Spain Corporate Tax Guide

Spain

Madrid GMT +1

EY Abogados

Torre AZCA

Calle de Raimundo Fernández Villaverde 65 28003 Madrid

Principal Tax Contacts

+34 915-727-200

Fax: +34 915-727-238

 Ramón Palacín +34 915-727-485 Mobile: +34 609-447-941 Email: ramon.palacinsotillos@es.ey.com

 Rocio Reyero, EY Europe, +34 915-727-383 Middle East, India and Africa Mobile +34 619-743-698 Tax Leader Email: rocio.reyerofolgado@es.ey.com

International Tax and Transaction Services – International Corporate Tax Advisory

 Castor Garate +34 915-727-293 Mobile +34 687-729-881 Email: castor.garatemutiloa@es.ey.com

Iñigo Alonso +34 915-725-890 Mobile: +34 609-669-133 Email: inigo.alonsosalcedo@es.ey.com

International Tax and Transaction Services – Tax Desk Abroad

 José Antonio Bustos +1 (212) 773-9584 (resident in New York) Email: joseantonio.bustosbuiza@es.ey.com

International Tax and Transaction Services – Transfer Pricing

 Javier Montes +34 915-727-301 Mobile: +34 630-443-004 Email: javier.montesurdin@es.ey.com

Marcos Pérez +34 915-727-723 Mobile: +34 699-350-271 Email: marcos.perezrodriguez@es.ey.com

International Tax and Transaction Services – International Capital Markets

Araceli Sáenz de Navarrete, +34 915-727-728 Financial Services Mobile: +34 610-757-830 Organization Email: araceli.saenzdenavarretecrespo @es.ey.com

Enrique Fernandez Albarracin, +34 917-493-429 Legal Mobile: +34 659-019-654 Email: enrique.fernandezalbarracin @es.ey.com

International Tax and Transaction Services – Transaction Tax Advisory 

Rocío Reyero, EY Europe, +34 915-727-383 Middle East, India and Africa Mobile: +34 619-743-698 Tax Leader Email: rocio.reyerofolgado@es.ey.com

Business Tax Advisory

Juan A. Cobo de Guzman +34 915-727-443 Mobile: +34 629-171-764 Email: juanangel.cobodeguzmanpison @es.ey.com

Víctor Gómez de la Cruz +34 915-727-385

Mobile: +34 609-572-204 Email: victor.gomezdelacruztalegon @es.ey.com

 Javier Seijo +34 915-727-414

Mobile: +34 618-338-214 Email: javier.seijoperez@es.ey.com

Rufino De La Rosa +34 917-495-850

Mobile: +34 626-816-286 Email: rufino.delarosa@es.ey.com

Tax Policy and Controversy

 Maximino Linares +34 915-727-123

Mobile: +34 609-150-902 Email: maximino.linaresgil@es.ey.com

Global Compliance and Reporting

 Sergio Garrido +34 915-727-717

Mobile: +34 629-129-282 Email: sergio.garridovillalba@es.ey.com

Fernando Gomez +34 915-727-831

Mobile: +34 659-307-726 Email: fernando.gomezgarcia@es.ey.com

Nuria Redondo 34 915-727-339

Mobile: +34 669-811-746 Email: nuria.redondomartinez@es.ey.com

Indirect Tax

Pedro Gonzalez-Gaggero +34 915-727-599 (resident in Sevilla)

Mobile: +34 699-107-940 Email: pedro.gonzalez-gaggero@es.ey.com

 Eduardo Verdun +34 915-727-421

Mobile: +34 638-353-170 Email: eduardo.verdunfraile@es.ey.com

People Advisory Services

Jorge Aguirre

+34 917-493-863

Mobile: +34 680-688-239 Email: jorge.aguirre.peris@es.ey.com

Olga Cecilia Garcia +34 917-499-523 Mobile: +34 683-168-937 Email: olga.cecilia@es.ey.com

 Jaime Sol +34 917-493-152 Mobile: +34 629-041-944 Email: jaime.sol@es.ey.com

Legal Services

Gonzalo Martin +34 914-925-114 Mobile: +34 660-493-403 Email: gonzalo.martindenicolas@es.ey.com

 Felix Plasencia +34 915-727-504 Mobile: +34 686-669-959 Email: felix.plasenciasanchez@es.ey.com

Francisco Silvan +34 916-578-223 Mobile: +34 629-789-482 Email: francisco.silvanrodriguez@es.ey.com

Barcelona GMT +1

EY Abogados

+34 933-663-700

Fax: +34 934-397-891 Edificio Sarriá Forum 08017 Barcelona Spain

Av. Sarriá, 102-106

International Tax and Transaction Services – International Corporate Tax Advisory and Transfer Pricing

José María Remacha

Manuel Moreno Ortega

+34 933-748-139

Mobile: +34 661-473-926 Email: jose.maria.remacha1@es.ey.com

+34 933-627-237 Mobile: +34 659-481-287 Email: manuel.moreno.ortega@es.ey.com

International Tax and Transaction Services – International Capital Markets

Patricia Miralles Majo, +34 933-748-375 Financial Services Mobile: +34 620-838-016 Organization Email: patricia.miralles.majo@es.ey.com

International Tax and Transaction Services – Transaction Tax Advisory



Josep Cami

Business Tax Advisory

Gorka Crespo

+34 933-666-540

Mobile: +34 660-386-210 Email: josep.camicasals@es.ey.com

+34 933-663-873 Mobile: +34 639-774-346 Email: jorge.crespocarrasco@es.ey.com

Antoni Murt +34 933-666-509 Mobile: +34 630-010-585 Email: antoni.murtprats@es.ey.com

Indirect Tax

Maria Lorente

+34 933-663-763 Mobile: +34 619-764-292 Email: maria.lorenteiranzo@es.ey.com

Global Compliance and Reporting

Emilio Margallo

People Advisory Services

+34 933-666-706

Mobile: +34 619-970-464 Email: emilio.margallogonzalez@es.ey.com

Judith Sans +34 933-663-750 Mobile: +34 609-724-069 Email: judith.sansoto@es.ey.com

Legal Services

 Pilar Fernández

+34 933-663-617 Mobile: +34 630-181-112 Email: pilar.fernandezbozal@es.ey.com

Simeón García-Nieto +34 933-663-738 Mobile: +34 630-184-413 Email: simeon.garcia-nietonubiola@es.ey.com

EY Abogados

+34 944-243-777

Fax: +34 944-242-745 Plaza Euskadi 5 Planta 13 48009 Bilbao Spain

Torre Iberdrola

Business Tax Advisory

Pablo Sanz Gutiérrez

+34 944-873-047 Mobile: +34 699-310-947 Email: pablo.sanz.gutierrez@es.ey.com

Macarena de Abiega +34 944-872-907 Mobile: +34 649-528-130 Email: macarenade.abiegavaldivielso@es.ey. com

La Coruña GMT +1

EY Abogados

+34 981-217-253

Cantón Pequeño 13-14, 7B Fax: +34 981-223-475 Edificio Ocaso 15003 La Coruña Spain

Business Tax Advisory

Marcos Piñeiro

Legal Services

Carlos Borrajo

+34 986-443-029 Mobile: +34 616-257-661 Email: marcos.pineiro.sanroman@es.ey.com

+34 981-217-253 Mobile: +34 690-843-699 Email: carlos.borrajo.leiros@es.ey.com

Las Palmas de Gran Canaria GMT

EY Abogados

+34 928-380-984

Avda. Alcalde Ramírez Fax: +34 928-380-098 Bethencourt, 6 Edificio Atlántico 35003 Las Palmas de Gran Canaria Spain

Business Tax Advisory

 Julio Méndez

+34 928-380-984 Mobile: +34 696-480-248 Email: julio.mendezcalderin@es.ey.com

Málaga GMT +1

EY Abogados

+34 952-228-506

Paseo de la Farola, 5 Fax: +34 952-210-190 Edificio Velería 29016 Málaga Spain

Business Tax Advisory Alberto García

Legal Services

 Guillermo Ramos

+34 954-665-283 Mobile: +34 629-767-991 Email: alberto.garcia.valera@es.ey.com

+34 952-285-408 Mobile: +34 619-075-325 Email: guillermo.ramosgonzalez@es.ey.com

Mallorca GMT +1

EY Abogados

+34 971-213-233

Camí del Reis, 308 Torre A Fax: +34 971-715-673

Urbanización Can Granada 07010 Palma de Mallorca Spain

Business Tax Advisory

Antoni Murt +34 933-666-509 (resident in Barcelona) Mobile: +34 630-010-585 Email: antoni.murtprats@es.ey.com

