SPAIN and USA have inked a protocol modifying the existing agreement aimed at avoiding double taxation. The protocol provides for improvements in the treatment of dividends, interests, royalties, and capital gains. It also provides for improvements as regards tax information exchange. The signed protocol reinforces legal certainty for companies and places the framework of the agreement with the US on a par with similar treaties negotiated with Spain's preferred partners in Europe.

It provides for exclusive residence-country taxation of interest, royalties, certain direct dividends and capital gains. In addition, consistent with a number of recent US tax treaties, the new protocol provides for resolution through mandatory binding arbitration of certain cases that the revenue authorities of the United States and Spain have been unable to resolve after a reasonable period of time. The new protocol contains a comprehensive limitation on benefits provision that is intended to ensure that only residents of the United States and Spain will enjoy the benefits of the treaty. It will also provide for the full exchange of information between the competent authorities to facilitate the administration of each country's tax laws.