Spain Explained

How the UK-Spain double tax treaty affects you

Double tax treaties are agreements made between two states to determine the rights of nationals living in the respective countries. For instance, a double tax treaty determines the taxation regime for people who have assets located in one country but are resident in the other. In the case of the UK-Spain double tax treaty, the agreement outlines the rights of UK nationals with assets or living in Spain and vice versa.

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In the case of the UK and Spain, it is possible for people to be classified as legally resident in both countries due to each nation’s domestic tax regimes. To overcome this complication, the UK-Spain double tax treaty was drawn up. Here, we explain what you need to know about the agreement.

2013 UK-Spain double tax treaty

In 2013, the UK and Spain renewed their double taxation convention. First created in 1976, this agreement between the two nations stipulates how individuals should be taxed in the event of the two following scenarios:

  • If the individual is classified as a tax resident in both countries under their domestic tax regime; or 
  • If they are living in one country but have income derived from assets in the other. 

This is necessary because, in theory, you should not have to pay tax twice on the same income. Therefore, if you fall into either of the two categories stated here, you are able to offset one tax declaration through deductions and allowances to make sure you do not pay tax twice.

A closer look and an example

Generally speaking, you can only be tax resident in one country. However, it is certainly not outside the realm of possibility that you fulfil the domestic criteria set out by two different countries. In this scenario, your tax obligations will be defined by a double tax treaty. These will depend on where you have your permanent home, your centre of vital interests, or habitual abode. If this is unclear, it will come down to your nationality.

In both Spain and the UK, if you spend more than 183 days per year in that country, you are considered a resident. Remember, these days do not need to be consecutive. If you are resident in Spain, it is your responsibility to declare your global income to the Spanish tax authority, or Hacienda.

However, there are other possible scenarios. We will set out an example; let’s say you have a holiday apartment in Spain that you rent out while you are not there. In Spain, you are obliged to declare income on Spanish rentals to the tax authority, no matter where you are resident. But what if you reside in the UK?

This is where the tax treaty comes into play. As the property is situated in Spain you will  be legally required to present a declaration to the Hacienda, however as a UK Resident  you will also have to declare this income there, the tax you have already paid to the Spanish  government will be offset against your bill in the United Kingdom. 

Types of income affected by the double taxation convention

The UK-Spain double tax treaty is a 24-page document that specifies which types of income qualify for deductions or relief under the auspice of double tax. These include:

How the double taxation agreement affects you will depend on your individual circumstances. Moreover, tax rates and reliefs are subject to change. Therefore, we strongly advise seeking professional advice on how to make sure you are tax compliant in both the UK and Spain.

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Experts in fiscal matters

Ábaco Advisers have been assisting our clients with fiscal matters in Spain since 1999. With a detailed, up-to-date knowledge of the taxation regime, we help you navigate your tax obligations in Spain based on your individual circumstances. For a free consultation, without obligation, complete this form. One of our team will be in touch at a time that is convenient for you.

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26 comments

Jennifer McWlliam

26 September, 2020 4:45 pm

We paid the SUMA, in full, on our villa in Quesada last year on 10/09/2019 but completed the sale of our property on 20/08/2020.

Does this mean we do not pay the SUMA anymore?

Oscar Paoli

28 September, 2020 8:14 am

Hi Jennifer,

The legal responsibility to pay the SUMA bill regarding the IBI is of the legal owner of the property on January 1st 2020. If you did not agree on something different at the signing of the selling contract or the sale at the notary, you will have to pay the IBI for the year 2020.

Please do not hesitate to contact us should you have any further queries.

With kind regards,

Ábaco Advisers

Rob Horgan

24 December, 2020 9:38 am

Hi. My wife is a resident in the UK but sold a property in Spain in January this year.
Does she have to pay the CGT in Spain or the UK?
Thanks

Oscar Paoli

28 December, 2020 11:00 am

Hi Rob,
As the property is situated in Spain under the double Taxation treaty it should have been declared in Spain within three months of te sale in a form 210H, there would have been 3% deducted in the sale which is discounted from any Capital Gains Tax this may mean if a loss has been made that the 3% would be refunded and if the 3% was not sufficint then any extra should have been paid. The sale will also have to be declared in the United Kingdom and nay Tax paid here is deducted from any liability here.
With kind regards,
Ábaco Adviser

Geraldine Lesley

10 January, 2021 4:56 pm

I bought a house in Asturias 2005 and have a NIE card which says residente, this expired 2011. My health card expired 2012, am I still classed as a resident. My husband who is German and myself want to become residents of Spain and also the UK. We pay our house mortgage in Spain through the bank plus all our utility bills through the bank. I have a UK state pension and we are owners of a UK based travel company but do not have an income in Spain (at the moment) We´ve looked through the various articles on your site which are clear and helpful but >I guess what we need to know is how does it relate to being a German /UK couple. My husband and myself pay tax in the UK?

