Protocolo que modifica el Convenio para evitar la doble imposición entre EEUU y España


Finally, and after several years, the United States has ratified the Protocol amending the Treaty for the avoidance of double taxation signed with Spain.

In general terms, the new Protocol considerably reduces taxation in the source country, incorporates measures to prevent tax evasion and expands coordination between the authorities of both States. Some of the main changes are detailed below:

  • Permanent Establishment and Branch: The concept of permanent establishment is modified in the case of a building site or construction or installation project or an installation or drilling rig or ship used for the exploration of natural resources. Previously a duration of 6 months was required, and with the new Protocol, the duration is extended to 12 months.
    In relation to branches, the complementary tax (i.e. “branch tax”) on distributed profits is reduced to 5% (from the current 10%).


  • Dividends: Under the old Protocol, taxation on dividends was generally limited to 15%, unless there was a substantial holding of at least 25%, in which case the withholding was limited to 10%.
    Under the new Protocol, taxation on dividends will continue to be limited, as a general rule, to 15% (this is maintained), unless there is a substantial holding of at least 10%, in which case the withholding will be limited to 5%. In addition, where the shareholder has an interest of at least 80% during the preceding 12 months, the dividends will be exempt (i.e. they will no longer be subject to taxation in the source country).
    In addition, specific rules are introduced for dividends distributed by REITs and Spanish Collective Investment Vehicles.


  • Interest: Under the new Protocol, taxation on interests (currently limited to 10%) is eliminated. The new Protocol removes the previous 10% limit and, consequently, interest will not be subject to taxation in the source country.
  • Royalties: The new Protocol eliminates the taxation on royalties, which under the old Protocol taxation was limited to 5%, 8% or 10%.


  • Capital gains: Under the old Protocol, capital gains from the transfer of a substantial holding (i.e. a holding of at least 25% with a minimum holding period of 12 months prior to disposal) could be taxed in the source country.
    The new Protocol removes this reference. Therefore, capital gains arising from the transfer of shares and other interests will be exempt from taxation. This will not apply however when transferring shares in entities with real estate underlying, in which case the source country may tax the capital gain.


  • Limitation on Benefits: The Limitation on Benefits clause is reformulated to define who may benefit from the application of the Treaty, by introducing the concept of “qualified person”. The main goal of this provision is to avoid treaty abuse (“treaty shopping”).


  • Mutual Agreement Procedure: The possibility of resorting to arbitration is introduced as a mechanism for resolving conflicts in cases of double taxation. This will make it possible, among other things, to speed up procedures and reach a resolution in less time.


  • Information exchange and financial assistance: The new Protocol expands and improves the exchange of information and administrative assistance between both countries.


  • Entry into force: The Protocol will enter into force on November 27th 2019. The provisions relating to (i) withholding shall take effect from the date on which the Protocol enters into force; (ii) taxes calculated by reference to a fiscal year shall take effect for fiscal years beginning on the date on which the Protocol enters into force; and (iii) the remaining cases shall take effect from the date on which the Protocol enters into force.


This content has been developed by the Bové Montero y Asociados´ Tax team. We will be happy to asist you if you have any questions. Contact us here!