Event Description
On July 16, 2019 the U.S. Senate voted in favor of ratifying the new protocol amending the income tax treaty and existing protocol between the United States and Spain. The new protocol is accompanied by a memorandum of understanding (MOU) between the two countries. It makes substantial changes to the existing treaty, which entered into force in 1990, and is intended to bring it into closer conformity with the current income tax treaty policies of the respective countries. The new protocol was originally signed in 2013 and was transmitted to the Senate for its approval in 2014. Final approval of the new protocol had been delayed in the Senate since that time.
The new protocol includes a provision that is intended to provide relief to individuals who participate in a pension plan based in one country while working in the other country. Changes are also made to the treatment of cross-border investment income (interest, dividends, and capital gains), and there is a new exemption from source country tax on dividends paid to pension funds based in the other country.
