Can I avoid double taxation if both Spain and Singapore tax my income?

Yes. The Singapore–Spain DTAA ensures that double taxation is avoided through one of the following mechanisms: (a)Exemption in one of the countries, or (b) Foreign tax credit in your country of residence, where you can offset tax paid in the source country against your domestic tax liability. Both Singapore and Spain offer tax relief to their residents through the foreign tax credit method under their respective laws. This helps ensure the same income is not taxed twice.

How does the DTAA determine who is a tax resident of Singapore or Spain?

The Spain-Singapore DTAA recognizes domestic tax residency first. If you are considered a resident of both Singapore and Spain, the treaty applies tie-breaker rules to assign residency to only one country for treaty purposes: Permanent home, Centre of vital interests (based on personal and economic ties), Habitual abode, Nationality, Mutual agreement between Singapore and Spain tax authorities if none of the above resolve the conflict.

How can I break Spanish tax residency while living in Singapore?

To break Spanish tax residency: (a)Spend fewer than 183 days in Spain per year, (b) Relocate your primary residence and employment to Singapore, (b)Sever significant economic ties with Spain, such as closing business interests, relocating family, or selling property.

Spain-Singapore DTAA: Tax Treaty Guide with Examples

The Singapore–Spain Double Taxation Avoidance Agreement (DTAA) is a bilateral tax treaty designed to prevent the same income from being taxed twice, once in Singapore and once in Spain. The treaty aims to foster cross-border trade, investment, and mobility of professionals by clarifying each country’s taxing rights and establishing tax relief mechanisms.

This guide is intended for:

Individuals who are residents of Singapore or Spain and derive income from the other country,
Businesses operating across both jurisdictions.

The comprehensive guide provides a clear breakdown of how different types of income such as dividends, interest, royalties, business profits, and employment income are treated under the treaty. It also explains common scenarios and includes real-world examples to help you understand the application of the DTAA.

Readers planning to establish a business presence in Singapore can refer to our detailed guide on how to register a Singapore company.

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This article covers the following topics of the Singapore-Spain DTAA:

Purpose & Scope of the Agreement
Key Terms
Tax on Business Profits
Tax on Dividends
Tax on Interest Income
Tax on Royalties
Tax on Personal Services
Tax on Director Fee
Elimination of Double Taxation

as well as

Frequently Asked Questions about the Spain–Singapore DTAA

Spain-Singapore DTAA: Purpose & Scope

The Singapore–Spain Double Taxation Avoidance Agreement exists to prevent the same income from being taxed twice, once in Singapore and again in Spain. It also provides a framework to allocate taxing rights between the two countries, minimizing tax obstacles for businesses and individuals engaged in cross-border activities. In addition, the agreement includes measures to combat tax evasion and ensure cooperation between the tax authorities of both countries.

Who Is Covered

The DTAA applies to “persons who are residents of one or both of the Contracting States.” In simpler terms, it covers:

Individuals who are tax residents of Singapore or Spain
Companies and other legal entities that are tax residents in either country

What Is Covered

The Singapore–Spain DTAA governs a wide range of income types, including but not limited to business profits, dividends, interest, royalties, employment income, consulting fees and professional services, director’s fees, and capital gains.

If you wish to learn more about the tax system of Singapore, you may refer to the following guides:

Spain-Singapore DTAA: Key Terms Defined

To understand how the DTAA operates, it’s important to clarify the key terms used in the agreement. These definitions are primarily based on Articles 3 to 5 of the treaty.

Person

A “person” includes an individual, a company, and any other body of persons. This broad definition ensures that both individuals and legal entities (such as partnerships or associations) are covered under the treaty.

Tax Resident

A “resident of a Contracting State” is any person who, under the laws of that country, is liable to tax based on domicile, residence, place of management, or another similar criterion. The term also includes government bodies and statutory authorities.

If an individual qualifies as a tax resident in both Singapore and Spain, the DTAA applies tie-breaker rules to determine residency based on:

Availability of a permanent home
Centre of vital interests (personal and economic relations)
Habitual abode
Nationality
Mutual agreement by the tax authorities if none of the above resolves the issue

For entities (e.g. companies), if they are tax residents in both countries, the deciding factor is place of effective management.