Pamplona GMT +1

EY Abogados

+34 948-175-510

Avda. Pío XII, 22 Fax: +34 948-271-151 31008 Pamplona Spain

Business Tax Advisory

 Maite Yoldi

+34 948-260-903 Mobile: +34 699-312-988 Email: maite.yoldielcid@es.ey.com

Sevilla GMT +1

EY Abogados

+34 954-239-309

Avda. de la Palmera, 33 Fax: +34 954-625-541 41013 Sevilla Spain

Business Tax Advisory

 Alberto García

Legal Services

 Guillermo Ramos

+34 954-665-283 Mobile: +34 629-767-991 Email: alberto.garcia.valera@es.ey.com

+34 952-285-408 Mobile: +34 619-075-325 Email: guillermo.ramosgonzalez@es.ey.com

Tenerife GMT

EY Abogados

+34 922-243-086

Avda. Bravo Murillo, 5 Fax: +34 922-240-738, +34 922-243-307 Edificio MAPFRE 38003 Santa Cruz de Tenerife Spain

Business Tax Advisory

 Julio Méndez +34 928-380-984 (resident in Las Palmas Mobile: +34 696-480-248 de Gran Canaria) Email: julio.mendezcalderin@es.ey.com

Valencia GMT +1

EY Abogados

+34 963-533-655

Menorca, 19 – Edificio Aqua Fax: +34 963-532-798 46029 Valencia Spain

Business Tax Advisory

Miguel Guillem

Legal Services

 Pablo Tramoyeres

+34 963-533-655 Mobile: +34 626-892-893 Email: miguel.guillemviella@es.ey.com

+34 963-532-797 Mobile: +34 609-750-896 Email: pablo.tramoyeresgalvan@es.ey.com

Vigo GMT +1

EY Abogados

+34 986-443-029 Arenal, 18 Fax: +34 986-430-021 Offices 10–13 36201 Vigo Spain

Business Tax Advisory

Marcos Piñeiro

Legal Services

Carlos Borrajo

+34 986-443-029

Mobile: +34 616-257-661 Email: marcos.pineiro.sanroman@es.ey.com

+34 981-217-253

Mobile: +34 690-843-699 Email: carlos.borrajo.leiros@es.ey.com

Zaragoza GMT +1

EY Abogados +34 976-458-110

Centro Empresarial de Aragón Fax: +34 976-458-111 Avda. Gómez Laguna, 25 50009 Zaragoza Spain

Business Tax Advisory

Jorge Izquierdo Millán +34 976-757-333

Mobile: +34 608-707-227 Email: jorge.izquierdomillan@es.ey.com

A. At a glance

Corporate Income Tax Rate (%) 25 (a)

Capital Gains Tax Rate (%) 25 (b)

Branch Tax Rate (%) 25

Withholding Tax (%)

Dividends 19 (c)

Interest 19 (d)

Royalties from Patents, Know-how, etc. 19/24 (d) Branch Remittance Tax 19 (e)

Net Operating Losses (Years)

Carryback 0 Carryforward Unlimited

(a) Other rates apply to specific entities. See Section B. (b) Certain capital gains are generally exempt from tax or are subject to tax at a reduced rate. See Section B. (c) Certain dividends are exempt from tax. See Section B. (d) Certain interest and royalties are exempt from tax. See Section B. (e) Exceptions may apply to this rate. See Section B.

B. Taxes on corporate income and gains

Corporate income tax. Corporate tax is imposed on the income of companies and other entities and organizations that have a sepa rate legal status. Resident entities are taxable on their worldwide income. The following entities are considered to be resident enti ties:

• An entity incorporated under Spanish law

• An entity having its legal headquarters in Spain or its effective place of management in Spain

In addition, the tax authorities may presume that an entity resident in a tax haven or in a country with no income taxation is tax resi dent in Spain if any of the following circumstances exist:

• The majority of its assets is directly or indirectly located in Spain.

• A majority of its rights may be exercised in Spain.

• The principal activity of the entity is carried out in Spain.

The above measure does not apply if business reasons justify the effective performance of operations and exercise of management in such foreign jurisdiction.

Nonresident entities are taxable only on Spanish-source income, which includes income from any kind of business activity con ducted in Spain through a branch, office or other permanent establishment. Nonresident companies or individuals must appoint a fiscal representative if they are conducting business activities in Spain through a permanent establishment (excep tions apply) or if certain other specified circumstances occur.

Tax rates. The general tax rate for residents and nonresidents that conduct business activities in Spain through a permanent estab lishment is 25%.

For tax periods starting on or after 1 January 2022, a minimum tax payment of 15% corporate tax over the taxable base has been introduced. The taxable base is calculated as the accounting profit plus or minus book-to-tax adjustments (such as the disal lowance or limitation of certain expenses or participation exemp tion). This minimum tax payment applies to the following groups:

• Companies that had more than EUR20 million in revenue during the 12 months preceding the start of the tax year

• Companies that are taxed as part of a tax unity (for example, consolidated tax group), regardless of their revenue

• Foreign companies that obtain income through a Spanish per manent establishment and are subject to the nonresidents income tax

Companies may not use credits and incentives (for example, re search and development (R&D) tax credits) to reduce their in come tax liability below the minimum tax threshold, except for foreign tax credits and certain tax incentives (bonificaciones), which must be applied first. The tax liability resulting from applying the general corporate income tax rate to the taxable base and after the application of certain tax credits may not be below this minimum corporate income tax liability. Unutilized tax credit resulting from this new rule may be carried forward.

Newly incorporated entities carrying out business activities are taxed at a special rate of 15% in the first fiscal year in which the entity has a positive tax base and in the following year, regardless of the amount of the tax base (a 10% minimum tax payment applies to newly created companies for tax periods starting on or after 1 January 2022). However, this special tax rate does not apply in certain cases, such as the following:

• Newly incorporated entities carrying out economic activities previously carried out by related entities

• Newly incorporated companies belonging to a group of compa nies

• Entities qualifying as passive entities (entidades patrimonia les), which are entities that have more than 50% of their assets constituted by shares or other assets not linked to a business activity

In addition to other tax benefits, companies licensed to operate in the Canary Islands Special Zone (Zona Especial Canaria, or

ZEC) are subject to a reduced tax rate of 4% if certain conditions are satisfied. This reduced rate applies up to a maximum amount of taxable income, equaling the lesser of the following:

• The ratio of income derived from qualified ZEC transactions with respect to total income

• The amount resulting from the sum of the following amounts: EUR1, 800,000 for those entities within the ZEC that fulfill the minimum job creation requisites (that is creation of three or five jobs annually, depending on the island) An additional EUR500,000 for each job created exceeding the minimum job creation requirements, up to 50 jobs

The tax reduction resulting from the application of the above rule (this reduction is calculated by comparing the corporate income tax paid to the tax that would have been due under the general corporate income tax rate) cannot be greater than the following:

• 17.5% of the ZEC entity’s turnover for an entity in the indus trial sector

• 10% of the ZEC’s entity’s turnover for an entity in a different sector

Specific tax rates apply to, among others, non-governmental or ganizations, charities, certain cooperatives, investment fund enti ties meeting certain requirements and financial institutions.

In general, nonresidents operating in Spain without a permanent establishment are taxable at a rate of 24%. This tax rate is reduced to 19% for income derived by European Union (EU) or European Economic Area (EEA) tax residents in a jurisdiction with which an effective exchange of tax information agreement is in place. Nonresidents without a permanent establishment that operate in Spain and that are resident in an EU member state and that can prove that their expenses are directly linked to their Spanish-source income and have a “direct and fully inseparable nexus” with the activity performed in Spain may deduct any expenses allowed by the following:

• The Personal Income Tax Law, as provided in Law 36/2006, 28 November (this law also refers to the Corporate Income Tax Law to determine the net tax base in the case of economic activities), if they are individuals

• The Corporate Income Tax Law (27/2014), if they are legal entities

Dividends and interest received by nonresidents are subject to a final withholding tax of 19%. As a result of a change in the Spanish Personal Income Tax Law, share premium distributions made to non-Spanish resident shareholders may be treated as dividend distributions instead of a return of basis and therefore subject to withholding tax under the general rules.

The tax rate applicable to income from reinsurance operations is 1.5%. A 4% tax rate applies to Spanish-source income generated by companies resident abroad operating ships and aircraft in Spain.

Interest income is exempt from tax if the recipient is resident in an EU member state or, effective 1 January 2021, in a state in the EEA under an effective exchange of information with Spain (or if the recipient is an EU/EEA permanent establishment of a resident in another EU member state or the EEA) that is not on the Spanish

tax haven list. Interest paid to nonresidents on Spanish Treasury obligations is exempt from tax. Income derived by nonresidents without a permanent establishment in Spain from bonds issued in Spain by nonresidents without a permanent establishment in Spain and from bank accounts is exempt from tax in Spain.

