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 is applied 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 Spanish:

   1. That ceases its activity.

   2. That transfers the assets assigned to the foreigner.

   3. That moves its activity abroad.

   With effect for tax periods beginning on or after January 1, 2021, in the cases provided for in letters b) and c) of this section, in the case of transferred assets to a Member State of the European Union or the European Economic Area that has concluded an agreement with Spain or with the European Union on mutual assistance in the collection of tax credits, the possibility that the taxpayer had to defer the payment of the exit taxation, until the affected assets were transferred to third parties, due to the possibility of dividing said payment, also at the taxpayer's request, into equal annual fifths .

   The exercise of the ## option will be carried out exclusively in the tax return corresponding to the tax period in which the transfer of assets provided for in letter b) of this section takes place, or in the tax declaration corresponding to the tax period concluded on the occasion of the transfer of activity, in the case provided for in letter c) of this section, payment of the first fraction must be made within the voluntary declaration period corresponding to said tax period.

   The expiration and enforceability of each of the four remaining annual installments, together with the late payment interest accrued for each of them, will occur successively, after one year from the end of the voluntary declaration period corresponding to the tax period provided for in the previous paragraph.

   In the event that the permanent establishment chooses to split the payment of the exit tax, it must complete form 200 in the manner indicated in Chapter 6 of this Practical Manual.

   Finally, it must be taken into account that in cases of transfer to Spain of assets or the transfer of the activity that has been subject to an exit tax in a Member State of the European Union, the value determined by the Member State The output value will be considered tax value in Spain, unless it does not reflect the market value. However, the difference between the market value and the tax value of the transferred assets that are related to the financing or delivery of guarantees or to meet prudential capital requirements or for the purposes of asset management will not be included in the tax base. liquidity, provided that it is anticipated that they must return to Spanish territory to be affected within a maximum period of one year.

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 transactions 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.

5. With effects for tax periods that begin on January 1, 2020 and that have not ended on March 11, 2022, Law 5/2022, of March 9, introduces a new regulation of hybrid asymmetries .

   Consequently, are not considered deductible:

   • The expenses corresponding to operations carried out with the head office or with one of its permanent establishments, as well as with a person or entity linked to said head office or one of its permanent establishments, which, as a consequence of a tax difference in its attribution between the permanent establishment and its head office, or between two or more permanent establishments do not generate income.

   • Estimated expenses for internal operations with the head office or with one of its permanent establishments or those of a related person or entity that, due to the legislation of the country or territory of the beneficiary, do not generate income, in the part that is not compensated with income that generates double inclusion income. The amount of expenses not deducted may be deducted in subsequent tax periods ending within the following three years to the extent that it is offset by income that generates double inclusion income.

   • Expenses corresponding to operations of the permanent establishment that are also tax deductible in the head office, in the part that is not offset by income from said permanent establishment or related entity that generates double inclusion income. The amounts not deducted may be deducted in the tax periods ending in the three years following the conclusion of the tax period in which such expenses were accrued, to the extent that they are offset by income from the permanent establishment or related entity that generates income. double inclusion.

   • Expenses corresponding to operations carried out with a permanent establishment of the head office or of a related person or entity that, as a consequence of not being recognized fiscally by the country or territory of location, do not generate income.

   For the purposes of the provisions of this point, as well as in any other case of hybrid asymmetry regulated in article 15 bis of the LIS that is applicable:

   • An income is considered to generate double inclusion income when it is subject to taxation in accordance with the TRLIRNR and the legislation of the other country or territory.

   • The reference to related persons or entities will include those provided in articles 15.2 and 18.7 of the TRLIRNR.