Income from Capital for Non-Residents

💵 Taxation of Interests

Interest income generally includes earnings from loans, bonds, debentures, and public securities. Penalties for late payment are typically not considered interest for DTA purposes.

General Double Taxation Agreement (DTA) Rule

DTAs often permit the source country (where the interest originates) to tax the income, but usually at a reduced rate.
The OECD Model DTA suggests a maximum rate of 10%, though this varies by bilateral agreement.
To prevent double taxation, the imputation or credit method is typically used, allowing the country of residence (Spain) to credit the tax paid abroad.

Spanish Law (IRNR) and Exceptions

Under Spanish IRNR Law, interest generated in Spain is currently exempt from taxation if the effective recipient is a resident of an EU country, Norway, or Iceland.
Furthermore, many modern DTAs signed by Spain (e.g., with Germany, the United Kingdom, or Finland) declare interest exempt in the source country.

Withholdings and Refunds

If the tax withheld in the source country is higher than the rate permitted by the DTA, or if the interest is exempt under Spanish law or the DTA, a refund of the excess amount can be requested from the Spanish Tax Authorities (AEAT) using Form 210.
The deadline for this refund is 4 years, starting on February 1st of the year following the year the interest accrued.
A valid certificate of tax residence in Spain must be provided with the refund request.

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.

Refunds in the IRNR (Non-Residents)

If you are a non-resident of Spain (but have Spanish-source income) and the correct DTA rate is not applied:

You should provide your certificate of tax residence to the payer before the dividend is paid.
If tax is withheld in excess of the DTA rate, a refund can be requested using Form 210. You must attach the withholding certificate, the tax residence certificate, and proof of account ownership for the refund.

💰 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%).

Dividens in IRNR, Spanish Legislation

They are considered to be obtained in Spain when they originate from shares in the equity of entities resident in Spain: Article 13.1(f) Non-Resident Income Tax Law (IRNR), Royal Legislative Decree 5/2004.

Tax rate: 19%