Law 46/2002, of December 18, of partial reform of the Tax on the Income of Physical Persons and amending the Laws of Taxes on Societies and on the Income of Non-Residents, has introduced in the Law 41/1998, of 9 December, of the Income Tax of Non-Residents and Tax Standards, improvements aimed at achieving a triple objective: to facilitate the internationalization of the Spanish company, both from the point of view of the investment as well as the geographical mobility of the labour factor, favouring the attraction of investments and improve control mechanisms to prevent tax fraud.

The regulatory development of the new precepts that Law 46/2002, of December 18, of partial reform, introduces in Law 41/1998, of December 9, of the Tax on the Income of Non-Residents and Tax Rules, does This Royal Decree, which is structured in two articles and a final provision.

The article first responds to the regulatory development of the new legal precepts and addresses the following matters: elements affecting the permanent establishment, retention obligations on the income of the work in case (a) change of residence and entities in the allocation of income.

Some technical improvements to the regulatory text are also included. Thus, the statements made by the former Minister of Economy and Finance to adapt them to the current situation are corrected, an amount is updated to express it in euros and certain measures are introduced in the field of management, relating to statements in support directly readable by computer, which already operate in other taxes.

The time limit for requesting the return of excess amounts on which the application of a double taxation convention is based is broadly extended, with the exception of four years.

In this way it fits the most widespread international practice. However, the Minister is entitled to set a different time limit in the event that the logic of reciprocity does not exist in the State of residence of the taxpayer.

The second article amends Royal Decree 1080/1991 of 5 July to introduce the possibility of excluding from the list of tax havens the countries and territories that commit to exchange information with the Spanish administration. This commitment must be reflected in a specific agreement on the exchange of information or in an agreement to avoid double taxation with an exchange of information clause.

Regarding the regulatory enablement, the precepts incorporated in this Royal Decree are covered both in the specific referrals that the Law itself makes and in the general enablement contained in the final provision The second part of Law 41/1998, of 9 December, of the Income Tax of Non-Residents and Tax Rules.

In its virtue, on the proposal of the Minister of Finance, in agreement with the Council of State and after deliberation of the Council of Ministers at its meeting of the day 31 January 2003,

D I S P O N G O:

Article first. Amendment of the Non-Resident Income Tax Regulation.

One. Amendment of Article 1, "Diversity of permanent establishments", of the Non-Resident Income Tax Regulation.

The heading of Article 1 to the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows: " Article 1a. Diversity of permanent establishments ".

Two. A new Article 1 of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, is added with the following wording:

" Article 1. Property assets affected by the permanent establishment.

The assets representative of the equity participation of an entity functionally linked to the development of the activity constituting the object of the permanent establishment shall only be considered as elements. The property is affected by a branch registered in the Trade Register and the following requirements are met:

(a) That such assets are reflected in the accounting statements of the permanent establishment.

(b) In the case of permanent establishments which, in accordance with Article 81 of Law 43/1995 of 27 December 1995, of the Company Tax, may be regarded as dominant companies, which permanent establishment, to direct and manage those units, of the relevant organisation of material and personal means. "

Three. Article 7 (2) of the Non-Resident Income Tax Regulation, adopted

by Royal Decree 326/1999, of February 26, will be worded as follows:

" 2. For the purposes of paragraph 5 (c) of Article 32 (5) of the Tax Act, there shall be an economic exploitation which differentiates from the simple holding or lease of the property when any of the following circumstances:

(a) That the real value of the real estate or real estate owned or owned by the non-resident entity or on which the actual rights of enjoyment or enjoyment fall does not exceed five times the actual value of the items These are the property of economic exploitation. For these purposes, in the case of buildings which partially serve the purpose of the holding, account shall be taken of the part of the building actually used in that part.

Where, in accordance with the provisions of the preceding paragraph, it cannot be considered that there is a differentiable economic exploitation affecting the whole of the building, the taxable amount of the special charge shall be only on the part of the cadastral value or, failing that, of the value determined in accordance with the provisions applicable for the purposes of the Heritage Tax, which corresponds to the part of the immovable property not used in the economic exploitation.

(b) The annual volume of operations of the economic exploitation shall be equal to or greater than four times the taxable amount of the special charge, calculated in accordance with Article 32 (2) of the Law of the Tax.

