🇫🇷 France — 🇪🇸 Spain

Tax Treaty / Double Tax Avoidance Agreement detail

The France-Spain Convention for the Avoidance of Double Taxation was signed in Madrid on 10 October 1995 and entered into force on 1 July 1997, replacing the prior 1963 treaty. The 1995 treaty modernised withholding tax rates across all passive income categories: dividends are capped at 15% for portfolio holdings, with a full 0% exemption where the beneficial owner holds at least 10% of the distributing company's capital—going further than the EU Parent-Subsidiary Directive as it then stood. Interest is capped at 10%, with a 0% exemption for several categories including payments to credit institutions and state entities. Royalties are capped at 5%, while literary and artistic copyright royalties are exempt at source (0%), taxable only in the residence state. EU directives (Parent-Subsidiary Directive and the Interest and Royalties Directive) further reduce or eliminate withholding on qualifying intra-group flows between French and Spanish corporate residents, often making the treaty rates academic for large corporates. The treaty is highly relevant for the large French retiree community in Spain—estimated at over 200,000—covering pension sourcing rules, real property income, and the Spanish wealth and solidarity tax exposure that French residents in Spain commonly face. It equally governs the significant Spanish workforce in France, including cross-border worker provisions relevant to the Basque Country and the Catalonia-Roussillon frontier. Spain's special expatriate tax regime (the Beckham Law, now reformed with a 24% flat rate for qualifying inbound workers) can interact with treaty residence tie-breakers where an individual is treated as a Spanish tax resident under domestic law but claims treaty protection. France's exit tax (Article 167 bis CGI) applies on unrealised gains when French residents transfer their fiscal domicile to Spain, with instalment payment relief available under the treaty framework. Both France and Spain signed the OECD Multilateral Instrument (MLI); the MLI became effective for this treaty from 1 January 2020, introducing principal-purpose-test anti-avoidance provisions and an arbitration mechanism for unresolved mutual-agreement cases. Social security coordination is governed separately by EU Regulation 883/2004, which takes precedence over bilateral arrangements for EU nationals.