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V0654-14 10 March 2014 · SG de Fiscalidad Internacional Criterion in force
IS · residencia fiscal

Effective head office determines tax residence in cases of dual residency (Spain-Germany Convention)

An entity incorporated in Spain with its registered office here but managed entirely from Germany seeks to determine its tax residence. The DGT establishes that, in cases of dual residency, the effective head office prevails under the Spain-Germany double taxation treaty.

The question raised

Determination of whether the consulting entity must be considered a tax resident in Spain or in Germany.

The DGT's ruling

If an entity is resident in both States, it shall be considered resident exclusively in the State where its place of effective management is located. The place of effective management is the location where the key commercial and management decisions necessary for the entirety of the activities are made. If strategic and management decisions are made in Germany, the entity shall be a tax resident in Germany and shall be taxed in Spain for Non-Resident Income Tax on its Spanish-source income.

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