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Qatar tax agreement with Spain

Qatar tax agreement with Spain. Agreement between Spain and Qatar for the Avoidance of Double Taxation. Once countries reach a considerable level of economic interaction, it is advisable to close double taxation agreements: this is exactly what Qatar and Spain began negotiating in 2015. The Middle Eastern nation has substantial investments across multiple sectors in Spain, from hospitality to new media. Likewise, many Spanish professionals and firms are relocating to Qatar, benefiting from its growing consumer market and its strategic location between East and West.

Double taxation agreements or treaties help foster mutual economic, cultural and diplomatic relations, as individuals and firms feel comfortable in setting up activities across borders. They help generate business confidence, as all actors are aware of the rules and make fewer mistakes when reporting their income to the relevant tax authorities. The final agreement, after negotiations, became active in February 2018. Its effects have already been notable in facilitating deals, expansions and exchanges between both countries.

What are the key elements underpinning this tax agreement between Spain and Qatar?

Understanding the tax agreement between Spain and Qatar

Double taxation agreements, as we have noted, are there to help both individuals and firms feel more confident about their initiatives across two countries. As a result, the taxes and duties affected by the agreement include the following:

  • Individual income tax on residents and non-residents, and the “Qatari Tax”.
  • Corporate tax.
  • Spanish municipal tax.

In reference to withholding rates, now dividends paid to a company in one of the countries holding a tenth of shares of the payer company, or which trades shares in one of the two stock markets, will have a 0% withholding tax rate. Rates on interests and royalties from intellectual property will be of 0%. Regarding corporate establishment, it will be considered constituted if a firm from Spain or Qatar conducts business in either country for more than half of the year.

What about capital gains? How will they be taxed? The agreement allows the following to be taxed by the other country, depending on the asset’s location. Gains include: sales of real estate, movable business properties, rights of use for real state in either State, and interest from sales of real estate holdings with more than 50% of the value in either State. However, if the sale is of any other kind of property or right, they will only be taxed by a single authority. There are also some exceptions to do with these taxes on gains; for example, residents from either Spain or Qatar who are conducting business in either nation exclusively seeking to take advantage of the treaty.

As you can see, there are many benefits to this double taxation treaty. However, to make the most of it, it is important to seek professional advice.

Making the most of the Spain-Qatar tax agreement

There is a growing constituency of individuals and firms affected by the treaty, and they should be aware that now is a good time to set their affairs in order. In practice, like other double taxation treaties, the agreement also includes closer collaboration and financial information exchange between Spain and Qatar; such as bank accounts. This is to apply the credit method and ensure that taxpayers are not paying additional tax; and to detect cases of fraud, of course. The agreement is also an admission on the side of Spain that Qatar is not a tax haven.

Del Canto Chambers, specialised in Tax & Legal Advisory, was one of the pioneers in Spanish-Qatari exchanges and has a long-standing presence in both nations. We can provide you advice on Corporate and Individual Taxes across our jurisdictions; we have offices in Doha and Madrid. If you are a Qatari seeking to enter the European market through Spain, or a Spanish firm seeking entry into a thriving market, you should review your plans with us. We will be happy to suggest a strategy that suits your needs.

By Del Canto Chambers

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