The US-Spain income tax treaty

By Brent Chudoba, editor Updated September 15, 2026

Under the US-Spain income tax treaty, the most the paying country can withhold from an ordinary investor is 15% on dividends, 0% on interest and 0% on royalties. Some recipients and some kinds of payment get a different rate, and the table below lists each one. Without a treaty, US-source dividends and royalties paid to a nonresident are withheld at 30%, while the tax code already exempts most portfolio and bank-deposit interest whether or not a treaty applies.

The treaty has generally applied since 1991, and IRS lists its most recent protocol as taking effect in 2019. It also decides residency when both countries claim you, and assigns who taxes pensions and Social Security. It does not generally stop the US taxing its own citizens.

What are the US-Spain treaty withholding rates?

US-Spain treaty withholding rates and who qualifies
Income	Rate cap	Who gets this rate, and where the treaty says so
Dividends	15%	Anyone not in a category below, including an ordinary individual investor (Article 10(2)(b))
Dividends	5%	a company that directly owns at least 10 percent of the voting stock of the company paying the dividends (Article 10(2)(a))
Dividends	0%	a company that has owned 80 percent or more of the voting stock of the payer, directly or through residents of either country, for the 12 months ending on the date entitlement to the dividend is determined, and that also passes one of the anti-abuse (limitation on benefits) tests listed in the article or gets a competent authority determination (Article 10(3))
Dividends	0%	a pension fund resident in the other country that is generally exempt from tax or taxed at zero, on dividends not earned from a trade or business carried on by the fund or through an associated enterprise (Article 10(4))
Interest	0%	Anyone not in a category below, including an ordinary individual investor (Article 11(1))
Interest	10%	a Spanish resident receiving US-source contingent interest of a type that does not qualify as portfolio interest under US law (applies only to interest arising in the US) (Article 11(2)(a))
Royalties	0%	Everyone, including an ordinary individual investor (Article 12(1))

The cap applies to income paid from one country to a resident of the other, and each treaty conditions it on that resident being the real recipient rather than a conduit; the article cited beside each rate is the one that sets the condition. Which document sets each rate today: dividends, 2013 Protocol Article IV, which replaced Article 10 in full; effective for dividends paid or credited on or after 2019-11-27 (Protocol Article XV(2)(a); date per IRS Table 3). Before that the 1990 text set 15 percent generally and 10 percent for a company holding 25 percent of the voting stock.; interest, 2013 Protocol Article V, which replaced Article 11 in full; effective for interest paid or credited on or after 2019-11-27. The 1990 text allowed source tax of up to 10 percent, with exemptions for government, long-term bank loans and equipment credit sales.; royalties, 2013 Protocol Article VI, which replaced Article 12 in full; effective for royalties paid or credited on or after 2019-11-27. The 1990 text had source rates of 5, 8 and 10 percent depending on what was licensed..

What else changes the rate?

These are edge cases. If you hold ordinary shares, bonds or a copyright, skip to the next section.

Dividends: The 5 percent rate never applies to dividends from a US RIC or REIT, a Spanish SOCIMI, or a Spanish collective investment institution (1990 Protocol paragraph 7 as replaced by 2013 Protocol Article XIV(2)). RIC dividends get 15 percent, or 0 for a qualifying pension fund. REIT dividends get those rates only if the owner is an individual or pension fund holding 10 percent or less of the REIT, or holds 5 percent or less of any class of a publicly traded REIT stock, or holds 10 percent or less of a diversified REIT; otherwise the treaty's 15 percent limit does not apply. SOCIMI dividends get 15 percent (or the pension fund exemption) only if the owner holds 10 percent or less of the SOCIMI's capital. The Memorandum of Understanding (paragraph 3(a)) lists US 401(a) and 401(k) trusts, 403(b) plans, IRAs, Roth IRAs and the Thrift Savings Fund among US pension funds. Separately, Article 17(6) caps source tax at 15 percent on dividends attributable to a low-taxed permanent establishment in a third country. The rates are symmetrical.

Interest: Asymmetric: the contingent interest rate and the REMIC rule apply only to interest arising in the United States. Interest that is an excess inclusion on a residual interest in a REMIC may be taxed by the US under its domestic law with no treaty limit (11(2)(b)). Article 17(6) caps source tax at 15 percent on interest attributable to a low-taxed permanent establishment in a third country.

