From Business over Tapas:
Spain and United Kingdom have signed a new treaty to avoid double taxation between the two countries (From
the La Moncloa Government website, in English). 'When it comes into effect (within three months of its ratification), this treaty will replace the agreement signed in London on 21 October 1975 between Spain and the United Kingdom of Great Britain and Northern Ireland, to avoid double taxation and prevent personal income and wealth tax evasion. ("Official State Gazette" of 18 November 1976).
The new treaty updates the text of the former document, which had become out-of-date in certain regards due to the considerable period of time that has elapsed since it first came into effect.
This update has led to the text being adapted to both the requirements arising from current economic and trade relations between Spain and the United Kingdom, and the successive changes that have been made to the OECD's Model Agreement on double taxation. A response has thus been given to the main problems that the previous treaty was unable to resolve, including the treatment of residents not domiciled in the United Kingdom and trusts.
The new agreement means a considerable reduction of source-based taxation, establishing exclusive residence-based taxation for those dividends derived from majority shareholdings, as well as for interest payments and fees. Furthermore, it includes an arbitration clause for the resolution of any conflict that may arise from applying the new agreement.
Spain is thus moving forward in its commitment to renegotiate all those agreements that, due to the passing of time and the strong economic relations maintained with certain countries, need to be adapted to the new status quo