Cross Border International taxes

 

 

The One Big Beautiful Bill Act, which was passed on 4th July 2025, made sweeping updates to the U.S. tax code and will extend a number of provisions from the 2017 Tax Cuts and Jobs Act, that were due to expire. This legislation creates new reporting requirements and amends certain eligibility thresholds.  Up to $25,000 in tip income is now deductible.  Many of the provisions will bring change in 2026 and include:

 

 

• Taxpayers claiming the standard deduction will now be able to deduct up to $1,000 in charitable contributions in their annual tax return. This figure will rise to $2,000 for couples filing a joint tax return.  Therefore, the new charitable contribution deduction for non-itemizers for cash contributions is up to $1,000 for individuals and $2,000 for married couples who file their tax returns jointly.

 

• For taxpayers who itemize deductions rather than claiming the standard deduction, their 2026 charitable deduction will be limited to the amount that exceeds 0.5% of their 2026 adjusted gross income (AGI).

 

• The annual limit of certain K-12 expenses increases to $20,000. The definition has been expanded to include other expenses, for example, books, fees, tutoring, etc. Please be aware, however, that K-12 expenses do not qualify for state income tax purposes in certain U.S. states.

 

• There will be a new limit on itemized deductions for taxpayers in the 37% tax bracket. Effectively, this means that for every dollar of itemized deduction, the maximum tax benefit available will only be 35 cents. For 2026, the 37% bracket kicks in where the taxable income exceeds $640,600 for single filers and heads of households, $768,700 for married couples filing jointly and at $384,350 for married couples filing separately.

 

• For 2026, the state and local taxes (SALT) deduction is capped at $40,400. There is a slight increase in the phase-out range, which begins when the modified adjusted gross income (MAGI) is $505,000. Once MAGI surpasses $606,333, the deduction cap will be $10,000. Therefore, regardless of the MAGI, the SALT deduction will not fall under $10,000.

 

• Commencing 4th July 2026, it will be possible for employers to contribute up to $2,500 to the new Trump Accounts for Children. This amount will be excluded from the employee’s gross income.

 

• With regard to the Federal Estate & Gift Tax Exemption, the lifetime federal estate and gift tax exclusion amount has risen to $15 million per individual in 2026. For married couples, a combined amount of $30 million applies.

 

• Catch-up contributions allow those participants aged from 50 years to contribute additional money to their retirement accounts while those individuals, making additional contributions who are aged between 60 and 63 years come within the “super catch-up” definition. Higher-income participants in 401(k), 403(b) and 457(b) retirement plans are required to make any catch-up contributions as after-tax Roth contributions. This requirement applies to participants with 2025 FICA wages exceeding $150,000. In summary, from 1^st January 2026, catch-up and super catch-up contributions for certain high-paid participants must be made on an after-tax Roth basis instead of pre-tax basis.  This rule does not apply to SIMPLE IRAs or SEP IRAs.

 

 

 

Please be aware that 15^th April 2026 is the tax filing deadline for your individual federal income tax return.  It is also the deadline date for most of the state tax returns, however, there are some exceptions so please make sure you check this out.

 

 

For further information, please click: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

 

 

 

If you are seeking comprehensive U.S. tax advice or looking to regularise your U.S. tax affairs, and wish to deal with a U.S. Tax Advisor, please contact us at queries@accountsadvicecentre.ie

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

As Chartered Tax Advisors in Ireland, you might be surprised to learn how many of our multi-jurisdictional clients have contacted us regarding the new GST rules in Malaysia.  According to Malaysia’s Ministry of Finance, the supply of goods and services made in Malaysia will now be subject to the zero rated Goods and Services Tax (GST) effective from 1^st June 2018.  The “Goods and Service Tax (Rate of Tax) (Amendment) Order 2018” amends the rate of tax on the supply of goods or services as well as on the importation of goods from 6% to 0%.

 

 

Please be aware that the zero rating will not apply to the supply of goods and services listed under the Goods and Services Tax (Exempt Supply) Order 2014.  However, these goods and services will remain exempt from GST.

 

 

All persons registered for GST (Goods & Services Tax) must comply with the new legislation in relation to zero rating. At the same time, they will continue to be governed by the current regulations with regard to invoicing, filing and claiming input tax credits.

 

 

GST registered persons must continue to ensure that the pricing of goods and services provided adheres to the Price control and Anti-Profiteering Act 2011.

 

 

In summary, Malaysia’s Ministry of Finance announced that from 1st June 2018, the supply of goods and services made in Malaysia, in addition to the importation of goods and services liable to the 6% rate of Goods and Services Tax will now be subject to GST at 0%.  It’s important that you don’t confuse the supply of goods and services which are GST exempt with those liable to 0% rate.  Therefore, for complete clarity, the zero rate does not apply to the supply of goods and services listed under the Goods and Services Tax (Exempt Supply) Order 2014.  This continues to be exempt from the Goods and Services Tax.

