The double tax treaty Spain Hong Kong

The Double Tax Treaty (Double Taxation Agreement, DTA) between Spain and Hong Kong is to eliminate or prevent the negative impact of double taxation by allowing the tax paid in one of the two states (Spain and Hong Kong SAR) to be offset against the taxes payable in the other state[i]. To make your company become the shareholder in the Hong Kong or Spanish investment, it is essential to understand the Comprehensive Double Taxation Agreement (DTA) between Spain and Hong Kong.

The Double Tax Treaty (Double Taxation Agreement, DTA) between Spain and Hong Kong was ratified on 1st of April 2011 and has entered into force on 13th of April, 2012.  The taxation authorities in Spain and Hong Kong exchange information about such declarations, and so may investigate any anomalies that might indicate tax evasion.[ii] The Double Tax Treaty (Double Taxation Agreement, DTA) between Spain and Hong Kong can be applied to companies or individuals who are residents of one or both sides for the avoidance of double taxation and prevention of fiscal evasion.

The Double Tax Treaty (Double Taxation Agreement, DTA) reduces tax impediments to cross-border trade and investment and assist tax administration in both Spain and Hong Kong. The Double Tax Treaty (Double Taxation Agreement, DTA) between Spain and Hong Kong has provided numerous new opportunities for both inward and outbound investment. The following table provides a more accurate understanding for the exact amount of the double tax treaty rate:

Hong-Kong DomesticSpain DomesticDTA Rate (Spain Hong-Kong Tax Treaty Rate)
Dividends 0%19%0% for companies that holds more than 25% of the shares /

Otherwise 10%

Interests0%0/19%0% /

Otherwise 5%

Royalties4,95/16,5%19/24%5%
Capital Gains0%25%10%

* Interest is exempted of tax if it is paid:

  • To a financial institution;
  • To a pension fund that is approved for tax purposes by that Contracting Party and the income of that fund is generally exempt from tax in that Party;
  • To the Contracting Party or the “central bank”, a political subdivision or local authority;
  • In respect of a loan, debt-claim or credit that is owed to, or made, provided; guaranteed or insured by, that Contracting Party or a political subdivision, local authority or export facilitating agency thereof.[iii]

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[i] Double Taxation Agreements and Your China Investment Strategy – China Briefing

[ii] Darren Rykers (2009): A Critical Analysis of how Double Tax Agreements can facilitate Fiscal Avoidance and Evasion; The Taxpayer and the Lotus, 17 Nov.2009.

 [iii]S.J.Grand Financial and Tax Advisory