Permanent Establishment (PE)

A “permanent establishment” refers to a fixed place of business through which the business of an enterprise is wholly or partly carried on. This includes:

A place of management
A branch
An office
A factory
A workshop
A mine, oil or gas well, quarry, or other site of natural resource extraction
Construction or installation projects in the other country create a PE only if they last more than 12 months. A dependent agent who has and habitually exercises authority to conclude contracts on behalf of a company may also create a PE.

Activities of a preparatory or auxiliary character, such as storage or information gathering, generally do not constitute a PE.

Withholding Tax

This is a tax withheld at source from cross-border payments such as dividends, interest, or royalties. The DTAA limits the maximum withholding tax rates that can be applied by the source country to reduce the tax burden on the recipient and avoid double taxation.

To understand how withholding tax works in Singapore, including domestic rates and filing obligations, see our Singapore Withholding Tax guide.

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Spain–Singapore DTAA: Tax on Business Profits

How business profits are taxed under the treaty

Under Article 7 of the Singapore–Spain DTAA, business profits are taxable only in the country of residence, unless the enterprise carries on business in the other country through a permanent establishment. In such cases, only the profits attributable to that PE may be taxed by the other country.

The PE is treated as a separate and independent enterprise, and only its attributable profits can be taxed. Expenses directly related to the PE’s activity are deductible.

Here are four examples based on S$500,000 business profit:

Singapore company earning from Spain With No PE in Spain

Spain has no taxing rights under the DTAA.
The full S$500,000 is taxed only in Singapore under domestic corporate tax rules.
No tax is paid in Spain.
No double taxation arises.

Singapore company earning from Spain With PE in Spain

Spain may tax the S$500,000 attributable to the PE.
Assuming a 25% Spanish corporate tax rate, the tax payable is S$125,000.
Singapore also taxes the income but allows a foreign tax credit for tax paid in Spain.
Double taxation is relieved through credit in Singapore.

Spain company earning from Singapore With No PE in Singapore

Singapore has no taxing rights under the DTAA.
The full S$500,000 is taxed in Spain under its domestic law.
No tax is paid in Singapore.
No double taxation arises.

Spain company earning from Singapore With PE in Singapore

Singapore may tax the S$500,000 attributable to the PE.
At Singapore’s 17% corporate tax rate, the tax payable is S$85,000.
Spain taxes the global income but allows a foreign tax credit for the tax paid in Singapore.
Double taxation is eliminated via credit in Spain.

Spain–Singapore DTAA: Tax on Dividends

How dividends are taxed under the treaty

Under Article 10 of the Singapore–Spain DTAA, dividends may be taxed in the country where the recipient is a resident. However, the source country (where the paying company is located) may also impose withholding tax, subject to treaty limits.

The maximum withholding tax rates on dividends are:

0% if the beneficial owner is a company (not a partnership) that holds at least 10% of the capital in the paying company.
5% in all other cases.

These treaty rates apply only if the recipient is the beneficial owner of the dividend and there is no permanent establishment in the source country to which the shareholding is connected. If the shares are connected to a PE, then Article 7 (Business Profits) applies instead.

Let’s explore two practical scenarios using S$500,000 in dividends:

Dividends paid by a Singapore company to a Spanish resident

If the Spanish recipient company holds at least 10% of the Singapore company:

Withholding tax rate under DTAA: 0%
Tax in Singapore: 0% (Singapore does not impose withholding tax on dividends under domestic law)
Tax in Spain: Taxable under Spanish domestic rules

If the Spanish recipient does not meet the 10% threshold:

Withholding tax rate under DTAA: 5%
Tax in Singapore: Still 0%, as there is no dividend withholding tax in Singapore
Tax in Spain: Full amount taxed under local law

Note: Even though the DTAA allows Spain to tax dividends, Singapore does not impose any dividend withholding tax, making the effective rate 0% regardless of ownership level.

Dividends paid by a Spanish company to a Singapore resident

If the Singapore recipient is a company holding at least 10% of the Spanish company:

Withholding tax rate under DTAA: 0%
Spanish domestic rate (before treaty): up to 19%
Actual tax payable: Limited to 0% under DTAA if the conditions are met
Tax in Singapore: Exempt if foreign dividend qualifies under Singapore’s foreign-sourced income exemption rules

If the Singapore recipient does not meet the 10% ownership threshold:

Withholding tax rate under DTAA: 5%
Spanish domestic rate: up to 19%, but reduced to 5% under the treaty
Tax in Singapore: May be exempt under specific conditions or taxed with foreign tax credit allowed

Spain–Singapore DTAA: Tax on Capital Gains

How capital gains are taxed under the treaty

Under Article 13, the taxation of capital gains depends on the type of asset and the location of the property or business interest. The general rule is that gains are taxable only in the country of residence of the seller, unless the gains relate to immovable property or certain types of shares.

