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V2441-14 17 September 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · retención

No retention in corporate tax on film prizes; IRNR retention depends on double taxation treaties

A public entity asks whether taxes should be withheld on economic prizes given to film distributors or producers. The DGT states that no corporate tax retention applies if the prize is for economic activity and assesses IRNR retention based on the existence of double taxation treaties.

The question raised

Whether it would be appropriate to apply withholding tax on the prizes paid by the consulting entity to both resident and non-resident entities.

The DGT's ruling

In Corporate Income Tax, no withholding tax should be applied to prizes awarded to production or distribution companies, as these derive from the exercise of an economic activity. In Non-Resident Income Tax, if a double taxation treaty exists and there is no permanent establishment, the prize is only taxed in the country of residence. If no treaty exists, the prize is taxed in Spain at the general rate and the paying entity must apply the corresponding withholding tax.

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