Entities resident in Spain will be taxed on transfers of assets abroad

The tax residence of an entity in Spain determines its tax obligation regarding Transfer Tax and Documented Legal Acts Tax (ITPAJD), even when the object of the transaction is located outside national borders.

What the DGT has ruled

The Directorate General of Taxes (DGT) has determined that entities resident in Spain are subject to ITPAJD for the onerous transfer of assets and rights located abroad. However, the regulations establish clear exceptions that limit this scope:

• Transfers of real estate located abroad will not be taxed.
• Transfers that take effect outside Spanish territory are excluded.

In the context of corporate operations, the entity will be subject to the tax if it maintains its registered office in Spain, regardless of whether its effective management is located outside the European Union. Likewise, it has been specified that the modality of documented legal acts is incompatible with that of corporate operations.

What this means for you

For companies with an international presence, this criterion implies that the physical location of the asset or right is not the only determining factor for the tax obligation. If the entity has its tax residence in Spain, it must evaluate the nature of the transferred asset. If it concerns movable assets or rights located abroad, the transfer could be subject to local tax, unlike what occurs with real estate assets outside of Spain.

What you should do

When dealing with purchase and sale operations of assets or rights in international markets, it is necessary to identify the exact location of the asset and the nature of the transfer. The distinction between real estate and other types of assets or rights is fundamental to determining the correct settlement of ITPAJD. It is recommended to analyze the structure of the operation and the location of the effective management in the case of corporate movements to avoid tax contingencies.