 

 

 

For further information, please click: https://mysst.customs.gov.my/assets/document/SST%20Act/Sales%20Tax%20Act%202018_b.pdf

 

 

 

We are a boutique tax firm specializing in international and expatriate tax compliance for people moving to or from Ireland. We provide tailored advice for your unique set of circumstances.  With over thirty years experience simplifying complicated international matters, we have a proven track record of success.  If you’re an individual (including a remote worker or expat) we have the requisite expertise in personal tax residency, double taxation relief and tax compliance for people moving between jurisdictions. We help individuals manage risks associated with tax residency, split-year treatment, cross border relief and foreign earnings deductions.  If you are a business owner, we can support your business in relation to international social security, shadow payroll and policies to minimise double taxation.  To make an appointment with a Chartered Tax Advisor, please contact queries@accountsadvicecentre.ie

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

 

 

There are a number of alternatives open to individuals wishing to invest in Spain.  These include setting up a limited company or forming a branch / permanent establishment.  Due to the number of Irish clients with trading companies in Spain, we have prepared a general summary of the taxes arising. This is not a full and comprehensive guide to Spanish taxes.  It does not provide detail on the local operation of taxes.  As a result, we would always advise anyone with Spanish interests to seek the advice and expertise of a local tax professional.

 

 

 

RESIDENCE

 

Corporate tax is levied on the income of companies and other separate legal entities.  Spanish resident entities are liable to tax on their worldwide income, not just on profits from activities carried on in Spain.

 

 

What is a Spanish resident entity?

1. A company which is incorporated in Spain shall be regarded for the purposes of Spanish Corporate Tax as being resident in Spain under Spanish law.

2.  The location of central management and control in Spain may bring the entity into the Spanish Corporate Tax regime.  For example, if the legal headquarters/registered offices of the company are located in Spain, or if it is effectively managed from Spain, then the corporate entity is deemed to be Spanish resident.

3.  In the event of the legal entity being resident in a country where no taxation is levied on its profits or gains (i.e. a tax haven) then that entity is deemed to be Spanish tax resident if the following arise:

a)      The majority of the entity’s main assets are located in Spain.

 

b)      The entity’s principal business activity is carried out in Spain.

 

c)      The strategic control is exercised in Spain

 

It is important to keep in mind that the above point (i.e. number 3) will not apply if the entity exercises its management and control in another country.  This is  provided it does so for bona fide commercial reasons and not for the purposes of managing securities or other assets.

 

 

 

 

NON-RESIDENCE

 

Non-resident companies and entities are only liable to Corporate Tax on their Spanish income arising from business operations carried out by a Permanent Establishment within the jurisdiction.  Please consult Article 5 of the Ireland/Spain Double Taxation Agreement for a definition of Permanent Establishment.

 

Please be aware that a “Fiscal Representative” must be appointed by a non-resident individual or company, to correctly handle all tax affairs, when carrying out commercial activities in Spain.

 

 

 

 

TAX RATES

 

Corporate Tax

 

25% is the general tax rate for residents as well as non-residents carrying out commercial activities in Spain through a “Permanent Establishment.” Other tax rates may apply, however, depending on the type of company and the type of business carried out.

 

Where foreign companies have permanent establishments in Spain, Non-Resident Income Tax of 25% is chargeable on the income arising to the Permanent Establishment.

 

A reduced rate of 15% applies to newly incorporated entities set up on or after 1^st January 2015.  This preferential rate applies to the first two years of operation, providing a taxable profit arose in the first tax period.

 

This start up rate of 15% does not apply in the following situations:

 

 

1. Where the trade/business was carried on previously by a related entity.

2.  if the newly created company belongs to a Group of Companies.

3.  Where the company is considered, by law, to be an equity company.

 

For new companies set up prior to 1^st January 2015 they will be taxed at 15% on their tax base up to €300,000 with 20% tax being levied on any excess amounts.  This will apply for the first two tax periods.

 

 

 

Without a Permanent Establishment

 

When dealing with non-residents operating in Spain without a permanent establishment, but who are resident in another EU or EEA state with which there is an Information Exchange Agreement in place, a distinction should be made between an individual and a corporate entity.

 

The tax rate applicable in the above situation is 19% and the tax deductible expenses are calculated in line with Personal Income Tax and Corporate Income Tax legislation.

 

In all other situations, the general rule is that non-residents operating in Spain without a permanent establishment are taxable at a rate of 24%.

 

 

 

Capital Duty

 

A 1% Capital Duty is payable by the shareholders on the dissolution of a company or on a reduction in its share capital.

