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Practical guide for completing census form 036

Permanent establishments

When a non-resident legal person or entity operates in Spanish territory through one or more permanent establishments (box B91 “YES”), it must indicate in the census declaration how many there are (box B92), the NIF (boxes B93, B95 or B97) and the different name assigned to each of them (boxes B94, B96 or B98).

In this regard, to determine whether it is a permanent establishment, it must be considered that within the sources of the tax system are the international treaties or agreements that contain clauses of a tax nature and, in particular, the agreements to avoid double taxation, in the terms provided for in article 96 of the Constitution.

, if there is an agreement between Spain and the country in which the resides, the definition of permanent establishment will be that stipulated in said agreement. This type of agreement uses as a model the “OECD Model Agreement between State A and State B to avoid double taxation with respect to Income Tax and Capital Tax”, in article 5 of which the concept of permanent establishment is defined in these terms:

Article 5 Permanent establishment.

  1. For the purposes of this Convention, the term "permanent " means a fixed place of through which an enterprise carries on all or part of its business.
  2. The term "permanent establishment" includes in :
    • the management headquarters;
    • the branches;
    • the offices;
    • the factories;
    • the workshops; and
    • mines, oil or gas wells, quarries or any other place where natural resources are extracted.
  3. A construction or installation project only constitutes a permanent establishment if its duration exceeds twelve months.
  4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
    • the use of facilities for the sole purpose of storing, displaying or delivering goods or merchandise belonging to the company;
    • the maintenance of a warehouse of goods or merchandise belonging to the company for the sole purpose of storing, displaying or delivering them;
    • the maintenance of a warehouse of goods or merchandise belonging to the company for the sole purpose of their being transformed by another company;
    • the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or collecting information for the enterprise;
    • the maintenance of a fixed place of business solely for the purpose of carrying out for the enterprise any other activity of an auxiliary or preparatory nature;
    • the maintenance of a fixed place of business solely for the purpose of carrying on any combination of the activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from such combination retains its auxiliary or preparatory character.
  5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status (to whom paragraph 6 applies) is acting on behalf of an enterprise and has and habitually exercises in a Contracting State an authority to conclude contracts in the name of the enterprise, then that enterprise shall be deemed to have a permanent establishment in that State in respect of the activities which that person performs for the enterprise, unless the activities of that person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of that paragraph.
  6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
  7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise) does not of itself constitute either company a permanent establishment of the other.

If, on the other hand, there is no double taxation agreement between Spain and the country in which the taxpayer resides , the regulatory regulations of Spain must be considered. For these purposes, the Non-Resident Income Tax Law establishes the following in its article 13:

A person or entity will be deemed to operate through a permanent establishment in Spanish territory when:

  • for any reason has, on a continuous or regular basis, facilities or workplaces of any kind in which carries out all or part of its activity , or
    • ­
  • acts in it through an agent authorized to contract, in the name and on behalf of the taxpayer, who habitually exercises said powers.

In particular, a permanent establishment exists in the following cases: management headquarters, branches, offices, factories, workshops, warehouses, shops or other establishments, mines, oil or gas wells, quarries, agricultural, forestry or livestock farms, or any other place of exploration or extraction of natural resources and construction, installation or assembly works lasting more than six months.