BackThe Ministry of Finance has issued a note establishing guidelines with the aim of facilitating voluntary compliance with the tax obligations of artists and sportsmen and women who are non-residents in Spain.
The Non-Resident Income Tax Law considers artistic or sports income as a species within the broader genre of income derived from economic activities or exploitations. In addition, income obtained by a nonresident artist or sportsman or sportswoman who performs in Spain as a dependent employee will also be considered as income obtained in Spanish territory.
The tax treaties have a specific regulation for this type of income. The regime defined for the distribution of taxation powers for the taxation of artistic or sports income constitutes an exception to the general principle provided bilaterally according to which business and professional income is normally taxed in the State of residence of the recipient, unless the latter operates through a permanent establishment in the other State.
The note prepared by the Tax Agency reviews the tax classification of artistic and sports income. It analyzes the income derived directly from the artistic or sports performance and those peripheral to the performance, such as merchandising rights.
Much importance is given to the criterion of temporary imputation of income, especially to those incomes that could be problematic, such as the case of tours of performances inside and outside Spain, or those who receive their remuneration in the form of salary and not according to events or events. In these cases, it is common to apply a proportional criterion.
A very important information to take into account is that the nature of the artistic or sports income and its tax treatment will not be altered by the fact that it is not received directly by the individual who performs the artistic or sports performance.
As with the rest of the income derived from economic activities, the applicable tax rate will be the general rate of 24%, except in the case of residents in other States of the European Union or belonging to the European Economic Area (EEA) with effective exchange of information, in which case it will be 19%. Even so, it should be borne in mind that the taxable base subject to taxation in Spain must reach a reasonable and proportionality quotes.
The Tax Agency clarifies that the determination of the taxable base will generally be represented by the full amount of the income, but that the taxable base may allow for the deduction of certain expenses, particularly when the taxpayer resides in the EU or EEA with effective exchange of information.
B Law & Tax International Tax & Legal Advisors.
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