Distributions by Spanish subsidiaries to parent companies in EU member states that are not on the Spanish tax haven list are ex empt from withholding tax if the parent company owns directly or indirectly at least 5% of the subsidiary for an uninterrupted period of at least one year and if certain other requirements are met. The one-year holding period requirement may be satisfied at the date of the distribution or subsequent to such date. An anti-avoidance provision applies in situations in which the majority of voting rights are vested in non-EU tax residents.

Royalties paid to associated EU resident companies or permanent establishments are exempt from tax in Spain if specific condi tions are met.

In addition to nonresident income tax at a rate of 25%, nonresi dents operating in Spain through a permanent establishment are subject to a branch remittance tax at a rate of 19%, unless one of the following exemptions applies:

• Branches of EU resident entities, other than tax-haven residents, are exempt from the tax.

• A branch can be exempt from tax if Spain and the country of residence of its head office have entered into a double tax treaty that does not provide otherwise and grants reciprocal treatment.

Patent Box Regime. Under the Patent Box Regime, a 60% exemp tion is granted for net income derived from the licensing of cer tain qualifying intellectual property (IP), including registered advance software that derives from R&D activities. Such income is considered only in the proportion of the amount resulting from the application of a specified ratio. The following are the rules for calculating the ratio:

• The numerator consists of the expenses incurred by the licensing entity that are directly related to the creation or development of the IP, including those incurred from outsourcing to unrelated third parties in this regard. These expenses are increased by 30%, subject to the limit of the amount included in the denomi nator.

• The denominator consists of the expenses incurred by the licens ing entity that are directly related to the creation of the IP, in cluding those related to the outsourcing from either related or unrelated parties and, if applicable, the acquisition of the IP.

Under the regime, expenses with respect to works related to the development of the IP that are subcontracted to related parties are included in the denominator, but not the numerator. Therefore, to the extent that the works related to the development of the IP are subcontracted to related parties, the reduction is less than 60% (that is, the lower the numerator in comparison with the denomi nator, the lower the percentage of reduction).

The net income qualifying for the reduction is calculated as the positive difference between the following two amounts:

• The revenues derived from the licensing of the right to use or exploit the assets or from the transfer of the assets

• The costs incurred by the company that are directly related to the creation of the assets and have not been included in the value of such assets, the amounts deducted as depreciation, and the costs that have been included in the corporate income tax base

This exemption also applies to the net income from the transfer of the qualifying IP.

To qualify for the exemption, the following requirements must be met:

• The licensee must use the licensed IP assets in an economic activity. This use cannot result in the sale of goods or provision of services to the licensor that generates deductible expenses for the licensor if the licensor and the licensee are related parties.

• The licensed entity must not be resident in a no-tax or prohib ited list jurisdiction.

• If any additional goods or services are included in the licensing agreement, the consideration for such services must be included separately in the agreement.

• Accounting books for determining the income and direct ex penses with respect to each of the licensed assets must be maintained. Income to be reduced is considered net of depre ciation and of expenses directly related to such asset in the relevant period.

Transitory regime. The regulation provides for a transitory regime for pre-July 2016 licensing agreements. The taxpayer needs to select the option on the tax form corresponding to the 2016 fiscal year.

For licensing agreements entered into before 29 September 2013, the licensing entities may opt to continue applying the original Spanish Patent Box Regime, which entered into force on 1 January 2008.

For licensing agreements entered into from 30 September 2013 to 30 June 2016, the licensing entities may opt for applying the Spanish Patent Box Regime in accordance with the law in force from 1 January 2015.

In general, these transitory regimes will remain applicable until 30 June 2021. After this date, the amended Spanish Patent Box Regime will be the only applicable regime.

In addition, gains derived from the sale of the IP assets made from 1 July 2016 to 30 June 2021 (or, exceptionally until 31 December 2017 regarding certain sales occurring between related parties) may also benefit from the application of the reduction in accordance with the law in force as of 1 January 2015. The option should be made in the tax form corresponding to the period in which the assets are sold.

Capital gains. Spanish law generally treats capital gains as ordinary income taxable at the regular corporate tax rate.

Capital gains realized by nonresidents without a permanent es tablishment in Spain are taxed at a rate of 19%. Capital gains on movable property, including shares, are exempt from tax if the recipient is resident in an EU country that is not on the Spanish tax haven list or (effective 1 January 2021) in a state in the EEA

under an effective exchange of information with Spain, unless the gains are derived from the transfer of shares and any of the following circumstances exists:

• The company’s assets directly or indirectly consist primarily of Spanish real estate.

• For an EU/EEA shareholder who is an individual, he or she has held at least a 25% interest in the Spanish company at any time during the prior 12 months.

• For an EU/EEA shareholder that is a legal person, it has not held a minimum ownership percentage of 5% and a one-year minimum holding period in the subsidiary has not been met.

If a nonresident that does not have a permanent establishment in Spain disposes of Spanish real estate, a 3% tax is withheld by the buyer from the sale price, with certain exceptions. The tax with held constitutes an advance payment on the final tax liability of the seller.

Capital gains derived by nonresidents without a permanent establishment in Spain from the reimbursement of units in Spanish investment funds or from the sale of shares traded on a Spanish stock exchange are exempt from tax in Spain if the seller is resi dent in a jurisdiction that has entered into a tax treaty with Spain containing an exchange of information clause.

Administration. The tax year is the same as the accounting period, which may be other than a calendar year. The tax year may not exceed 12 months. The tax return must be filed within 25 days after six months following the end of the tax year. In April, October and December of each calendar year, companies and permanent establishments of nonresident entities or individuals must make payments on account of corporate income tax or non residents income tax, respectively, equal to one of the following:

• Eighteen percent of the tax liability for the preceding tax year.

• An amount calculated by applying 19/20 (for entities with net turnover of more than EUR10 million) or 5/7 (for entities with net turnover not exceeding EUR10 million) of the corporate income tax rate (that is, 24% or 17%, respectively, if the corporate tax rate is the general rate of 25%) to the profits for the year as of the end of the month preceding the date of the payment and then subtracting from the result tax withheld from payments to the company and advance payments of tax previ ously made. This alternative is compulsory for companies with turnover of more than EUR6 million in the immediately preced ing tax year.

• For taxpayers with net turnover of more than EUR10 million in the immediately preceding tax year, a minimum interim pay ment of 23% of the taxpayer’s accounting result after taxes (re gardless of eventual applicable book-to-tax adjustments and the pending application of a tax-loss carryforward), reduced by the amount of previous payments on account corresponding to the same fiscal year. As a result, for taxpayers with net turnover of more than EUR10 million, the interim payment is the higher of the following:

24% to the profits (tax base) for the year as of the end of the month preceding the date of the payment, reduced by the tax withheld from payments to the company and advance payments of tax previously made

23% of the positive accounting profit for the year as of the end of the month preceding the date of the payment, reduced by tax withheld from payments to the company and advance payments of tax previously made

Statute of limitations. Although the Spanish tax law provides that the statute of limitations period is four years, the Corporate Income Tax Act provides that tax losses and tax credits may be subject to tax audit for a period of 10 years from the tax year of generation. It also contains provisions enabling the tax auditors to review transactions implemented in statute-barred years if they produce effects in non-statute barred periods.

Participation exemption regime and foreign tax relief. The exemp tion method may be used to avoid double taxation on dividends received from Spanish resident and non-Spanish resident subsid iaries and on capital gains derived from transfers of shares issued by such companies. However, as a result of the 2021 Budget Bill, effective for fiscal years starting on or after 1 January 2021, the former full participation exemption method on qualifying divi dends and capital gains is reduced to a 95% partial exemption. Consequently, a 1.25% (1.50% for financial entities) effective tax rate should be expected on these sources of income. Exceptionally, a full participation exemption may still be available for a threeyear period under certain conditions to avoid double taxation of dividends or capital gains flowing from newly incorporated entities.

To qualify for this exemption, the following requirements must be met:

• At the time of the distribution of the dividend or the generation of the capital gain, the Spanish company has owned, directly or indirectly, at least 5% of the share capital of the resident or non resident company for an uninterrupted period of at least one year. For dividends, the one-year period can be completed after the distribution. In addition, the time period in which the par ticipation is held by other group entities is taken into account for purposes of the computation of the one-year period.

• For foreign companies only, a minimum level of (nominal) taxation of 10% is required under a foreign corporate tax sys tem similar to Spain’s corporate tax system. This requirement is considered to be met if the subsidiary is resident in a country that has entered into a double tax treaty with Spain containing an exchange-of-information clause.

