UK–Spain Double Taxation Treaty: What UK Expats and Investors Should Know in 2025

If you’re a UK citizen living in Spain or investing there, the UK–Spain Double Taxation Treaty (DTA) is your essential guide to avoiding double taxation and making the most of cross-border investments. Here’s how the treaty works in 2025-26 and what practical effects it has on your taxes.

How the UK–Spain Treaty Prevents Double Taxation

Since its inception, the UK–Spain DTA ensures that you’re not taxed twice on the same income. Here are its most important features:

• Income from Real Estate in the UK: If you’re a Spanish resident earning rental income from UK property, you pay tax in both countries—but you can claim a tax credit in Spain to avoid double taxation. 
• Dividends from UK Companies:
  • Subject to UK tax, but limited to a maximum of 10% or 15% depending on circumstances.
  • Any UK withholding can be credited against your Spanish tax liability.  
• Interest Income:
  • Taxed exclusively in Spain when received by a resident.  
• Capital Gains:
  • Real estate gains from UK properties can be taxed in both countries, with a credit available in Spain.
  • Gains from non-real estate assets such as shares are typically taxed only in Spain. 
    
    

Determining Tax Residency: Tie-Breaker Rules

When both the UK and Spain consider you a tax resident, the treaty applies a clear sequence of tests:

1. Permanent home availability
2. Centre of vital interests
3. Habitual abode
4. Nationality

These rules help avoid dual residency confusion and are especially relevant if you hold a Golden Visa or split time between Spain and the UK.  

Reporting to the UK: Claiming Foreign Tax Credits

To prevent being double-taxed, UK residents must submit SA106 forms to claim credits for Spanish taxes:

• Rental and dividend income taxed in Spain can be credited up to UK limits.
• For example, if you paid €20 of Spanish tax on dividends but the treaty limits UK tax to €15, only €15 is eligible as a tax credit.  
• Excess foreign tax may be recoverable directly from Spanish authorities—not claimable via UK tax returns.
  
  

Practical Scenarios for UK Expats and Investors

Final Thoughts

The UK–Spain Double Taxation Treaty is a powerful tool for expats and investors—but it requires strategic use. Whether you’re receiving pensions, managing investments, or earning income from rents or capital gains, you’ll benefit from understanding:

• Where your income is taxable
• How to apply for tax credits in the UK
• How to avoid dual residency pitfalls

Need expert help navigating cross-border tax? At Taxadora, we specialize in UK–Spain tax coordination, ensuring you pay only what you owe—and benefit from every available relief.

UK–Spain Tax Treaty: Frequently Asked Questions (2025)

1. What is the UK–Spain Double Taxation Treaty?

It’s a bilateral agreement that prevents individuals and companies from being taxed on the same income in both countries. It covers income from employment, pensions, dividends, interest, real estate, and capital gains.

2. Do I still have to file a UK tax return if I live in Spain?

Yes, if you’re still a UK tax resident or have UK income (e.g. rental income, pensions). You can claim Foreign Tax Credit Relief (SA106) for Spanish tax paid on the same income.

3. How do I avoid double taxation as a UK citizen in Spain?

The treaty allows you to:

• Pay tax in Spain (if you’re a Spanish resident),
• Claim credit in the UK for Spanish tax paid,
• Use the tie-breaker rules if both countries claim you as a resident.

4. What are the tie-breaker rules for tax residency?

If both countries treat you as a resident, tax residency is decided based on:

1. Where you have a permanent home,
2. Where your personal and economic interests are strongest,
3. Where you habitually live,
4. Your nationality, as a last resort.
   
   
5. Are UK pensions taxed in Spain or the UK?

• State and private pensions are generally taxed in Spain if you’re a resident.
• Government/public pensions (e.g. civil service) are usually taxed only in the UK, not in Spain.
  
  

6. What about rental income from UK property?

Rental income from the UK is taxed in the UK, but if you’re a tax resident in Spain, you must declare it there as well and can claim a tax credit for UK tax paid.

7. How are dividends from UK companies taxed in Spain?

• UK may withhold up to 10–15% tax on dividends.
• Spain also taxes dividends, but you can claim credit for UK tax paid under the treaty.
  
  

8. Do I pay capital gains tax in both countries?

• On UK property, yes—you pay CGT in the UK, and again in Spain if you’re a resident, but can claim a tax credit.
• On shares and other assets, Spain typically has taxing rights if you’re a resident.
  
  

9. What tax forms do I need to file in the UK?

• SA100 – Main self-assessment form
• SA106 – Foreign income and tax relief
• SA109 – Non-residency and domicile (if applicable)
  
  

10. How can Taxadora help me?

   We help UK expats and non-residents:

• Understand residency rules
• File Spanish returns correctly (IRPF, Modelo 210)
• Claim tax credits under the treaty
• Stay compliant with both HMRC and AEAT
  
  

📆 Summary Table: Where Income is Taxed