Royalties: The 2013 definition in 12(2) no longer includes payments for the use of industrial, commercial or scientific equipment, which the 1990 text taxed at 8 percent. Article 17(6) caps source tax at 15 percent on royalties attributable to a low-taxed permanent establishment in a third country, unless the intangible was produced or developed by that permanent establishment. Symmetrical.

Which country are you a resident of under the US-Spain treaty?

If the US and Spain both treat you as a resident under their own laws, Article 4(2) decides. It works through these tests in order, and stops at the first one that points to a single country:

Where you have a permanent home available to you
If you have a permanent home in both countries, where your personal and economic ties are closer (your centre of vital interests)
If that centre cannot be determined, or you have no permanent home in either country, where you have a habitual abode
If you have a habitual abode in both countries or in neither, the country you are a national of
If you are a national of both countries or of neither, the two tax authorities settle it by mutual agreement

Using the tie-breaker to be treated as a resident of Spain has US consequences: you file Form 1040-NR with Form 8833 attached, and a green card holder of 8 of the last 15 years who makes the claim is treated as having ended US residency. The details are on the hub page.

How does the US-Spain treaty tax pensions and Social Security?

Pensions (Article 20(1)(a)). A private pension for past employment is taxable only in the country where the retiree lives, although the saving clause still lets the US tax its own citizens living in Spain; a pension for government service is generally taxable only by the paying government, unless the retiree is both a resident and a national of the other country (21(2)). Under 20(5), added in 2013, the country where a person lives may not tax the growth inside a pension fund based in the other country until money is paid out.

Social Security (Article 20(1)(b)). Social security benefits, including publicly run non-government pensions such as US Railroad Retirement (1990 Protocol paragraph 15), may be taxed by the paying country when paid to a resident of the other country or to a US citizen. That right is not exclusive, so the country where the recipient lives may tax them too and gives relief under Article 24, and the US keeps the right to tax its own citizens in any case.

Does the treaty stop the US taxing its own citizens?

Generally no. The saving clause (Article 1(3)) keeps that right. Each country may tax its own residents (as decided under Article 4) and its own citizens as if the treaty did not exist, and for this purpose the US counts a former citizen for 10 years if avoiding tax was one of the principal purposes of giving up citizenship (1990 Protocol paragraph 1).

The exceptions: Article 1(4)(a) keeps these benefits for everyone: correlative adjustments (9(2)), child support (20(4)), double tax relief (24), non-discrimination (25) and mutual agreement (26); Article 1(4)(b) keeps government service (21), student and trainee (22) and diplomat (28) benefits only for people who are neither citizens of the taxing country nor hold immigrant status there (in the US, a green card).

What does the treaty say about students?

Article 22. A visiting student, professional trainee or grant-funded student or researcher is exempt in the host country for up to five years on payments from abroad, the grant itself, and up to 5,000 US dollars a year of local earnings (22(1)); an employee of, or contractor for, a home-country business who visits to study or gain experience is exempt on up to 8,000 US dollars of earnings for 12 consecutive months (22(2)). Both caps count amounts already excluded under domestic law (1990 Protocol paragraph 16), and the host country need not give this relief to its own citizens or green card holders (1(4)(b)).

What do people most often get wrong about this treaty?

Most published Spain rates predate the 2013 Protocol, which took effect only for payments on or after 2019-11-27. It cut interest and royalties to 0 (from up to 10 percent), cut the corporate dividend rate to 5 percent at a 10 percent holding (from 10 percent at 25 percent) and added 0 percent for 80 percent parents and pension funds, while the individual dividend rate stayed at 15 percent. A US citizen or green card holder counts as a US resident under this treaty only with a substantial presence in the US, or if the permanent home, vital interests and habitual abode tests of 4(2)(a) and (b) would make them a US resident rather than a resident of another country (1990 Protocol paragraph 5(a), kept by the 2013 Protocol). IRS Table 1 (May 2023) agrees with the treaty text on the dividend, interest and royalty rates.

How do you claim the treaty rate?

Give the US payer Form W-8BEN naming Spain as your country of residence, before the payment. Many countries ask a US resident for Form 6166, a US residency certificate requested on Form 8802, before they apply the lower rate on their side. Both, with the fees and who can get them, are covered on US tax treaties by country.

Sources

Every rate and article on this page was read in the treaty text and its protocols, then checked a second time by a separate review of the same documents, on September 15, 2026.