Spain and the United States of America was last approved by the U.S. Treasury in July 2019. The double taxation agreement between Spain and the United States has been in effect since November 27, 2019. As we said at the beginning, this is a very attractive contract for investors from both countries in their respective territories, and the fact that it reduces twice the tax burden on international investment is logically always encouraging. The new tax treaty only maintains the additional taxation of branches (branch tax) in certain cases, including real estate income (in some cases), which would bring this additional tax to 5% (compared to the previous rate of 10%). the ANTS Policy Commission A compromise clause is provided in the event that the tax authorities of Spain and the United States fail to reach an agreement within two years on a reciprocal agreement procedure requested by a subject.

This procedure and its conciliation are not exclusively aimed at preventing cases of double taxation, but at resolving situations in which the taxpayer feels that there has been taxation that is not in accordance with the provisions of the new tax treaty.

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