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V1595-14 20 June 2014 · SG de Fiscalidad Internacional Criterion in force
IRPF · residencia fiscal

Residents in Spain must include foreign property income in their IRPF, applying progressive exemption

A Dutch citizen resident in Spain enquires about the taxation of the sale of a property in the Netherlands. The DGT explains that as a fiscal resident in Spain, he must pay tax on worldwide income, but the Spain-Netherlands double taxation treaty allows avoidance of double taxation through a progressive exemption.

The question raised

Taxation in Spain of the capital gain or loss derived from the disposal of real estate located in Spain.

The DGT's ruling

If the consultant is a tax resident in Spain, they shall be taxed under Personal Income Tax (IRPF) on their worldwide income, including capital gains from real estate in the Netherlands. Pursuant to the Convention between Spain and the Netherlands, these gains may be taxed in the Netherlands and shall be exempt in Spain. Notwithstanding, the exemption with progression shall be applied to calculate the tax on other income.

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