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V3395-15 4 November 2015 · SG de Fiscalidad Internacional Criterion in force
IS · establecimiento permanente

Benefits from consultancy services rendered from Spain not taxable in Algeria without a permanent establishment

A Spanish company enquired whether it could claim the double taxation relief on an tax incurred in Algeria for engineering services. The DGT replied that, as there is no permanent establishment in Algeria, the profits are only taxable in Spain.

The question raised

The taxpayer asks whether the deduction for legal double taxation, for the tax paid in Algeria, may be applied in accordance with Article 31 of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

According to the Spanish-Algerian Convention, business profits are taxable only in Spain unless there is a permanent establishment in Algeria. Since the consulting services are provided from the offices in Spain, a fixed place of business in Algeria is not established. Therefore, Algeria cannot tax those profits and any withholding applied would be improper under the Convention.

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