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Practical Manual for Companies 2024.

A. Scope of application

Regulation:  DA 70. Four.1 Law 31/2022; Articles 2 and 3 DR 710/2024

The following taxpayers may apply this reservation:

  • Corporate tax payers are subject to income earned through establishments located in the Balearic Islands, whether or not they are domiciled there.

  • Entities not resident in Spanish territory, when operating in the Balearic Islands through a permanent establishment, for the income obtained through it.

Keep in mind:

The concepts of establishment and permanent establishment are, in accordance with the provisions of article 3 of RD 710/2014, those included in article 22.3 of the LIS and in article 13.1.a) of the TRLIRNR. For these purposes, it shall be understood that a natural person or entity operates through a permanent establishment situated in the Balearic Islands, when, for any reason, he or she has, in the Balearic Islands, on a continuous or habitual basis, facilities or workplaces in which he or she carries out all or part of his or her activity, or acts therein through an agent authorized to contract, in the name and on behalf of the taxpayer, who habitually exercises said powers. In particular, permanent establishments shall be deemed to include management headquarters, branches, offices, factories, workshops, warehouses, stores or other establishments, mines, oil or gas wells, quarries, agricultural, forestry or livestock operations or any other site of exploration or extraction of natural resources, and construction, installation or assembly works lasting more than 6 months.

If the permanent establishment is located in a country with which Spain has signed an agreement to avoid international double taxation, which is applicable to it, the resulting tax will apply.