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A Spanish company asked whether expenses from its establishment in France were deductible, as it only carried out preparatory or ancillary activities. The DGT ruled that, since it is not a permanent establishment under the Spain-France Double Taxation Agreement, the prohibition on deducting negative income does not apply.
Expenses related to a foreign office are deductible if the activities are preparatory or ancillary and do not constitute a permanent establishment under the bilateral tax agreement.
The tax team reviews your specific situation.
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