Oscar Paoli

14 January, 2021 1:12 pm

Hi Geraldine,
Thank you for your query. The NIE is a tax identification number which is a life long number but it does not signify residency in Spain. The document format for an NIE is an A4 certificate.
You will not still be classed as a resident if you have not renewed your padron registration at your local town hall in the last five years.
If you wish to become residents in Spain you will have to meet the new criteria for non EU citizens as although your husband has German nationality he is a UK resident as you state that you are both tax residents of the UK.
The criteria to become resident in Spain as no EU citizens is for you to have private health cover at a comprehensive level and prove a sufficient income or have substantial savings.
Please do not hesitate to contact us should you have any further queries.
With kind regards,
Ábaco Advisers

S J Becker

3 February, 2021 3:30 pm

Dear All,

Is it correct, that as a UK tax resident you can’t deduct any expenses from the income of your rental property since Brexit?
You could you let me know as well how much you charge for the quarterly tax computation filing for poor rental income.

Looking forward to hearing from you

Oscar Paoli

4 February, 2021 2:42 pm

Thank you for contacting us.
That is correct as of after Brexit you can’t deduct any expenses from the income of your rental property.
Our quarterly tax declaration for rental income is 50 € per quarter.
With kind regards,
Ábaco Advisers

Angeles Fernandez

16 March, 2021 10:43 pm

My husband (Irish) and I (Spanish) are UK pensioners and we spend 7 months in Spain, where we are residents and done the S1 forms under the Withdrawal Agreement. We also spend about 4 months at our home in England and the rest travelling. We are due to do our tax forms in Spain next year. All our assets are in the UK, where we spent our working life. I read there is Residency and Tax Residency. The guidance booklet of the Dual Tax Treaty is very complicated to me. My question is, can we have our assets taxed in the Uk instead of Spain? We would prefer to be UK tax payer. We have property in both countries but we do not receive any income from Spain. Your advice would be appreciated. Angeles

Oscar Paoli

18 March, 2021 10:28 am

Hi Angeles,

As a resident in Spain you are obligated to pay Tax here irrespective of where the income comes from, and can not choose. Under the terms of the double taxation treaty you will need to apply to the United Kingdom on form SI 1976 Number 1919 with a Certificate of Fiscal Residency in agreement with the Double Taxation Treaty from Spain. They will then stop deducting Tax from you and give a NT coding, there are some Pension which have to remain Taxable there but are declared here as exempt.

Should you have any further queries please do not hesitate to contact us at info@abacoadvisers.com or by phone at 0034 966 703 750.

Kind regards,

Ábaco Advisers

Frances

2 April, 2021 1:51 pm

Please please how does one get Agencia Tributaria to accept a correctly completed form 210 to reclaim witholding rax on Dividends ….AT keep rejecting the 210 so cannot produce a pdf …every error code is different and they have denied a MAP complaint because we cannot submit a 210 …its their website that is the issue but they refuse point blank to acceot that

Oscar Paoli

6 April, 2021 10:55 am

Hi Frances,

Unfortunately we do not deal with these matters directly, we highly recommend you contact a specialized firm who can assist you in the matter.

With kind regards,

Ábaco Advisers

Darren Clarke

28 April, 2021 6:41 pm

I bought a property in Valencia in January 2020. Due to the Covid situation however i was only actually in Spain until June 2020
My sole income is that of a UK government Police pension which is taxed at source by HMRC.

I hope /intend to return to Spain to take up residency in June 2021

What is the situation with my income tax? I have previously been told that as it is a Government pension taxed at source it will remain that way. However could you please provide a definitive answer

Oscar Paoli

29 April, 2021 8:34 am

Hi Darren,

In 2014 a new Double Taxation Treaty between the United Kingdom and Spain came into force which will effect how the Pensions received from Crown, Civil Service, Fire and Police Force are treated as of the 2014 Tax Declaration. Under Article 22 section B the Text now reads

“(B) Where in accordance with any provision of the Convention income derived or capital owned by a resident of Spain is exempt from tax in Spain, Spain may nevertheless, in calculating the amount of tax on the remaining income (or capital) of such resident, take into account the exempted income or capital.”

Where as in the past this pension was not included in the calculation of your tax band previously, since 2014 it has to be included however if you have no other income and were not in Spain during 2020 for the required 183 days then you would not have to declare as a Resident rather as a Non Resident.

Please do not hesitate to contact us should you have any further queries.

With kind regards,

Ábaco Advisers

Barry O'Donnell

25 June, 2021 1:35 pm

Hello.

I don’t know if you can advise me on a tax problem i have incurred.

I moved to Spain permanently 3 years ago and have since, received a work pension in December 2020.
I had the option to take 25% of it tax free, which i did.
I did have the option not to take the 25% and just have a larger monthly pension , which would have left me under the tax bracket.

A major financial problem arose when i had to declare my income in Spain.
If you live here all the time ( over 183 days per year, , you have to declare your income to the Spanish tax authorities.

Also i am officially retired, over 65.

On doing this in the last week, my lawyer stated i have to pay 24% tax on my 25% tax free earning from the work pension, even though it is free in the UK.

I now have a bill, which i have to pay, of over 9,500 euros.
I would have been under the

I haven’t seen anything regarding this in any financial sections of the newspapers.