Here is how the treaty allocates taxing rights for different situations:

Gains from immovable property located in the other country: Taxable in that country.
Gains from movable property forming part of a PE: Taxable in the country where the PE is located.
Gains from ships or aircraft operated in international traffic: Taxable only in the country where the effective management is located.
Gains from shares or rights tied to immovable property in the other country: Taxable in that country.
Gains from the sale of shares that derive more than 50% of their value from immovable property in the other country: Taxable in that country, unless the shares are publicly traded or meet certain exemption thresholds.
All other gains: Taxable only in the country of residence of the seller.

Let’s illustrate two common scenarios with S$500,000 capital gain:

Sale of Spanish shares by a Singapore resident

If the shares do not derive more than 50% of their value from Spanish immovable property, the gain is taxable only in Singapore.
Singapore does not impose tax on capital gains, so no tax is payable.
If the shares derive more than 50% of their value from Spanish immovable property, Spain has taxing rights.
The tax may be avoided if the shares are publicly listed or the seller held less than 25% of a SOCIMI (Spanish REIT) over the last 24 months.
Singapore still does not tax the gain.

Sale of Singapore shares by a Spanish resident

The gain is taxable only in Spain.
Singapore does not tax capital gains under domestic law, so no tax is imposed in Singapore.
The full S$500,000 is subject to Spanish capital gains tax under local law.

Spain–Singapore DTAA: Tax on Interest Income

How interest income is taxed under the treaty

Under Article 11 of the Singapore–Spain DTAA, interest income may be taxed in the country where the recipient is a resident, but it may also be taxed in the source country. However, the treaty sets a maximum withholding tax rate of 5% in the source country if the recipient is the beneficial owner of the interest.

In some specific cases, interest is exempt from tax in the source country altogether, including when the interest is paid to:

A government, central bank, political subdivision, or statutory body
A pension fund that is tax-approved in its home country
An export credit agency
A financial institution lending to another financial institution
The Government of Singapore Investment Corporation (GIC)

The term “interest” includes income from debt-claims such as bonds, debentures, and government securities, but excludes late payment penalties.

Here are two examples using S$100,000 interest income:

Interest paid by a Singapore company to a Spanish resident

Spain has the taxing right as the recipient’s country of residence.
Singapore may impose withholding tax, but under its domestic law, interest paid to non-residents is usually subject to 15% withholding tax.
The DTAA reduces this to 5%, provided the Spanish resident is the beneficial owner.
Tax payable in Singapore: S$5,000
Spain may tax the interest under its domestic rules, but will allow a foreign tax credit for the S$5,000 paid in Singapore.
If the recipient is a Spanish pension fund or government entity, the interest may be fully exempt from Singapore tax under Article 11(3).

Interest paid by a Spanish company to a Singapore resident

Singapore has the taxing right as the country of residence.
Spain may also tax the interest at up to 5% withholding tax under the treaty.
Tax payable in Spain: S$5,000
If the interest is paid to the Government of Singapore or GIC, it may be exempt from Spanish tax.
Singapore may also tax the interest income, but will provide a foreign tax credit for the Spanish tax withheld.

Spain–Singapore DTAA: Tax on Royalties

How royalty income is taxed under the treaty

Under Article 12 of the Singapore–Spain DTAA, royalty income may be taxed in the recipient’s country of residence, but the source country may also impose tax. The treaty limits the maximum withholding tax rate to 5% of the gross royalty amount, provided the recipient is the beneficial owner.

The term “royalties” includes payments for:

The use of, or the right to use, any copyright (including books, films, software)
Patents, trademarks, designs, or models
Secret formulas or processes
Industrial, commercial, or scientific know-how or experience
Broadcasting rights (radio, TV, cinematographic works)

If the royalty is effectively connected to a permanent establishment in the source country, the income is taxed under Article 7 (Business Profits) instead.

