Taxable base

Regulation: Article 18 TRLIRNR

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

Among the specialties that permanent establishments must take into account to determine the tax base, the following should be noted, basically:

1. Integration into the tax base of the difference between the normal market value and the accounting value of the assets assigned to a permanent establishment located in the territory Spaniard who ceases his activity or who transfers the assets assigned to him abroad.

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

   In relation to the consideration of linked operations the provisions of article 18.2 of the LIS must also be taken into account, as well as in article 15.2 of the TRLIRNR.

3. Deductibility of the part of the management and general administration expenses imputed by the head office to the permanent establishment, provided that they are reflected in the financial statements of the permanent establishment and are allocated in a continuous and rational manner. To determine these expenses, it is foreseen that taxpayers may request the Tax Administration to determine the valuation of the part of the management and general administration expenses that are deductible, in accordance with the provisions of article 18.9 of the LIS.

4. The amounts corresponding to the cost of the entity's own capital assigned, directly or indirectly, to the permanent establishment will not be attributable in any case.