How do I report foreign income?

You hold shares of Apple, Allianz or TotalEnergies in your portfolio. Every time you collect a dividend, the country where the company is listed withholds a portion, sometimes 15%, sometimes 26%, sometimes 30%, before the money reaches your account. Afterward, Spain asks you to declare that dividend and pay between 19% and 30% on it, depending on the rest of your savings income.

The result, if not managed correctly, is that you end up paying taxes twice on the same income. And the most frustrating part: in many cases part of that double taxation is avoidable or recoverable, but the mechanisms are not automatic, you have to activate them.

In this article we look at how much of that double taxation you can recover in Spain, what to do about the excess in the country of origin, what changes if you are taxed under the Beckham Law, and what documentation you need to keep from day one.

Why you end up paying twice for the same dividend

When a foreign company distributes dividends to a shareholder resident in Spain, two tax systems are triggered simultaneously. The country where the company is domiciled, the source country, applies a withholding tax on the gross dividend before paying it out. And Spain requires that same dividend to be declared as investment income and included in the savings tax base of the personal income tax (IRPF).

Without any corrective mechanism, the taxpayer would pay taxes in two countries on the same income. To avoid this, two instruments exist: double taxation treaties (DTTs), which limit the maximum rate the source country can withhold, and the international double taxation deduction under Article 80 of the Personal Income Tax Law, which allows you to subtract from the Spanish tax bill what was paid abroad.

The problem is that these mechanisms are not applied automatically. They require knowing about them, activating them at the right time, and documenting them properly.

How much you’ll actually pay in Spain on that dividend

Dividends, whether domestic or foreign, are taxed as investment income within the savings tax base. As of January 1, 2025 (Law 7/2024), the scale has five brackets and the top rate rose from 28% to 30%:

The gross dividend is declared in box 0029, “Investment income to be included in the savings tax base,” of Form 100. The withholding tax borne abroad is entered separately, in box 0588, corresponding to the international double taxation deduction. The Tax Agency automatically applies the treaty limit to that figure and calculates the deduction.

Note if you use a foreign broker: Spanish brokers automatically apply the 19% domestic withholding when they pay out the dividend. If you operate through a non-Spanish broker (common on international platforms), that domestic withholding is not applied at the time of collection: the full amount reaches your account and you are the one who must self-assess that Spanish portion in your income tax return, not just the deduction for what was withheld abroad.

If you’re taxed under the Beckham Law, this guide may not apply the same way to you

Everything above assumes you file as an ordinary tax resident, subject to general IRPF on your worldwide income. But if you’re under the special regime of Article 93 LIRPF (Beckham Law), you’re taxed under the rules of the Non-Resident Income Tax: only income from Spanish sources is taxed.

Practical consequence: dividends, interest, and capital gains from foreign sources are generally not taxed in Spain for as long as the regime lasts, regardless of the country of origin. They are not declared on Form 150 and do not give rise to the Article 80 deduction, because that deduction corrects a double taxation that, for this income, does not actually occur on the Spanish side.

That doesn’t mean the problem disappears entirely: the country where the company is listed still withholds tax at source, and that withholding no longer has anything to offset in Spain, so it’s worth checking case by case whether the relevant treaty still allows the reduced rate, since the prevailing doctrine holds that someone under the Beckham regime retains Spanish tax residency for treaty purposes.

If your situation changes (the regime ending after six years, leaving Spain, or no longer meeting the requirements), you go back to being taxed as an ordinary resident and the rules in this article apply to you again from that tax year onward. It’s worth planning for that transition before it arrives, not after.

What each country withholds before you see a single euro

The withholding rate at source varies depending on each country’s domestic rules and the double taxation treaty in force with Spain. The following table lists the most common cases for Spanish investors:

What the Tax Agency gives back, and what it doesn’t

Article 80 of the Personal Income Tax Law establishes the international double taxation deduction. It allows you to subtract from the gross Spanish tax liability the lesser of these two amounts:

→ The amount actually paid abroad for a tax of a nature similar to the IRPF.

→ The result of applying the effective average tax rate of the savings tax base to the income obtained abroad.

In practice, for foreign dividends covered by a treaty, this means Spain gives you back, via a reduction in your tax liability, up to the limit set by the treaty, which in most cases is 15%. The excess over that limit is not recovered in Spain: you have to claim it directly from the tax authority of the country of origin.

Common mistake: declaring the net dividend (after the foreign withholding has already been deducted) instead of the gross amount. The result is that you don’t apply the deduction correctly and end up overpaying in Spain.

Without a double taxation treaty, the calculation changes

When the source country of the dividend has no treaty in force with Spain, there’s no 15% reference limit and the source country can apply its full domestic withholding rate. Even so, the Article 80 LIRPF deduction still applies: you recover the lesser of these two amounts.

→ What was actually paid abroad on that dividend.

→ The result of applying your effective average savings tax rate to that same income.

In other words, if the foreign rate is higher than your average Spanish rate, you only recover up to the amount you would have owed in Spain; the rest becomes a permanent cost. That’s why, for portfolios with recurring dividends, it’s worth assessing exposure to countries without a treaty before building the position, not after collecting the first dividend.

A real case: a €1,000 German dividend, step by step

An investor resident in Spain receives €1,000 gross in dividends from a German company. Germany applies its domestic rate of 26.375% and withholds €263.75. The investor receives €736.25 net into their account.

Conclusion: if the investor declares correctly in Spain and claims the excess in Germany, the effective tax rate is 19%, exactly the same as if the dividend came from a Spanish company. The problem is that without active management, they end up paying the 26.375% German withholding plus 19% in Spain, a combined tax rate of 45%.

