Skip to main content
Form 200. Corporate Income Tax Declaration 2018

11.9.1.3 Taxable base

The taxable base of the permanent establishment shall be determined in accordance with the provisions of the general regime of the Corporate Income Tax Law, taking into account the existence of peculiarities in the formation of the taxable base inherent to the Non-Resident Income Tax. The permanent establishment is subject to the negative tax base compensation regime.

Among the specialities that permanent establishments must take into account when determining the tax base, the following are basically worth mentioning:

  • integration into the tax base of the difference between the normal market value and the book value of the assets assigned to a permanent establishment located in Spanish territory that ceases its activity or that transfers the assets assigned abroad.

  • Application of the rules of linkage for operations carried out by the permanent establishment with the head office or with other permanent establishments of the same head office or with other persons or entities linked to the head office or its permanent establishments, whether located in Spanish territory or abroad

  • deductibility of the portion of management and general administration expenses charged by the head office to the permanent establishment, provided that they are reflected in the financial statements of the permanent establishment and are charged in a continuous and rational manner. In order to determine these expenses, taxpayers are expected to be able to request the Tax Authority to determine the valuation of the part of management and general administration expenses that are deductible, in accordance with the provisions of article 18.9 of the Corporate Tax Law.

  • In no case shall the amounts corresponding to the cost of the entity's own capital that are directly or indirectly assigned to the permanent establishment be imputable.

It should be noted that the Non-Resident Income Tax Law establishes specific rules for determining the tax base for cases in which the operations carried out in Spain by a permanent establishment do not close a business cycle (section 3 of article 18), or in which the activity of the permanent establishment in Spain consists of construction, installation or assembly works whose duration exceeds six months (section 4 of article 18).