(c) The annual volume of operations of the economic holding is equal to or greater than EUR 600 000. '

Four. Article 7 (4) of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows:

" 4. The Minister of Finance shall establish the models to be used for the declaration of the Special Gravamen on Non-Resident Entities. "

Five. Article 8 (2) of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows:

" 2. For the purposes of paragraphs (c) and (d) of the preceding paragraph:

(a) For the determination of the total income obtained by the taxpayer in the tax period, account shall be taken of all the income obtained during that period, irrespective of the place where they were produced. and whatever the residence of the payer.

(b) For the purpose of the income rating, the provisions of the rules governing the income tax of the physical persons shall be treated.

(c) The income shall be computed by its net amounts, determined in accordance with the provisions of Law 40/1998 of 9 December 1998 on the Income Tax of Physical Persons and other Tax Rules. The reductions referred to in Articles 46a and 47d shall apply where appropriate. '

Six. Article 8 (4) of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows:

" 4. For the purposes of applying the optional arrangements provided for in this Chapter, the tax period shall coincide with the calendar year. However, where the death of the taxpayer occurs on a day other than 31 December, the tax period shall end on the date of death.

The determination of the members of the family unit shall be carried out on the basis of the situation as at 31 December of each year. "

Seven. Article 14 (4) of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows:

" 4. The Minister of Finance is empowered to establish the procedure for making the retention practice effective, at the appropriate rate in each case, or for the exclusion of withholding, on yields arising from the issuance of marketable securities. '

Eight. Article 19 (1) of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows:

" 1. The retainer or the obligation to enter into account for the Income Tax of non-residents must present in the first twenty calendar days of the months of April, July, October and January, before the competent organ of the Administration tax, statement of the amounts withheld and of the income to account made corresponding to the previous immediate calendar quarter and to enter its amount in the Treasury.

However, the declaration and entry referred to in the preceding paragraph shall be made in the first twenty calendar days of each month, in relation to the amounts withheld and the revenue to be made corresponding to the the preceding immediate month, in the case of retainers or obliged persons in which the circumstances referred to in Article 71 (3) of the Value Added Tax Regulation are met, approved by Royal Decree 1624/1992, 29 December. By way of derogation, the declaration and entry for the month of July shall be made during the month of August and the first twenty calendar days of the month of September.

The retainers and those forced to enter into account will submit a negative statement when they have satisfied income from those mentioned in Article 30 (4) of the Tax Law, except in the cases in which the establish the Minister of Finance. "

Nine. Article 19 (2) of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, is hereby amended as follows:

" 2. The retainer and the obligation to enter into account shall, within the same period of the last declaration for each year, submit an annual summary of the withholding and income to account. In this summary, in addition to their identification data, a nominative relationship of the recipients of the income subject to the tax paid or paid by the retainer or obliged to enter into account, including those to whom have been satisfied with income in respect of which no withholding tax would have been made pursuant to Article 30 (4) of the Tax Act. The ratio of recipients shall contain the data determined by the Minister of Finance.

However, in the event that the summary is present in support directly readable by computer or has been generated by the use, exclusively, of the corresponding developed printing modules, to these for the tax administration, the time limit for filing shall be between 1 January and 31 January of the year following that of the annual summary.

The same obligations set out in the preceding paragraphs are subject to the entities domiciled, resident or represented in Spain, which pay for income from income subject to withholding or income deposits or manages the collection of income from securities.

Without prejudice to the foregoing paragraphs of this paragraph, the Minister of Finance, on the basis of substantiated technical reasons, may extend the time limit for declarations which may be submitted by telematics. '

Ten. Article 20 of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, will be worded as follows:

" Article 20. Returns.

1. Where a withholding tax has been incurred or has been incurred in excess of the tax, the tax authorities may be asked to refund the excess over the said fee.

To this effect, the self-settlement of the tax in the model determined by the Minister of Finance will be practiced.

2. As provided for in Article 3 of the Tax Law, the tax administration shall make such refunds in accordance with the terms laid down in Article 85 of Law 40/1998 of 9 December 1998 on the Income Tax of Persons Physical and other Tax Standards.

3. In addition to the taxpayers, they may submit declarations with a request for the return of the persons responsible and the persons required to retain them.

4. Where the Treasury has entered into amounts, or withholdings of withholding tax, in excess of those resulting from the application of a double taxation convention, such application may be requested and the refund accordingly, within the four-year period, counted from the date of the entry or the end of the period of return and entry of the retention.

The Minister of Finance, in the event of a lack of reciprocity, may set a different deadline. "

Once. A new Article 21 is added to the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, with the following wording:

" Article 21. Retention obligations on income from work in the event of a change of residence.