Recovering the excess outside Spain: is it worth it?

When the withholding at source exceeds the treaty limit, the excess can’t be recovered in Spain, you have to claim it directly from the tax authority of the source country. Before starting the process, it’s worth doing a quick calculation, because it doesn’t always pay off:

→ Recoverable amount: with small portfolios and low withholdings, the amount to be recovered may not be worth the time spent managing the claim.

→ Resolution time: ranges from several months (Germany) to more than a year (US without a W-8BEN), so the money stays tied up in the meantime.

→ Cost of the process: some countries charge a fee or require apostilled documents; in Switzerland, for example, the cost can come close to the amount recovered for small portfolios.

→ Recurrence: if the dividend repeats every year, the initial setup (residency certificate, registration with the foreign tax authority) pays for itself quickly in subsequent years.

With that in mind, here’s the specific process in the countries where our clients operate most:

United States: Form W-8BEN

This is the most common case among Spanish investors. The US domestic withholding rate is 30%, but the Spain-US treaty limits it to 15% for minority shareholders. The preventive solution is to sign Form W-8BEN with your broker before receiving dividends: this form certifies that you’re a resident of a treaty country, and the withholding is applied directly at 15% with no need to make a claim afterward. If you haven’t signed it and 30% was withheld, the 15% excess can only be recovered from the IRS via Form 1040-NR, a complex process that can take more than a year.

Germany: claim before the Bundeszentralamt für Steuern

The excess over the treaty’s 15% is claimed from the German federal tax authority (BZSt) using the corresponding refund form, which requires a Spanish tax residency certificate issued by the AEAT and documentation of the dividends received. The typical resolution time is 6 to 18 months.

France: claim before the DGFIP

France applies a 30% domestic rate, but the treaty limits it to 15%. The claim for the excess is filed with the Direction Générale des Finances Publiques using Form RF1-FR. It likewise requires a Spanish tax residency certificate. The process can take up to 2 years in some cases.

Switzerland: Form DA-1

Switzerland applies a 35% withholding on dividends, well above the treaty’s 15%. The 20% excess is recoverable, but the process is more complex: you have to file Form DA-1 with the Eidgenössische Steuerverwaltung (ESTV). This is one of the countries where the cost of recovery can come close to the amount recovered for small portfolios, so it’s worth evaluating whether the claim is cost-effective.

The folder that saves you headaches: essential documentation

Both to apply the deduction on your Spanish tax return and to claim the excess abroad, it’s essential to keep:

→ A statement from your broker or financial institution detailing the gross dividend, the withholding applied, the country of origin, and the collection date.

→ A withholding-at-source certificate issued by the source country (in some countries the broker issues it; in others you have to request it separately).

→ A Spanish tax residency certificate issued by the AEAT, needed for claims filed with foreign tax authorities. It can be requested online through the AEAT’s electronic office.

→ Country-specific forms (W-8BEN for the US, DA-1 for Switzerland, etc.) duly completed.

→ Proof of tax payment in the country of origin, in cases where the foreign tax authority requires it to process the refund.

A good practice is to keep an annual record of all foreign dividends received, organized by country, with the gross amount, the withholding applied, and the corresponding treaty rate. This makes both filing your tax return and any future claim for excess withholding much easier.

Did you file incorrectly in previous years? You can still fix it

If in previous years you declared foreign dividends without applying the double taxation deduction, or without claiming the excess from the foreign tax authority, you’re still within the four-year statute of limitations to correct it.

In Spain, a request to amend an IRPF self-assessment in order to apply a deduction that wasn’t included at the time can be made within four years of the end of the filing period for that return. For claims filed with foreign tax authorities, the deadline is set by each country: four years in Germany, two in France, three in the US.

For portfolios with recurring dividends from the same countries, reviewing the last four tax years can lead to significant refunds, especially in cases of high withholding rates such as Switzerland, France, or the US without a W-8BEN.

Frequently asked questions about foreign dividends

How are foreign dividends declared on the Spanish tax return?

The gross dividend (before the foreign withholding) is declared in box 0029 for investment income, and the withholding borne outside Spain is entered in box 0588 for the international double taxation deduction. The Tax Agency automatically applies the treaty limit, typically 15%.

Can you recover all of the foreign withholding in Spain?

Only up to the limit set by the double taxation treaty with that country, in most cases 15%. If more was withheld (for example 30% in the US without a W-8BEN), the excess has to be claimed directly from the foreign tax authority, not on the Spanish tax return.

What happens if the country has no double taxation treaty with Spain?

The Article 80 LIRPF deduction still applies, but it’s limited to the lesser of what was paid abroad and what would be owed in Spain on that same income. If the foreign rate is higher, the difference isn’t recovered.

What is Form W-8BEN and when does it need to be filed?

It’s the form that certifies to the US tax authorities that you’re a tax resident of Spain, which triggers the reduced treaty rate (15%) instead of the 30% US domestic rate. It’s signed with your broker before collecting dividends; if it isn’t signed in time, the excess can only be recovered afterward from the IRS.

Are foreign dividends taxed the same way under the Beckham Law?

No. Under the special regime of Article 93 LIRPF, only income from Spanish sources is taxed, so foreign dividends generally aren’t declared or taxed in Spain for as long as the regime lasts. The withholding at source still applies, and it’s worth checking case by case whether the treaty allows the reduced rate.

Until when can I claim foreign dividends from previous years?

In Spain, the deadline to amend self-assessments in order to apply a deduction not included at the time is four years from the end of the filing period for that return. For foreign tax authorities, the deadline varies by country (for example, four years in Germany, two in France, three in the US).