Spain withholding tax on dividends for non-residents 2026

How can foreigners gain their dividends?

For any non-resident investor receiving dividends from a Spanish company, Spain withholding tax on dividends for non-residents is a direct cost that can significantly affect net investment returns.

The rate that applies, and whether it can be reduced or eliminated, depends on the investor’s country of residence, the applicable double tax treaty, and the structure through which the Spanish company is held.

Since Brexit took effect on 1 January 2021, UK shareholders have lost access to the EU Parent-Subsidiary Directive, which previously allowed qualifying EU parent companies to receive Spanish dividends free of withholding tax.

Understanding the current framework and the treaty relief available under the Spain–UK Double Tax Treaty is therefore a priority for UK investors, fund managers, and business owners with Spanish shareholdings.

For context on how Spain withholding tax on dividends for non-residents fits within the broader Spanish tax landscape, our guide to the main taxes applicable in Spain provides a useful starting point.

The domestic withholding tax rates on dividends in Spain

Spain’s domestic withholding tax on dividends paid to non-residents is governed by the Non-Resident Income Tax Law (Real Decreto Legislativo 5/2004, Ley del IRNR) and administered by the AEAT.

The applicable rates under domestic law are as follows:

These domestic rates are overridden where a double tax treaty applies and provides a lower rate.

Spain withholding tax on dividends for non-residents at the domestic 24% rate, therefore represents the default exposure for UK shareholders who have not taken steps to claim treaty relief.

The Spain–UK Double Tax Treaty: reduced withholding rates

The Spain–UK Double Tax Treaty (in force 12 June 2014) provides reduced withholding tax rates on dividends paid from Spain to UK residents.

Under Article 10 of the treaty, the withholding rate is reduced as follows:

To benefit from treaty rates, the UK shareholder must provide the Spanish company with a certificate of tax residence issued by HMRC confirming UK tax residency in the relevant tax year.

A comprehensive overview of how the Spain–UK double taxation treaty applies across dividends, interest, royalties, and capital gains sets out the full scope of relief available under the agreement.

The impact of Brexit on Spain withholding tax on dividends for non-residents

The removal of the EU Parent-Subsidiary Directive for UK companies is the most significant practical change affecting Spain withholding tax on dividends for non-residents since 2021.

Before 1 January 2021, a UK parent company meeting the Directive’s conditions could receive dividends from a Spanish subsidiary with no Spanish withholding tax applied.

Since Brexit, UK companies are treated as third-country shareholders and must rely on the Spain–UK Double Tax Treaty, which provides for a 10% rate for qualifying corporate shareholders rather than 0%.

For groups with significant dividend flows from Spain to the UK, this change has a material impact on cash repatriation costs and group effective tax rates.

UK businesses with Spanish operations should review their corporate structure to assess whether restructuring through an EU holding company jurisdiction, such as the Netherlands or Luxembourg, would restore access to the Parent-Subsidiary Directive and reduce the withholding cost.

Our tax law and accounting team advises on the tax-efficient structuring of cross-border investments and the use of Spanish holding companies as part of international group structures.

Dividends from Spanish ETVEs: potential exemption from withholding

A specific exemption from Spain withholding tax on dividends for non-residents is available where the Spanish company is structured as an ETVE (Entidad de Tenencia de Valores Extranjeros), Spain’s holding company regime.

Under the ETVE regime, dividends paid to non-resident shareholders are exempt from Spanish withholding tax, provided the shareholder is not resident in a country that Spain classifies as a tax haven and the income distributed relates to exempt foreign-source dividends or capital gains derived from qualifying foreign subsidiaries.

For UK shareholders receiving dividends via a Spanish ETVE, the exemption may still be available post-Brexit, subject to confirmation that the UK is not treated as a harmful tax jurisdiction by Spain.

The conditions, benefits, and practical requirements of the ETVE holding company regime are explained in full in our dedicated guide to this structure.

How to claim treaty relief and recover excess withholding

There are two mechanisms for a UK shareholder to reduce the impact of Spain withholding tax on dividends for non-residents through the treaty rate:

• Exemption at source: the Spanish company withholds at the treaty rate rather than the domestic rate, provided the UK shareholder has supplied a valid HMRC residence certificate before the dividend is paid.
• Refund procedure: if withholding was applied at the domestic 24% rate, the UK shareholder can apply to the AEAT for a refund of the excess via Modelo 210, submitting the treaty claim with supporting documentation.