 

 

 

Dividends, Interest and Royalties

 

 Dividends paid to non-residents are liable to a 19% Withholding Tax unless a lower rate applies under a relevant Double Taxation Agreement.

 

It is also possible for an exemption to apply under the EU Parent Subsidiary Directive.  Distributions paid to E.U. parent companies by Spanish subsidiaries are exempt from withholding tax provided the parent company held, either directly or indirectly, at least a 5% holding in the subsidiary company for a continuous period of twelve months in addition to satisfying other conditions.

 

Anti-Avoidance legislation exists where the ultimate shareholder in not E.U. resident.

 

Following an amendment in the Spanish Personal Income Tax Legislation, a share premium distribution paid to a non-resident shareholder may now be treated as a dividend distribution liable to withholding tax under the general rules.

 

Interest paid to a non-resident including a non-resident individual is liable to 19% withholding tax unless a lower rate applies under the relevant Double Taxation Treaty.

 

Interest income is exempt from tax if the recipient is a resident of an E.U. member state or an E.U. Permanent Establishment of an E.U. resident company which is not deemed to be a tax haven.

 

Royalties paid to non-residents including a non-resident individual are liable to withholding tax of 24% or 19% if the recipient is resident in an EU or EEA member state where an Information Exchange Agreement exists.

 

This rate can be reduced by the provisions of a relevant Tax Treaty.

 

Royalties paid to associated EU resident companies or permanent establishments are exempt from tax in Spain providing certain conditions are satisfied.

 

 

 

 

Capital Gains

 

Under Spanish law capital gains are treated as ordinary business income taxable at the 25% corporate tax rate.

 

Capital gains on disposals by non-residents without a permanent establishment in Spain are taxed at a reduced rate of 19%.

 

Where non-residents without a permanent establishment dispose of real estate situated in Spain, a tax of 3% will be withheld from the sales price by the purchaser and paid over to the Spanish Tax Authorities to be offset against the vendor’s tax liability.

 

Capital Gains from the transfer of shareholdings/ownership interests in Spanish companies and foreign subsidiaries by corporate entities are exempt from tax if the conditions of Participation Exemption are satisfied.

 

For an E.U. corporate shareholder, ownership of at least 5% must be held directly or indirectly or the shareholding must be valued at over €20 million and it must be held for at least a twelve month period.

 

In situations where the company is non-resident, a foreign tax which is similar to Spanish Corporate Income Tax of 10% will apply providing the corporate entity is resident in a country with which Spain has concluded a Double Taxation Agreement.

 

 

 

VAT

 

Spanish VAT or IVA is charged on the supplies of goods and services within the Spanish VAT territory as well as on imports and intra-EU acquisitions of goods and services.

 

IVA is charged at 21% on the majority of goods and services in Spain.

 

There is a reduced rate of 10% which applies to certain goods and services such as the purchase of a newly built property, passenger travel, health products and equipment, toll roads, refuse collection and treatment, entrance to cultural buildings and events, some foodstuffs, water supplies, renovation and repair of private dwellings, agricultural supplies, hotel accommodation, restaurant services, etc.

 

There is a super reduced rate of 4% which applies to the basic necessities other than those classified under the 10% rate and these include human medicine, basic foodstuffs (i.e. bread, milk, cheese, eggs, fruit, vegetables, cereals, potatoes, etc.), books, newspapers and magazines except the electronic equivalents.

 

Sales Tax is applied in Ceuta and Melilla instead of VAT.

 

The Canary Island Indirect Tax or IGIC applies in the Canary Island instead of VAT.

 

The ordinary rate of IGIC is 7% but there are a range of other rates: 0%, 3%, 9½%, 13½% and 20%.

 

 

 

CHANGES TO VAT RULES

 

On 1^st July 2017 a new “Immediate Supply of Information” system took effect in Spain.

 

This new VAT management system now requires taxpayers to maintain their VAT books and records through the Spanish Tax Authorities website on a near real-time basis.

 

This new system is mandatory for all taxpayers who file their VAT Returns on a monthly basis including:

 

• Companies included in the VAT Grouping Special Regime.

• Large organisations whose annual turnover exceeds €6 million.

• Taxpayers registered on the VAT Monthly Refund  Registry (REDEME)

 

This new system, however, also enables Taxpayers to elect to use the S.I.I.  If they voluntarily choose to use this system then they must declare their intention on Form 036.

 

 

 

For further information, please click: https://sede.agenciatributaria.gob.es/Sede/en_gb/estadisticas/estadisticas-impuesto/declaracion-pais-pais-multinacionales-matriz-espanola/informe-pais-pais-2017.html

 

 

 

 

To speak with a Chartered Tax Advisor, specialising in Spanish Taxes, please contact us at queries@accountsadvicecentre.ie

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.