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V0188-16 20 January 2016 · SG de Fiscalidad Internacional Criterion in force
IRNR · residencia fiscal

Sale of shares in a Spanish company by a Spanish national resident in the UAE is subject to Non-Resident Income Tax (IRNR)

A Spanish national residing in the United Arab Emirates has enquired whether they can apply the Double Taxation Convention to the sale of shares in a Spanish company. The Directorate General for Taxes (DGT) has ruled that, as a Spanish national, they do not meet the residency requirements for the Convention and must therefore pay Non-Resident Income Tax (IRNR) in Spain.

The question raised

Question raised: Whether a certificate of tax residence issued by the authorities of the United Arab Emirates allows for the application of the Spanish-Emirati Convention and whether the capital gain would be subject to taxation in Spain.

The DGT's ruling

To be a resident in the UAE according to the Convention, natural persons must be nationals of said State. As the taxpayer is a Spanish national, the Spanish-Emirati Convention cannot be applied. Therefore, the gain from the sale of shares in a Spanish company is subject to Non-Resident Income Tax (IRNR).

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