Spanish tax law · Non-Resident Income Tax · 05

Transparent entities and the property levy

Chapters V and VI, articles 34 to 45: how the tax looks through partnerships and other attribution-regime entities to their members, and the separate 3 per cent annual levy on Spanish property held by companies resident in tax havens.

Unofficial English translation from the Spanish by Voixa Consultors S.L. Alexander Baranov is responsible for the translation. Source: Real Decreto Legislativo 5/2004, consolidated text, BOE-A-2004-4527 ↗. Check wording, rates, dates and legal effect against the Spanish original before relying on this reading. Source snapshot: 4 November 2026.

Two unrelated chapters, kept together here

Chapter V answers a structural question: when income flows through an entity that is not itself taxed, who does Spain charge? The answer turns on where the entity was formed and whether it carries on an economic activity in Spain, and in one case it creates a permanent establishment automatically. Chapter VI is a short, self-contained annual levy that applies to a much narrower group than its name suggests.

Chapter V. Entities under the income attribution regime

Article 34. Entities under the income attribution regime

1. The entities referred to in article 7 of this Act which have among their members taxpayers for this tax shall apply section 2 of title VII of the consolidated text of the Personal Income Tax Act, approved by Royal Legislative Decree 3/2004 of 5 March, with the particular rules laid down in this chapter according to whether the entities were constituted in Spain or abroad.

2. Likewise, the members of the entities referred to in the preceding paragraph who are taxpayers for this tax shall apply the particular rules set out in this chapter.

Section 1. Attribution-regime entities constituted in Spain

Article 35. Entities carrying on an economic activity

In the case of attribution-regime entities carrying on an economic activity in Spanish territory, members not resident in Spanish territory shall be taxpayers for this tax with a permanent establishment.

One sentence, and it creates a permanent establishment by operation of law. A foreign partner in a Spanish partnership or community of property that trades in Spain does not need premises, an agent or six months of anything: article 35 deems that partner to have a permanent establishment, with all of chapter III following from it — separate accounts, instalments, the annual return and the restrictions in article 18. Joining a Spanish trading partnership is therefore a materially different act from holding shares in a Spanish company.

Article 36. Entities not carrying on an economic activity

1. In the case of attribution-regime entities not carrying on an economic activity in Spanish territory, members not resident in Spanish territory shall be taxpayers for this tax without a permanent establishment, and the part of the income attributable to them shall be determined in accordance with the rules of chapter IV.

2. In that case, and without prejudice to paragraph 3, the attribution-regime entity shall be obliged to pay on account the difference between the part of the withholding borne that corresponds to the non-resident member and the withholding that would have resulted from applying article 31 directly to the income attributed.

3. In the case of transfers of immovable property situated in Spanish territory, where any of the members of the attribution-regime entity is not resident in Spanish territory, the acquirer shall make, on the part of the agreed consideration corresponding to those members, the withholding resulting from the application of article 25.2.

4. The Minister for Finance shall determine the manner, place and periods in which the obligation referred to in paragraph 2 is to be met.

The entity tops up the withholding, and the buyer withholds separately. Paragraph 2 makes the entity itself responsible for paying over the shortfall between what was actually withheld and what article 31 would have produced on the attributed income. Paragraph 3 then puts the familiar 3 per cent property withholding on the purchaser, but only on the slice of the price belonging to non-resident members.

Section 2. Attribution-regime entities constituted abroad

Article 37. Attribution-regime entities constituted abroad

Entities constituted abroad whose legal nature is identical or analogous to that of attribution-regime entities constituted under Spanish law shall be regarded as attribution-regime entities.

The test is the entity’s legal nature, not its label or its home-country tax treatment. A foreign vehicle is looked through here if it is identical or analogous in legal nature to a Spanish attribution entity. A structure treated as transparent at home may or may not pass that test, and the reverse is equally possible.

Article 38. Entities with a presence in Spanish territory

1. Where an attribution-regime entity constituted abroad carries on an economic activity in Spanish territory, and all or part of it is conducted, on a continuous or habitual basis, through facilities or workplaces of any kind, or where it acts in that territory through an agent authorised to contract in the name and on behalf of the entity, it shall be a taxpayer for this tax and shall file, on the terms laid down by the Minister for Finance, an annual self-assessment in accordance with the following rules:

1. The tax base shall consist of the part of the income, wherever obtained, determined in accordance with article 90 of the consolidated text of the Personal Income Tax Act, approved by Royal Legislative Decree 3/2004 of 5 March, which is attributable to the non-resident members of the entity.

2. The gross tax amount shall be determined by applying to the tax base the rate of tax applicable from among those provided for in the Corporate Income Tax rules.

3. That amount shall be reduced by applying the allowances and deductions permitted by article 19.4 for taxpayers operating through a permanent establishment, and the payments on account, always as to the part corresponding to the income attributable to the non-resident members.

2. These entities must file the information return referred to in article 91 of the consolidated text of the Personal Income Tax Act, approved by Royal Legislative Decree 3/2004 of 5 March, for the part of the income attributable to the resident members of the entity.

3. The taxpayers referred to in paragraph 1 above shall be obliged to make instalment payments on account of this tax, self-assessing and paying the amount on the conditions determined by regulation.

4. Where any of the non-resident members of the entities referred to in paragraph 1 of this article invokes a double taxation convention, the amounts paid by the entity shall be regarded as having been paid by those members as to the part corresponding to them.

The foreign entity itself becomes the taxpayer. Unlike the Spanish case in articles 35 and 36, where the members are taxed, article 38 charges the entity: it files its own annual self-assessment, at Corporate Income Tax rates, on the income attributable to its non-resident members, and pays instalments during the year. The threshold for this is the same factual test as a permanent establishment in article 13.1.a), without the six-month construction rule.

