01 April 2016 Spanish Tax Authorities find payments for website hosting service agreement constitute business profits under treaty with US In a recent ruling, the Spanish Tax Authorities have held that payments made by a Spanish tax resident entity to a US tax resident provider under a complex "website hosting" service agreement including the use of software should be characterized as "business profits" and not "royalties" under the Spain-US Tax Treaty, despite the client being able to personalize the web page. The ruling is of special interest as it implies a change in the interpretation adopted by the Spanish tax authorities in previous rulings pursuant to which any minimal customization or personalization of the software led to the characterization of the income as royalty payments for Spanish Nonresidents' Income Tax Law and tax treaty purposes. A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details. Document ID: 2016-0600 |
