Spain UK tax treaty
How to avoid double taxation between Spain and the UK
Living in Spain but earning income from the UK? Receiving a British pension while retired on the Costa del Sol? Owning rental property in Spain while working in London? If any of this sounds like you, read on.
The Spain UK tax treaty, officially known as the double taxation agreement (DTA) between Spain and the United Kingdom, is designed to make sure you don’t pay income tax twice on the same earnings. It lays out clear rules about where and how your income should be taxed, depending on your residency and where the income comes from.
In short:
- It prevents double taxation on most types of income
- It determines your tax residency to clarify who gets taxing rights
- It applies to salaries, pensions, property income, dividends, and more
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Who benefits from the treaty?
This agreement is useful if you:
- Live in one country but earn income in the other
- Are a British expat living in Spain
- Are retired in Spain and receive a UK pension
- Work in the UK but own rental property in Spain
- Are self-employed or run a business across both countries
What is a tax treaty?
A tax treaty is a legal agreement between two countries that protects individuals and businesses from being taxed twice on the same income. It also promotes transparency and prevents tax evasion.
The Spain UK tax treaty is based on the OECD model and was last updated in 2013. It remains in force after Brexit, as it is a bilateral agreement independent of the EU.
Determining your tax residency
Before the treaty can be applied, you need to know where you are tax resident. Both Spain and the UK have their own rules.
In Spain, you’re a tax resident if:
- You spend more than 183 days in a calendar year in Spain, or
- Your main economic or family ties are in Spain
In the UK, tax residency is determined by the statutory residence test, which looks at:
- Days spent in the UK
- Your UK connections (home, job, family)
- Your residence history in the last few years
If both countries consider you resident, the treaty includes a tie-breaker test, which considers where you have a permanent home, where your personal and economic relations are closer, and other factors.
What types of income does the treaty cover?
The Spain UK tax treaty applies to most types of personal and investment income. Here's a breakdown of how different income sources are taxed:
Employment income
- Taxed in the country where the work is physically performed
- If you live in Spain but work in the UK, the UK can tax your salary
Pensions
- Private pensions (such as from personal pension plans or workplace pensions): taxed only in your country of residence
- Public pensions (for example, paid to former UK government employees): taxed in the UK, even if you live in Spain
Dividends and interest
- Taxed primarily in your country of residence
- The source country (UK or Spain) may withhold a reduced tax rate, typically 5–15%, depending on the type of income
Rental income
- Taxed in the country where the property is located
Example: rent from a flat in Madrid is always taxable in Spain, even if you live in the UK
Capital gains
- Gains from selling real estate are taxed in the country where the property is located
- Gains from selling shares or other investments usually follow residency-based taxation, unless exceptions apply
How the treaty prevents double taxation
The treaty uses two main methods:
- Exemption method – Income is taxed in only one of the two countries
- Credit method – You can deduct the foreign tax paid from your local tax liability (up to a limit)
If you're a Spanish tax resident and you pay tax in the UK on a British pension, Spain may allow you to credit that tax against your Spanish tax bill—so you don’t pay twice on the same income.
Is the tax treaty still valid after Brexit?
Yes. The treaty remains fully in force. It’s a bilateral agreement, unaffected by the UK leaving the European Union.
Do I have to file tax returns in both countries?
Sometimes. You may need to declare your global income in both countries, but thanks to the treaty, you won’t pay tax twice on the same income if you follow the right procedures.
How do I apply the treaty benefits?
- Declare your country of tax residence to both tax agencies
- Provide residency certificates if requested
- Use official forms to apply for tax relief or credits
- Keep all documentation and payment proofs in case of audits
Practical tips for managing tax across Spain and the UK
- Review your residency status each year, especially if your time or connections shift
- Check how each type of income is treated under the treaty—don’t assume it’s tax-free
- Use a tool like SpainTax’s online tax calculator to simulate your situation based on real rules
- Keep records of foreign income, tax payments, and forms you submit to tax authorities
- Consult a qualified tax advisor if you’re unsure about specific cases
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Understanding the Spain UK tax treaty protects your money
The Spain UK tax treaty isn’t just a legal document—it’s a financial safeguard for anyone earning income across both countries. Whether you’re an expat, a remote worker, a retiree, or a property investor, understanding how the treaty works will help you stay compliant and avoid overpaying tax.
At SpainTax, we make it easier to understand your tax obligations with our instant tax calculator, which uses the rules of the treaty to give you fast, reliable estimates.
Want to see how the treaty affects your taxes? Contact us.
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