Income subject to withholding tax

Regulations:Article 31 Law IRNR and Article 9 IRNR Regulation

Generally, any income subject to income tax is subject to withholding of tax.

Exceptions to the obligation to withhold:

Regulations:articles 31.4 of the Non-Resident Income Tax Law and article 10 of the Non-Resident Income Tax Regulation.

There is no obligation to withhold tax in relation to the following income types:

• Exempt income according to IRNR regulations.

  However, an obligation shall exist to withhold tax from certain exempt incomes:the exemption relating to dividends received by equivalent pension funds and the exemption relating to dividends received by collective investment undertakings.

  Income types exempt by virtue of an Agreement to avoid double taxation.

• Income deposited for taxpayers when the payment of the tax is accredited.

• Capital gains.

  However, there is an obligation to withhold tax with respect to:

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

  • Transfer of real estate assets situated in Spanish territory.

  • Income derived from the transfer or reimbursement of stocks or shares representative of capital or assets of unit trust institutions, except those from participation in investment funds and companies regulated by section 49 of the Regulation of Act 35/2003 on unit trust institutions, passed by Royal Decree 1309/2005.

Exoneration of the withholding is not automatic, but rather requires the taxpayer obliged to withhold to accredit the circumstances motivating the application of this measure, without prejudice to the obligation to file a tax return on the part of the withholder.