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The taxation analyzed up to this
point is that established in general terms under Spanish law for the diverse
types of income. If the taxpayer is resident in a country with which Spain has
signed a Convention to avoid double taxation, its terms will have to be complied
with as, in some cases, the taxation is lower and in others, the income, if
certain circumstances arise, may not be subject to taxation in Spain. In these
cases in which the income is not taxed in Spain, or is taxed at a lower tax
rate, the non resident taxpayer must, when presenting his tax return, justify
that he is resident in the country with which Spain has subscribed the
Convention, by means of the relevant certificate of residence issued by the Tax
Authorities of his country.
Types of
income.
As a general rule and,
notwithstanding the specific provisions of the different conventions, the
treatment given to the majority of the types of income is as follows:
- Corporate profit:
Corporate
profit may only be subject to taxation in the country of residence of the
taxpayer, except if obtained through a permanent establishment, in which case it
shall be taxed in Spain.
- Professional activities:
As in
the previous case, the Conventions attribute the powers of taxation upon this
income to the country in which the taxpayer resides, with the same exception of
that obtained by means of or through a fixed base, in which case they shall be
taxed in Spain.
- Artistic and sporting
activities:
As a general rule, income on performances in Spanish territory
are taxed in Spain, although there are specific provisions in the diverse
Conventions concerning such income.
- Yield from real estate:
The
Conventions subscribed by Spain attribute the power to tax the yield from real
estate it and State where it is located. Thus, the yield obtained from real
estate located in Spain is taxed under Spanish law.
- Dividends, interests and
canons:
The regime of shared taxation is implemented, between Spain and the
State where the taxpayer resides; thus, Spain is entitled to tax such yield,
although limited to the tax rate stated in the Convention (Addendum II).
- Income from work as an
employee:
Generally, the income obtained from employment in Spain is taxed by
the Spanish State, except if three circumstances arise jointly: that the non
resident does not remain in Spain more than 183 days during the tax year
concerned, that the remunerations are paid by a non resident employer and that
the remuneration is not borne by a permanent establishment or fixed base the
employer has in Spain.
- Directors:
The stakes, per
diems for attendance and other similar retributions that the taxpayer obtains
due to being a member of a Board of Directors of a company resident in Spain are
taxed by the Spanish State.
- Pensions:
Pensions, understood
as remuneration, which are due to employment previously held, are treated
differently depending on whether they are public or private. A public pension is
understood to be that received due to a previous public employment. That is to
say, that received for services rendered to a State, to one of its political
subdivisions or a local entity. A private pension is understood as any other
kind of pension received due to previous private employment, on the contrary to
what has been identified as a public pension.
- For private pensions, the majority
of the Conventions establish the rate of exclusive taxation by the State of
residence of the taxpayer.
- For public pensions, the right is
held by the state issuing these, not the State of residence, except in some
Conventions, in which, if one has the nationality of the State of Residence, the
power to tax shall be held by it.
- Students:
As a general rule,
the amounts received for maintenance expenses, studies and training are exempt,
if obtained from sources abroad.
- Property gains:
Except for
gains arising from disposal of real estate located in Spanish territory, which
is taxed in Spain, the power to tax is normally held by the State of
residence.
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