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Practical Handbook for Companies 2021

Concept and taxation

Regulation: Articles 37 and 38 TRLIRNR and Resolution of 6 February 2020, of the Directorate General for Taxation, on the consideration of certain entities incorporated abroad as entities under the income attribution system (BOE of 13 February).

The Non-Resident Income Tax Law considers as entities under the income attribution regime those incorporated abroad whose legal nature is identical to that of entities under income attribution constituted in accordance with Spanish law.

The basic characteristics that an entity incorporated abroad must meet in order to be considered in Spain as an entity in attribution of income are as follows:

  • The entity is not a personal income taxpayer in the State of incorporation.

  • The income generated by the entity is attributed for tax purposes to its members or participants, in accordance with the law of their State of incorporation, and the members or participants are taxed on it for their personal tax purposes.This attribution must take place by the mere fact of the entity obtaining the income, and it is irrelevant for these purposes whether or not the income has actually been distributed to the shareholders or unit-holders.

  • The income obtained by the entity in attribution of income and attributed to the members or unit-holders retains, in accordance with the law of its State of incorporation, the nature of the activity or source from which it derives for each member or unit-holder.

When an entity under the income attribution system constituted abroad carries out an economic activity in Spanish territory , and all or part of this activity is carried out, continuously or habitually, through installations or workplaces of any kind, or acts there through an agent authorised to contract, in the name and on behalf of the entity (called "entity with presence in Spanish territory" by article 38 of the TRLIRNR), it will be liable to pay this tax, and must file an annual self-assessment, using form 200, referring to the part of the income obtained in Spain attributable to its non-resident members. The deadlines for filing this self-assessment tax return shall be the same as those indicated in this chapter for the filing of the return by permanent establishments, although considering for these purposes the cessation of activity as the only event determining the early termination of the tax period, instead of the six cases referred to in Article 20.2 of the TRLlRNR with respect to permanent establishments.For these purposes, these entities, in the event that they cease their activity, must file the tax return within the first twenty calendar days of the months of April, July, October or January, depending on the quarter in which the cessation occurs, unless the tax return period began prior to the entry into force of Order HFP/379/2022, of 28 April, which approves the tax return form for tax periods commencing between 1 January and 31 December 2021.

These entities are obliged to appoint a representative, a natural or legal person resident in Spain, to represent them before the tax authorities.The communication to the Tax Administration shall be made within a period of two months from the date of appointment, and shall be made to the Delegation of the State Tax Administration Agency where the tax return for this tax is to be filed, accompanying said communication with the express acceptance of the representative.However, entities incorporated in another Member State of the European Union or of the European Economic Area are not obliged to appoint a representative, provided that in the latter case, there are regulations on mutual assistance in the exchange of tax information and collection.