The new double taxation agreement between Spain and the United States incentivizes direct investment between the two countries
The agreement establishes a favorable tax framework for US investments in Spain
The new double taxation agreement between Spain and the United States will come into force next November 27 after approval by the US Senate.
The agreement contains substantial modifications and establishes a favorable tax framework for US investments in Spain. According to the latest figures in the Investment Registry at the Ministry of Industry, Trade and Tourism, the US is the largest investor in Spain in terms of stock.
The agreement, which is due to come into effect at the end of November, will encourage American companies to invest directly in Spain without using third countries as a base. One of the main aims of the new agreement is specifically to incentivize direct investment in Spain, with the added benefit for the investing companies that they do not incur any of the structural costs involved in triangular transactions when using a third country as a base.
The modifications in the protocol include particularly the fact that once it comes into effect it will be possible to distribute dividends, pay interest and taxes and obtain capital gains on the sale of shares without taxation in the source country – that is, in the country of origin of the income, either in Spain or the US – as long as certain requirements are met.
It is also noting that US companies currently use Spain as a platform for their international investments, especially in markets in the EU, Latin America and North Africa.
On January 14 2013, Spain and the US signed the protocol that modifies the current agreement in force between the Kingdom of Spain and the United States of America to avoid double taxation and prevent tax evasion. The text was ratified by the Spanish parliament and subsequently approved by the US Senate, and will finally take effect in 2019.