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V4365-16 11 October 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · renta mundial

A Spanish resident's sale of property in Portugal is taxed in both countries with an international double taxation deduction

A Spanish tax resident asks where the capital gain from selling property in Portugal should be taxed. The DGT responds that Spain taxes worldwide income and Portugal has jurisdiction over the property, with an international double taxation deduction applying.

The question raised

Question raised: In which country should the capital gain be taxed? Can the taxpayer opt to declare it exclusively in Spain?

The DGT's ruling

The taxpayer resident in Spain must be taxed in Spain on their worldwide income, including gains from the sale of real estate abroad. According to the Convention between Spain and Portugal, the State where the real estate is located may subject the gain to taxation. To avoid double taxation, Spain will allow a deduction for the tax paid in Portugal in accordance with the Convention and Article 80 of the Personal Income Tax Law (LIRPF).

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