• The foreign company is not resident in a country identified by the Spanish tax authorities as a tax haven.

The new Spanish Corporate Income Tax Act eliminates the socalled “business activity test,” commonly referred to as the 85/15 rule. However, the potential impact of the new controlled foreign company (CFC) rules (see Section E) need to be taken into ac count because capital gains derived from the transfer of shares may not benefit from the participation exemption regime if the subsidiary has registered CFC income in excess of certain thresh olds. In addition, a new anti-hybrid measure prevents the applica tion of the participation exemption if the dividend constitutes a deductible expense for the payer.

If the exemption method does not apply, a tax credit is allowed for underlying foreign taxes paid by a subsidiary on the profits out of which dividends are paid and for foreign withholding taxes paid on dividends.

For medium-size and large taxpayers (with revenue exceeding EUR20 million in the immediately preceding year), the tax credit utilization is limited to 50% of the gross tax liability, but the un used credit may be carried forward indefinitely.

The credit method (see below) and exemption method cannot be used with respect to the same income. Tax credits granted under the credit method may be carried forward indefinitely.

A tax credit is available for resident entities deriving foreignsource income that is effectively taxed abroad. Such credit is equal to the lesser of the following:

• The Spanish corporate tax payable in Spain if the foreign in come had been obtained in Spain

• The tax effectively paid abroad on the foreign-source income (in accordance with applicable double tax treaty provisions)

Foreign portfolio holding company regime. A special tax regime applies to companies that have foreign portfolio holding company (entidades de tenencia de valores extranjeros or ETVE) status. ETVEs are ordinary Spanish companies engaged in the administration and management of participations in the equity of nonresident entities. ETVEs may also be engaged in other activities. In addition to the 95% exemption for dividends and capital gains derived from shares in qualifying foreign companies as described in Participation exemption regime and foreign tax relief, an ETVE benefits from certain other tax advantages, including the following:

• No withholding tax is imposed on distributions made by ETVEs out of reserves derived from tax-exempt foreign-source dividends and capital gains to nonresident shareholders who are not taxhaven residents.

• Capital gains derived by foreign shareholders of ETVEs from transfers of shares in ETVEs are not taxed to the extent that the capital gain corresponds to qualifying exempt dividends and gains (realized or unrealized) derived at the ETVE level if the shareholder is not resident in a tax haven.

C. Determination of taxable income

General. Taxable income is the company’s gross income for the tax year, less certain deductions. It is determined from the annual financial statements prepared under Spanish generally accepted accounting principles (Spanish GAAP), as adjusted under certain statutory tax provisions. Spanish GAAP follows several criteria contained in International Financial Reporting Standards (IFRS).

In general, all necessary expenses incurred in producing income during the year and depreciation on income-producing property may be deducted from gross income to arrive at taxable income.

Certain items are not deductible from gross income, such as the following:

• Penalties and fines.

• Corporate income tax payments.

• Gifts and donations (gifts to customers are deductible up to an amount equal to 1% of a company’s turnover).

• Expenditures for the improvement or enhancement of capital assets.

• Amounts directly or indirectly remunerating own equity (for example, dividends and other payments made by entities in favor of their shareholders).

• Expenses related to services carried out by persons or entities that are resident in a listed tax haven, unless the taxpayer can prove that the expense relates to an effectively performed trans action.

• Depreciation charges that exceed the maximum rates prescribed by law, unless it can be demonstrated that the rates used corre spond to the actual depreciation incurred.

• Interest expenses on intragroup financing related to the acquisi tion (or equity increase) of a participation in group entities, un less valid business reasons for such transactions are proven.

• Losses from foreign permanent establishments, unless the per manent establishment is transferred or closed down. In the event that the permanent establishment is closed down, the losses may be reduced by the amount of previous exempt income.

• Capital losses derived from the sale of a permanent establish ment.

• Losses from members of Temporary Business Alliances (Uniones Temporales de Empresas) operating abroad, unless the interest is transferred or the relevant Temporary Business Alliance is closed down.

Deduction of losses derived from the impairment of tangible as sets, intangible assets (including goodwill), real estate assets and shares of subsidiaries is deferred until they are sold to third parties or, if they are depreciated, during their useful life.

Deduction of losses arising from the transfer of tangible assets, intangible assets, real estate assets and debt securities between entities in the same group of companies (as defined by Article 42 of the Commercial Code) is deferred until the earliest of the fol lowing periods:

• The period in which the assets are further written off by the buyer

• The period in which the buyer resells the assets to a third party outside the group of companies

• The period in which the seller or the buyer leaves the group of companies

For depreciable assets, the deduction is claimed during their use ful life.

Deduction of tax losses derived from the sale of shares in subsid iaries in which the buyer is a company of the same group of companies as the seller is deferred until the shares are resold to a third party outside the group or until the buyer or the seller leaves the group of companies. However, such deferred tax losses are deductible only with respect to the sale of non-qualifying par ticipations (see Participation exemption regime and foreign tax

relief in Section B); in the case of nonresident subsidiaries, they must also meet the 10% minimum taxation requirement. In addition, the tax losses may be reduced by the exempt gains recog nized by the related-party buyer on the sale to a third party outside the group.

Capital losses derived from the sale of qualifying participations are not deductible.

Capital losses derived from the sale of non-qualifying participations may be deductible, but reduced by the amount of exempt dividends received since 2009 and by the amount of exempt gains recognized by a related-party seller in the purchase by the Spanish company.

The deduction of losses derived by the dissolution of subsidiaries may be reduced by exempt dividends recognized in the preceding 10 years.

Recapture of losses. Write-downs of participations deducted before 2013 must be recaptured in a maximum period of five years beginning in 2016, or in a shorter period if the value of the sub sidiary is recovered in a shorter time period or if the participation is sold before the end of the five-year period.

The Spanish head office is not allowed to apply the participation exemption regime on profits of the branch abroad until profits do not exceed the amount of branch losses deducted before 2013.

In the case of a sale of a permanent establishment, the taxpayer’s tax base must be increased by an amount equal to the positive difference between the negative income generated by the perma nent establishment before 1 January 2013 and the positive income generated by the permanent establishment after 1 January 2013, up to the amount of the capital gain derived from the sale.

Capitalization reserve. Taxpayers may reduce their tax base by an amount equal to 10% of the increase of their net equity in a given year if they book a non-distributable reserve corresponding to the tax base reduction and keep it in their balance sheet for five fiscal years.

The reduction is calculated as 10% of the difference between the net book value of the company at the beginning of the year (excluding the preceding year’s accounting result) and the net book value at the end of the financial year after deducting negative adjustments, up to a maximum limit of the positive taxable base before the utilization of any tax loss carryforward. Any amount exceeding this limit will be carried forward to the following two years.

Hybrid instruments. The new Spanish Corporate Income Tax Act introduces certain amendments to anti-abuse rules in accordance with the Organisation of Economic Co-operation and Development (OECD) Base Erosion Profit Shifting (BEPS) proj ect. In this regard, a special anti-abuse provision for hybrid instruments prevents the deductibility of expenses incurred in transactions with related parties in which as a result of different tax characterizations, any of the following circumstances would exist:

• Income would not be subject to tax.

• No income would be generated to the counterparty.

• The income would be subject to a nominal tax rate below 10%.

In addition, intragroup profit-sharing loans are characterized as equity instruments for Spanish tax purposes. Consequently, inter est expenses derived from profit-participating loans are not tax deductible for the borrower. In line with such treatment, interest income derived from intragroup profit-sharing loans qualifies as a dividend that is exempt for the lender under the participation exemption regime (see Section B).

Furthermore, Spain has implemented the EU Anti-Tax Avoidance Directive (Council Directive 2017/952 of 29 May 2017 or EU ATAD 2) into the Spanish corporate income tax and nonresident income tax provisions, effective from 11 March 2021. Under these newly implemented rules, expenses are not deductible or income must be taken into account, if specified mismatches occur, such as deductions without inclusion, double deductions, hybrid or disregarded permanent establishments or dual residencies. Legal and factual analysis is necessary to determine whether a specified transaction or arrangement falls within the definition of non-permitted mismatches.

Inventories. The corporate tax law does not prescribe permissible methods for the valuation of inventory. Consequently, any valua tion method allowed under the Spanish accounting rules may be used for tax purposes. Weighted average price is the generally accepted method, but first-in, first-out (FIFO) is also accepted. A common method is required with regard to inventories of the same nature and use.

Provisions. Provisions that are properly recorded are generally taxdeductible except for those specified by law.

Depreciation. All fixed or movable tangible assets (except land) that are owned by and used in the trade or business of a company are depreciable if their useful life exceeds a tax year. Intangible assets, such as patents, may be amortized during their useful life if they depreciate and have a limited and clearly defined useful life. Intangible assets whose useful life cannot be estimated reli ably are amortized at an annual rate of 10%.

