New Spain-Qatar Double Tax Treaty

According to the Spanish Tax Administration, the new Double Tax Treaty (DTT) will serve to favour the economic exchanges between both countries, in particular from the perspective of the investment. Currently, commercial exchanges between the two countries are worth over €1bn euros per year. Furthermore, as the Spanish Government explains in a press release, the World Cup of 2022 on the horizon is a stimulus to strengthen networks of infrastructure and transport of the country and an opportunity of investment.

The treaty follows the standard of the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention. In Spain it will be applicable to Personal Income Tax, Corporate Income Tax, Non-Resident Income Tax and municipal income taxes, not applying therefore to the Wealth Tax. In Qatar it will apply to income taxes. The DTT also includes a provision that will allow a broad tax information exchange, including bank account information, between Qatar and Spain.

Dividends, interests and royalties

The withholding tax (WHT) rates applicable under the DTT will be as follows:

(1) Note that dividends paid out to a resident in the other state can only trigger a 5% withholding tax. However, if the recipient is a company who owns at least 10% of the voting rights or share capital of the paying company, then the withholding tax will be zero.

Capital gains

Capital gains shall be generally taxable only in the state of which the person making the gain is resident. However, a number of exceptions are covered under the agreement:

• the disposal of real estate, including shares or comparable interests deriving more than 50% of their value directly or indirectly from real estate and rights which directly or indirectly entitle the owner of such shares or rights to the enjoyment of real estate
• business property of a permanent establishment, and
• disposal of ships or aircraft operated in international traffic.

Spanish DTT network

With the Spain-Qatar DTT, Spain has expanded its international tax strategy even more, based on promoting business investment via elimination of double taxation, while at the same time reducing tax opacity thanks to the exchange of tax information.

This agreement joints the broad network of nearly one hundred DTTs designed to prevent double taxation and tax fraud across a broad geographical spectrum with European countries, Asia, the Americas, and the Middle East, where Spain has agreements with Cyprus, Egypt, Iran, Kuwait, Oman, Saudi Arabia, United Arab Emirates and Turkey (and is in negotiations with Bahrain and Syria).