Dividends and interest from foreign brokers in your Renta

A broker domiciled outside Spain is not a withholding agent for the Tax Agency. It does not apply the 19% withholding tax on account that a Spanish bank would apply when paying you a dividend, nor does it send Hacienda (the Spanish tax authority) the annual summary that feeds your tax data. The draft return may be empty in this regard and, even so, you are still obliged to declare it.

The fact that it does not appear does not mean that Hacienda does not know about it. Spain receives information on financial accounts opened abroad through automatic information exchange agreements between administrations, so the portfolio is usually identified even if the draft return does not include it.

There is a detail that surprises many small investors: the €1,600 annual limit that exempts you from filing only covers investment income and capital gains subject to withholding tax or payment on account. Those from a foreign broker are not, so they fall under the joint limit of €1,000 in the table of non-obligated taxpayers published by the Tax Agency. With a modest portfolio, you may be obliged to file the full return.

Everything that follows refers to someone who is a tax resident in Spain, normally because they spend more than 183 days a year here or have the centre of their economic interests here. Someone who is not a tax resident in Spain does not declare foreign-source dividends or interest here: they pay tax in their country of residence. This is the number 1 mistake made by readers who have just moved or left halfway through the year.

Dividends and interest are investment income and go to the savings base for their full amount. Full means what the company or issuer declared, not what entered your account: if the gross dividend was €100 and €15 was withheld at source, you declare 100 and then subtract those 15 through the deduction, which is explained below.

Sales of shares, holdings and ETFs generate a capital gain or loss, also in the savings base. The gain is the difference between the transfer value and the acquisition value: purchase commissions add to the cost and sale commissions subtract from the amount received. Administration and custody fees for securities do reduce investment income; discretionary portfolio management fees do not.

The rate is not unique, it rises in brackets with the total savings base for the year, adding what comes from the foreign broker and what comes from any Spanish bank.

The scale in the table is that of the common territory and does not change from one region to another: the savings scale is set by state law and is the same throughout that territory, including the Canary Islands, because common regime regions can only approve their own scale and deductions for the general base, not for the savings base. If your residence is in the Basque Country or Navarre, your Renta is not the state one: the savings scale and the double taxation deduction itself come from the regional regulations, which are their own regulations and not a bonus on the state one. In Ceuta and Melilla, the common tax also applies, without their own scale or deductions: what exists is a state deduction on the quota for those who reside there, of 60% of the part of the quota corresponding to the income obtained in those cities.

2 clarifications that avoid expensive mistakes. The 1st: if your broker automatically reinvests the dividend by buying more shares, the dividend is taxed the same, because you have received it even if you have not seen it in cash. The 2nd: the exemption for the first €1,500 of dividends no longer exists, it disappeared in 2015 and still circulates in forums and old answers.

The international double taxation deduction subtracts from your quota the lesser of 2 amounts: the tax you have actually paid abroad and the result of applying your effective average savings tax rate to the part of the base that was taxed abroad. It is calculated income by income and country by country, not with a global percentage.

There is a 2nd limit, the one that costs the most money: the tax paid abroad only counts up to the limit allowed by the double taxation agreement signed with that country. If the foreign payer withheld above that limit, that excess is not deducted in Spain. It is not necessarily lost, but it must be claimed from the tax administration of the country of origin with its own procedure and its own deadline.

The limits in the table come from the country brochures published by the Tax Agency for residents with foreign income. They should be taken as what they are, the general limit: the same agreement can set different percentages depending on the type of shareholder, and the Multilateral Convention (the so-called MLI) has modified clauses of many bilateral agreements, so the specific data of a case is checked against the text of the agreement in force with that country.

For interest, the result is usually better than people expect. With Germany and the United Kingdom, interest whose beneficiary is a resident in Spain can only be taxed in Spain, so there should be no withholding at source to claim. With France, the agreement allows taxation at source up to 10%.

If the country does not have an agreement with Spain, there is no conventional limit to apply: what is actually paid there is deducted with the limit of the Spanish effective average rate, and the rest is a cost.

