Obtaining dividends from another country
How foreign earned dividends affect Personal Income Tax
If a natural person is a tax resident in Spain, they must pay tax in Spain on their worldwide income , that is, they must declare in Spain the income they obtain anywhere in the world, including dividends, without prejudice to the provisions of the Convention to avoid international double taxation signed between Spain and the country of origin of the dividends.
If the dividends come from a country with which there is an Agreement to avoid double taxation, you must refer to its provisions to know the taxation limits in the country of origin (normally the agreements provide for shared tax power over dividends for the signatory States) and measures to alleviate double taxation, which usually consist of the State of residence (Spain) allowing the application of a deduction for double taxation for the tax incurred abroad up to the tax limit provided for in the agreement.
If the dividends come from another country with which there is no Convention to avoid international double taxation and they are also taxed in the other country, the taxpayer may apply the deduction for international double taxation provided for in article 80 of Law 35/2006, of November 28, on Personal Income Tax (IRPF).
In the event that the shares that generate dividends from foreign sources are deposited in a resident depository entity in Spain , this entity is obliged to practice withholding on account of Spanish personal income tax, on the net dividends received, a withholding that will be deductible as withholdings on movable capital