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V1281-19 5 June 2019 · SG de Fiscalidad Internacional Criterion in force
IRPF · intereses

Interest on a loan granted to a German company is taxable only in Spain

A tax resident in Spain, who is a partner in a German company, inquired whether interest from a loan granted to said entity should be taxed in Germany due to the existence of a permanent establishment. The DGT determined that no permanent establishment exists and that the taxing rights belong to Spain.

The question raised

Information is requested regarding their taxation.

The DGT's ruling

Interest of German source whose beneficial owner is a resident in Spain may only be subject to taxation in Spain, pursuant to Article 11.1 of the Convention between Spain and Germany. Article 11.3 does not apply because the status of partner does not constitute a permanent establishment under Article 5 of the Convention. Therefore, they are not considered income from business activities linked to a permanent establishment.

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