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Spain Corporate - Corporate residence

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A company is resident in Spain and subject to CIT on its worldwide income when:

  • it has been incorporated in accordance with Spanish law
  • its registered office is in Spain, and/or
  • its ‘effective’ head office is in Spain.

Under Spanish law, a company’s ‘effective’ head office is in Spain when its business activities are managed and controlled from Spain.

Companies established in a country or territory where no tax is levied or that is a tax haven are considered tax resident in Spain in the following cases:

  • When the company’s main assets consist, directly or indirectly, of property located or rights fulfilled or exercised in Spain.
  • When the company’s core business activity is carried on in Spain.

This presumption may be refuted by the company if it can prove that it is effectively administered and managed in the country or territory in which it is established and that it was incorporated and operates for valid economic and business reasons and not merely for the purpose of managing securities or other assets.

Permanent establishment (PE)

Taxpayers operating in Spain through a PE are subject to NRIT.

Most Spanish tax treaties for the avoidance of double taxation contain a definition of PE in line with OECD criteria.

In the absence of a double tax treaty (DTT), domestic law states that companies or individuals are considered to operate through a PE when, by any legal means, they have continuous or habitual work facilities in Spain or a place to do any kind of work where they perform all or part of their activities, or when they act in Spain through an agent with powers to enter into an agreement in the name and on behalf of the non-resident company/individual, provided that these powers are exercised on a regular basis.

In particular, a PE includes management offices, branches, offices, factories, workshops, warehouses, shops or other establishments; mines, oil or gas wells, quarries, farms, forestry facilities, livestock farms, or any other site where natural resources are collected; and construction, installation, or assembly sites whose duration lasts more than six months.

The Spanish High Court has issued several judgements on the question of PEs where it has adopted a functional approach to the subject of the existence of a PE. In this regard, it has afforded a flexible interpretation of what should be considered a PE, and specifically, of the concepts of dependent agent and fixed place of business.


Last Reviewed - 05 July 2019

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