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V2835-17 2 November 2017 · SG de Fiscalidad Internacional Criterion in force
IRNR · establecimiento permanente

No IRNR withholding on foreign stand rentals, advertising, or ACFI fees

A public company has requested clarification on whether it must withhold Non-Resident Income Tax (IRNR) for payments related to an international trade fair stand, advertising in foreign magazines, and membership fees for a US association. The DGT ruled that withholding is not required because the activities are not carried out in Spain and, regarding the association, the double taxation treaty with the US prevents these profits from being taxed in Spain.

The question raised

1-Whether the three activities described above are considered the provision of services used in Spanish territory and therefore are subject to withholding tax under the Non-Resident Income Tax.

The DGT's ruling

The rental of a stand at an international fair and the sale of advertising in foreign guides are not taxed in Spain because the economic activity is carried out outside the national territory. Regarding the fee to the ACFI, according to the Convention between Spain and the USA, business profits may only be taxed in the State of residence. To apply the treaty exemption, a certificate of tax residence is required, which does not require the Hague Apostille to be valid.

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