Goodwill is amortized at an annual rate of 5%.

Under certain conditions, Spanish-resident entities may amortize for tax purposes the financial goodwill embedded in shares of qualified foreign subsidiaries with respect to the following acqui sitions:

• Acquisitions carried out before 21 May 2011 in non-EU countries if it can be proven that cross-border mergers cannot be accomplished

• Other acquisitions carried out before 21 December 2007

The amortization of financial goodwill is set at a maximum rate of 5%.

Depreciation methods are restricted to the straight-line method and the declining-balance method. The straight-line method may be used for any depreciable asset. The declining-balance method may be used only for certain new tangible assets (industrial and

farming machinery, vehicles, information systems and so forth) that have an anticipated useful life of three years or more.

The basis for depreciation is the acquisition price of assets pur chased by the company or the manufacturing cost of assets manufactured by the company. The acquisition price includes all related costs, such as customs duties, transportation costs and installation expenses.

Maximum depreciation rates for tax purposes are fixed by law. The following are general straight-line rates and periods of de preciation for certain assets.

Maximum Maximum period rate of depreciation

Asset % years

Commercial buildings 2 100

Industrial buildings 3 68

Office equipment 10 or 15 20 or 14

Motor vehicles 16 14

Plant and machinery 10 or 12 20 or 18

Computers 25 8

Companies may use higher rates if they can demonstrate that the actual depreciation is in excess of that allowed by law.

To be deductible, the depreciation amount must be recorded in the company’s accounting books and must be “effective”; that is, it must correspond to the actual depreciation of the asset. The second condition is met if the depreciation amount is calculated in accordance with the rates prescribed by law or with other rates that have been expressly approved by the tax authorities. Otherwise, the “effectiveness” of the depreciation must be demonstrated. On request, the tax authorities may grant approval for accelerated depreciation if the company presents a plan specifying the assets, the date and price of the acquisition, the depreciation rates and the annual depreciation allowance desired, and reasons to support the adoption of such a plan.

Investments in new tangible assets and real estate in Spain or abroad carried from 2009 through 31 March 2012 may qualify for a free tax depreciation allowance. For investments made during tax years that began during 2009 and 2010, such tax benefit is conditioned on the maintenance of the level of employment. Any depreciation allowance on such assets that was pending to be fully accelerated by 31 March 2012 is still available for use but is sub ject to certain limitations. New fixed assets can be freely depreci ated on an annual basis if their unit cost is below EUR300, with an overall cap of EUR25,000.

Relief for losses. Net operating losses can be carried forward indefinitely (no expiration period) with an annual limit of 70% of the positive tax base before the application of the capitalization reserve tax reduction (see Capitalization reserve). The limitation applies to losses in excess of EUR1 million.

The following restrictions are imposed on taxpayers with revenue exceeding EUR20 million in the immediately preceding year:

• If the revenue within the 12 months before the beginning of the tax period ranged from EUR20 million to EUR60 million, tax

losses carried forward may offset up to a maximum of 50% of taxable income.

• If the revenue in the period mentioned in the first bullet exceed ed EUR60 million, the limitation equals 25% of taxable income.

Change-in-control rules for entities with tax loss carryforwards are aimed at limiting the transfer or the use of loss carryforwards. In particular, the use of tax losses is restricted if the entity that is transferred engages in a different or additional activity within the two years after the change of ownership and if the net turnover derived from such activities in those years is greater than 50% of the average turnover of the prior two years.

Groups of companies. A group of companies may file a consoli dated tax return if the election to apply this regime is carried out before the beginning of the tax year in which the regime is to be applied and if the tax authorities are notified of the election. After the group elects taxation under the consolidated regime, the re gime applies indefinitely, provided that certain requirements are satisfied.

Effective from 1 January 2015, in line with several EU court cases, Spanish legislation has extended the scope of the tax group concept in order to allow the following:

• Subsidiaries held indirectly through a foreign intermediary company can form part of the tax group.

• Horizontal tax consolidation is allowed, so that Spanish direct or indirect subsidiaries of a common foreign parent company are able to form a Spanish tax group.

For this purpose, Spanish corporations include stock companies (sociedades anónimas), limited liability companies (sociedades limitadas) and limited partnerships (sociedades comanditarias por acciones). The parent company may adopt any of these legal forms or otherwise it must have legal personality and be subject to and not exempt from corporate income tax, if resident in Spanish territory, or if resident abroad, subject to a similar corpo rate tax system as in Spain. Registered branches of nonresident entities may qualify as controlling top entities in consolidated groups if certain requirements are met.

A company is deemed to control another company if, on the first day of the tax year for which the consolidated regime applies, it satisfies the following requirements:

• It owns, directly or indirectly, at least 75% of the other com pany’s share capital (70% for companies quoted on the stock exchange) and it maintains such ownership and a minimum 50% of voting rights in such entities for the entire tax year of consolidation.

• It is not subject to the special tax regimes applicable to Domestic and European Economic Interest Groupings (Agrupaciones de Interés Económico) or Temporary Business Alliances (Uniones Temporales de Empresas).

• It is not a subsidiary of another company fulfilling the require ments to be regarded as the controlling company.

Tax-exempt companies, companies taxed at a different rate than the parent company and companies in specified legal situations, such as bankruptcy, may not be part of a group of companies.

Pre-consolidation losses can be used only up to the amount of the individual positive tax base that could be used on a stand-alone basis.

D. Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)

Value-added tax (VAT), levied on goods delivered and services rendered within the Spanish territory (excluding the Canary Islands, Ceuta and Melilla), on imports from EU and non-EU member states, and on certain services rendered by foreign suppliers to persons subject to Spanish VAT (also, see Section E)

Standard rate 21 Rate on certain necessary products and services 10

Rate on basic products 4

Special annual tax on real estate owned by companies resident in tax havens; assessed on the government’s official value on 31 December 3

Social security and employee-related fund contributions, calculated on an employee’s total compensation, with certain limitations; paid by Employer 29.9 Employee 6.35

Capital duty on reductions and liquidations of companies 1

E. Miscellaneous matters

Foreign-exchange controls. Exchange controls are administered by the Bank of Spain and the Ministry of Economy and Finance. Exchange controls were liberalized several years ago. As a result, only a few, simple reporting requirements are now imposed, pri marily for statistical purposes.

Restrictions on the deduction of financial expenses. In general, net interest expenses exceeding 30% of earnings before interest, tax, depreciation and amortization (EBITDA), with some adjustments, may not be claimed as a deduction for tax purposes in the year of their accrual (with some exceptions, such as a minimum allowance of EUR1 million per year). The excess may be carried for ward indefinitely. This restriction applies regardless of whether the interest is paid to a related party or an unrelated lender. In addition, as mentioned in General in Section C, interest expense on intragroup financing related to the acquisition (or equity in crease) of participation in group entities is disallowed unless valid business reasons for such transactions are proven.

Additional rules for leveraged acquisitions limit the deductibility of interest on loans to purchase shares (acquisition debt) to 30% of the operating profit of the acquiring entity. The limitation ap plies if the acquired and acquiring entities are merged within a

four-year period or if new entities join the tax group in which the acquiring and acquired entity are included. Under an escape clause in the law, the limitation does not apply in the year of the acquisition if the acquisition debt does not exceed 70% of the consideration paid for the shares. In the following years, the limi tation will not apply if the acquisition debt is proportionally re paid within an eight-year period until it is reduced to 30% of the total consideration.

Anti-avoidance legislation. To prevent fraud, the tax code contains several anti-avoidance measures in various chapters. Substanceover-form principles apply.

Controlled foreign companies. Under controlled foreign company (CFC) rules contained in the corporate income tax law, Spanish resident companies must include in their tax base certain passive income derived by their foreign subsidiaries if certain control and effective taxation conditions are satisfied. Significant exceptions apply to these rules.

These rules do not apply to EU-controlled subsidiaries if the Spanish shareholder proves that the incorporation of the foreign entity was undertaken for sound business reasons and such entity carries on business activities.

Effective from 1 January 2015, certain amendments to CFC rules were introduced. These include, among others, additional substance requirements to be met by the foreign subsidiary in order to avoid the imputation of the foreign low-taxed income.

Transfer pricing. Spanish law includes the arm’s-length principle and the requirement of documenting all related-party transactions. The arm’s-length principle applies to all transactions carried out by taxpayers with related parties. The following are the principal aspects of the law:

• Taxpayers must use arm’s-length values in their tax returns. As a result, taxpayers bear the burden of proof on transfer-pricing issues.

