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V3228-21 29 December 2021 · SG de Fiscalidad Internacional Criterion in force
IRNR · fletamento por tiempo

Shipping hire benefits taxed only in effective management country

The DGT confirms that shipping hire payments by a Spanish company to a Panamanian company for international gas transport are subject to taxation only in Panama under the Spain-Panama treaty.

The DGT's ruling

Profits from the operation of vessels in international traffic, including time charter or bareboat charter, are covered by Article 8 of the Convention between Spain and Panama. As it constitutes international transport, the taxing power rests exclusively with the State of residence of the company (Panama). Therefore, the Spanish company must not withhold tax on the freight, although it must file the corresponding negative withholding tax return.

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