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V0102-17 20 January 2017 · SG de Fiscalidad Internacional Criterion in force
IRNR · establecimiento permanente

The attribution of profits and expenses between head office and branch is governed by the principle of separate and independent enterprise

A Spanish branch of a Latvian company has requested clarification on the tax treatment of financing and expenses covered by its head office. The Directorate General for Taxes (DGT) indicates that the allocation of costs depends on whether the transaction would have been conducted with third parties at market rates, and that financing must be based on sufficient free capital.

The question raised

The taxpayer inquires about the taxation of the financing received from its head office. Specifically:

The DGT's ruling

Para determinar si se aplica un precio de mercado entre casa central y establecimiento permanente, debe analizarse si la operación es de las que la empresa cargaría a terceros en su actividad normal. Si las mercancías no son para la venta sino para uso empresarial, podría ser oportuno que se soporte solo la parte correspondiente del coste. En cuanto a la financiación, el establecimiento debe disponer de un capital libre suficiente para sus funciones y riesgos, y solo sobre el exceso de dicho capital se deben soportar intereses a plena competencia. Además, el TRLIRNR establece la no deducibilidad de intereses pagados a la casa central, salvo en el caso de bancos extranjeros.

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