• OECD guidelines and pricing methodology apply.

• The law provides for secondary adjustments. Under this mea sure, if the agreed value in a transaction differs from the normal market value, the difference between the values is recharacter ized by following a substance-over-form approach. In particu lar, for a transaction between a company and a shareholder, the difference (proportionally to the participation in the entity) is considered a dividend if such difference is in favor of the share holder or a contribution by the shareholder to the entity’s equity if the difference is in favor of the entity.

• Advance Price Agreements (APAs) may be negotiated. They apply to the current year, the preceding four years and the fol lowing four years. The law allows APAs to have retroactive effect within the statute-of-limitations period.

• Statutory documentation requirements in line with the guide lines of the EU Joint Transfer Pricing Forum entered into force on 19 February 2009. This documentation is required to support the taxpayer’s transfer-pricing policy regarding domestic and international transactions.

• Penalties and delay interest may be imposed. If the documenta tion is correct, the tax authorities do not impose a penalty with respect to a transfer-pricing assessment. However, the absence

(or incompleteness) of documentation is subject to penalties, even if no adjustments are assessed.

The Spanish Corporate Income Tax Act provides the following three exceptions to the obligation to prepare statutory transferpricing documentation:

• When the transaction takes place between entities that form part of a Spanish tax consolidated group

• When the transaction is carried out between members of an Economic Interest Grouping (Agrupaciones de Interés Económico) or a Temporary Business Alliance (Uniones Temporales de Empresas)

• When the transaction is carried out within the scope of a public stock offering

• When transactions with the same entity do not exceed EUR250,000 per year

Simplified documentation requirements apply to entities with a turnover that does not exceed EUR45 million, computed at the level of the mercantile group.

Some specified transactions must be documented in any case, such as transactions performed with group “related parties” that are tax resident in a tax-haven jurisdiction. Article 18.2 of the Spanish Corporate Income Tax Act provides a definition of “re lated parties.”

In addition, transactions performed with related or unrelated residents of listed tax havens must comply with the arm’s-length principle and are subject to statutory documentation requirements.

New Country-by-Country (CbC) Reporting obligations apply to Spanish tax resident groups if the consolidated group’s net turnover in the immediately preceding fiscal year exceeded EUR750 million. This obligation may also apply in certain cases to subsidiaries of foreign groups.

As of 1 January 2016, new transfer-pricing documentation rules require more detailed information (for example, intangible assets, financial activities, management structure, main competitors and reconciliation of data used in economic analyses with annual fi nancial statements).

VAT Immediate Supply of Information System. Effective from the 2017 fiscal year, businesses and professionals who are required to file VAT returns on a monthly basis are subject to the new VAT Immediate Supply of Information System. Businesses and pro fessionals who are required to file monthly returns if they meet any of the following conditions:

• They have revenue exceeding EUR6 million.

• They are included in the monthly refund regime.

• They are applying the VAT grouping provisions.

Under the new system, information related to all invoices issued or received, customs documents and accountancy documents, if any, must be transmitted electronically and almost immediately to the Spanish tax authorities so that the tax authorities have all of the information relating to the operations carried out by VAT taxpayers in real time. Failure to comply with this filing system is subject to penalties.

Mandatory disclosure regime. Spain has enacted mandatory dis closure rules in connection with the implementation of the EU Mandatory Disclosure Regime (MDR). The rules entered into force on 1 July 2020. However, reports will retrospectively cover arrangements if the first step was implemented between 25 June 2018 and 1 July 2020. The Spanish MDR legislation is closely aligned with the requirements of the directive.

On 6 April 2021, the Spanish government approved regulations to further implement MDR, which became effective on 8 April 2021. These regulations contain certain detailed guidance on the hallmarks, including reporting deadlines. A Ministerial Order issued by the Ministry of Tax approved the tax forms to comply with these reporting obligations. For agreements for which the first step was implemented in the transitory period (between 25 June 2018 and 1 July 2020), the reporting deadline is 30 cal endar days from the date on which the Ministerial Order indi cated above entered into force (14 April 2021), so the deadline expired on 14 May 2021. The same deadline applies for the agreements reporting obligation arose between 1 July 2020 and the date of entering into force of such Ministerial Order.

F. Treaty withholding tax rates

The rates reflect the lower of the treaty rate and the rate under domestic tax law.

On 28 September 2021, Spain deposited its instrument of ratifi cation of the Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting (MLI) with the OECD. The provisions included in the MLI will have a significant impact on the vast majority of the treaties in the Spanish tax treaty network. The instrument will enter into force on 1 January 2022 for Spain. However, because Spain made a reser vation pursuant to Article 35(7)(a), the date of effects should be monitored on a jurisdiction-by-jurisdiction basis.

Dividends (a) Interest (b) Royalties % % %

Albania 0/5/10 (c) 6 (d) 0

Algeria 5/15 (e) 5 (d) 7/14 (f)

Andorra 5/15 (e) 5 (d) 5

Argentina 10/15 12 (d) 3/5/10/15 (gggg)

Armenia (i) 0/10 (j) 5 5/10 (k)

Australia 15 10 10

Austria 10/15 (e) 5 5 Azerbaijan 5/10 (llll) 8 0

Barbados 0/5 (kkkk) 0 0

Belarus 5/10 (hh) 0/5 (qqqq) 5

Belgium 0/15 (m) 10 (d) 5

Bolivia 10/15 (e) 15 (d) 15

Bosnia and Herzegovina 5/10 (n) 7 (d) 7

Brazil 15 10/15 (o) 10/15 (p)

Bulgaria 5/15 (e) 0 0

Canada 5/15 0/10 0/10

Cape Verde 0/10 (l) 5 0 Chile 5/10 (q) 5/15 (r) 5/10 (s)

China Mainland 0/5/10 (tt) 0/10 (qqqq) 10

Colombia

Dividends (a) Interest (b) Royalties % % %

0/5 (t) 10 (d) 10

Costa Rica (u) 5/12 (v) 5/10 (w) 10

Croatia 0/15 (x) 0 0

Cuba 5/15 (e) 0/10 (d) 5 (y)

Cyprus 0/5 (zzz) 0 0

Czech Republic (z) 5/15 (e) 0 5

Dominican Republic

0/10 (www) 10 (d) 10

Ecuador 15 0/5/10 (d)(aa) 5/10 (bb)

Egypt 9/12 (cc) 10 (d) 12

El Salvador 0/12 (dd) 10 (d) 10

Estonia 5/15 (e) 10 (d) 5/10 (ee)

Finland 10/15 (e) 10 5

France 0/15 (ff) 10 (d) 5

Georgia 0/10 (hh) 0 0

Germany 5/15 (e) 0 0

Greece 5/10 (ii) 8 (d) 6

Hong Kong SAR 0/10 (l) 5 (d) 5 Hungary 5/15 (e) 0 0

Iceland 5/15 (e) 5 (jj) 5 India 15 15 (g) 10/20 (kk)

Indonesia 10/15 (e) 10 (d) 10 Iran 5/10 (ll) 7.5 (d) 5 Ireland 0/15 0 5/8/10 (mm)

Israel 10 5/10 (nn) 5/7 (oo)

Italy 15 12 (d) 4/8 (pp)

Jamaica 5/10 (qq) 10 (d) 10 Japan 0/5/10 (oooo) 0/10 (pppp) 0 Kazakhstan 5/15 (rr) 10 (d) 10 Korea (South) 10/15 (e) 10 (d) 10 Kuwait 0/5 (zzz) 0 5

Latvia 5/10 (ss) 10 (d) 5/10 (ee)

Lithuania 5/15 (tt) 10 (d) 5/10 (s)

Luxembourg 10/15 (e) 10 (d) 10 Malaysia 0/5 (vv) 10 5/7 (ww)

Malta 0/5 (xx) 0 0

Mexico 0/10 (hhhh) 4.9/10 (iiii) 0/10 (y)

Moldova 0/5/10 (zz) 5 (d) 8 Morocco 10/15 (e) 10 5/10 (bb)

Netherlands 5/10/15 (e)(aaa) 10 6

New Zealand 15 10 (jj) 10

Nigeria 7.5/10 (cccc) 7.5 (d) 3.5/7.5 (dddd)

North Macedonia 5/15 (uu) 5 (d) 5

Norway 10/15 (e) 10 (d) 5 Oman 0/10 (eeee) 5 (d) 8

Pakistan 5/7.5/10 (bbb) 10 (ccc) 7.5

Panama (ddd) 0/5/10 (eee) 5 (d) 5

Philippines 10/15 (e) 10/15 (d)(fff) 10/15/20 (ggg)

Poland 5/15 (e) 0 0/10 (hhh)

