Deductions to avoid international double taxation

Yes, the quantities not deducted due to insufficiency of total tax due may be deducted in the following tax periods.

When the taxpayer includes in his tax base income obtained and taxed abroad, he may apply the deduction to avoid double taxation regulated in article 31 LIS .

For tax periods commencing from 1-1-2017, it is specified that positive income be included.

The amount to be deducted from the total payable will be the lesser of the following amounts:

1. The amount paid abroad in tax of an identical or analogous nature.

   Tax not paid because of exemptions, allowances or any other tax benefit will not be deducted.

   If an agreement to avoid double taxation is in force, the deduction may not exceed the amount specified therein.

2. The total amount of tax that would be payable in Spain if the income had been obtained in this country.

   The amount of tax paid abroad will be included in income for the purposes of the above provisions and will be part of the gross tax base, even if it is not fully deductible.

The part of the amount paid in tax abroad that does not qualify for a deduction from taxable income as specified above will be treated as a deductible expense, provided that it corresponds to business activities abroad.