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V0596-18 6 March 2018 · SG de Fiscalidad Internacional Criterion in force
IRNR · establecimiento permanente

Professional activity in a Spanish law firm may constitute a permanent establishment subject to IRNR

A Spanish lawyer who moves to the UK asks whether prior professional activity in Spain creates a permanent establishment. The DGT states that the law firm could be considered a permanent establishment, and if the individual is a non-resident, they must pay tax on those revenues through the IRNR.

The question raised

Existence of a permanent establishment for the period from January to May 2016.

The DGT's ruling

If the consultant is considered a non-resident, their income from January to May 2016 could be taxed in Spain if their professional activity is carried out through a permanent establishment. The law firm could meet the requirements of a fixed place of business according to the Spain-UK Convention. In such a case, the tax base would be determined according to the rules of Corporate Income Tax and Form 200 of Non-Resident Income Tax would be filed. Personal Income Tax prepayments made until the change of residence shall be deductible.

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