Withholdings and payment on account

The third paragraph of section 1 of article 128 of the LIS establishes:

“Likewise, insurance companies domiciled in another Member State of the European Economic Area that operate in Spain under the free provision of services regime will be required to make withholdings or payments on account, in relation to operations carried out in Spain.”

Therefore, insurance entities domiciled in another Member State of the EEA that operate in Spain under the free provision of services regime are required to withhold in relation to the operations they carry out in Spain.

As of January 1, 2021, the determining factual situation for British entities regarding their status as subjects obliged to withhold tax for this concept will no longer occur (they may be subjects obliged to withhold tax if they operate in Spain through a permanent establishment).