The economic and investment relationship between Thailand and Spain has continued to grow steadily across the years, specially recently. Although historically the Spaniards and Spanish corporations have look for business opportunities and relocation to Latin America, H&P law firm in Thailand have been witness on the growth and strength of the relationships between Spain and Thailand. As H&P is a law firm that provides legal service in Spanish in Thailand, our Thai and Spanish lawyers in Bangkok have prepared a brief summary of the key aspects of the Double Taxation Agreement signed between Thailand and Spain.
The Double Taxation Avoidance Agreement (DTA) was established to:
Reduce double taxation burdens for taxpayers earning income in both countries.
Prevent and monitor tax evasion through the exchange of information between tax authorities.
This article prepared by our Thai Tax Lawyers and Spanish lawyers in Thailand highlights the key provisions concerning income tax, methods of tax relief, and anti-avoidance measures.
1- Types of Taxes Covered
Thailand: Personal income tax and corporate income tax.
Spain: Individual income tax and corporate income tax.
Covers income arising both in the country of source and in the country of residence of the taxpayer or investor.
2- Principles of Taxation for Different Types of Income
2.1-Income from Immovable Property
Tax may be levied in both the country where the property is located and the country of residence of the income recipient.
Example: rental income from land or buildings.
2.2-Business Profits
If a business has a Permanent Establishment (PE) in a country, that country may tax the profits attributable to the PE.
Profits not connected to the PE shall not be taxed in that country.
2.3-Employment Income / Directors’ Fees / Salaries
Income earned from employment in one country may be taxed in that country.
However, if the work period does not exceed 183 days in a tax year and the remuneration is paid by an employer not resident in that country, an exemption may apply.
2.4-Dividends
The country paying the dividends may impose tax, but the rate shall not exceed the limit specified in the treaty.
Typical rates: 10–15%, depending on the shareholding percentage.
2.5-Interest
The country paying the interest may impose tax not exceeding 15% of the amount of interest paid, depending on the type.
2.6-Royalties
The maximum tax rate is 15% of the royalty amount, depending on the nature of the right.
Royalties must relate to intellectual property such as patents, trademarks, or copyrights.
2.7-Capital Gains
The country where the property is located has the right to tax gains derived from the sale of such property.
The sale of shares in a company may be exempt under certain shareholding and company-type conditions.
3- Methods for the Elimination of Double Taxation
3.1-Credit Method
The tax paid in one country may be credited against the tax payable in the other country, with only the difference to be paid.
3.2Exemption Method
One country may exempt income from taxation if it has already been taxed in the other country.
4-Measures to Prevent Tax Evasion
Taxpayers must report information and evidence concerning income earned abroad.
Thailand and Spain may exchange tax and income information to verify and prevent tax evasion.
5-Conclusion
The Thailand–Spain DTA reduces double taxation burdens and builds confidence for cross-border investment.
It ensures that taxpayers pay tax only once or receive a tax credit for taxes already paid abroad.
Information exchange between tax authorities enhances transparency and prevents tax evasion.
For investors and cross-border workers, understanding this treaty is essential for effective tax planning.
How can H&P Help?
At Herrera and Partners (H&P), we take pride in providing legal and tax consulting services to help Spanish companies and Spanish private clients to comply with the law and maximize tax benefits. With both legal and accounting teams under one roof, we deliver comprehensive legal support in Spanish language in Thailand.
If you are interested to discuss with our international tax advisers and Spanish lawyers in Thailand, please send us an email to [email protected]
