The scope of application of all direct taxes is circumscribed, generally, to Spanish territory, including the territorial sea adjacent to its coasts (twelve nautical miles). It is expanded, under the Corporate Tax, to several zones adjacent to territorial waters over which Spain can exercise its rights, regarding the exploitation of the seabed, sea sub-bottom and its natural resources, pursuant to Spanish legislation and international law.


In relation to the scope of application of tax regulations, the General Tax Act is based upon the principle of actual residence for individual income tax assessments and on the principle of territoriality in all other cases.

Said scope of application, when it affects income obtained by foreigners, can be modified by the appropriate rule for each tax. Thus, in connection with individual income taxes of a personal nature, two forms of taxation are established in Spain:

  • Taxation by personal obligation covers persons or entities resident in Spain ("personal obligation").
  • Taxation by real obligation covers nonresident persons or entities, for income obtained or produced in Spain or for assets located within Spain ("real obligation").


Article 31 of the Spanish Constitution sets forth the principle that every taxpayer will be taxed according to his economic capacity, and that taxation shall not be of a confiscatory nature. The general principle that Article 31 of the Constitution expounds is also applicable to the taxation of nonresidents.


Although the principle of nondiscrimination is generally accepted as a rule of law in international relations and expressly set forth in tax treaties signed by Spain, aimed at avoiding the double international taxation of persons and transactions, it is equally true that occasionally the development of tax regulations has violated this standard of nondiscrimination, placing a higher tax burden on nationals of other States.


The Spanish Constitution incorporates international treaties into Spanish domestic law, once they are officially published. The international law principle that accords supremacy of treaties over domestic law is expressly recognised by Spanish tax laws.



General Overview

Entities and individuals which are not resident in Spanish territory and which obtain income therein are subject to taxation by effective obligation.

Concept of Resident

Natural persons who maintain their habitual residence in Spain, as defined by one of the following:

  • One who stays longer than 183 days, during any one calendar year, within Spanish territory. Once tax residence is established in Spain, it cannot be lost by temporary absences except where habitual residence is reestablished elsewhere and can be demonstrated by proof of residence abroad lasting 183 days during any one calendar year.
  • One who establishes the nucleus or the base of his business or professional activities or his economic interests in Spain.
  • As a presumption: In the absence of proof to the contrary it is presumed that a person has his habitual residence in Spain when his/her spouse and his/her minor children are habitual residents.

Legal persons who fulfil any of the following requirements:

  • The entity has been incorporated under the laws of Spain.
  • The entity has its registered office in Spanish territory.
  • The entity has its effective management headquarters in Spanish territory.

}Effective management headquarters is understood to be where the management and control of its overall activities are situated.

Tax Representative of Nonresidents

General Overview


  • They operate through a permanent establishment.
  • They provide services, technical assistance, installation or assembly works under engineering contracts and, in general, economic activities carried out in Spain without the intermediation of a permanent establishment and wish to deduct certain expenses.

This obligation would not exist for natural persons that only have a residence in Spain that is designated as a domicile for communications.

They are obliged to communicate this appointment to the Administration within two months of the date of said appointment.

The nonperformance of these obligations, appointment of a representative and its communication to the Administration, is sanctionable with a fine of 25,000 to 1,000,000 ptas.

When nonresidents maintain a permanent business establishment in Spain ("permanent establishment") his representative (who has the power to contract) will be deemed to be the tax representative if the attorney is domiciled in Spanish territory.

Tax Domicile

  • When they operate in Spain through a permanent establishment in the place in which the effective administrative management and management of their business in Spain is located.
  • In the case of income from real estate, at the tax domicile of the representative, in absence thereof at the location of the corresponding real estate.
  • In other cases, at the representativeïs tax domicile or, in the absence thereof, at that of the party who is jointly and severally responsible.

Responsible Parties

The payer of the income accrued by a nonresident acting without a permanent establishment will be directly jointly and severally liable for paying the tax liabilities corresponding to the income for which he has been paid.

The mere payment by an intermediary on order and for the account of a third part will not be understood as payment of an income.

The depository or manager of a nonresidentïs assets or rights which are not attached to a permanent establishment will be jointly and severally liable for paying the tax liabilities corresponding to the income from the assets or rights which deposit or management is entrusted to him or it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Florentino Carreno on +341 524 7100

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