Exemptions

Which incomes are exempt?

Exemption of income obtained abroad through a permanent establishment

Positive income obtained abroad through a permanent establishment located outside Spanish territory will be exempt when it has been subject to, and not exempt from, a tax of an identical or similar nature to this Tax with a nominal rate of at least 10% or, in the terms of section 1 of article 21 of the LIS .

Negative income acquired abroad via a permanent establishment will not be integrated into the gross tax base, except in the event that it is transferred or its activity ceases.

As of January 1, 2017, positive income derived from the transfer of a permanent establishment or cessation of its activity will be exempt when it has been subject to and not exempt from a tax of an identical or similar nature to this Tax with a nominal rate of at least 10% or, in the terms of section 1 of article 21 of the LIS . Negative income derived from the transfer of a permanent establishment will also not be incorporated into the gross tax base. Nevertheless, negative income generated will be tax deductible in the event of the termination of a permanent establishment. In this case, the amount of the negative income will be reduced by the amount of net positive income acquired previously, and which was subject to the application of an exemption or deduction regime to avoid double taxation, for the amount thereof.

As of January 1, 2017, this exemption will not apply when, with respect to income obtained abroad, the circumstances provided for in section 9 of article 21 of the LIS occur. The option referred to in letter c) of said section will be exercised for each permanent establishment outside of Spanish territory, even if there are multiple permanent establishments in the territory of a single country.

Next Exemptions on dividends and income derived from the transfer of securities representing the equity of entities resident and non-resident in Spanish territory

Exemptions

Exemption of income obtained abroad through a permanent establishment

When is income obtained abroad through a permanent establishment located outside Spain deemed exempt?

When are income derived from the transfer of a permanent establishment located outside Spanish territory or the cessation of its activity exempt for tax periods beginning on or after 1-1-2017?

In which cases will the exemption provided for in article 22 of the LIS not apply to income obtained abroad through a permanent establishment located outside Spanish territory in tax periods starting on or after 1-1-2017?