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El Salvador - Spain — Orbitax Withholding Tax Rates

Capital Gains

  • Best Rates0%
  • Domestic Rates 10%
  • Treaty Rates0%
  • EU Rates-

Domestic

Capital gains from the sale of shares in a private resident company by non-residents are taxed at a standard rate of 10%. Gains realized from the sale of shares or securities traded on the Salvadorian stock exchange are subject to withholding tax at a reduced rate of 3%. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Dividend

  • Best Rates0%
  • Domestic Rates 5%
  • Treaty Rates0%
  • EU Rates-

Domestic

Tax is withheld at the rate of 5% from gross dividends distributed to non-residents. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Treaty

0%:12%. The 0% rate requires a holding of at least 50%.

Interest

  • Best Rates10%
  • Domestic Rates 20%
  • Treaty Rates10%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% from Salvadorian-source interest, commission, fees and other financial expenses paid or credited to non-residents. A reduced withholding tax rate of 10% applies on interest paid to foreign financial institutions deemed to be such by the Central Bank of El Salvador. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Treaty

0%:10%. The 0% rate applies to interest paid by public bodies.

Royalty - Copyright

  • Best Rates10%
  • Domestic Rates 20%
  • Treaty Rates10%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% from Salvadorian-source royalties paid or credited to non-residents for the use of patents, formulae, trademarks, privileges or franchises. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Royalty - Patent

  • Best Rates10%
  • Domestic Rates 20%
  • Treaty Rates10%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% from Salvadorian-source royalties paid or credited to non-residents for the use of patents, formulae, trademarks, privileges or franchises. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Royalty - Trademark

  • Best Rates10%
  • Domestic Rates 20%
  • Treaty Rates10%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% from Salvadorian-source royalties paid or credited to non-residents for the use of patents, formulae, trademarks, privileges or franchises. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Sales

  • Best Rates0%
  • Domestic Rates 0%
  • Treaty Rates0%
  • EU Rates-

Service - Management

  • Best Rates0%
  • Domestic Rates 20%
  • Treaty Rates0%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% on payments made by an El Salvadorian resident for management services performed outside of El Salvador by a non-resident without an El Salvadorian permanent establishment. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Treaty

The treaty does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes). For a technical analysis of the issue of services Vs. royalties, ##HowToReadTreatyLink##. For a quick reference as to whether any of a selection of some 350 widely-used tax treaties specifically addresses technical service fees, ORBITAX has developed a proprietary Treaty Analysis allowing you to quickly and easily capture the most salient features of the relevant treaty. In order to access the Treaty Analysis of a particular bilateral tax treaty, select the pair of countries under the Treaties Tab.

Service - Technical

  • Best Rates10%
  • Domestic Rates 20%
  • Treaty Rates10%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% on payments made by an El Salvadorian resident for technical services performed outside of El Salvador by a non-resident without an El Salvadorian permanent establishment. The withholding tax rate is 25% if the recipient is domiciled in a territory listed as a tax haven (see Sec. 12.5. in El Salvador Analysis Chapter).

Treaty

The treaty does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes). For a technical analysis of the issue of services Vs. royalties, ##HowToReadTreatyLink##. For a quick reference as to whether any of a selection of some 350 widely-used tax treaties specifically addresses technical service fees, ORBITAX has developed a proprietary Treaty Analysis allowing you to quickly and easily capture the most salient features of the relevant treaty. In order to access the Treaty Analysis of a particular bilateral tax treaty, select the pair of countries under the Treaties Tab.

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