Income from Capital for Residents

The distinction between the General Tax Base and the Savings Tax Base is the key to understanding how dividends and interest are taxed.

If you’re unsure where to begin, check out our comprehensive tax obligation strategy. Taxes in Spain Guide 2026.

In Spain’s Personal Income Tax (IRPF), income is divided into two distinct categories, or “Tax Bases,” each subject to a different set of tax rates.

The Two Types of Tax Bases

Income Included in the General Tax Base

The General Tax Base combines most standard types of active income:

• Employment Income (Rendimientos del Trabajo).
• Income from Real Estate Rentals (Rendimientos del Capital Inmobiliario).
• Income from Economic Activities (Rendimientos de Actividades Económicas).
• Imputed Real Estate Income (for properties not rented out).
• Certain types of Capital Income, such as:
  • Income derived from intellectual or industrial property (when the taxpayer is not the author).
  • Income from the rental of movable goods, business assets, or mines.

Income Included in the Savings Tax Base (The Focus for Investors)

The Savings Tax Base is composed of the following two categories, which are key for investors:

A. Returns on Movable Capital (Rendimientos del Capital Mobiliario)

This includes typical passive income from investments:

• Income derived from participation in the equity of entities (e.g., Dividends).
• Income derived from lending capital to third parties (e.g., Interest).
• Income from life or disability insurance contracts and capitalization operations.
• Income from temporary or life annuities derived from capital placement.

B. Capital Gains and Losses (Ganancias y Pérdidas Patrimoniales)

• Gains or losses derived from the transfer (sale) of assets (e.g., selling shares, mutual funds, or real estate).

Tax Rates for the Savings Tax Base

The Savings Tax Base is split into a State rate and a Regional (Autonómico) rate. The combined rate is the final effective tax rate applied to your investment income.

Combined Savings Tax Rate

By combining the State and Regional components, here is the final, effective combined tax rate applied to savings income:

For those foreigners living in Spain, understanding how income from capital—specifically interest and dividends—is taxed is crucial. Spain’s Non-Resident Income Tax (IRNR) and Double Taxation Agreements (DTAs) are key to determining your final tax liability.

📈 Taxation of Dividends Abroad

Dividends cover income from shares, stocks, and other rights (excluding credit rights) that allow participation in a company’s profits.

General DTA Rule

• The source country (where the company paying the dividend is located) has the right to tax dividends, but only up to a reduced rate defined in the DTA (e.g., often 10% or 15% for portfolio investments).
• To manage this, some countries withhold tax at the DTA rate if you provide a tax residence certificate upfront. Others apply a high initial withholding, requiring you to apply for a refund later.

Avoiding Double Withholding: An Updated Example

A potential issue is double withholding, where tax is deducted both by the source country and the depositary bank’s country.

Declaration for Spanish Personal Income Tax (IRPF)

The Spanish IRPF declaration uses the actual net yield for the base calculation:

• Gross Yield: €3,000.00
• Deductible Expenses (Custody fees): -€25.00
• Net Yield (Taxable Base): €2,975.00
• Spanish Withholding: €399.00

Deduction for International Double Taxation

• The foreign tax you can deduct from your Spanish tax liability is limited to the maximum set by the DTA: €450.00 (15% of €3,000.00).

Action Required Before the Australian Tax Authorities

• Ms. B must request a refund for the excess amount withheld by the Australian authorities: €900.00 (Actual Withholding) – €450.00 (DTA Max) = €450.00. This involves using the specific refund form required by the source country (Australia).

Key Consideration: If your securities account is held abroad with dividends from multiple countries, you must apply the specific DTA between Spain and each source country, not the country of the depositary bank.

💰 Dividends in OECD Convention Model

Double taxation treaties follow a shared taxation regime regarding dividends, meaning that they can be taxed both in the state of residence of the recipient and in the state from which the dividends originate, though in this case, with a limit that is generally set at 15%.

Therefore, when a resident of a state that has a treaty with Spain receives dividends from a Spanish entity, they can be taxed in Spain, with the limit established in the treaty (generally 15%).

Article 10 of the OECD Model Tax Convention establishes shared taxation between the source State and the residence State of the recipient, with a limit on the source State (Article 10.1):

• 5% if the beneficial owner is a company (under the wording prior to the 2017 OECD Model Tax Convention, partnerships were excluded, but now the treatment given by the relevant Double Taxation Agreement to partnerships must be considered in accordance with Article 1) that directly holds at least 25% of the capital.
• 15% in all other cases.