Tax Representative in Spain for Non-Resident Companies

The figure of the fiscal representative in Spain is primarily governed by Article 10 of the Non-Resident Income Tax Law (Real Decreto Legislativo 5/2004). The law establishes that NRIT taxpayers operating without a permanent establishment in Spain must appoint a representative domiciled in Spain when required by regulation or when the Tax Administration expressly demands it.

Appointment is mandatory in the following cases: when the taxpayer is resident in a country or territory with which Spain does not have a mutual assistance instrument in tax matters (i.e., countries outside the EU/EEA without a DTT with an information exchange clause), when operating in Spain through a permanent establishment, or when required by the AEAT based on the amount and nature of the income obtained in Spain.

The most significant aspect of fiscal representation is joint and several liability. Article 10.2 of the TRLIRNR establishes that the fiscal representative is jointly and severally liable for the tax debts of the non-resident taxpayer. This means the AEAT can proceed directly against the representative for the collection of tax debts if the non-resident fails to comply. This is not a nominal responsibility: Euroaccounts assumes it with full knowledge and therefore requires complete transparency in the information provided by the represented company.

For VAT purposes, Article 164.One.7 of Law 37/1992 (VAT Act) and Directive 2006/112/EC establish a specific regime. Companies established in the EU may register directly for Spanish VAT without a representative, while non-EU companies must mandatorily appoint a VAT fiscal representative if they carry out taxable transactions in Spain. The VAT fiscal representative files quarterly or monthly returns (Form 303), intra-Community recapitulative statements (Form 349) and the annual summary (Form 390).

One of the most common queries from international companies beginning operations in Spain is whether they need a fiscal representative or whether they already have (or should establish) a permanent establishment (PE). The distinction is fundamental as it determines the applicable tax regime, accounting obligations and liability before the AEAT.

A fiscal representative is appropriate when the non-resident company carries out occasional or limited operations in Spain that generate tax obligations but do not constitute a PE: property sales, collection of dividends or interest from Spanish sources, occasional service provision, property rental, or participation in public tenders. The fiscal representative does not alter the company’s non-resident status: it continues to be taxed under the NRIT (without PE), with withholding rates depending on the applicable DTT.

A permanent establishment arises when there is a fixed place of business in Spain where all or part of the business is carried out: a permanent office, branch, workshop, dependent agent with authority to contract, or a construction project lasting more than 12 months (Article 5 OECD Model, Article 13 TRLIRNR). A PE is taxed under the NRIT but on net profit (income minus deductible expenses), similar to CIT, at 25%. It has full accounting obligations, must maintain separate accounts and file returns as if it were a CIT taxpayer.

The risk of an involuntary PE is the primary concern for companies operating in Spain without a formal structure. An employee regularly working from a co-working space in Madrid, a commercial agent with authority to sign contracts, or a consultancy project that extends longer than planned can create a de facto PE with retroactive tax obligations from day one. Consequences include: NRIT assessments for undeclared periods, late-payment interest (currently 4.0625% per annum) and penalties that can reach 150% of the evaded amount in the most serious cases.

Euroaccounts evaluates each situation to determine whether operations in Spain generate PE risk and, accordingly, recommends the appropriate structure: simple fiscal representation, formal PE/branch formation, or incorporation of an SL subsidiary. With over 500 companies advised from Madrid and the INPACT Global network as support, we ensure the chosen structure is correct from the outset.