New double taxation treaty

 

Earlier this year Germany and Spain signed a new Double Taxation Treaty. As soon as it comes into effet, the treaty will replace the previous Double Tax Treaty of 1966. A major change is the reduction of withholding tax on dividends from 10 % to 5 % in case the beneficial owner is a company which holds directly at least 10 % of the capital of the company paying the dividends. The WHT on interest and royalties is reduced to nil. Furthermore, the treaty introduces an extended exchange of information clause developed by the OECD in order to eliminate harmful tax competition.