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Witholding tax to non-EU company
Hi,
I've been looking at a couple of the threads here and would like some further advice as the info so far seems to be concerned with UK companies and/or properties.
I am a UK agent for a US company, which provides goods (servers and software) and services (software support & maintenance) to a Spanish company.
There is a local company in Spain who interface to the end-user.
The US company invoice the Spanish company (not the end user) in US$ and the Spanish company withhold 10% of the fee when they pay us.
I recently was sent by the US company a letter from the USA IRS stating the US company and its employees are US residents for US tax purposes.
Will this enable the Spanish company to stop witholding?
John Mayo
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Hi mayojs, and welcome to our forums.
This is not the first time we see this happening. There is another thread by someone asking a similar question - Spanish IVA 10% Tax withholding.
As stated previously, I don't believe such retention should be made, especially if it has to do with VAT. It could be customs duties, but as far as I know computer software is exempt. I suggest that you ask this Spanish company to quote the law or regulation by which they are withholding this 10% amount. Once you have this information, we will be more than happy to analyse whether this is legal or not.
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Thanks for this.
I did look at the other thread before I posted.
The firm in question there was located in the UK, and therefore within the EU.
My parent company is based in Minneapolis, USA, from where goods & services are provided to the Spanish company, and from there to the Spanish end user.
I didn't know if this came under different jurisdiction.
I will ask the question of the Spanish company anyway
John Mayo
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