In accordance with art. 76.1.d) of the Personal Income Tax Regulations, non-resident entities operating in Spain without a Permanent Establishment (PE) must withhold personal income tax on the salaries paid to tax-resident workers in Spain.

In other words, what determines the obligation to withhold (and, consequently, the registration for tax purposes in Spain) is that they are entities that carry out operations in Spanish territory, even if they do not have a PE, as confirmed by the DGT in several consultations (among them, V2221-19, of 8/19/2021).

The Central Economic Administrative Court (TEAC) has issued a recent resolution on 6/28/2022 exonerating a non-resident entity without PE that does NOT operate in Spain from withholding, as all it does is paying a retirement pension to a n individual tax resident in Spain which is subject to his / her Personal Income Tax Income tax.