8.9.3. Deduction due to international double taxation

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

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

2. The result of applying the average effective tax rate to the portion 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 tax by the taxable base. To this end, the type of tax that corresponds to general income and savings income 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 applied, and in no case will the procedure for eliminating double taxation provided for in article 22 of the consolidated text of the Corporate Income 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 income from work or economic activities and key 2 if it corresponds to another type of income (other income 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 (total income less deductible expenses) obtained abroad must 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 on economic activities in objective estimation and the capital gains subject to taxation, obtained abroad, shall be indicated.

  4. The actual amount paid abroad for personal tax on income or capital gains will be recorded.

• Income included in the taxable savings base

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

  • Other income included in the taxable savings 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 taxation will be stated.

    2. The actual amount paid abroad for personal tax on income or capital gains will be recorded.

THE THEORETICAL AMOUNT OF THE FULL FEE

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

1. When the balance resulting from integrating and offsetting the income 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 the sixth transitional provision of the consolidated text of the Personal Income Tax Law in its version in force on December 31, 2006, is zero or negative, the theoretical amount of the full rate will be zero.

2. Where the balance resulting from integrating and offsetting the income provided for in section a) above, applying the reduction percentages provided for in articles 24.2, 94 and the sixth transitional provision of the consolidated text of the Personal Income Tax Law in its version in force on 31 December 2006, is positive, the theoretical amount of the full tax will be the positive difference between the tax resulting from applying the provisions of articles 63.1.1.º and 74.1.1.º of Law 35/2006 to the sum of the general taxable base and the positive balance indicated above, and the corresponding tax from applying the provisions of said articles to the general taxable base.