Portugal 10/15 (e) 15 5

Qatar 0/5 (jjjj) 0 0

Romania 0/5 (zzz) 3 0

Russian Federation 5/10/15 (iii) 5 (jjj) 5

Saudi Arabia 0/5 (kkk) 5 (d) 8

Senegal 10 10 (d) 10

Dividends (a) Interest (b) Royalties % % %

Serbia 5/10 (ii)(lll) 10 (d)(lll) 5/10 (lll)(mmm)

Singapore 0/5 (hh)(nnn) 5 (d) 5

Slovak Republic (z) 5/15 (e) 0 5

Slovenia 5/15 (e) 5 (d) 5

South Africa 5/15 (tt) 0/5 (ooo) 5

Sweden 10/15 (e) 15 (d) 10

Switzerland 0/15 (vv) 0 5 (ppp)

Thailand 10 0/10/15 (g) 5/8/15 (mm)

Trinidad and Tobago 0/5/10 (zz)(qqq) 8 (d)(qqq) 5 (qqq)

Tunisia 5/15 (e) 5/10 (rrr) 10

Turkey 5/15 (sss) 15 (ttt) 10

United Arab Emirates 5/15 (vvv) 0 0

United Kingdom 0/10/15 (aaaa) 0 0

United States

(mmmm) 5/15 (e) 0 (d) 0 (nnnn)

Uruguay 0/5 (www) 10 (d) 5/10 (xxx)

USSR (uuu) 18 0 5 (hhh)

Uzbekistan 5/10 (ffff) 5 5 Venezuela 10 (ppp) 4.95/10 (d)(yyy) 5

Vietnam 7/10/15 (gg) 10 (e) 10

Non-treaty jurisdictions (h) 19 19 20/24 (bbbb)

(a) Distributions by Spanish subsidiaries to parent companies in EU member states are exempt from withholding tax if the parent company owns at least 5% of the subsidiary for an uninterrupted period of at least one year and if certain other requirements are met. The one-year holding period requirement may be satisfied at the date of the distribution or subsequent to such date. An anti-avoidance provision also applies in situations in which the ultimate shareholder is not an EU resident.

(b) Interest paid to an EU resident without a permanent establishment in Spain is exempt from tax if the EU country is not on the Spanish tax haven list.

(c) The 0% rate applies if the beneficial owner of the dividends is a company (other than a partnership) that directly controls at least 75% of the capital of the distributing company. The 5% rate applies if the beneficial owner of the dividends is a company (other than a partnership) that directly controls at least 10% of the capital of the distributing company.

(d) Certain interest payments are not subject to withholding tax. In the particular case of the double tax treaty between Spain and the United States, as a gen eral rule, interest payments are not subject to withholding tax.

(e) The treaty withholding rate tax is increased to 15% in certain circumstances if the recipient is not a corporation or if the shareholding does not exceed a certain percentage. In addition, the branch remittance tax has been removed from the double tax treaty between Spain and the United States. Consequently, the allocation of benefits from a permanent establishment located in Spain to its head office in the United States is not subject to withholding tax, accord ing to this treaty.

(f) A 14% rate applies to royalties paid for artistic, scientific or literary works.

(g) Interest paid to the government or central bank of the other contracting state is exempt from tax if the recipient is the beneficial owner of the interest. The government of the state of the payer may authorize an exemption for interest paid to a beneficial recipient other than the government or central bank of the other contracting state.

(h) See Section B.

(i) The treaty provides for a tax sparing in favor of Armenia for the five years following the entry into force of the treaty.

(j) The 0% rate applies if all of the following conditions are satisfied:

• The recipient of the dividends is the beneficial owner of the income.

• The direct or indirect shareholding is equal to or higher than 25%.

• A minimum two-year shareholding period has been fulfilled.

• Dividends are not subject to tax in the state of residency of the recipient of the dividends.

(k)

The 5% rate applies to royalties for copyrights of literary, artistic or scien tific works (including films and videotapes used for its reproduction on television or radio).

(l) The 0% rate applies if the beneficial owner of the dividends is a company (other than a partnership) that directly controls at least 25% of the capital of the distributing company.

(m) The 0% rate applies if all of the following conditions are satisfied:

• The recipient of the dividends is a corporation.

• The shareholding is equal to or higher than 25%.

• Exemption is allowed under the rules of the state of residence of the subsidiary.

The rate is 15% if the effective beneficiary is a resident of the other con tracting state.

(n) The 5% rate applies if the beneficial owner of the dividends is a company that directly controls at least 20% of the capital of the distributing company.

(o) A 10% rate applies to interest paid to financial institutions for long-term (10 or more years) loans for goods or equipment.

(p) A 10% rate applies to royalties paid for copyrights of literary, artistic or scientific works (including films and videotapes produced by a resident of a contracting state).

(q) A 5% rate applies if the effective beneficiary of the dividends is a corpora tion that controls at least 20% of the capital of the distributing company.

(r) A 5% rate applies to interest derived from loans granted by banks and insurance companies, from bonds and securities traded on a recognized stock exchange and from sales on credit of machinery and equipment.

(s) A 5% rate applies to royalties paid for the use of industrial, commercial and scientific equipment.

(t) The 0% rate applies if the dividends are received by a company that holds a direct or indirect shareholding of at least 20% in the capital of the distrib uting company.

(u) The protocol includes a most-favored-nation clause under which Costa Rica automatically will provide similar tax treatment to Spanish residents if Costa Rica enters into a treaty with a third country that enters into force and that offers more beneficial tax treatment for dividends, interest, royal ties and/or income from personal independent services.

(v) The 5% rate applies if the beneficial owner of the dividends is a company (other than a partnership) that directly controls at least 20% of the capital of the distributing company.

(w) The 5% rate applies to loans with a maturity exceeding five years.

(x) A 15% rate applies if the shareholding is less than 25%.

(y) Certain copyright royalties are exempt.

(z) Spain honors the Czechoslovakia treaty with respect to the Czech and Slovak Republics.

(aa) A 5% rate applies to certain loans.

(bb) A 5% rate applies to royalties paid for copyrights of literary, dramatic, musi cal or artistic works (excluding motion picture films and television films or videotapes).

(cc) A 12% rate applies if the shareholding is less than 25%.

(dd) The 12% rate applies if the shareholding is less than 50%.

(ee) A 5% rate applies to royalties paid for industrial, commercial or scientific equipment.

(ff) No withholding tax is imposed if the recipient is a company that is subject to corporate income tax and that holds a participation of at least 10% in the payer.

(gg) The 7% rate applies if the shareholding is at least 50%. The 10% rate applies if the shareholding is at least 25%, but less than 50%. The 15% rate applies if the shareholding is less than 25%.

(hh) The lower withholding tax rate is applicable if the effective beneficiary of the dividends is a corporation (other than a partnership) and the sharehold ing is equal to or higher than 10%. The higher withholding tax rate is applicable for other dividends.

(ii) The withholding tax rate is 5% if the effective beneficiary of the dividends is a corporation and if the shareholding is equal to or higher than 25%. The withholding tax rate is 10% for other dividends.

(jj) Withholding tax is not imposed if the recipient is the beneficial owner of the interest and if the interest is beneficially owned by a contracting state, or a political subdivision or local authority of the contracting state.

(kk) The 20% rate applies to certain royalties and technical services.

(ll) The 10% rate applies if the shareholding is less than 20%.

(mm)

A 5% rate applies to royalties paid for copyrights of musical composi tions and literary, dramatic or artistic works. An 8% rate applies to royal ties paid for the following:

• Motion picture films

• Films, tapes and other means of transmission or reproduction of sounds

• Industrial, commercial or scientific equipment

• Copyrights of scientific works

(nn)

A 5% rate applies to interest paid with respect to sales of industrial, com mercial, scientific equipment, or on loans from financial institutions. A 0% rate applies to interest paid to the government or central bank of the other contracting state.

(oo) A 5% rate applies to royalties paid for copyrights of musical composi tions, and literary, dramatic or artistic works, and to amounts paid for the use of industrial, commercial or scientific equipment.

(pp) The rate is 4% for royalties paid for copyrights of literary, dramatic, musical or artistic works (excluding motion picture films and television films or videotapes).

(qq) The 10% rate applies if the shareholding is less than 25%.

(rr) The 5% rate applies if the beneficial owner of the dividends is a com pany (other than a partnership) that directly or indirectly controls at least 10% of the capital of the distributing company.

(ss) The treaty withholding tax rate is increased to 10% in certain circum stances if the recipient is not a corporation or if the shareholding does not exceed a certain percentage.