I can’t get around it anyway, because if the Spanish find out anything is hidden, you can be fined 10’s of 1000’s of euros.

It might be worth mentioning and warning any other people who are thinking of doing what i did about the above.

Regards

Barry O’Donnell

Oscar Paoli

25 June, 2021 2:20 pm

Hi Barry,

Although under British regulations you can obtain a certain amount of a Lump Sum payment free of Tax the same conditions do not apply here and you would therefore be Taxable on the full amount received, as you account has done unfortunately.

With kind regards,

Ábaco Advisers

Peter Jones

10 August, 2021 3:23 pm

I work for a UK company (PAYE) but wish to live in Spain (Balearics). My wife is a Spanish resident already and we own houses in both the UK and Spain. I wish to continue working for my employer and am likely to ‘physically’ work in BOTH countries over a year, but more in Spain.
I would like to understand if the DTT will help me.

Oscar Paoli

19 August, 2021 8:45 am

Hi Peter,

In this situation the Double Taxation Treaty would mean the period that you actually work in the UK would be declared here and the Tax paid on this part of the income deducted under the terms of the treaty and period in Spain full declare here and request a refund form the UK for this period, however it is very possible under the statutory Residence Test in the UK they would not consider you to be a non resident even if you spend more time here then there so it is very important to contact HMRC and complete the statutory Residence Test before making any decisions which could lead to falling into paying Double Tax.

Hope this information can be useful.

With kind regards,

Ábaco Advisers

Bob kemp

2 September, 2021 1:34 pm

In the uk we have a Capital Gains Annual Exemption of £12.3k each.
When we sell our house in Spain do we get the same annual exemption if Spain have a double tax agreement with the uk?

Thanks

Oscar Paoli

7 September, 2021 11:44 am

Hi Bob,

The agreement to avoid double payment of taxes, the agreement determines in which country taxes are paid or in case they are paid in both, the tax paid in the other can be deducted, but each country has its own internal regulations.

In Spain there is only a “personal allowance” which is 5,550 € and if you are over 65 it rises to 6,700 € this applies to all your income plus, in your case the profit determined by the sale of the property, there is no separate exemption for property sales as in the UK.

But there is a possibility of applying a total exemption from the profit when you sell the home in Spain, which has been your usual home for at least the last three years and at the time of sale you are over 65 years old.

Hope this information is iseful.

For more information contact us at info@abacoadvisers.com

With kind regards,

Ábaco Advisers

Leon Ferguson

30 September, 2021 3:44 pm

My partner worked in Spain over lockdown on-line at our house in Andalucia, Spain for a UK organisation, paying UK tax, PAYE. No income was sourced in Spain.
As follows:
2020 July and August then September to December 31st. 145 days in 2020
2021 January 1st to May 2nd 122 days in 2021.

His employer is saying that the 183 days in a calendar year that operates in Spain does not apply under the taxation Treaty as in a 12 month rolling period it was exceeded. They are using the periods July 2020 to June 2021 I can see no mention of this in the treaty. Please can you clarify if tax should be filed in Spain ? If they are correct, then where does the next 12 month rolling period start and end ? And does the 12month calendar rule in Spain never apply ? Thank you.

Oscar Paoli

1 October, 2021 3:24 pm

Hi Leon,

The Tax year in Spain is January to December so the days are 183 to be considered to be a Tax Resident here during this period.

However the issue may not be with Tax Residency but the period allowed to be in Spain after BREXIT which does work on a rolling period and not a calendar year so this issue comes under the guidelines for visits to the Schengen area. More information can be obtained from the Foregin Office on both the Spanish and British Web sites.

With kind regards,

Ábaco Advisers

Stuart Anderson

8 October, 2021 8:25 am

Hello,
we have a property in Spain. We are British and non resident. We rent the property in Spain in the summer months and declare the income and expenses on our British tax forms. Usually we do not make a profit and hence usually do not pay tax. On rare years we have made a small profit and paid tax in the UK. So, we are declaring the furnished rental property in the UK and not in Spain.

We pay the local taxes but do not pay any taxes in Spain on the understanding that we are declaring the income (or loss) in the UK.

I am worried that I should be declaring something in Spain having read through your web pages but I’m not clear what or how.

Is this correct? I would appreciate your advise

Best Regards

SA

Oscar Paoli

8 October, 2021 11:51 pm

Hi Stuart,
You should be paying both the non-resident income tax yearly in Spain before December 31st of each year and you should also declare quarterly in Spain and rentals you may have had.
Should you need any assistance in this matter please do not hesitate to contact us at info@abacoadvisers.com or by phone at 0034 966 703 750.
With kind regards,
Ábaco Advisers

Gary Cheesman

13 October, 2021 3:45 pm

If I am tax resident in Spain do I have to pay CGT on the sale of my principal home in the UK.
Many thanks Gary

Oscar Paoli

14 October, 2021 7:37 am

Hi Gary,
As you are now a Resident in Spain your main residence will be here therefore Capital Gain Tax will be due on the property in the UK now considered to be a second home.
With kind regards,
Ábaco Advisers