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V3318-16 14 July 2016 · SG de Fiscalidad Internacional Criterion in force
IRNR · exención

Non-resident income tax exemptions under domestic law apply regardless of UK Double Taxation Treaty limitations

A UK resident under a special tax regime has enquired whether they can apply Spanish domestic tax exemptions to Spanish-source income (interest and capital gains), given that the Spain-UK Double Taxation Convention limits such benefits if the income is not taxed in the country of residence. The Directorate General for Taxes (DGT) has ruled that exemptions provided under Spanish domestic law apply independently of the provisions set out in the Convention.

The question raised

Question posed: Whether, regarding income of Spanish source obtained subsequent to the entry into force of the Double Taxation Convention signed between Spain and the United Kingdom on May 14, 2013, the exemptions provided for in the Spanish domestic rule would be applicable despite the fact that the exemptions or limitations provided for in the aforementioned Convention do not apply by virtue of the provisions of its Article 23.

The DGT's ruling

The exemptions provided for in Article 14 of the TRLIRNR for interest and capital gains shall apply regardless of the provisions of Article 23 of the Convention between Spain and the United Kingdom. In principle, the exemption shall apply to the aforementioned income, except for dividends from listed companies, provided that they fall within the scope of the exemption under the domestic rule.

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