Managora calculates this deduction and documents it with the broker's report and the withholding receipt, which is what Hacienda asks for if it reviews the return.

With US shares, the default withholding tax on dividends paid to a non-US person is 30%. The IRS W-8BEN form is the document with which you prove to the broker that you are not a tax resident in the United States and that you are entitled to the treaty rate, which for dividends has a general limit of 15%.

The form is signed before the broker, not before Hacienda, and it expires: it is valid for the year in which it is signed and the following 3 years, unless your details change earlier. An expired W-8BEN returns the withholding tax to 30% without warning and the investor only discovers it when looking at the payment details.

If you have already been over-withheld, Spain does not compensate you: the deduction stops at the treaty limit and the excess is claimed from the US tax authority. That is why you should check the form before the 1st dividend of the year and not after.

No. The transfer regime, which allows you to move from one fund to another without paying tax on the accumulated gain, excludes exchange-traded funds and exchange-traded index investment companies. Since 2022, this exclusion also applies to exchange-traded funds on foreign stock exchanges, which is exactly what is usually bought from a foreign broker. Selling an ETF to buy another is a sale and is taxed as such.

The fact that the ETF is accumulating changes nothing for you. Accumulation prevents the fund from distributing the dividend to you, but it does not defer your tax by your decision: the capital gain emerges entirely on the day you sell. If the ETF is distributing, each distribution is investment income for the year in which it is received.

There is a transitional exception for those who bought foreign exchange-traded funds or companies before 1 January 2022: you can maintain the deferral if you reinvest in non-listed institutions.

With non-listed funds bought directly from a foreign broker, the tax-free transfer also usually does not work in practice, because the regime is designed for holdings acquired through marketing entities registered in Spain. Before giving a transfer order trusting that it is not taxed, you should check it with the specific case.

When you have bought the same security on several dates, it is understood that you sell the oldest shares first. This is the rule known as FIFO and it is applied per homogeneous security, adding all your accounts and all your brokers, not account by account. 2 different portfolios with the same shares are calculated as 1.

Each transaction is converted to euros at the exchange rate of its date: the one at the time the dividend or interest is due and the one on the date of purchase and sale for gains. It is not valid to apply an annual average exchange rate to the whole year, nor to convert only the final balance of the account.

If you sell at a loss and repurchase the same listed security within the 2 months before or after the sale, that loss is not computed in that return. For unlisted securities, the period is 1 year. The loss does not disappear: it is parked until you definitively transfer the repurchased securities.

The losses that are computed are subtracted from the gains of the year. If there is a negative balance, you can offset it with the positive balance of the investment income (dividends and interest) with a limit of 25% of that balance, and whatever is left over is carried forward to the following 4 financial years.

Form 720 is informative and has no tax quota. It is mandatory when the block of securities, rights, insurance and income deposited abroad exceeds €50,000 as of 31 December. It is filed between 1 January and 31 March of the following year, with no possible extension. If you already filed it in the past, you only have to repeat it when the block rises by more than €20,000 compared to the last return or when you cease to be the owner of something you did declare.

Securities are declared at their value as of 31 December calculated with the Wealth Tax rules: for shares traded on an organised market, the average trading value of the 4th quarter or the quotation as of 31 December.

In the Wealth Tax, the resident is taxed on their worldwide wealth, so the foreign portfolio is included just like the local one. You are obliged to file form 714 if you have a quota to pay or if the gross value of your assets and rights exceeds €2,000,000. The general exempt minimum is €700,000, but each region sets its own and some subsidise almost the entire quota, so 2 identical portfolios pay different things depending on where their owner lives.

Form D-6 is no longer filed for a securities portfolio. The annual obligation for the small investor disappeared with Real Decreto 571/2023 on foreign investments and the order that developed it in 2024. Today you only have to declare to the Investment Register of the Ministry of Economy, Trade and Business when you reach 10% of the capital or votes of a foreign company or collective investment institution, when you have a branch abroad or when you buy real estate abroad above €300,000.

Managora reviews all 3 obligations at the same time and files the ones that apply to you: the Renta, form 720 and Wealth Tax if applicable. You can see the updated amount for each service on its page.