Paragraph 4 keeps treaty access alive for the members. Because the entity pays, a member invoking a treaty would otherwise have nothing to credit. The Act solves this by deeming the entity’s payments to have been made by the members in their respective shares.

Article 39. Entities without a presence in Spanish territory

1. Where an attribution-regime entity constituted abroad obtains income in Spanish territory without carrying on an economic activity in that territory in the manner provided for in paragraph 1 of the preceding article, members not resident in Spanish territory shall be taxpayers for this tax without a permanent establishment, and the part of the income attributable to them shall be determined in accordance with chapter IV.

2. Article 90(2) of the consolidated text of the Personal Income Tax Act, approved by Royal Legislative Decree 3/2004 of 5 March, shall not apply to withholdings or payments on account on income obtained in Spanish territory. Withholdings or payments on account shall be made as follows:

a) If the residence of the members of the entity and the proportion in which the income is attributed to them are evidenced to the payer, the withholding corresponding to those circumstances shall be applied to each member in accordance with their respective tax.

b) Where the payer does not regard the circumstances described in the preceding paragraph as evidenced, it shall make the withholding or payment on account under the rules of this tax, without regard to the place of residence of the members or to the exemptions provided for in article 14. The rate of withholding shall be that applicable under article 25.1.

Where the attribution-regime entity is constituted in a country or territory classified by regulation as a tax haven, the withholding to be applied shall in every case follow the rule laid down in the preceding paragraph.

The withholding or payment on account shall be deductible from the personal taxation of the member, heir, co-owner or participant, in the same proportion in which the income is attributed.

4. The entities referred to in this article shall not be subject to the information obligations referred to in article 91 of the consolidated text of the Personal Income Tax Act, approved by Royal Legislative Decree 3/2004 of 5 March.

Not evidencing who the members are costs the exemptions, not just the rate. Under paragraph 2.b), a payer that is not satisfied as to the members’ residence and shares withholds under this Act ignoring both their residence and the article 14 exemptions. Treaty rates and exemptions that the members would otherwise enjoy simply do not enter the calculation. For an entity constituted in a tax haven that harsher treatment applies in every case, however well documented the membership is.

Chapter VI. Special levy on immovable property of non-resident entities

Article 40. Charge

Entities resident in a country or territory regarded as a tax haven which own or possess in Spain, under any title, immovable property or rights in rem of use or enjoyment over such property shall be subject to the tax by way of a special levy.

The name is misleading: this is not a levy on non-resident companies generally. Article 40 charges only entities resident in a country or territory regarded as a tax haven. A company resident in France, the United Kingdom or Panama’s neighbours is outside it unless its own residence carries that classification. The levy is frequently quoted as a reason not to hold Spanish property through any foreign company; on the text, that is too wide.

Article 41. Tax base

1. The tax base of the special levy shall consist of the cadastral value of the immovable property. Where there is no cadastral value, the value determined under the provisions applicable for the purposes of Wealth Tax shall be used.

2. Where an entity of those referred to in article 40 shares ownership of the property or rights with one or more other persons or entities, the Special Levy on Immovable Property of Non-Resident Entities in Spain shall be payable on the part of the value of the property or rights corresponding proportionally to its share in the ownership.

Article 42. Exemptions

The special levy on immovable property shall not be payable by:

a) Foreign States and public institutions and international organisations.

b) Entities which carry on in Spain, on a continuous or habitual basis, economic operations distinguishable from the mere holding or letting of the property, in accordance with the rules laid down by regulation.

c) Companies listed on officially recognised secondary securities markets.

Letter b) is the practical exit, and it is drawn narrowly. The activity must be continuous or habitual and distinguishable from simply holding or renting out the property. Letting the property, by itself, is named in the text as not enough.

Article 43. Rate

The rate of the special levy shall be 3 per cent.

Article 44. Deductibility of the levy

The amount of the Special Levy on Immovable Property of Non-Resident Entities shall be regarded as a deductible expense for the purposes of determining the tax base of the tax which, where applicable, is payable under the preceding articles of this Act.

Article 45. Accrual, return and charge on the property

1. The special levy shall accrue on 31 December of each year and must be declared and paid in the month of January following accrual, at the place and in the manner laid down.

2. Failure by taxpayers to self-assess and pay the special levy within the period laid down in paragraph 1 shall give rise to its enforcement by the attachment procedure against the immovable property, the certificate issued by the tax authorities of the expiry of the voluntary payment period without the tax having been paid, and of its amount, being sufficient title to commence that procedure.

3. In the case of transfers of immovable property situated in Spanish territory by entities subject to the special levy, the property transferred shall be charged with payment of the amount of that special levy.

Three per cent of cadastral value, every year, and the property answers for it. The levy accrues on 31 December and must be declared and paid during January, a window that is easy to miss because it sits outside the ordinary tax calendar. If it is not paid, the tax authorities can proceed directly against the property on the strength of their own certificate, and on a sale the property remains charged with the unpaid amount. Note also article 31.2, on the previous page: the withholding calculation is made without regard to article 44, so the deduction for this levy is not reflected in amounts withheld.

Where this sits

Chapter VII, on the next page, gives individuals resident in other EU and EEA States an option to be taxed as if they were Spanish residents, and chapter VIII collects the remaining machinery: succession to the tax debt, penalties, provisional assessment and the rules on financial assets.

Nothing here is advice on your own position, and this reading is not the official text. Spain publishes no official English version of this Act; where the wording matters to a decision, read it against the Spanish original linked above.