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Double taxation

Double taxation occurs when two similar taxes are imposed on the same income.

It usually occurs when income is invested or earned in two different countries, and both have similar taxes.

The most common case of international double taxation occurs with dividends from foreign companies, in which the country of origin applies a withholding tax and so does the country of destination.

For example, if you invest in a U.S. stock that pays dividends, the U.S. will apply a withholding tax at source and the Spanish tax authorities will add theirs. This double withholding can be reclaimed when filing your income tax return thanks to international double taxation treaties.