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V0270-15 23 January 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · establecimiento permanente

Expenses for a foreign location are deductible if not considered a permanent establishment

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.

The question raised

Yes, given the special nature of the permanent establishment held in France, the provisions of letter k) of Article 14.1 of the TRLIS are not applicable to the taxpayer and, consequently, the expenses originated by the permanent establishment are deductible in Spain.

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