Corporate Tax 2010 - BMR Advisors

Cuatrecasas, Gonçalves Pereira
Spain
Spain
228
2.5 Are there any other transaction taxes
Transfer tax is levied on the transfer of rights and assets located in
Spain if such transfers are not taxed with Spanish VAT. The transfer
tax rate applicable to real estate is generally 6%, except otherwise
provided by the autonomous region where the real estate is located
(most of them have established a 7% rate). The transfer of an entity’s
shares may be subject to transfer tax if more than 50% of its assets’
market value consists of real estate properties located in Spain.
An indirect tax similar to Spanish VAT applies in the Canary Islands
known as IGIC (Impuesto General Indirecto Canario). This is
levied on: (i) supplies of goods and services performed by
individual or corporate entrepreneurs within the Canary Islands;
and (ii) on the importation of goods to the Canary Islands. Another
similar tax (IPSI) is levied in Ceuta and Melilla.
2.6 Are there any other indirect taxes of which we should be
aware
The most relevant of the other indirect taxes levied in Spain are the
following:
Special taxes on manufacture and importation of alcoholic
drinks or products, hydrocarbons, tobacco products and
electricity, to Spain.
Special taxes on registration of certain means of transport
(i.e. registry tax for vehicles).
Special taxes on certain hydrocarbons.
Insurance premium taxes.
3 Cross-border Payments
3.1 Is any withholding tax imposed on dividends paid by a
locally resident company to a non-resident
According to Spanish domestic legislation, an 18% withholding tax
rate is levied on outbound dividends (draft of State Budget Act for
2010, still pending for approval, provides that the 18% withholding
tax rate will be increased to 19%, as of January 1, 2010).
However, dividends paid by a Spanish subsidiary to an EU resident
company may be exempt from withholding taxes in Spain if the
requirements of the Spanish implementation of the EU Parent-
Subsidiary Directive, summarised below, are met:
a) Both companies must be subject to and not exempt from a
tax levied on corporate profits.
b) The profit distributed may not derive from the liquidation of
the Spanish subsidiary.
c) Both companies must have one of the corporate forms that
are mentioned in the annex of the EU Parent-Subsidiary
Directive.
d) The parent company must hold at least a 10% direct
participation in the share capital of the Spanish subsidiary,
within the one year period before the profit that is distributed
becomes due (commitment is accepted).
This regime does not apply if the majority of the voting rights of the
parent company are owned, directly or indirectly, by individuals or
companies that are not resident in an EU Member State, except if
the parent company develops a business activity directly related to
the business activity developed by the Spanish subsidiary, or its
legal purpose is the administration and management of the Spanish
subsidiary through the appropriate organisation of personal and
material means, or it can be proved that it was incorporated for valid
economic reasons and not only to benefit from this special regime.
As per the Agreement signed between the EU and Switzerland,
dividends paid by a Spanish company to a Swiss company are not
subject to withholding taxes in Spain under similar conditions as
those laid down in the EU Parent-Subsidiary Directive.
3.2 Would there be any withholding tax on royalties paid by a
local company to a non-resident
According to Spanish domestic legislation, a 24% withholding tax
rate is levied on royalties paid by a local company to a non-resident.
However, a reduced rate of 10% applies to certain royalty payments
made by Spanish companies to EU resident companies as per the
Spanish implementation of the EU Interest and Royalties Directive
(as of July 1, 2011, royalty payments will be exempt from
withholding taxes in Spain). This special regime applies to royalty
payments made by a Spanish-resident entity or by a permanent
establishment located in Spain of an entity resident in another EU
Member State, provided that the beneficial owner of the royalties is
a company resident in another Member State or a permanent
establishment located in another EU Member State of a company
resident in another EU Member State, under the following
requirements:
a) Both companies must be subject to and not exempt from a
tax levied on corporate profits.
b) Both companies must have one of the corporate forms that
are mentioned in the annex of the EU Interest and Royalties
Directive.
c) Both companies must be EU tax residents and must not be
considered resident of a third state by the provisions of a tax
treaty with this third state.
d) Both companies must be associated. Two companies are
considered to be associated if: (a) one of them holds directly
at least 25% of the share capital of the other; or (b) a third EU
company holds directly at least 25% of the share capital of
the two companies. In both cases a continuous minimum
holding period of 1 year is required.
e) Royalties must be tax deductible in the Member State where
the permanent establishment paying them is located.
f) The company that receives the royalties must receive them in
its own benefit and not as an intermediary or authorised
agent of another person and, being a permanent
establishment; the amounts received must be effectively
related with its activity and must be considered when
determining the permanent establishment tax base.
This regime does not apply if the majority of the voting rights of the
entity receiving the payment are owned, directly or indirectly, by
individuals or companies not resident in an EU Member State,
except if it can be proved that such entity was incorporated under
valid economic reasons and not only to benefit from this special
regime.
3.3 Would there be any withholding tax on interest paid by a
local company to a non-resident
According to Spanish domestic legislation, as a general rule, a
withholding tax rate of 18% is levied on interest paid by a local
company to a non-resident (draft of State Budget Act for 2010, still
pending for approval, provides that the 18% withholding tax rate
will be increased to 19%, as of January 1, 2010).
However, no withholding taxes are levied on interest payments
made by a local company to EU residents (whether individuals or
entities) or EU located permanent establishments of EU residents.
WWW.ICLG.CO.UK
ICLG TO: CORPORATE TAX 2010
© Published and reproduced with kind permission by Global Legal Group Ltd, London