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INCOME OBTAINED THROUGH A PERMANENT ESTABLISHMENT
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Taxation of non residents in Spain
varies considerably according to the existence or not of a permanent
establishment in Spanish territory, so its concept has a special transcendence.
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A |
Definition of permanent
establishment |
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An individual or firm is
considered to operate by means of a permanent establishment when it has the
following in Spain: |
- Management offices.
- Branches.
- Offices.
- Factories.
- Workshops.
- Warehouses, shops or other
establishments.
- Mines.
- Oil or gas
wells.
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- Quarries.
- The agricultural, forestry, stock
farming or any other operations, or place of prospecting or extraction of
natural resources.
- Building works, installations or
assemblies lasting more than twelve months.
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| Definitively, when the non
resident has facilities or places of work in Spain, of any kind, by any means,
in a continued or habitual manner, where all or part of his activity is
performed, or when acting in Spain through an authorised agent authorised to
enter into contracts in name and on behalf of the non resident person or firm,
as long as such powers are normally used, the non resident will be considered to
act in Spain through a permanent establishment.
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B |
Tax Base, type
of encumbrance, deductions, tax period, accrual and complementary
taxation. |
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Non
residents who obtain revenue through a permanent establishment in Spain shall be
taxed on all the revenue that may be imputed to that establishment, whatever the
source from which it is obtained.
Taxable
base
The taxable base of the permanent
establishment is determined according to the provisions of the general regime of
the Company Tax Act and the tax losses regime is applicable (ten years), with
the following features:
- Applications of the linking rules
for transactions between the permanent establishment and parent firm, or with
another permanent of the same parent firm.
- No deduction, in general terms, of
the payments the permanent establishment makes to the main firm of fees,
interest, commissions, technical assistance services and for use or cession of
goods or rights.
- Deduction of part of the
management and general administration expenses imputed by the main firm to the
permanent establishment, as long as these are recorded in the accounting records
of the permanent establishment and imputed in a continued, rational manner. In
order to determine these expenses, it is foreseen that the tax payers may submit
proposals to the Tax Authorities to evaluate the part of the management and
general administration expenses that may be deducted.
Taxation
rate
In general terms 35 %
Research and operation activity for
hydrocarbons 40 %
Deductions
The permanent establishments may
apply the following deductions and rebates to their full quota, on the same
terms as payers of Company Tax:
- Deduction to avoid internal double
taxation.
- Rebate on the yield obtained in
Ceuta and Melilla.
- Rebate on yield obtained from film
and book export activities.
- Deduction for performance of
research and development activities.
- Deduction for activities by export
companies.
- Deduction for investment in goods
of cultural interest, cinematographic productions, publication of books and
environmental investments.
- Deduction for vocational training
expenses.
- Deduction for job creation.
Tax period and
accrual
The tax period coincides with the
financial year declared, without this being able to exceed twelve months. The
tax is accrued on the last day of the tax period.
The permanent establishments are
obliged to fulfil the same obligations of an accounting, registry or formal
nature as required of resident firms.
Complementary taxation
When the permanent establishments
of non resident firms (not natural persons) transfer revenue abroad, they shall
be required to pay complementary taxation of 25 per 100 of the amounts
drafted.
However, this tax shall not be
applicable, in terms of reciprocity, to permanent establishments which have
their tax residence in another State of the E.U.
The complementary tax must be
declared on form 210 within the term of one month from the date of drafting the
revenue abroad.
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C |
Retention,
revenue to account and payment
by instalment. Tax
return.
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Retention,
revenue to account and payment by instalment.
The permanent establishments are
subject to the same regime of retention as firms subject to Company Tax, on the
revenue they receive. The permanent establishments are also obliged to make
payments to account of the tax, on the same terms as firms subject to Company
Tax. The formal obligations related to payments by
instalment are:
Term:
The first 20 calendar days of April, October
and December.
Place for
presentation:
If
identification labels are available, at any collaborating entity in the province
of the fiscal domicile of the tax payer, or at the collaborating firm that
provides the till service at the Inland Revenue Agency Delegation or
Administrative Office assigned to the tax domicile of the permanent
establishment.
If identification labels are not
available, or if more than a month has elapsed from expiry of term to present
the tax return, at the entity which provides the till service located in the
Inland Revenue Agency Delegation or Administrative Office assigned to the tax
domicile of the permanent establishment.
Form:
Form 202, in pesetas and euros.
When no deposit is to be made for
payment by instalment, it will not be obligatory to present form 202.
Tax
return
The permanent establishments must
present the tax return on the same forms and within the same terms as the
resident companies subject to Company Tax.
Term:
In the 25 calendar days following the six
months after conclusion of the tax period.
Place of presentation:
The place of presentation coincides with
that indicated in relation to instalment payments.
Forms:
200, 201, in pesetas and euros, in both
cases.
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