Mexico–Spain vs Colombia–Spain vs Argentina–Spain: Which Saves You More Money?

Cristina Schuttmann
2 days ago
4 min read

Every LATAM country has a different treaty with Spain. Knowing the differences can save you €10K–€40K annually. Here I explain the specific advantages of each with real examples.

THE SPAIN–LATAM TAX TREATY MAP

Spain has 104 tax treaties to avoid double taxation. The most relevant for LATAM real estate investors are:

Quick comparison:

🇲🇽 Mexico → 0% double taxation on rental income, 5% withholding on dividends, partial capital gains exemption, inheritance protocol.
🇨🇴 Colombia → Full tax credit on real estate income, 0–5% on dividends, capital gains taxed in source country, no inheritance treaty.
🇦🇷 Argentina → 13% tax on rental income (vs 24% standard), 10% on dividends, capital gains exempt after 5 years, limited inheritance coverage.
🇨🇱 Chile → Rental income only taxed in Spain, 15% withholding on dividends, capital gains taxed in country of residence, no inheritance treaty.
🇧🇷 Brazil → Credit method, 15% on dividends, capital gains always taxed in Spain, no inheritance treaty.

🇲🇽 Mexico–Spain Treaty: The Most Favorable

Signed: 1994, updated 2020
Includes additional protocol for inheritance & donations
Main advantage: Avoids total double taxation

Rental income: Taxed only in Spain (24% non-resident or 25% corporate tax). Deductible under Spanish rules. In Mexico: full exemption if taxed in Spain.

Case – Madrid villa €850K: Annual rent: €42,000

Without treaty: €10,080 Spain + €12,600 Mexico = €22,680
With treaty: €10,080 Spain + €0 Mexico = €10,080 = Annual savings: €12,600 (56%)

Dividends: 5% withholding in Spain (vs 19% general). In Mexico: credit for Spanish withholding. Effective: 5% vs 19% + 30% Mexico.

Capital gains: Mexican residents → exemption if reinvested within 2 years. Non-residents → standard Spanish taxation. Planning tip: change tax residency before selling.

Inheritance & gifts: Taxed in country of residence of the deceased. Exception: real estate taxed where located. Credit for foreign tax paid. Planning: strategic residency for heirs.

🇨🇴 Colombia–Spain Treaty: Credit Method

Signed: 2008, updated 2015
Main advantage: Full tax credit mechanism

Rental income: Spain: 24% non-resident / 25% corporate. Colombia: taxed normally but credit for Spanish tax paid. Result: no effective double taxation.

💡 Case – Barcelona apartment €600K: Annual rent: €30,000

Spain: €7,200 tax
Colombia: €10,800 – €7,200 credit = €3,600 Effective total: €10,800 (36% vs 63% without treaty)

Optimization:

Spanish SL company → 25% vs 24% non-resident tax
Depreciation: 3% deductible annually
Interest: 100% deductible . Effective burden: 18–22% with structure vs 36% as individual

Capital gains: General rule: taxed in country where asset is located. Exception: Colombian residents under 2 years may be taxed in Colombia. Planning: adjust tax residency timing.

🇦🇷 Argentina–Spain Treaty: Reduced Rates

Signed: 2013, effective 2019
Advantage: Lower specific rates

Rental income: 13% in Spain (vs 24% general). In Argentina: exemption if fully taxed in Spain. Direct saving: 11 points.

💡 Case – Madrid portfolio €1M: Annual rent: €50,000

Without treaty: €12,000 (Spain) + €19,500 (Argentina) = €31,500
With treaty: €6,500 (Spain) + €0 (Argentina) = €6,500 . Annual savings: €25,000 (79%)

Dividends: 10% Spanish withholding (vs 19%). Argentina: credit method. Effective 10–15% vs up to 58% combined.

Capital gains: Exemption if asset held >5 years and reinvested in Spain or Argentina. Planning: use holding structure for multiple assets.

🇺🇸 U.S.–Spain Treaty: FATCA Complexity

Signed: 1990, updated 2013
Special feature: FATCA compliance obligations
Main advantage: Avoids double state/federal taxation

Rental income: Spain: 24% standard non-resident. U.S.: normal rental treatment with credit for Spanish tax. Obligations: FBAR + Form 8938.

💡 Case – Florida investor, Valencia €750K: Annual rent: €36,000

Spain: €8,640 (24%)
U.S. federal: €0 (full credit)
State: €0 (Florida has no state income tax) . Effective total: €8,640 (24%)

How to Choose the Optimal Strategy

Decision Matrix:

🇲🇽 Mexican: Best → Keep Mexican residency + Spanish SL + Golden Visa → 50–65% savings
🇨🇴 Colombian: Best → Consider moving residency to Spain + SOCIMI for large portfolios → 40–55% savings
🇦🇷 Argentine: Best → Keep Argentine residency + 5-year holding plan → 65–79% savings
🇺🇸 U.S. investor: Best → Choose no-income-tax state + Spanish LLC → 35–45% savings

Common Pitfalls in Applying Treaties

Misdefining tax residency → loss of treaty benefits
Poor timing of transactions (e.g. selling before changing residency) → €20K–€50K extra capital gains
Using wrong legal structure (individual instead of company) → €10K–€30K annual over-taxation