After being stalled for a number of years by an objection raised by Senator Rand Paul, on July 16 the U.S. Senate issued the Resolution of advice and consent to ratification of the Protocol amending the tax treaty between Spain and the U.S., which brings a substantial improvement to the current tax treaty.

A key amendment is that following its entry into force it will be possible to distribute dividends, pay interest and royalties, or obtain capital gains on the sale of shares without taxation in the source country, whether Spain or the U.S., subject to certain requirements.

The protocol will enter into force three months after the “exchange of letters” between the U.S. and Spain occurs, to notify each other that the necessary domestic formalities have been completed. In relation to the taxes withheld at source or deducted in relation to a specific taxable event (e.g. withholding taxes on dividends, interest and royalties or tax on capital gains) the new protocol will take effect in practice from the date of its entry into force; in all other cases, the effects of the protocol will take place for taxable periods beginning on or after the date it enters into force.

As a result of being passed at this time of year, it may be expected to come into force at the end of 2019 or beginning of 2020.