New process for Spanish investors to enjoy tax benefits with Norm No. 11-22 of DGII

March 2, 2023

The General Tax Directorate (DGII), by means of General Norm No. 11-2022, established a new procedure for Spanish taxpayers to benefit from International Agreements to Avoid Double Taxation (CDT).

The benefits available to Spanish taxpayers include the following:

-Exemption from Income Tax (ISR) on capital gains arising from the sale of shares of a Dominican company (with exceptions).

-Limitation to 10% (and sometimes 0%) instead of 27%, for the withholding of income tax on payments to Spanish suppliers of services deemed to be of Dominican source.

-Exemption from the 10% withholding as a definitive payment of income tax when dividends are distributed, as long as the recipient shareholder is a Spanish legal entity that holds more than 75% of the distributing company.

Norm No. 11-22 is scheduled to enter into force on October 3, 2023. As of this date, the Spanish taxpayer who wants to enjoy the tax benefits under the Convention, will need to obtain a validation from the DGII certifying that he/she is in fact a Spanish tax resident, and that he/she does not hold permanent residence in the Dominican Republic.

If the DGII rejects the validation, the taxpayer may appeal for reconsideration and/or before the Superior Administrative Court, both within thirty (30) working days from its notification.