Guide to business in Spain Guía de negocios en España

INVEST IN SPAIN

10. Appendix


APPENDIX I

Table 18

TABLE SUMMARIZING THE TAX TREATMENT GIVEN TO THE VARIOUS WAYS OF INVESTING IN SPAIN

Ways of investing in Spain

Tax treatment

Incorporation of a subsidiary Corporation S.A. / Limited liability company S.L.

General corporate income tax rules pursuant to the Corporate Income Tax Law (See Chapter 3, section 2.1 for more detailed information).

Formation of a branch

Nonresident income tax, with permanent establishment (See Chapter 3, section 2.3.1 for more detailed information).

Economic Interest Grouping (E.I.G.), Temporary Business Alliance (U.T.E.) and joint venture

Special rules for economic interest groupings, both Spanish and European, and temporary business alliances. In particular:

  • The part of the tax base attributable to members resident in Spain is not subject to corporate income tax.
  • The tax bases, tax credits and tax relief and the withholdings and prepayments of E.I.G.s or U.T.E.s are attributed to the resident members.
  • Dividends distributed to nonresident members of Spanish EIGs or UTEs will be taxed pursuant to the Nonresident Income Tax Law and to the tax treaties signed by Spain.

(See Chapter 3, sections 2.1.10 for more detailed information).

Distribution agreement

The tax treatment of nonresidents in Spain who contract with Spanish distributors will depend on whether or not said contracting gives rise to the existence of permanent establishment in Spain for the nonresidents:

  • If a permanent establishment exists, it will be taxed according to the rules on permanent establishments stipulated under the Nonresident Income Tax Law or in the applicable tax treaties (See Chapter 3, section 2.3.1 for more detailed information).
  • If a permanent establishment does not exist, it will be taxed pursuant to the same legislation, but in connection with taxpayers without a permanent establishment; in general, the income will be characterized as business profits, which are usually exempt where a tax treaty can be applied. (See Chapter 3, section 2.3.2 for more detailed information)

Whether or not a permanent establishment exists will depend, in general, on whether the nonresident is deemed to be distributing in Spain through a fixed place of business.

Guide to business in Spain

Establishing a business in Spain

39

ICEX - Gobierno de España - Ministerio de Economía y competitividad
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