Income subject to withholding

Regulations: article 31 Law IRNR and article 9 IRNR Regulation

In general, income subject to tax is subject to withholding.

Exceptions to the obligation to withhold:

Regulations: article 31.4 IRNR Law and article 10 IRNR Regulation

There is no obligation to withhold in relation to, among others, the following income:

• Exempt income in accordance with IRNR regulations.

  However, there will be an obligation to withhold with respect to certain exempt income: the exemption relating to dividends obtained by equivalent pension funds and the exemption relating to dividends obtained by collective investment institutions.

  Exempt income under a Convention to avoid double taxation.

• Income paid to taxpayers, when payment of the tax is proven.

• Capital gains.

  However, there will be an obligation to withhold, regarding:

  • Prizes derived from participation in games, contests, raffles or random combinations.

  • The transfer of real estate located in Spanish territory.

  • Income derived from transfers or redemptions of shares or participations representing the capital or assets of collective investment institutions, except those from participations or shares in the funds and companies regulated by article 49 of the Regulation of Law 35/2003 on investment institutions collective, approved by Royal Decree 1309/2005.

The exoneration of withholding is not automatic, but requires that the person obliged to withhold comply with the circumstances that motivate its application, without prejudice to the withholder's obligation to declare.