Back to index
V2404-16 1 June 2016 · SG de Fiscalidad Internacional Criterion in force
IRNR · plan de pensiones

UK-resident pension scheme can avoid Spanish withholding tax on dividends via Double Taxation Treaty

A manager of a British pension scheme requested clarification on whether dividends sourced in Spain are exempt from withholding tax. The DGT ruled that, as the Double Taxation Treaty prevails over domestic law, the scheme is entitled to the treaty exemption and can avoid withholding tax.

The question raised

Whether, in relation to said dividends, they would be entitled to the exemption provided for in Article 10 of the Spanish-British Convention and, consequently, to not be subject to withholding tax at the time of receipt as established by Article 31.4.a) of the TRLIRNR, benefiting from the rapid refund procedure to make effective the exclusion of Spanish withholding taxes provided by the Order of the Ministry of Economy and Finance of April 13, 2000.

The DGT's ruling

The pension plan, being a tax resident in the United Kingdom and meeting the definition of the DTA, is entitled to the dividend exemption under Article 10.2.b)(ii). As the treaty prevails over domestic regulations, the taxpayer may avail themselves of the first paragraph of Article 31.4.a) of the TRLIRNR. This allows them to benefit from the exclusion of withholding taxes and from the rapid refund procedure.

Book your free first meeting