Relief comes in two forms: exemption (the income is taxed in only one of the two countries) or credit (it is taxed in both, but one lets you deduct the tax paid in the other). Applying a treaty usually requires a certificate of tax residency issued by the relevant country.
In practice, the treaty decides who taxes first. For an autónomo's business income, the usual rule is that it is taxed in the country of residence unless you have a permanent establishment in the other one. For dividends or interest, the source country may withhold tax, but only up to the limit set by the treaty, and your country of residence lets you deduct that withholding.
A common example: an autónomo resident in Spain is paid by a foreign client who withholds tax at source. If the treaty does not allow that withholding, the route is to claim a refund in that country with your residency certificate; if it does, you recover it as an international double taxation credit in your Spanish income tax return. The typical mistake is writing the withholding off or not reporting that income in Spain.
It is linked to tax residency, the tax residency certificate and the IRNR, and to the tie-breaker rules when two countries consider you resident. In your books, taxes withheld abroad should be recorded so you can support them later.
Guides that use this term
- Renting out a property in Spain as a non-resident: what you pay and when you declare it
- Modelo 210: the Spanish non-resident tax, explained in full
- Are you a Spanish tax resident? The 183-day rule, and the other two almost nobody looks at
- Selling a property in Spain as a non-resident: the 3% withholding, the capital gain and the plusvalía municipal
Related terms
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