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V1227-14 7 May 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRNR · sociedad unipersonal

A Swedish sole trader is taxed as a physical person in Spain

A Swedish citizen asks whether registration as a single-member company in Sweden grants separate legal personality. The DGT states that, as a sole trader, it is a physical person, not a separate legal entity.

The question raised

1) Whether, for the corresponding legal and tax purposes, the applicant can operate in Spain, as in Sweden, as a single-member company in the conduct of a business activity, enjoying the status of a legal entity despite not being incorporated as such.

The DGT's ruling

The tax classification depends on whether the subject is a sole trader or an entity with a legal personality distinct from the partner. In this case, the registration in Sweden corresponds to a "Sole Trader", and is therefore considered a natural person. As such, income and gains from real estate in Spain are taxed under the Non-Resident Income Tax. Regarding Inheritance Tax, real estate in Spain may be taxed, but if it were a legal entity, this tax would not be applicable.

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