International Tax

Base Erosion and Profit Shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. Over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS, amongst them Spain.

The global campaign to address tax BEPS is changing the Tax landscape.

The OECD/G20 BEPS Project creates a single set of consensus-based international tax rules to protect tax bases while offering increased certainty and predictability to taxpayers developed in 15 actions:

The aim of the treaty network is to eliminate double taxation and provide for reduced rates of withholding tax or dividends, interest and royalties. Spain’s treaties generally follow the OECD model treaty, providing for relief from double taxation on all types of income, limiting the taxation by one country of companies resident in the other and protecting companies resident in one country from discriminatory taxation in the other.

Resident taxpayers are granted a tax credit for foreign direct taxes paid that are similar to the Spanish corporate income tax. The credit is limited to the lesser of the tax payable in Spain if the income had been obtained there, or the actual foreign tax paid.

This double taxation relied also may apply to dividends and capital gains that do not qualify for the participation exemption, or where the taxpayer elects not to apply the participation exemption. In the case of dividends, additional double taxation relief may apply for the underlying foreign corporate income tax liability paid by the participated entity.