Note

Canada-Spain tax treaty and Spanish property

§ 1The documents

The Department of Finance Canada publishes the tax treaties Canada has. For Spain, the convention was signed in Ottawa in 1976, and a protocol amending it was signed on 18 November 2014. The department’s notice states that the protocol enters into force on 12 December 2015. The notice refers to the protocol for its effect dates, which we did not read. This page belongs to the chapter in Canadian buyers explained.

§ 2What treaties do

Treaties between states divide the right to tax and require relief from double taxation. For income from real property, they commonly allow the state where the property lies to tax. For example, the Netherlands-Spain convention that we read lets income and gains from immovable property be taxed where the property is. We have not read the articles of the Canada-Spain convention, so we do not state its detail. Read them, or ask your adviser to point to the articles on income from immovable property, capital gains and relief from double taxation.

§ 3What treaties do not do

They do not remove filing duties, and they do not set the rate of Spanish tax, which comes from Spanish law. The costs section explains the Spanish returns of a non-resident owner and the rate, which is higher for non-EU residents. A Canadian resident files in Canada too, and claims relief for Spanish tax paid.

§ 4Residence

If both countries treat you as resident, the treaty normally contains tie-breaker tests. The tax residency chapter in the residency section explains the Spanish tests and the idea of tie-breakers. A Canadian who spends long periods in Spain should look at both countries’ rules and at the treaty.

§ 5Using the treaty

Collect the facts: your residence, the income, the Spanish tax paid and the Canadian rules that apply. Ask your adviser to apply the articles and give you the result in numbers. Keep proof of Spanish tax paid, since claims for relief need it.

§ 6Stays and tax

The days you spend in Spain matter for both tax residence and immigration. More on the short-stay limit for Canadians explains the stay limit, and the two questions need separate answers.

§ 7Questions for your adviser

Ask which articles of the convention and the protocol cover rental income, a sale and any pension or other income you also have. Ask how Canada gives relief for Spanish tax and which forms record it. Ask what to do if the Spanish tax is paid after the Canadian return is due.

§ 8A caution

Treaties are technical. Use this page as a map of the issue and take advice on your case.

§ 9Where to check

Official pages change, so confirm the point that matters to you on the source before you act, and keep a dated copy of what you read. Where a page here says we did not read a text, ask your adviser to read it for you.

Legal note. How the process works in general. It is not legal advice, and it never replaces an independent Spanish lawyer acting for you.