If you are an individual or company with fiscal ties to Spain and Russia, understanding the Spain–Russia Double Taxation Convention (DTC) is essential. This agreement defines which country has the right to tax various streams of income or capital, and helps prevent you from being taxed twice on the same income. Below, we break down the key provisions, how it works in practice, and what you must watch out for.
What Is the Spain–Russia Double Taxation Convention?
- The Convention is a bilateral treaty between the Kingdom of Spain and the Russian Federation aimed at avoiding double taxation and preventing tax evasion on income and capital.
- It covers taxes on income and capital levied in either State (or their subdivisions), regardless of how they are collected.
- It entered into force on June 13, 2000, and became effective for taxation purposes starting January 1, 2001.
- The treaty supersedes the former USSR–Spain treaty as between Spain and Russia.
Note: As of August 2023, Russia has suspended several Articles (5–22 and parts of the protocol) of the Convention. This may affect the enforceability of many provisions. Always check the latest legal status.
Key Terms & Definitions
- Resident: A person or entity subject to tax in a State due to domicile, residence, or similar criteria.
- Permanent Establishment (PE): A fixed business place through which an enterprise operates.
- Beneficial Owner: The true recipient of income such as dividends or royalties.
- Income and Capital Taxes Covered: Includes corporate tax, personal income tax, and capital tax in both Spain and Russia.
How the Convention Allocates Taxing Rights
| Type of Income | Spain’s Right to Tax | Russia’s Right to Tax | Mechanism to Avoid Double Taxation |
| Dividends | Yes | Yes (5% withholding) | Tax credit in Spain |
| Interest | Yes | Yes (5% withholding) | Tax credit in Spain |
| Royalties | Yes | Yes (5% withholding) | Tax credit in Spain |
| Capital Gains | Yes (on Spanish property) | Yes (under specific conditions) | Credit or exemption rules apply |
| Employment Income | Yes (if work done in Spain) | Yes (if work done in Russia) | Exemption or credit based on circumstances |
| Pensions / Gov. Service | Yes (for private pensions) | Yes (for state-paid pensions) | As per treaty rules |
| Other Income | Yes (if resident in Spain) | Possibly | Credit or exemption mechanism |
Methods for Eliminating Double Taxation
- Spain’s method: Tax credit for Russian tax paid, limited to Spanish tax on that income.
- Russia’s method: Tax credit for Spanish tax paid, subject to limits.
These credits prevent double taxation, though not always fully due to differences in tax bases.
Practical Risks, Limitations & Current Issues
- Russia’s suspension of key treaty articles (2023)
- Definition discrepancies between jurisdictions
- Anti-abuse rules impacting beneficial ownership claims
- Withholding tax thresholds requiring strict compliance
- Procedural burdens such as residence certificates
Who Can Benefit from This Convention?
- Individuals with cross-border income or investments
- Companies with operations in both countries
- Consultants, digital nomads, and professionals providing services abroad
Key Questions to Ask
- Is the relevant treaty article still enforceable?
- Am I considered a tax resident in one or both countries?
- Do I need official tax residency certificates?
- How does local law affect the treaty application?
How Lextax Can Help
Our international tax experts can help you: – Apply the DTC properly – Optimize foreign tax credits – Resolve dual residency conflicts – Structure your cross-border investments efficiently
Contact our team today for a personalized consultation on tax planning between Spain and Russia.