SPAIN Law and Practice Contributed by: Cristina Alba and José María Rodríguez Hernández, act legal
estate, where the treaty or domestic rules permit Spain to tax the gain). In real estate transactions involving a non-resident seller, the purchaser is generally required to withhold 3% of the purchase price as a payment on account of the seller’s NRIT liability. In cross-border cases, however, the final taxing out - come depends on the applicable DTT. As a general rule, gains from Spanish immovable property are usu - ally taxable in Spain under treaty provisions (typically aligned with Article 13 (1) OECD Model). By contrast, gains from shares may or may not be taxable in Spain depending on the treaty wording, including whether the treaty includes a property-rich company clause. For that reason, careful analysis of the relevant treaty is essential in capital gains cases involving non-resi - dent investors. 3.5 Employment Income Employment income taxation in Spain is primarily based on where the work is physically performed. Income derived from services rendered in Spain is generally treated as Spanish-source income and taxed accordingly for non-residents under the NRIT, while Spanish tax residents are taxed on their world - wide employment income. Residents may benefit from specific reliefs, notably the foreign work exemption (Article 7.p PIT), subject to statutory requirements and limits, in addition to the foreign tax credit for taxes paid abroad. Spain does not have any explicit laws for remote workers, so the rules that are already in place apply to this situation. Remote work can create problems with corporate taxes, like PE exposure, depending on whether the home office is a fixed place of business of the company or whether the employee acts as a dependent agent. Following the recent update to the Commentaries on the OECD Model Tax Convention, when assessing if PE based on a fixed place of business exists, three key elements must be considered: • whether the place is at the disposal of company;
• whether the enterprise’s business is carried on through that place; and • whether such activity is carried out on a habitual basis. It is therefore very important to carefully examine the facts and the treaties in each case. 3.6 Other Income Certain categories of income are subject to specific domestic rules that may differ from standard OECD Model Convention approaches. • Imputed real estate income: where urban real estate is held for personal use and not rented, Spanish law requires the recognition of “imputed income,” calculated as 2% of the cadastral value (or 1.1% depending on the case), which is included in the taxable base. • Special annual tax for non-resident entities resident in non-cooperative jurisdictions owning Spanish urban real estate: a 3% levy on cadastral value (deductible from NRIT base where relevant). 4. OECD/G20 Global Tax Reform 4.1 Pillar One – Amount B As of 24 February 2026, Spain has not enacted any legislation to implement Pillar One – Amount B. There - fore, the CIT legislation continues to govern transfer pricing in Spain. This includes the arm’s length con - cept that applies to transactions between related par - ties. The current rules are mostly in line with the OECD Transfer Pricing Guidelines. Spain has therefore not introduced a domestic sim - plified pricing mechanism for baseline marketing and distribution activities based on Amount B. No elective safe harbour or fixed return system has been incorpo - rated into Spanish law to date. In practice, multinational groups must continue to substantiate Spanish transfer pricing positions using traditional methods, supported by benchmarking analyses and contemporaneous documentation, unless and until specific implementing measures are enacted.
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