Barbados Spain Tax Treaty
The Barbados Spain Tax Treaty is designed to facilitate improved international business and trade relations between the two countries. This agreement is one of the more recent treaties that Barbados has entered into as the island continues to expand its tax treaty network. The network includes a large number of Spanish speaking countries located in the Americas, to which it has now added Spain in Europe.
Tax treaties allow businesses to have better access to the attractive low tax incentives offered by setting up an offshore company in Barbados coupled with the benefit of having access to the expansive Barbados tax treaty network to help them explore business opportunities further afield.
The Double Taxation Agreement
The Barbados Spain Double Taxation Agreement (DTA) came into full effect on October 14, 2011.
Double Taxation Agreements play a pivotal role in preventing double taxation between partner countries which ensures that the same profits are not subjected to unreasonable taxation by being taxed twice, once by each country, which would create an unfair burden on international businesses. DTAs allow partner countries to deduct the tax payable in one country from the taxes due in the other by awarding foreign tax credits.
In addition, the DTA outlines the maximum withholding taxes that can be charged by partner countries. The Barbados Spain Tax Treaty has set the withholding tax rates for dividends, interest and royalties at zero in most cases, creating a very attractive environment for business and investment between the two nations.
The DTA also facilitates tax information exchange between partner countries to help prevent tax evasion. Overall, this tax treaty plays a critical role in encouraging business development and investment, and improving trade relations between the two partner countries.
The Barbados Spain Tax Treaty applies withholding taxes as follows:
• Dividends: No withholding tax if the owner holds at least 25% of the capital of the company paying the dividends. In all other cases, the withholding tax shall not exceed 5%.
• Interest: No withholding tax.
• Royalties: No withholding tax.
Double taxation is avoided as follows:
• Tax payable in Spain on profits or income from sources within Spain shall be allowed as a credit against any Barbados tax computed in reference to the same profits or income.
• In the case of a dividend paid by a company that is a resident of Spain to a company that is a resident of Barbados, the credit shall take into account, the Spanish tax payable in respect of the profits out of which such dividend is paid.
• Where a resident of Spain derives income which may be taxed in Barbados, Spain shall allow as a deduction, an equal amount to the income and corporation tax paid in Barbados.
Barbados Tax Advantages
Barbados offshore companies pay low offshore tax rates from 2.5% down to 0.5% of income earned. There are no withholding taxes on dividends, interest payments, management fees and royalties paid. Capital gains are also exempt from taxation.
Barbados Offshore Company Types
There are a variety of Barbados offshore company types that can be registered including:
Learn More about Barbados Offshore Opportunities
The Barbados Offshore Advisor offers free assistance and advice if you would like to learn more about setting up a Barbados offshore company:
• The Advisor offers a free offshore evaluation to help determine company eligibility
• The Advisor provides management, accounting and administrative services to run your international business
With the right contacts and assistance, getting your Barbados international business running is a breeze.
The Right Treaty Network
Barbados’ expansive tax treaty network now includes over 30 countries that have Double Taxation Agreements in place with this leading Caribbean jurisdiction. These treaties represent a responsible approach to conducting international business by promoting transparency over secrecy. This approach landed Barbados on the Organization for Economic Co-operation and Development’s (OECD) “white list” of approved international business jurisdictions. Choosing a leading jurisdiction as your international business hub offers strong competitive advantages over other, less reliable jurisdictions.
The new Barbados Spain Tax Treaty has further strengthened the role of Barbados as an international hub for Spanish speaking businesses in Europe and in the Americas. The network allows members to use Barbados as an intermediary to access other important Spanish speaking economies and to improve their international business opportunities around the world.