8.9.3. Deduction due to international double taxation

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

1. The effective amount of what is paid abroad for an tax of an identical or similar nature to this tax or to the Income Tax of Non-Residents on such income or capital gains.

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

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

When income is obtained abroad through a permanent establishment, this deduction will be applied, and under no circumstances will the procedure for eliminating double taxation provided for in article 22 of the revised text of the Corporation Tax Act be applicable.

Completion

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

• Type of income obtained:

  You must select key 1 if it concerns earned income or economic activities and key 2 if it corresponds to other types of income (other income and capital gains).

• Income included in the general tax base

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

  1. Net earned income (full income minus deductible expenses) obtained abroad will be indicated.

  2. The reduced net returns of economic activities will be indicated in the direct estimate obtained abroad.

  3. The net gains of the capital will be indicated, the net gains of economic activities in objective estimates and capital gains subject to taxation, obtained abroad.

  4. The effective amount of what is paid abroad for personal tax on the return or capital gain will be entered.

• Incomes included in the savings tax base

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

  • Other income included in the savings tax base.

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

    2. The effective amount of what is paid abroad for personal tax on the return or capital gain will be entered.

The NET AMOUNT OF THE RATE

The theoretical amount of the full payment will be as follows:

1. When the balance resulting from integrating and compensating among themselves the yields obtained by the transfer of own capital to third parties and insurance contracts of life or disability, applying the reduction percentages provided for in Articles 24,2, 94 and transitional provision six of the revised text of the Tax Act on Personal Income Tax, in its current wording at 31 December 2006, whether zero or negative, the theoretical amount of the total tax payable will be zero.

2. When the resulting balance of integrating and offsetting the returns provided for in section a) above, applying the reduction percentages provided for in articles 24,2, 94 and transitional provision six of the revised text of the Personal Income Tax Act in its current wording at 31 December 2006, if positive, the theoretical amount of the full payment will be the positive difference between the resulting payment the sum of the general net asset base and the aforementioned positive balance, as set out in Articles 63,1,1 and 74,1,1 of Act 35 / 2006, and the corresponding fee for applying the provisions of these articles to the general net tax base.