Convention between Italy and Spain against double taxation

In recent decades, in the European Union, the principle of freedom of establishment and the freedom to provide services has allowed the mobility of businesses and people as well as the increase in relations between people and capital within the EU.

All this undoubtedly also has repercussions on the issue of taxes to be paid on income produced and to which State taxes must be paid.

The problem of double taxation and the unfairness of the fact that the same person can be subject to tax on the same income at the same time in two different countries was considered.

In the absence of a detailed common European regulatory framework, it should be noted that Italy has nevertheless stipulated various agreements with individual European countries over the years to avoid double taxation.

One of these is Spain, a country that boasts numerous economic relations with Italy and in which the Italian community is truly numerous.

There are many Italians who have economic interests in Spain, who work there independently or as subordinates. There are equally numerous companies operating in both countries.

There are some rules to follow to avoid incurring double taxation or a long dispute with the Tax Authorities of Italy and Spain.

The regulatory framework of reference is given primarily by the Convention between Italy and Spain to avoid double taxation on income and to prevent tax evasion from Italy, signed in Rome on 8 September 1977 and ratified with law no. 663 of 29 September 1980.

This convention lays down fundamental principles regarding income taxes on both natural and legal persons, and in particular among the many areas covered, certainly the most relevant are those relating to real estate income, company profits, self-employed and employed work and to pensions.

In addition to the Rome Convention of 1977 which attributes tax authority to the country in which the natural person has residence and in which the corporate enterprise has its registered office, the multiple national laws must be considered, therefore a detailed analysis is necessary for each individual case to find the right solution.

As always, much is possible but nothing can be improvised.

Milano, June 19th 2020.

Avv. Giovanni Babino