Here are two examples using S$100,000 in royalty income:

Royalty paid by a Singapore company to a Spanish resident

Singapore imposes a domestic withholding tax of 10% on royalties paid to non-residents.
Under the DTAA, this is reduced to 5%, assuming the Spanish recipient is the beneficial owner.
Tax payable in Singapore: S$5,000
Spain may also tax the income under its domestic rules but must allow a foreign tax credit for the S$5,000 paid in Singapore.
If the royalty is linked to a Spanish resident’s PE in Singapore, the income is taxed under Article 7.

Royalty paid by a Spanish company to a Singapore resident

Spain's domestic withholding tax on royalties is higher, but the DTAA limits it to 5% for Singapore residents.
Tax payable in Spain: S$5,000
Singapore may tax the royalty, unless it qualifies for foreign-sourced income exemption. Otherwise, Singapore provides a foreign tax credit for the Spanish tax.

If the royalty is attributable to a Singapore PE in Spain, the income is taxed as business profits.

Spain–Singapore DTAA: Tax on Personal Services

How Independent Services are taxed under the treaty

According to Article 14 of the Singapore–Spain DTAA, income earned from independent personal services is generally taxable only in the country where the individual is a tax resident, unless certain conditions are met.

Independent personal services refer to professional services provided in a self-employed capacity. This includes professions such as lawyers, doctors, consultants, engineers, and architects.

The source country (where the services are performed) may also tax the income if either of the following applies:

The individual has a fixed base regularly available in the other country
The individual is physically present in the other country for more than 183 days in any 12-month period

Here are two examples using S$100,000 in service fees:

Services by a Singapore resident to a Spanish company

If the Singapore professional performs the work remotely from Singapore, and does not have a fixed base in Spain and does not spend more than 183 days in Spain, the income is taxable only in Singapore.
Singapore taxes the income under its personal income tax regime.
Spain has no taxing rights.
Double taxation does not arise.
If the professional either maintains a consulting office in Spain or spends more than 183 days there, Spain may tax the portion of income attributable to that activity.
Singapore will allow a foreign tax credit for the Spanish tax paid, provided all qualifying conditions are met.

Services by a Spanish resident to a Singapore company

If the Spanish consultant performs the services entirely from Spain, with no fixed base and no physical presence in Singapore, the income is taxable only in Spain.
Spain taxes the income under its domestic tax rules.
Singapore has no taxing rights.
Double taxation does not arise.
If the Spanish professional works in Singapore for more than 183 days or has a fixed base in Singapore, Singapore may tax the relevant income.
Spain will grant a foreign tax credit to avoid double taxation.

How Dependent Services are taxed under the treaty

According to Article 14 of the Singapore–Spain DTAA, salaries and wages earned from employment are taxable only in the country of residence, unless the employment is physically exercised in the other country. If the work is performed in the other country, that country may also tax the income.

However, there is an important exemption: if all of the following conditions are met, then only the country of residence may tax the income, even if the employment is exercised abroad.

The employee is present in the other country for no more than 183 days in any 12-month period
The employer is not a resident of the country where the work is performed
The salary is not paid by or borne by a permanent establishment or fixed base in that country

Let’s examine two examples using S$100,000 in employment income:

Spanish resident employed by a Singapore company and working in Singapore

If the Spanish employee relocates to Singapore and works there full-time, the income is taxable in Singapore, since the employment is exercised there.
Singapore taxes the full S$100,000 based on its individual income tax rates.
Spain may also tax the worldwide income of its resident but must provide a foreign tax credit for the tax paid in Singapore.
Double taxation is eliminated through credit relief in Spain.
If the Spanish employee visits Singapore for less than 183 days, is paid by a Spanish employer, and the salary is not borne by a permanent establishment in Singapore, then Singapore does not tax the income.
In that case, the income remains taxable only in Spain.

Singapore resident employed by a Spanish company and working in Spain

If the Singapore resident works in Spain and stays there for more than 183 days, or if the salary is paid by or borne by a Spanish permanent establishment, the income is taxable in Spain.
Singapore may also tax the foreign income if it is received in Singapore, but will allow a foreign tax credit for Spanish tax paid.
If the Singapore resident works in Spain for less than 183 days, is paid from Singapore, and the salary is not linked to a Spanish permanent establishment, then only Singapore taxes the income.

Spain–Singapore DTAA: Tax on Director Fee

How director fee is taxed under the treaty

Under Article 15 of the DTAA, director’s fees and other similar payments received by a resident of one country in their capacity as a member of the board of directors of a company that is a resident of the other country may be taxed in the country where the paying company is located.

