Spain's Tax Authority Issues Ruling on Remote Workers and Permanent Establishments

The Spanish General Directorate of Taxes (GDT) recently issued a ruling (not yet published) confirming that the presence of an employee working remotely from home during the COVID-19 crisis and after the termination of public health measures will not result in a permanent establishment (PE) in Spain...

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Bibliographic Details
Published inJournal of International Taxation Vol. 33; no. 4; pp. 18 - 19
Main Authors (Jano) Bustos, Jose A, Carracedo, Andres
Format Trade Publication Article
LanguageEnglish
Published Boston Thomson Reuters (Tax & Accounting) Inc 01.04.2022
Subjects
Bans
Coronaviruses
COVID-19
International taxation
Nonresidents
Pandemics
Permanent establishment
Public health
Telecommuting
Work at home
United Kingdom > UK
Spain
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Summary:The Spanish General Directorate of Taxes (GDT) recently issued a ruling (not yet published) confirming that the presence of an employee working remotely from home during the COVID-19 crisis and after the termination of public health measures will not result in a permanent establishment (PE) in Spain, under certain circumstances, following the application of the relevant tax treaty provisions. The GDT concluded that during the COVID-19 pandemic, individuals who stay at home to work remotely are doing so by an extraordinary event, not an enterprise's requirement. [...]considering the extraordinary nature of the COVID-19 pandemic, teleworking from home during the lockdown and travel ban would not create a PE for the business/employer, because such activity lacks a sufficient degree of permanency or continuity. In the case at hand, the GDT considered that the employee's home office was not at disposal of the UK Company for the following reasons: * The activity previously performed by the employee did not change as a result of his movement to Spain. * Moving to Spain was a pure personal decision, and the UK Company did not require or ask the employee to move to Spain for a specific business reason. * The UK Company did not bear any cost triggered by the employee stay in Spain. * The UK Company has an office in the UK which could have been used by the employee to develop his daily work without the need to be in Spain.
ISSN:1049-6378