1. Employees who are not taxpayers for this tax, but who are going to acquire such a condition as a result of their posting abroad by their employer, may inform the tax administration of such a condition. the communication model approved by the Minister of Finance, who will establish the form, place and time limit for his presentation, as well as the documentation to be attached to that model.

2. This communication shall include the identification of the worker and the payer of the income of the work, the date of departure from the Spanish territory, the date of commencement of the work abroad, and the date of departure of the work. the existence of objective data in that employment relationship which makes it foreseeable that, as a result of the provision of work in another country, the stay in that country is greater than 183 days during the calendar year in which the posting occurs or, in the default, in the following.

3. The tax administration, in the light of the communication and documentation submitted, shall issue to the worker, where appropriate, no later than 10 working days following the date of the submission of the communication, a supporting document in which the The date from which the withholding tax will be applied is recorded.

4. The worker shall provide the paying agent with a copy of the document issued by the tax administration, in order to ensure that the latter, for the purposes of withholding tax, considers it a tax payer. on the Income of non-residents as of the date indicated on that date.

The aforementioned accrediting documents shall extend their effects in respect of the practice of withholding tax in accordance with the Income Tax of non-residents, at most, two calendar years, that of the displacement and the next or, if not The offset, to the following two immediate ones, is to be computed.

5. This procedure may also be used in cases where, by application of the rules for determining the income obtained in Spanish territory contained in Article 12 of Law 41/1998, the Income Tax Residents and Tax Rules, the practice of withholding taxes did not proceed. In these cases, these workers shall be taken into account for the purposes of complying with the obligations laid down in Article 30 (5) of the Tax Act.

6. The obtaining of the accrediting document in accordance with the procedure described above will not exonerate the worker from crediting his new tax residence with the tax administration. "

Twelve. A new section 3.a is added to Chapter V of the Non-Resident Income Tax Regulation, approved by Royal Decree 326/1999 of 26 February, with the following wording:

" SECTION 3.A ENTITIES UNDER THE INCOME ALLOCATION SCHEME

Article 22. Obligation to practice split payments.

1. The tax payers referred to in Article 32e (1) of the Tax Act shall be obliged to make split payments on account of the liquidation of this tax, on the same terms as the taxpayers of this tax.

Tax with permanent establishment in Spain.

2. In any of the forms of split payments to be made by the entity under the income allocation scheme, the amounts of those payments shall be those corresponding to the income portion attributable to non-resident members.

3. For the purposes of Article 38 (3) of Law 43/1995 of 27 December 1995 on the Company Tax, the taxable amount shall be calculated in accordance with the provisions of Chapter VI of Law 41/1998 of 9 December 1998. Non-Resident Income Tax and Tax Rules.

Article 23. Return to the invocation of a more favourable double taxation convention.

Where, in accordance with Article 32e (4) of the Tax Act, a double taxation convention is invoked, the provisions of Article 20 of this Regulation shall apply. "

Article 2. Amendment of Royal Decree No 1080/1991 of 5 July determining the countries or territories referred to in Articles 2 (3), 4 (4) of Law 17/1991 of 27 May 1991 on Urgent Tax Measures and 62 of Law 31/1990, of 27 December, the General Budget of the State for 1991.

One. Article 1 of Royal Decree No 1080/1991 of 5 July 1991 becomes Article 1.

Two. An article 2 is added to Royal Decree 1080/1991 of 5 July, with the following wording:

" Article 2.

The countries and territories referred to in Article 1 that sign with Spain an agreement to exchange information on tax matters or an agreement to avoid double taxation with an exchange of information clause shall cease to be considered as tax havens at the time when such agreements or agreements enter into force. "

Single end disposition. Entry into force.

1. The provisions of this Royal Decree shall enter into force on the day following that of its publication in the "Official Gazette of the State".

2. The rules of the Non-Resident Income Tax Regulation shall apply to the tax periods starting from 1 January 2003.

3. The provisions of Article 1 (9) of this Royal Decree shall apply in respect of annual summaries and information statements for which the information relates to the financial year 2003 and subsequent.

4. The provisions of Article 1 (10) of this Royal Decree, in relation to the period laid down in Article 20 (4) of the Non-Resident Income Tax Regulation, shall apply in respect of the amounts entered and holds supported as of 1 January 2003.

Given in Madrid on 31 January 2003.

JOHN CARLOS R.

The Minister of Finance,

CRISTOBAL MONTORO ROMERO