Spain-Singapore DTAA: Double Tax Avoidance Agreement

This article provides an overview of the Spain-Singapore Double Tax Treaty. It can provide useful guidance to individuals and companies who are doing business in both — Spain and Singapore — as they explore their options for minimizing their tax burden. The article describes the scope of the agreement, types of taxes covered by it, specific rules on taxation of different types of income, regulations for eliminating double taxation, and other salient features of the treaty.
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Spain-Singapore DTAA: Double Tax Avoidance Agreement

Spain-Singapore Relations

Singapore and Spain share robust and longstanding ties, underpinned by strong trade and flow of investment. They have come a long way since the establishment of diplomatic relations in 1968. Over the years, the countries have substantially deepened their bilateral linkages, with regular exchanges across political and economic spheres.

Today Singapore plays host to more than 200 large Spanish companies, one of the largest concentrations of Spanish businesses in the region. Spanish companies in Singapore are involved in key sectors such as info-comms and technology, energy and chemicals, as well as construction and infrastructure. They have lent their expertise and technological know-how to Singapore, and many have found success in partnering with local companies.

Spain, as a member of the European Union, shares with Singapore many international agreements such as the EU-Singapore Free Trade Agreement, EU-Singapore Investment Protection Agreement, EU-Singapore Partnership and Cooperation Agreement, etc. One of the agreements enhancing Spain-Singapore cooperation in the tax field is the Spain-Singapore Double Tax Treaty, which we will focus on in this article.

spain-singapore dta analysis

What is the Spain-Singapore Double Tax Treaty?

The Spain-Singapore Double Taxation Agreement (DTA) is an agreement between the two states designed to:

  • Protect the residents of both countries against double taxation where the same income may be considered taxable in both states
  • Provide certainty of treatment for cross-border trade and investment
  • Prevent excessive foreign taxation and other forms of discrimination against business interests abroad

Singapore’s DTA with Spain became effective on January 1, 2013. It was Singapore’s 69th DTA, concluded to encourage and facilitate cross-border trade and investment between Singapore and Spain by providing greater clarity on taxing rights and minimizing the scope of double taxation between the two nations. The DTA also includes the internationally agreed standard for the exchange of information for tax purposes upon request.

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Scope of the Spain-Singapore Tax Treaty

The scope of the Spain-Singapore DTAA covers the type of persons (individuals, companies) and the types of taxes to which the treaty applies as described below.

Who is covered?

The DTAA applies to residents of both contracting states, i.e. to legal entities and individuals who reside in Spain, or Singapore, or both countries.

Type of taxes covered

The DTAA covers all taxes on income levied by the relevant tax authorities. It clarifies that taxes on income include all taxes imposed on total income or on elements of income, including taxes on gains from selling movable or immovable property, taxes on total wages or salaries paid by enterprises, and taxes on capital appreciation.

In the case of Spain, the treaty applies to "Spanish tax," namely:

  • Income tax on individuals;
  • Corporation tax;
  • Income tax on non residents; and
  • Local taxes on income

For Singapore, the DTA applies to the "Singapore tax," namely:

  • Income tax

This agreement also applies to any taxes that may be imposed in addition to or in place of those that currently exist.

How is Tax Residency Defined Under the Spain-Singapore DTA?

Under the Spain-Singapore DTAA, individuals and corporate entities are considered residents for taxation purposes of one of the two contracting states, and taxes are charged only by the country of residence, not by the country that is the source of income.

What Taxes Will I Owe Under the Spain-Singapore Double Tax Avoidance Agreement?

The tax you owe will depend on the country where you have to pay the tax which further depends on the type of income involved. Taxes on various types of income are described in the following sections.

How Spain-Singapore DTAA Avoids Double Taxation?

The main goal of any DTA is to reduce the tax burden on individuals and companies by eliminating the possibility of being taxed twice on the same income. The basic instrument established by the DTA for this purpose is the foreign tax credit. It allows for a tax credit in the country of residence if the income was taxed in the source country.

The foreign tax credit is a tax break that offsets income tax paid to the other country. For example, if you paid S$1000 of Spanish taxes and you are liable to pay S$1500 on that same income in Singapore, your tax credit will be S$1000 and you will have to pay only S$500 in Singapore.

In Which Country Will the Income be Taxed?

The Spain-Singapore double taxation avoidance agreement specifically states where different types of income are subject to tax. Essentially, the place of taxation determines the rate of tax applicable to each type of income as follows:

Type of income or payment

Where it is taxed

Income from immovable property

Taxed in the state where the property is situated.

Business profits

Taxed in the state where a company is managed and controlled — typically, the country of the company's Board of Directors meetings.

Permanent Establishment profits

Taxed in the state where it carries on business activities, but only in the amount attributable to that PE.

Profits from shipping and air transport

Taxed in the state where a company is managed and controlled.


May be taxed in the state where the recipient resides and in the state where dividends arise.


May be taxed in the state where the recipient resides and in the state where interest arises.


May be taxed in the state where the recipient resides and in the state where royalties arise.

Capital gains

Taxed in the state where the seller is a resident.

Professional services

Taxed in the state where the person is a resident and in certain cases in the state where the work is performed.

Salaries and wages

Taxed in the worker’s state of residency and in certain cases in the state where the work is performed.

Directors’ fees

Taxed in the state where the company (paying the directors’ fees) resides.

Income of artists and sports persons

Taxed in the state where activities are performed.


Taxed in the state where the recipient resides.

Government payments

Taxed in the state that pays the remuneration.

Payments to students and trainees

Tax exempted.

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Today Spain is a strong economic partner to Singapore, with bilateral trade amounting to S$2 billion yearly. There are more than 200 large international Spanish companies in Singapore, and many of them use Singapore as a gateway to the ASEAN region.

A significant step forward in bilateral relations was made when the EU-Singapore FTA was signed. Another important legal instrument enhancing business relations between Spain and Singapore is a DTA that became effective in 2013.  Like every other DTA Singapore has entered into, its agreement with Spain contains information on how tax residency is established, with the purpose of avoiding a levy of similar taxes on taxpayers with activities in both countries.

You can find the full text of the Singapore-Spain DTA. If you are an investor from Spain who needs information about how the DTA can influence the way your income is taxed, or if you would like to incorporate a Singapore company, please contact us in Singapore.

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