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V1204-16 28 March 2016 · SG de Fiscalidad Internacional Criterion in force
IRNR · retención

Withholding tax obligations for non-resident pilots operating flights to or from Spain

A Spanish company managing human resources for a Norwegian group has requested a ruling regarding the obligation to withhold income tax for two pilots residing in Norway and Denmark. The Directorate General for Taxes (DGT) has ruled that, as the work is not performed entirely abroad, the income is subject to Non-Resident Income Tax (IRNR) in Spain, thereby triggering a withholding obligation.

The question raised

Question posed: Obligation of the consulting entity to withhold tax on the remuneration paid to the aforementioned pilots.

The DGT's ruling

Remuneration for pilots residing abroad who work aboard aircraft in international traffic and whose routes originate or terminate in Spain is considered income obtained in Spanish territory. Therefore, it is subject to taxation under Non-Resident Income Tax (IRNR) and the paying entity must apply the corresponding withholding tax. However, if it were determined that the true employer is the Norwegian airline and it does not have a permanent establishment, taxation in Spain would only apply to the portion of the salary corresponding to the work performed in Spanish territory.

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