International Tax Transparency

International tax transparency is a special tax regime that is applied in Spain both to people who are subject to the Personal Income Tax and to the entities that pay the Corporation Tax.

What is intended through the international tax transparency regime is to avoid evading the payment of taxes by filing a company in territories with a different tax structure from the Spanish one.

Therefore, those incomes that do not come from the development of economic activities obtained by companies located in territories of low taxation, are imputed to their resident partners as if they had directly obtained those incomes, without mediation of the interposed company.

Requirements for the application of the International Tax Transparency regime

The benefits obtained by a non-resident company in Spain must be included in the tax base (either the Corporation Tax or the Personal Income Tax) of the people who must pay this regime, provided that produce the following circumstances:

  1. Participation in the capital stock equal to or greater than 50%.
  2. A tax similar to that of Companies has been paid abroad and is less than 75% of what should be paid in Spain.

This regime will not apply when the entity not resident in Spanish territory is resident in another member state of the European Union, unless the company resides in a territory considered as a tax haven.

Income object of inclusion

  • Rentas derivadas de inmuebles:rentas positivas derivadas de bienes inmuebles rústicos o urbanos salvo que estén afectos a actividad empresarial o encuentren   cedidos   en   uso   a   entidades   no   residentes   pertenecientes   al   mismo   grupo   de   sociedades   de  la entidad instrumental no residente titular de los inmuebles.
  • Income derived from movable capital:dividends and income derived from financial assets. Income from the following financial assets is not included: Those held to comply with legal and regulatory obligations arising from the exercise of business activities, which incorporate credit rights born of contractual relationships established due to the development of business activities, those held as a result of the exercise of intermediation activities in official securities markets and those owned by credit institutions and insurers due to the exercise of their business activities.
  • Certain economic activities:Income from the performance of credit, financial, insurance and service provision activities, except those directly related to export activities, carried out directly or indirectly with persons or entities residing in Spanish territory and linked in tax terms.
  • Transmissions:The transfer of real estate and financial assets that generate income for the purposes of Corporation Tax, or capital gains and losses in the Personal Income Tax.

 

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