8.9.3. Deduction due to international double taxation

When the taxpayer's income includes income or capital gains obtained and taxed abroad, the lesser of the following amounts will be deducted:

1. The effective amount paid abroad due to a tax of a nature identical or analogous to this tax or the Non-Resident Income Tax on said income or capital gains.

2. The result of applying the average effective tax rate to the part of the taxable base taxed abroad.

For these purposes, the average effective tax rate will be the result of multiplying by 100 the quotient obtained by dividing the total net amount by the taxable base. To this end, the type of tax that corresponds to general income and savings must be differentiated, as appropriate. The tax rate will be expressed with two decimal places.

When income is obtained abroad through a permanent establishment, this deduction will be made, and in no case will the double taxation elimination procedure provided for in article 22 of the consolidated text of the Corporate Tax Law be applicable.

COMPLETION

The following information will be recorded through a data capture window:

• Type of income obtained:

  You must select key 1 if it is about income from work or economic activities and key 2 if it corresponds to other types of income (rest of returns and capital gains).

• Income included in the general tax base

  A data capture window will open in which you must separately indicate the amount of income obtained and taxed abroad included in the general tax base, taking into account the following:

  1. The net income from work (full income less deductible expenses) obtained abroad will be indicated.

  2. The reduced net returns from economic activities in direct estimation obtained abroad will be indicated.

  3. The reduced net returns on capital, the reduced net returns from economic activities in objective estimation and the capital gains subject to taxation, obtained abroad, will be indicated.

  4. The effective amount of what was paid abroad will be recorded due to a personal tax on the performance or capital gain.

• Income included in the savings tax base

  A data capture window will open indicating the amount of income obtained and taxed abroad included in the savings tax base, taking into account the following:

  • Rest of income included in the savings tax base.

    1. If the income obtained abroad is considered income from movable capital, the amount of the reduced net income obtained abroad will be indicated. In the case of capital gains, the amount of the capital gain subject to tax will be recorded.

    2. The effective amount of what was paid abroad will be recorded due to a personal tax on the performance or capital gain.

THE THEORETICAL AMOUNT OF THE FULL FEE

The theoretical amount of the full fee will be the following:

1. When the balance resulting from integrating and compensating among themselves the returns obtained from the transfer to third parties of own capital and life or disability insurance contracts, applying the reduction percentages provided for in articles 24.2, 94 and sixth transitional provision of the consolidated text of the Personal Income Tax Law in its current wording as of December 31, 2006, whether zero or negative, the theoretical amount of the full tax will be zero.

2. When the balance resulting from integrating and compensating among themselves the returns provided for in section a) above, applying the reduction percentages provided for in articles 24.2, 94 and sixth transitional provision of the consolidated text of the Personal Income Tax Law Physical in its current wording as of December 31, 2006, is positive, the theoretical amount of the full quota will be the positive difference between the quota resulting from applying to the sum of the general liquidable base and the positive balance previously indicated the provisions of the articles 63.1.1.º and 74.1.1.º of Law 35/2006, and the corresponding fee for applying what is stated in said articles to the general liquidable base.