UK tax resident selling the shares of an Offshore: last chance to get benefit from the UK-Spain DTA
9 Oct. 2013
The resolution V2054-13 from General Directorate of Taxes of 18/06/2013 has ruled that the sale of shares on a Gibraltar Company, for which the sole asset was a real estate property in Spain, was not subject to Spanish Capital Gain Tax provided that the seller (shareholder) was tax resident in the UK.
According to art.13 of the 1975 DTA, any capital gain derived from the transfer of shares is exclusively subject to taxation in the Country of residence of the seller. The new DTA will shift the taxation to the country where the property is situated. Thus, the sale of the shares of the above mentioned Gibraltar Company will be subject to taxation in Spain as from the approval of the new DTA.
The seller is obliged to submit a Capital Gain Tax return in Spain providing all the details and applying for the exemption on Spanish tax liability providing a tax certificate issued by the UK HMRC according to the DTA.
If you are in the process of selling such shares and you find tax efficient to subject the taxation to UK legislation, you should take decisions before the new DTA comes into force.