(tt) The 0% rate applies if the beneficial owner of the dividend is, among others, the state (or its subdivisions), public entities or companies fully owned (directly or indirectly) by the state or the central bank of the other contracting state. The 5% rate applies if the beneficial owner of the divi dend is a corporation (other than a partnership) that controls at least 25% of the capital of the distributing company. The withholding tax rate is 10%/15% for other dividends.

(uu) A 15% rate applies if the shareholding is less than 10%.

(vv) A 0% rate applies if the beneficial owner holds at least a specified per centage of the share capital of the distributing entity and if certain other conditions are met.

(ww) A 5% rate applies to income derived from the rendering of technical services.

(xx) A 5% rate applies if the shareholding is less than 25%.

(yy) The withholding tax rate is 10% if the effective beneficiary of the interest is a financial entity.

(zz) The 0% rate applies if the dividends are received by a company that holds directly or indirectly a shareholding of at least 50% in the capital of the distributing company. A 5% rate applies if the direct shareholding is more than 25% but less than 50%. Otherwise, a 10% rate applies.

(aaa) The withholding rate is 5% if the recipient is not subject to Dutch tax on the dividends and if the 10% rate would otherwise apply.

(bbb) The 5% rate applies if the beneficial owner of the dividends is a com pany that has owned directly for the six-month period ending on the date on which entitlement to the dividends is determined at least 50% of the voting shares of the distributing company. The 7.5% rate applies if the beneficial owner of the dividends is a company that has owned directly for the period of six months ending on the date on which entitlement to the dividends is determined at least 25% of the voting shares of the dis tributing company.

(ccc) Certain interest payments are not subject to withholding tax.

(ddd) Tax treaty provisions do not apply if the dividend, interest or royalties paid by a Panamanian resident are sourced in Spain or in a country that has not entered into a tax treaty with Spain and if such income has not been effectively taxed in Panama.

(eee)

The 0% rate applies if the beneficial owner of the dividends is a capital company that directly controls at least 80% of the capital of the distribut ing company and if certain conditions are satisfied. The 5% rate applies if the beneficial owner of the dividends is a company (other than a part nership) that directly controls at least 40% of the capital of the distribut ing company.

(fff) A 10% rate applies to interest paid with respect to sales of industrial equipment or publicly traded bonds.

(ggg)

(hhh)

A 20% rate applies to royalties paid with respect to films, television or radio. A 10% rate applies to royalties derived in preferred areas of activities.

A 0% rate applies to royalties paid for copyrights of literary, dramatic, musical or artistic works (excluding motion picture films and television films or videotapes).

(iii) The withholding tax rate is 5% if the effective beneficiary of the divi dends is a company that has invested at least ECU100,000 in the share capital of the payer and if the dividends are exempt from tax in the other contracting state. The withholding tax rate is 10% if only one of these requirements is met. The withholding tax rate is 15% for other dividends.

(jjj) No withholding tax is imposed on interest paid to and beneficially owned by financial institutions with respect to long-term (seven years or more) loans and certain other debts.

(kkk)

(lll)

A 0% rate applies if the beneficial owner of the dividends is a company that directly controls at least 25% of the capital of the distributing com pany.

A most-favored-nation clause applies.

(mmm) The 5% rate applies to royalties paid for the use of copyrights of literary, artistic or scientific works, including cinematographic films or films or tapes used for radio or television broadcasting, but excluding computer software. The 10% rate applies to royalties paid for the use of patents, trademarks, designs or models, plans, secret formulas or processes and computer software, for the use of, or the right to use, industrial, com mercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. (nnn) The 5% rate applies if the distributing company is a stock-listed real estate investment company and if the beneficial owner of the dividends directly or indirectly controls less than 10% of the capital of the distribut ing company.

(ooo) A 0% rate applies to interest paid to financial institutions for long-term (seven years or more) loans. (ppp) A 0% rate applies if certain conditions are met. (qqq) A limitation-of-benefits clause in the treaty may apply. (rrr) A 5% rate applies to loans over seven years. (sss) A 5% rate applies to certain dividend distributions. (ttt) A 10% rate applies to interest derived from loans granted by banks or in connection with sales on credit of merchandise or equipment. (uuu) Spain honors the double tax treaty with the former USSR with respect to Kyrgyzstan, Tajikistan, Turkmenistan and Ukraine. (vvv) A 5% rate applies if the beneficial owner of the dividends is a corpora tion that holds directly at least 10% of the entity paying the dividends. (www) The 0% rate applies if the beneficial owner of the dividends is a capital company that directly controls at least 75% of the capital of the distribut ing company.

(xxx) The 5% rate applies to royalties paid for copyrights of literary, artistic or scientific works.

(yyy) A 4.95% rate applies to interest paid to financial institutions. (zzz) The 0% rate applies if the beneficial owner of the dividends is a com pany that directly controls at least 10% of the capital of the distributing company.

(aaaa) The 0% rate applies to dividends paid to a company that controls, directly or indirectly, at least 10% in the equity of the distributing company, pro vided that the recipient of the dividends is the beneficial owner. The 15% rate applies to dividends paid out of income (including capital gains) derived directly or indirectly from immovable property by an investment vehicle that distributes most of this income annually and whose income from such immovable property is exempt from tax. The 10% rate applies in all other cases.

(bbbb) The 20% rate applies to EU residents in jurisdictions with which an exchange of information agreement is in place.

(cccc) The 7.5% applies if the beneficial owner of the dividends is a company that directly controls at least 10% of the capital of the distributing com pany.

(dddd) The 7.5% rate applies if the beneficial owner of the royalties is a capital company.

(eeee) The 0% rate applies if the beneficial owner of the dividends is a com pany that directly controls at least 20% of the capital of the distributing company.

(ffff)

The 5% applies if the beneficial owner of the dividends is company that directly controls at least 25% of the capital of the distributing company.

(gggg) The 3% rate applies to copyright royalties with respect to (journalistic) news. The 5% rate applies to copyright royalties received by the author or his or her heirs with respect to literary, theater, musical or artistic works. The 10% rate applies to royalties relating to patents, designs or models, computer software, know-how and technical assistance. The 15% rate applies in all other cases.

(hhhh) The 0% rate applies if the dividends paid to a company the capital of which is wholly or partly divided into shares and that directly controls at least 10% of the capital of the distributing company or if the dividends paid to a pension fund.

(iiii) The 4.9% applies to interest paid on loans of any kind granted by banks or other financial institutions, including investment banks, savings banks and insurance companies, as well as to interest paid on bonds and other debt instruments that are traded regularly and substantially on a recog nized stock exchange. The 10% rate applies in all other cases.

(jjjj) The 0% rate applies if the beneficial owner of the dividends is a com pany that holds directly at least 10% (1% if the company is substantially and regularly traded on a stock exchange of Spain or Qatar) of the capital of the company paying the dividends or is a public body holding at least 5% of the stock in the company paying the dividends.

(kkkk) The 0% rate applies if the beneficial owner of the dividends is a com pany (other than a partnership) that holds at least 25% of the capital of the company paying the dividends. The 5% rate applies in all other cases. (llll) The 5% rate applies if the beneficial owner of the dividends is a com pany (other than a partnership) that holds at least 25% of the capital of the company paying the dividends and its investment exceeds EUR250,000. The 10% rate applies in all other cases.

(mmmm) These are the withholding tax rates under a new tax treaty with United States, which took effect on 27 November 2019. (nnnn) As a general rule, royalties are not subject to withholding tax. (oooo) The withholding tax rate is 0% if the beneficial owner of the dividends is a corporation that has voting rights equal to or higher than 10% or a qualifying pension fund. The withholding tax rate is 5% for other divi dends, except if the dividend paid is tax deductible for corporate income tax purposes.

(pppp) The withholding tax rate on interest payments is 10% if the interest is computed by reference to certain economic parameters. Otherwise, the interest payments should not be subject to withholding tax. (qqqq) A 0% rate applies to interest paid to, among others, the government or central bank of the other contracting state. Otherwise, a 5% (in the case of Belarus) or 10% (in the case of China Mainland) withholding tax rate applies.

Spain is in the process of negotiation, ratification or signature of its tax treaties with Bahrain, Montenegro, Namibia, Peru, Syria and Ukraine. Spain is negotiating agreements on the exchange of tax information with Bermuda, the Cayman Islands, the Cook Islands, Guernsey, the Isle of Man, Jersey, the Macau Special Administrative Region (SAR), Monaco, St. Lucia, St. Vincent and the Grenadines.

Spain has agreements on the exchange of tax information with Andorra, Aruba, Bahamas, the Netherlands Antilles and San Marino.

The agreement between Spain and the United States for the im provement of international tax compliance and the implementa tion of the Foreign Account Tax Compliance Act entered into force on 1 July 2014.

Spain is renegotiating its tax treaties with Austria and the Netherlands.