For years, the Spanish tax authorities have imposed on companies established outside the EU that plan operating in Spain the obligation to appoint a tax representative with residence in Spain to represent them in their relations with the Tax Administration. This obligation implies, among others, an important extra cost for these companies compared to other community companies to which this requirement is not imposed, which implies less competitiveness in the market.
Moreover, since this tax representation means for the tax representative that they automatically become jointly and severably liable of their represented company in case the latter does not pay the corresponding taxes, which will certainly increase the possibilities of the Tax Administration of collecting debts. At this point, it is not easy to find in the market a representative who would like to voluntarily assume this liability and, in the event of finding someone, they will not normally accept their appointment free of charge, which will involve a significant additional cost for the company.
Given this situation and the discrimination that the voluntary representative must necessarily be resident in Spain, the European Union Commission has decided to send to Spain a formal requirement in order to proceed to eliminate this obligation. The main argument that it is based on is to be inconsistent with the majority of freedoms provided for in the EU Treaty: freedom of establishment, freedom of workers and freedom of movement of capital, and all this for imposing higher costs on non-European taxpayers to deter them from making investments or doing business in Spain. If Spain does not act in the next two months, the Commission will decide whether to bring the issue before the European Courts of Justice.
Tax Manager, Barcelona
+34 93 218 07 08