I have dual citizenship (Spain and US
). I've been a US citizen, have lived in the US, and have paid taxes
in US for over 20 years. About 15 years ago, my grandfather passed away in Spain. He left a business, a hotel, that subsequently was divided into 9 unequal parts. My siblings and I now have 50% ownership (I have 10%). Since this is not an LLD, but a "sociedad de comuneros", which is a legal entity that is formed when an inheritance
is distributed to heirs, and those heirs do not agree to forming a conventional business society (corporation) per se. Since I'm a legal resident of the US, the Spanish government
withholds 25% of the earnings proceeding from the hotel business. Although there's a treaty between the US and Spain to avoid double taxation
, my accountants here say that the US government only recognizes 15% of those taxes paid, and therefore, I've been paying an additional 10% here in the US.
To make matters simple in this example, if I received $10000 in earnings in Spain , I have a $2500 withholding
in Spain. Per my accountant here, only $1500 are recognized by the IRS
, and I still have to pay an additional $1000 in taxes. That seems to me as a true case of double taxation. The accountant in Spain states
that if what the accoutants here are saying made sense, the Spanish government would be perceiving no earnings on a business in that country, since 83% of the total hotel ownership is from non-residents. They contend that I should ask the US government for relief under the article 26 of the agreement (conflicts about double taxation).
Can you give me an answer on this? I know it's not a simple question :)