For international investors buying property in Spain, one of the most important — yet often overlooked — aspects of tax planning is understanding how to avoid double taxation. If you generate income from a Spanish property but also pay taxes in your country of residence, there’s a risk you could be taxed twice on the same earnings.
Fortunately, Spain has signed numerous Double Taxation Agreements (DTAs) with countries around the world. These treaties — combined with the right legal structures and tax filings — can help ensure that your Spanish rental income or capital gains are not taxed twice, and that your global tax strategy remains efficient and compliant.
In this article, we explain what double taxation is, how Spain’s treaties work, and what foreign investors can do to avoid overpaying tax.
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1. What Is Double Taxation?
Double taxation occurs when:
- A taxpayer is subject to income or capital gains tax in more than one country, and
- There is no legal mechanism to offset or eliminate the duplication of tax
For property investors in Spain, this most often applies to:
- Rental income generated from Spanish real estate
- Capital gains from the sale of property
- Wealth tax on property assets
If your home country also taxes these categories of income or assets, and Spain does as well, you may face double taxation unless a treaty or credit applies.
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2. What Are Double Taxation Agreements (DTAs)?
Spain has signed over 90 Double Taxation Agreements (Convenios de Doble Imposición) with countries across the EU, the Americas, Asia, the Middle East, and beyond.
A DTA is a bilateral treaty that:
- Clarifies which country has the right to tax specific types of income (e.g. rental income, capital gains, dividends)
- Prevents the same income from being taxed twice
- Provides mechanisms for tax credits, exemptions, or reduced rates
- Sets rules for resolving tax disputes between jurisdictions
These treaties follow the OECD model and ensure that non-residents who pay tax in Spain can avoid being taxed again in their country of residence — or vice versa.
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3. How DTAs Apply to Property Investors in Spain
The key income streams affected by Spain’s tax treaties include:
Rental income:
Spain retains the primary right to tax rental income from Spanish real estate. Your home country may also require you to declare that income — but most DTAs allow you to claim a credit for taxes paid in Spain.
Capital gains from property sales:
Spain typically retains the right to tax capital gains on the sale of real estate located in Spain. If your home country also taxes capital gains, you may be able to credit the Spanish tax paid against your local liability.
Wealth tax:
Some treaties specifically mention wealth tax (e.g. France–Spain treaty), while others do not. In cases where no treaty provision exists, you may need to rely on unilateral tax relief or structuring strategies to avoid duplication.
Dividends and interest:
If your Spanish property is owned via a company, you may also be affected by treaty provisions on dividends or interest payments.
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4. How to Claim Tax Relief in Your Home Country
To avoid double taxation, you must:
- Declare your Spanish rental income or capital gains in your country of residence
- Provide proof of tax paid in Spain (Modelo 210 for rental, Modelo 211/IRNR for capital gains)
- Apply for a foreign tax credit or exemption in your home country’s tax return
- Ensure compliance with local rules (some countries have maximum credit limits or conditions)
Tip: Maintain organized records of your Spanish tax filings, bank transfers, and property expenses to support your claim.
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5. How Spain Taxes Non-Resident Investors
Spain taxes non-resident investors as follows:
| Income Type | Tax Rate (EU/EEA Resident) | Tax Rate (Non-EU) | Deductible Expenses |
|---|---|---|---|
| Rental Income | 19% | 24% | Yes (EU), No (non-EU) |
| Capital Gains | 19%–23% | 19%–23% | Yes |
| Wealth Tax | 0.2%–2.5% (over €700k) | 0.2%–2.5% | Yes (on net value) |
Spain will not withhold income tax from abroad — you are expected to file and pay voluntarily, quarterly or annually, using Modelo 210 (rental income) or Modelo 210/211 (capital gains).
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6. What If There Is No Tax Treaty?
If your country does not have a tax treaty with Spain (e.g. many tax havens), you may still:
- Be taxed on Spanish-source income or assets by Spain
- Be taxed again in your home country
- Have limited or no access to tax credits or relief
In these cases, tax planning becomes more complex, and you may benefit from:
- Using a corporate structure (e.g. Spanish SL)
- Holding property through a country with a treaty in place
- Consulting international tax experts before investing
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7. Residency Planning and Tax Coordination
Choosing whether or not to become a Spanish tax resident affects double taxation planning:
- If you are a non-resident, you are only taxed in Spain on local income
- If you become tax resident in Spain, your worldwide income and gains may be subject to Spanish taxation — and Spain’s treaties will apply accordingly
You must coordinate your residency status, income sources, and property structures carefully to avoid unnecessary exposure.
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8. Tax Reporting and Documentation
To avoid double taxation, you must meet reporting obligations in both Spain and your home country:
- In Spain: file Modelo 210 for rental income, Modelo 211 for capital gains, Modelo 714 for wealth tax
- In your home country: declare foreign income and capital gains, and claim a foreign tax credit using official forms and tax certificates
Ensure that all documents are:
- Submitted within deadlines
- Accurately translated or certified (if required)
- Consistent with banking and property records
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Want Help Coordinating Your International Tax Strategy?
Our Investment Strategy Session helps property investors:
- Understand if a tax treaty applies to their home country
- Calculate net after-tax returns across jurisdictions
- Claim credits or exemptions to avoid double taxation
- Structure ownership to minimize global tax exposure
- Coordinate residency, reporting, and compliance
Price: €500
Duration: 60 minutes
Outcome: A tax-compliant, globally optimized investment strategy
Book your Investment Strategy Session here
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Conclusion
Double taxation can erode your investment returns — but with the right strategy, it’s entirely avoidable. Spain’s network of tax treaties, combined with proper reporting and structuring, allows most investors to legally reduce or eliminate tax duplication.
Whether you’re a first-time buyer or expanding a Spanish portfolio, understanding how to leverage treaties and credits is essential for protecting your profits.