—The U.S. Department of the Treasury announced today that U.S. Ambassador to Spain Alan D. Solomont and Spanish Minister of Finance and Public Administration Cristobal Montoro signed a new Protocol to the income tax treaty between the United States and Spain.
In a ceremony held at the Spanish Ministry of Finance in Madrid today, the two officials signed a new Protocol intended to bring the existing tax treaty, concluded in 1990, into closer conformity with the current tax treaty policies of both the United States and Spain. Significantly, the new Protocol provides for exclusive residence-country taxation of interest, royalties, certain direct dividends and capital gains. In addition, consistent with a number of recent U.S. tax treaties, the new Protocol provides for resolution through mandatory binding arbitration of certain cases that the revenue authorities of the United States and Spain have been unable to resolve after a reasonable period of time.
The new Protocol contains a comprehensive limitation on benefits provision that is intended to ensure that only residents of the United States and Spain will enjoy the benefits of the treaty. The new Protocol also provides for the full exchange of information between the competent authorities to facilitate the administration of each country’s tax laws.
The final version of the unsigned treaty document is posted here.