The Spanish Supreme Court issued a decision on June 20, upholding a prior judgment rendered by the Spanish National High Court (Audiencia Nacional), where it was held that a Spanish entity belonging to an international group constitutes a permanent establishment (PE) of an Irish entity of the group under both the "fixed place of business" and the "dependent agent" clauses of the Spain-Ireland tax treaty (the treaty). The resolution is of special interest in the interpretation of the "fixed place of business" and "dependent agent" clauses because (i) it follows the trend set by the Spanish Supreme Court in preceding judgments which upheld the Spanish tax authorities' functional approach with regard to post-restructuring schemes and commissionaire dealings involving complex business structures in Spain; and (ii) it is aligned with the reasoning contained on Action 7 of the Base Erosion and Profit Shifting (BEPS) action plan developed by the Organisation for Economic Co-operation and Development (OECD) to prevent the artificial avoidance of PE status through the use of commissionaire arrangements.

A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details.

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Full text of Tax Alert 2016-1160