Tax and Customs Authority

Department of Personal Income Tax Services

Circular no. 2/2016, of 6 May

Clarifies various questions concerning the qualification of PIT Category B income, particularly in what concerns the application of new coefficients and the deductibility of mandatory social security contributions.

Among other aspects, it clarifies that, for purposes of determining the taxable income, the coefficient of 0.35 applies to income from the provision of services identified with the residual code “1519 - Other service providers” of the table referred to in Article 151 of the PIT Code, while the coefficients 0.75 or 0.35 apply to income from one-shot service provisions (“acto isolado”) depending on the nature of the services in question.

Tax and Customs Authority

Binding Information concerning case no. 9664, of 16 May 2016

Services rendered – Free passenger transport, provided by an “intercity bus transport” entity on its regular routes. Taxable value. Rates

Clarifies that the free transport of employees and their relatives that an intercity bus transport company is required to provide under the vertical collective bargaining agreement for road passenger transport is considered a provision of services subject not exempt from VAT.

Further clarifies that the taxable amount corresponding to the free transport service is the normal value of that service and that the tax can be borne by the service provider (not being required to be passed on to beneficiaries).

Tax and Customs Authority

Office of the General-Subdirector of Income Tax and International Relations

Circular No. 20190/2016, of 25 May

Clarifies several topics regarding the taxation of income obtained by the participants in Collective Investment Undertakings (“CIU”), after 1 July 2015, in particular in respect of individuals owning the participations outside the scope of a commercial, industrial or agricultural activity, as well as the procedure to be adopted in the filling-in of the PIT statement.

In this regard, it clarifies that  income distributed or arising from the redemption of participation units or shares is taxed by definitive withholding at a 28% rate (the option for aggregating said income to the remaining income also being available), whereas the remaining income would be subject to taxation as per general PIT rules.

Additionally it clarifies that income obtained from real estate investment funds or real estate investment companies qualifies for PIT purposes as rental income and real estate capital gains, whereas income from securities investment funds or securities investment companies qualifies as investment income and securities capital gains.