This rule is an exception to the general rule for employment income. It reflects the principle that directorships create a governance and income connection with the country of the company’s incorporation, regardless of where the director resides or performs their duties.

Let’s illustrate two cases using S$100,000 director’s fee:

Fee paid by a Singapore company to a Spanish resident

Singapore has the primary taxing right.
The S$100,000 is taxed under Singapore’s domestic tax rules for non-resident directors.
Singapore imposes a withholding tax of 22%, unless reduced by a domestic exemption.
Tax payable in Singapore: S$22,000
Spain may also tax the income, but must allow a foreign tax credit for the tax paid in Singapore to avoid double taxation.

Fee paid by a Spanish company to a Singapore resident

Spain has the taxing right under the DTAA.
The S$100,000 (converted to euros) is taxed under Spanish domestic law.
Singapore may also tax the director’s income, depending on local rules for foreign-sourced income.
A foreign tax credit is available in Singapore if the income is taxed in both countries and does not qualify for full exemption.

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Frequently Asked Questions about Singapore-Spain DTAA

Yes. The Singapore–Spain DTAA ensures that double taxation is avoided through one of the following mechanisms:

Exemption in one of the countries, or
Foreign tax credit in your country of residence, where you can offset tax paid in the source country against your domestic tax liability.

Both Singapore and Spain offer tax relief to their residents through the foreign tax credit method under their respective laws. This helps ensure the same income is not taxed twice. The guide above explains which method applies in each type of income scenario.

The DTAA does not include a standalone article on transfer pricing. However, it provides a Mutual Agreement Procedure (MAP) under Article 23 and further supplemented by the Multilateral Instrument (MLI). This mechanism allows tax authorities in Singapore and Spain to consult and resolve disputes arising from transfer pricing adjustments.

Transfer pricing rules themselves are set out in each country’s domestic legislation. For example:

Singapore transfer pricing rules follow the arm’s length principle and require supporting documentation for related-party transactions. Penalties apply for non-compliance.
Spain has detailed rules and reporting obligations for intra-group transactions, including country-by-country reporting for large multinationals.

It depends on whether you are still considered a tax resident of Spain under Spanish domestic law. Citizenship alone does not determine tax residency.

If you are not a Spanish tax resident:

Spain taxes non-residents only on Spain-sourced income.
Your Singapore employment income is not taxed in Spain.
Singapore dividends and capital gains are not taxed in Spain unless they are from Spanish sources.
In this case, there is no Spanish tax on your Singapore income.

If you are still a Spanish tax resident:

Spain taxes residents on worldwide income.
Your Singapore employment income is taxable in both countries, but you may claim a foreign tax credit in Spain for tax paid in Singapore.
Singapore dividends may be taxable in Spain depending on local rules.
Capital gains may also be taxed in Spain, depending on the asset type.

To avoid Spanish tax on foreign income, you must cease to be a tax resident in Spain based on Spanish domestic criteria such as habitual abode, economic ties, and presence

The Spain-Singapore DTAA recognizes domestic tax residency first. If you are considered a resident of both Singapore and Spain, the treaty applies tie-breaker rules to assign residency to only one country for treaty purposes:

Permanent home
Centre of vital interests (based on personal and economic ties)
Habitual abode
Nationality
Mutual agreement between Singapore and Spain tax authorities if none of the above resolve the conflict

To stop being taxed by Spain on your global income, you must cease being a tax resident under Spanish domestic law. Spain generally considers a person tax resident if they:

Spend more than 183 days in Spain in a calendar year, or
Have their centre of economic interests located in Spain

To break Spanish tax residency:

Spend fewer than 183 days in Spain per year
Relocate your primary residence and employment to Singapore
Sever significant economic ties with Spain, such as closing business interests, relocating family, or selling property

Singapore does not require renouncing other residencies. You can qualify as a Singapore tax resident if you are physically present in Singapore for at least 183 days in a calendar year or meet IRAS criteria for tax residency.

This article is provided for general informational purposes only and does not constitute tax advice. You should consult with a qualified professional for advice tailored to your specific situation.

Author

Eddy Putra

Eddy has been in the corporate services industry for over 20 years. An experienced Chartered Accountant and alumnus of Deloitte Singapore, he has extensive expertise in corporate finance, tax, structuring, and regulatory compliance. Eddy specializes in advising global clients on business expansion and corporate migration to Singapore.

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