On Friday 25 March 2010 in Hong Kong an agreement to avoid double taxation and regulate the exchange of information between the Kingdom of Spain and the Special Administrative Region of Hong Kong was signed. Spain’s Council of Ministers have on 25 May approved the double taxation agreement and protocol with Hong Kong and will now submit the treaty to parliament.
The agreement, which follows the model implemented by the OECD, will regulate the taxation of dividends paid in either direction between Spain and Hong Kong, as well as the payment of interest and fees, among other things.
Furthermore, the agreement will include an article on the exchange of information under the terms established by the model agreement from the OECD. This article will enable an extensive exchange of highly-important tax-related information between the two tax authorities, which will include removing the option to refuse the exchange of information on grounds of banking secrecy.
The signing of this agreement strengthens the bilateral economic relations that exist between Spain and Hong Kong, removing barriers to reciprocal investment and increasing legal security for investors. Moreover, it represents an instrument for administrative cooperation of extreme importance in the fight against tax fraud.
Under this agreement, Hong Kong will lose its tax haven status in Spain from the moment it comes into force.