The United Kingdom, this includes England, Wales, Scotland and Northern Ireland, and Spain, including their territories, agreed upon a taxation treaty in 1975 and put in force in 1976, to reinforce the taxation system for people moving between the two countries.
The double taxation treaty was created for the avoidance of double taxation that is being charged taxes on the same thing in both countries and for the prevention of fiscal evasion to do with particularly with income and capital taxes.
The terms of this treaty applies to all those who are either a resident in one or both countries. In terms of personal taxation the following taxes are what are included in the agreement.
Taxes covered in the UK
• Income tax
• Corporation tax
• Capital gains tax
Taxes covered in Spain
• General income tax (Impuestos sobre la renta de las personas físicas)
• The general corporation tax (el impuesto general sobre la Renta de Sociedades y demas entidades jurídicas)
• Taxed prepayments: land, earned income, income from capital, business and industrial activities
• The local taxes on income and capital (los impuestos locales sobre la renta y el patrimonio)
This all means that these particular taxes are covered under the treaty and therefore are not to be taxed twice. There do exist exceptions for these taxes under given circumstances, however this is usually the norm. In Spain regulations state that if you reside in Spain as resident, there you are obliged to submit your tax return forms declaring all income and assets and that you are to pay, if any, corresponding taxes in Spain, even though you may have been taxed at source, which inn this case, in the UK. To avoid being taxed twice, you are to declare your residency in Spain, with proof that you are paying taxes in Spain so that the UK does not retain funds for taxes.
These are general guidelines for taxation between countries and you should always consult the corresponding tax offices and a professional solicitor and tax advisors to avoid any misunderstandings or mistakes.
ABAD LEGAL and FINANCIAL firm would be more than happy to inform and assist you with inter-country taxation.