If you are not resident in the UK and have income or gains in the UK
If you are not resident in the UK you may have to pay UK tax on any income or capital gains you have in the UK.
But you may also be charged tax on your worldwide income or gains, which will include the UK, in the country in which you are resident. That depends on the Double taxation agreements which aim to ensure that you pay tax on your income and gains once only.
Spain belongs to the countries that have a double taxation agreement with the UK.
Double taxation agreements usually operate in one of three ways:
• you pay tax in your country of residence and get an exemption or relief from tax in the country where you have made your income or gain
• you pay tax in the country where you have made your income or gain and get an exemption or relief from tax in the country where you are resident
• tax is deducted in the country where you make your income or gain and you declare this tax as already paid on your tax return for the country where you are resident – the tax already paid is known as ‘withholding tax’
The agreements work in the same way for residents of both countries involved, but which system is in place depends on the individual agreement between those two countries (and can depend on the type of income involved).
For example, where the relevant agreement allows UK residents to claim exemption or relief from Income Tax in Spain, Spanish residents can claim the same for their income in the UK.
This means also that the reliefed income has to be declared in the country of residence – Spain.
INCOME FROM INTERESTS
1. Interest arising in a Contracting State and beneficially owned by a resident of
the other Contracting State shall be taxable only in that other Contracting State.
Income from Capital Gains Tax and double taxation relief
Under many agreements, you will pay Capital Gains Tax in the country where you are resident and you will be exempt from Capital Gains Tax in the country where the gain is made.
6. Gains from the alienation of any property other than that referred to in
paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the
alienator is a resident.
Income from Employment and Pensions
Subject to the provisions of paragraph 2 of Article 18, pensions and other similar
remuneration paid to an individual who is a resident of a Contracting State, shall be
taxable only in that State.
EXEPTIONS – Pensions for services rendered to the State:
2. a) Notwithstanding the provisions of paragraph 1, pensions and other similar
remuneration paid by, or out of funds created by, a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be taxable only in that
2013 Spain-UK Double Taxation Convention