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V0542-15 11 February 2015 · SG de Fiscalidad Internacional Criterion in force
IRNR · establecimiento permanente

German engineering services only taxable in Spain if permanent establishment exists

A German company asks whether engineering services provided to a Spanish company must be taxed in Spain. The DGT responds that, under the double taxation treaty with Germany, such income is only taxable in Spain if the German company has a permanent establishment in Spain.

The question raised

The consulting entity raises the following questions:

The DGT's ruling

Income from engineering services received by the German entity may only be subject to taxation in Germany, provided that it does not carry out its activity through a permanent establishment in Spain and is the beneficial owner of the income. If no permanent establishment exists, the payments cannot be subject to withholding in Spain, subject to prior accreditation of tax residence by means of an official certificate. The existence of a permanent establishment or the status of beneficial owner are matters of fact that must be proven before the Administration.

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