The Double Tax Treaty Spain Japan (Double Taxation Agreement, DTA between Spain and Japan) has entered into force on 20th of November in 1974 in order to regulate taxation or personal / corporate income tax, the main purpose of the Double Tax Treaty (Double Taxation Agreement, DTA) is to prevent Double Taxation by enabling offsetting tax paid in Spain or Japan against the tax payable in the other. Moreover, in 2008 Spain and Japan signed an agreement regulating social security contributions in order to eliminate the problem of dual social security tax liability.[i]
The Government of Spain and the Government of Japan desire to conclude a Convention for the avoidance of Double Taxation with respect to taxes on income. Although countries like Spain and Japan are more than 10,000 kilometers away from each other, Spain and Japan have concluded Tax Treaties (Double Taxation Agreement, DTA) with each other for the purposes of avoiding Double Taxation of personal / corporate income internationally and preventing tax evasion; in other words, the taxation authorities in Spain (Agencia Tributaria) and Japan (国税庁) exchange information about such declarations, and so may investigate any anomalies that might indicate tax evasion.[ii]
The Spain and Japan Double Tax Treaty (Double Taxation Agreement, DTA) is applicable for personal and commercial taxes (mostly income tax and capital tax, including properties and appreciation). And when an individual is a residence of both (Spain and Japan), the individual is expected to be taxed in the country in which the individual has more relations in terms of business or personal matters.
The grant of an exemption or tax at a reduced rate on certain receipts such as interest, royalties, dividends, capital gains and others that are connected with a transaction carried out between parties associated with the Double Taxation Prevention Treaty. For instance, in terms of income, in Japan or Spain, when certain income is taxable under the Japanese Income Tax Ordinance or Spanish Income Tax Ordinance, but there is an exemption (reduced tax) under any Taxation Treaty (Double Taxation Agreement, DTA), the income is taxed, if at all, but only according to the provisions of the Taxation Treaty (Double Taxation Agreement, DTA). [iii]
|Japan Tax Treaty Rate||Dividends||Interest||Royalties|
|For Spain||10% where the payee is a company holding directly at least 25% of the paying company’s voting stock for six months before the end of the distribution’s accounting period 15%||10%||10%|
[i] Seguridad Social – Ministerio de Empleo y Seguridad Social
[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.