Fiscal questions and answers

 • Which earnings are considered to have been obtained or produced in Spain?

The two traditional criteria according to which income may be considered to have been obtained in Spain, are territoriality and payment. Nevertheless, the payment criteria is only applicable with respect to the income for which it is expressly established. Below is a breakdown according to the type of income obtained.

1. Earnings derived from economic activity.

2. Earnings from work.

3. Pensions and other similar benefits.

4. Remuneration of directors and members of Boards of Directors, of Boards performing their duties or of representative organisations.

5. Earnings from liquid capital.

6. Earnings from real estate (real estate assets).

7. Income attributed to individual taxpayers who are titleholders of urban real estate not subject to economic activities.

8. Capital gains.

• Under the Double Taxation Agreements signed by Spain, where is income derived from real estate assets taxed?

All the Double Taxation Agreements subscribed by Spain follow the criteria of the OECD Agreement Model, in the sense that income derived from real estate assets may be taxed in the country in which said assets are located. This criteria is applied whatever the income obtained from real estate, rental, use of housing, etc.

• Under an Agreement in effect, are the sums received by a non-resident as a member of a Board of Directors in a Spanish company taxed in Spain?

Yes. Holdings, assistance allowance and other similar remuneration obtained by a resident of a country with which Spain has subscribed a Double Taxation Agreement as member of a Board of Directors of a Spanish company may be subject to taxation in Spain (see table).

• What are the general tax rules contained in the Agreements signed by Spain relative to dependent work earnings?

As a general rule, the country of residence of the recipient of work earnings is that with the right to tax the income received, except where the employment takes place in another country, in which case it can also be taxed in that other country.

Therefore, work earnings paid by a Spanish company to a resident of a country holding an agreement with Spain for work carried out in their country of residence, can only be taxed in that country, and will be exempt in Spain.

When earnings are received by a non-resident for employment in Spain, they are subject to tax in Spain. However, the right to levy tax will rest with the country of residence (and, therefore, will be exempt in Spain) if all the following circumstances apply simultaneously:

1. The employee does not stay in Spain for more than 183 days during the relevant tax year.

2. The remuneration received is paid by or on behalf of an employer who is not a resident in Spain.

3. The remuneration received is not paid by permanent establishment or a fixed base that the employer has in Spain

• Wealth tax

This tax has been temporarily re-established for the 2011 and 2012 financial years and is due on 31 December of each of these years.

Additional information