Obtaining dividends from another country

If a natural person is a tax resident in Spain, he/she must pay taxes in Spain on his/her worldwide income , that is, he/she must declare in Spain the income he/she obtains 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 agreement to avoid double taxation, it is necessary to refer to the provisions of the agreement to find out the tax limits in the country of origin (normally the agreements provide a shared tax power over dividends for the signatory States) and the measures to alleviate double taxation, which usually consist of the State of residence (Spain) allowing a deduction for double taxation to be applied for the tax borne abroad up to the tax limit provided for in the agreement.

If the dividends come from another country with which there is no Agreement 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 generating dividends from a foreign source are deposited in a depository entity resident in Spain , this entity is obliged to withhold tax on account of Spanish personal income tax, on the net dividends it receives, once the prior withholding tax has been borne in the country of origin, which withholding will be deductible as withholding tax on movable capital.