What Is a Double Tax Treaty?
A Double Taxation Agreement (DTA) is a bilateral agreement between two countries that aims to prevent income from being taxed twice—once in the country where it’s earned and again in the country of residence.
Spain has signed a Double Taxation Agreement with Cape Verde to facilitate economic cooperation and protect taxpayers from unfair tax burdens.
🤝 Benefits of the Spain–Cape Verde Double Tax Treaty
✅ Avoidance of Double Taxation
If you’re a resident of Cape Verde with income from Spain (or vice versa), the treaty determines which country has taxing rights and allows for tax credits or exemptions to avoid being taxed twice.
🏦 Lower Withholding Tax Rates
The treaty typically reduces withholding tax rates on:
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Dividends
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Interest
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Royalties
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Technical service fees
Exact rates depend on the nature of the income and the residency status of the recipient.
📄 Tax Certainty
The treaty outlines clear rules on:
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Tax residency
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Permanent establishment
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Income from employment, pensions, property, and more
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Procedures for dispute resolution and exchange of information
This provides legal certainty for investors and workers in both countries.
📌 Key Treaty Provisions (Overview)
| Type of Income | Taxation Rule |
|---|---|
| 💰 Dividends | Taxed in both countries but typically subject to a reduced rate (e.g., 5–15%) |
| 💸 Interest | Often subject to a reduced rate (commonly 5–10%) |
| 📀 Royalties | Usually taxed in the country of residence with capped source tax |
| 👷♂️ Employment Income | Taxed where the work is performed unless specific exemptions apply |
| 🏠 Real Estate Income | Taxed in the country where the property is located |
Exact percentages depend on the final signed protocol and its application by the Spanish and Cape Verdean tax authorities.
📍 Who Should Care About This Treaty?
This treaty is particularly relevant for:
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📈 Investors with income or assets in both countries
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👨💼 Expats living in Spain or Cape Verde
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🏢 Businesses with cross-border operations
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🧾 Freelancers and consultants providing services internationally
🛡️ How We Help
Our international tax lawyers can help you:
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🧮 Interpret the Spain–Cape Verde treaty based on your residency
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📑 Structure your income to benefit from reduced tax rates
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✅ File tax returns and claim treaty benefits
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🔁 Navigate tax audits or disputes involving cross-border income
📞 Avoid Double Taxation — Stay Compliant
If you earn income in both Spain and Cape Verde, the tax treaty can protect you from overpaying taxes. But navigating these rules without legal help can be risky.
🎯 Need personalized guidance?
💼 Our international tax advisors are here to help.