Refund applications via Modelo 210 must generally be filed within four years of the withholding event.

The AEAT has become more rigorous in reviewing treaty relief claims and may request additional documentation to establish beneficial ownership of the dividend income.

UK individuals receiving Spanish dividends

UK individuals who are tax residents in the UK and receive dividends from Spanish companies are entitled to the 15% treaty rate on those dividends.

The Spanish withholding tax suffered can generally be credited against the UK income tax liability on the same dividend income, subject to the credit limitation rules under UK domestic law and the Spain–UK treaty’s credit provisions.

UK individuals who have become tax residents in Spain are subject to Spanish IRPF on their worldwide income, including dividends from Spanish companies, and should take advice on their residence status and the implications for their overall tax position.

For investors who have relocated to Spain, the Beckham Law special tax regime may allow qualifying individuals to be taxed as non-residents for a period of up to six years, which directly affects the applicable rate of Spain withholding tax on dividends for non-residents and their overall IRPF exposure.

For a broader view of the corporate tax framework within which dividend distributions are made, our article on Spanish corporate income tax explains how company profits are taxed before they are available for distribution.

Holding structures and their effect on withholding tax

The choice of corporate structure significantly affects the quantum of Spain withholding tax on dividends for non-residents that applies to any given distribution.

UK groups considering how to hold their Spanish subsidiaries should evaluate the following structures in light of their withholding tax implications:

• Direct UK parent holding a Spanish SL: minimum 10% withholding under the Spain–UK treaty.
• EU intermediate holding company (Netherlands, Luxembourg, Ireland): access to the Parent-Subsidiary Directive and potential 0% withholding on the Spain-to-EU layer.
• Spanish ETVE holding foreign subsidiaries: potential 0% withholding on distributions to non-haven shareholders.
• Spanish holding company holding domestic subsidiaries: participation exemption on 95% of dividends received, then domestic or treaty withholding on outbound distribution.

The interaction between these structures and the ETVE regime is explored in depth in our guide to setting up a holding company in Spain, which covers both the IS and withholding tax dimensions of group structuring decisions.

Common mistakes

• Applying the 19% EU rate to UK shareholders post-Brexit, when the correct domestic rate is 24% before treaty reduction.
• Failing to obtain an HMRC residence certificate before paying the dividend results in withholding at the domestic rate and a subsequent refund claim.
• Overlooking beneficial ownership requirements, where the AEAT may deny treaty relief if the recipient is a conduit entity rather than the true beneficial owner.
• Assuming the ETVE exemption applies automatically without confirming that the conditions are met for the specific distribution.
• Missing the four-year deadline for Modelo 210 refund applications.
• Failing to review the corporate structure after Brexit to assess whether an EU intermediate holding company would reduce the withholding cost.

FAQs

What withholding rate applies to dividends paid to a UK company from a Spanish subsidiary?

Under the Spain–UK Double Tax Treaty, a UK company holding at least 10% of the Spanish subsidiary’s capital is entitled to a 10% withholding rate.

Without a valid treaty claim, the domestic rate of 24% applies, as the UK is treated as a non-EU/EEA jurisdiction post-Brexit.

Can a UK company still access the 0% Parent-Subsidiary Directive rate?

No.

The EU Parent-Subsidiary Directive ceased to apply to UK companies on 1 January 2021.

The minimum rate for qualifying UK corporate shareholders under Spain withholding tax on dividends for non-residents rules is now 10% under the Spain–UK treaty.

How does a UK shareholder claim the treaty rate in Spain?

The UK shareholder provides the Spanish company with a certificate of UK tax residence issued by HMRC.

The Spanish company then withholds at the treaty rate rather than the domestic rate.

If domestic withholding has already been applied, the shareholder can apply for a refund via Modelo 210 within four years.

Are dividends from a Spanish ETVE exempt from withholding tax for UK shareholders?

Potentially yes, subject to the ETVE conditions being met and the UK shareholder not being resident in a territory classified as a tax haven by Spain.

Each case requires specific analysis of the income being distributed and the ETVE’s qualifying foreign income.

What is Modelo 210 and when is it used for dividends?

Modelo 210 is the non-resident income tax return used to declare and pay IRNR on Spanish-source income received by non-residents, including dividends.

It is also used to apply for refunds of excess withholding tax where treaty relief was not applied at source.