Most common provisions of the Agreements
Distribution of tax authority in the Agreements, in general, for different types of income
Agreements. Business activities
The Agreements signed by Spain attribute the right to levy tax on business income to the country in which the company obtaining the income resides. Only in the event that this company acts in the other country by means of a permanent establishment (PE) may these profits be subject to taxation in that country, but only in so far as they can be attributed to this permanent establishment.
For example, an organisation resident in a country that has signed an agreement with Spain carries out business activities in Spain without permanent establishment. In this case, the income it perceives is exempt from tax in Spain.
Nevertheless, if this activity were carried out through a permanent establishment, business income would be subject to taxation in Spain.