Skip to main content
Practical Manual of Companies 2022.

Income attributable to permanent establishments

Regulation: Article 16 TRLIRNR

income from a permanent establishment is considered to be income that it could have obtained if it were a different and independent entity, taking into account the functions performed, the assets used and the risks assumed by the entity. through permanent establishment.

For these purposes, the estimated income from internal operations with the entity itself will be taken into account in those cases in which this is established in an agreement to avoid international double taxation that is applicable.

The income attributable to the permanent establishment is made up of:

  1. The returns of the economic activities or exploitations developed by the permanent establishment.

  2. The income derived from assets assigned to it.

  3. The capital gains or losses derived from the assets affected.

    Affected heritage elements

    Affected heritage elements are those that are functionally linked to the development of the activity.

    The assets representing the participation in the own funds of an entity will only be considered assets belonging to the permanent establishment when it is a branch registered in the Commercial Registry and the following requirements are met:

    • That these assets are reflected in the financial statements of the permanent establishment.

    • That the permanent establishment has, to direct and manage these holdings, the corresponding organization of personal and material resources, in the event that such holdings entail a dominant position in accordance with the provisions of article 58 of the LIS .

    For these purposes, assets transferred within the three tax periods following that of the transfer will be considered affected assets.

In cases of re-export of goods previously imported by the same taxpayer, the following will be considered:

  1. That there has been no asset alteration if it involves temporarily imported fixed assets.

  2. That there has been a capital alteration if they are fixed assets acquired for use in the activities carried out by a permanent establishment.

  3. That there has been performance of an economic activity or exploitation if they are elements that are considered inventories.


Taxpayers who obtain income through a permanent establishment in Spain will be taxed on the entire income attributable to said establishment, regardless of the place where it was obtained.