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V2940-23 6 November 2023 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · doble imposición internacional

Cannot claim full foreign tax deduction if payment is deferred

A Spanish resident heir asks whether the international double taxation deduction can be applied for tax paid in Germany, even if the payment is deferred. The DGT responds that the full amount cannot be recorded unless the foreign debt has been fully settled.

The question raised

Question posed: Whether the consultant may apply the international double taxation deduction provided for in Article 23.1 of Law 29/1987, of December 18, on Inheritance and Gift Tax in the Spanish ISD tax return, given that the total payment of the foreign tax liability was not made within the voluntary declaration period for the Spanish ISD due to the partial deferral of said payment granted by the foreign administration.

The DGT's ruling

To apply the international double taxation deduction under Article 23 of the ISD Law, the amount must be that which has been effectively paid abroad. If the foreign tax is deferred, the full amount cannot be reported in the Spanish ISD tax return. Once the entirety of the foreign tax liability is satisfied, the taxpayer may request a rectification of the tax return and a refund of the excess amount paid.

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