Taxation of permanent establishments

They are taxed on all the income attributable to the permanent establishment, irrespective of the place where it is obtained.

The taxable base should be calculated according to the guidelines in the General Corporation Tax System, with a possibility to compensate negative taxable bases from prior financial years and taking the following special cases into account:

• Generally speaking, non-deductibility of the payments that the permanent establishment makes to the head office for fees, interest, commissions, technical assistance services and for the use or assignment of assets or rights.

• Deduction of management and general administrative expenses are subject to a number of requirements.

• The regulations governing related-party transactions set out in the Corporation Tax Law shall apply to transactions carried out with the head office, with another permanent establishment of the same head office or with other persons or organisations connected to the head office or its permanent establishments, whether these are located inside Spain or abroad.

Permanent establishments are obliged to undertake separate accounting, as well as to fulfil the other filing and formal accounting obligations to which Corporation Tax payers are subject.

The tax period shall coincide with the declared financial year and may not exceed 12 months. Unless otherwise stated, the tax period shall be deemed to refer to the calendar year.

The tax is accrued on the last day of the taxable period.