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Spain – Canada Double Taxation Treaty

Spain – Canada Double Taxation Treaty

Canadian investors interested in the business environment available in Spain are advised to invest on the Spanish market, as the country is one of the most important pillars of the European Union. The Spain-Canada double taxation treaty (DTA), was signed on 23rd of November 1976 in Ottawa, to designate the way in which the citizens and legal entities carrying various activities in the contracting states will be taxed for their income. The document was amended in 2014 and our team of Spanish company formation specialists can provide an in-depth presentation on the main provisions of the agreement

Income taxes under the Spain- Canada DTA 

In order to avoid the double taxation of entities who are residents of a state and who carry taxable activities in the other state, the Spanish and Canadian authorities have signed a treaty which is applicable to similar taxes available in both countries. 

In the case of Canada, the local authorities will impose only taxes which refer to the taxable income of individuals and legal entities. 

In the situation of Spain, the local authorities will impose the following taxes: 

  • the income tax on individuals;
  • the income tax applicable to legal entities;
  • the tax on rural and urban land;
  • the tax on earned income;
  • the income tax on capital;
  • the tax on business;
  • the tax on industrial activities;
  • the surface royalty –applicable to companies with activities in the field of hydrocarbons exploitation. 

Our team of Spanish company incorporation representatives can offer more details on the income taxes available in Spain

General definitions of the Spain- Canada DTA 

One of the main aspects related to taxation is that foreign companies, which have the main office in one of the contracting states of the DTA, will be taxed in that state. The rule is available for all types of companies, but it is important to know that the foreign company will be taxed in Spain if the business is carried here through a permanent establishment. If so, the company will be taxed only in respect to the income derived through its permanent establishment. 

Investors who need further information on the Spain-Canada DTA can address to our team of Spanish company incorporation representatives for assistance on the matter.