Last 19 October the Spanish Official Gazette published the Royal Decree 595/2019, of 18 October, which amends the Spanish-Non-resident Income Tax (hereinafter, NRIT) Regulation, passed by the Royal Decree 1776/2004, on 30 July. This amendment entered into force on 20 October.
Royal Decree 595/2019 amends the NRIT Regulation regarding the tax certification requirements applied to pension funds, Undertakings for the Collective Investment in Transferable Securities (hereinafter, UCITs) and Alternative Investment Fund Managers (hereinafter, AIFMs). The tax certification requirement is imposed in order to benefit from the withholding tax and taxation exemption established in article 14 (c) of the NRIT Law on interest and other income payments made to EU residents obtained from the transfer of own capital to third parties as well as on capital gains derived from movable property, with certain exceptions, provided that such income is obtained by EU residents without acting through a permanent establishment in Spain, or by a permanent establishment of said residents located in another EU Member State.
This amendment aims to simplify the certification process which is not always feasible due to the particular characteristics of the investors, their lack of legal personality or their tax transparency status, in which cases the Spanish domestic withholding tax exemption has traditionally not been applied.
The new rules would ease the tax certification process in order to entitle certain types of entities (described below) to benefit from the Spanish domestic withholding tax and taxation exemption for EU residents even if such entities cannot obtain a tax residency certificate in their country of residence: