Intro to taxation and PIT

What is NOT a purpose of taxation policies?

• To fund private expenses.

• To fund welfare.

• To modify patterns of consumptions.

• To contribute to public services.

What kind of tax are Sales taxes?

• Direct.

• Indirect.

• Direct for the buyer, indirect for the seller.

• Direct for the seller, indirect for the buyer.

If there is a conflict between an international tax treaty and Spanish tax legislation, the Spanish tax legislation will prevail.

• True.

• False.

• Only regarding real estate, if it is in Spain.

• Conflict between international tax treaty and Spanish legislation is not possible.

Tax havens:

• Often lead to tax competition between countries.

• Are safe countries or territories with stable tax policies.

• Have signed a wide range of tax treaties with other countries.

• Exchange information with other countries.

Chose the correct order for PIT purposes.

• taxable net income * tax rates - withholding taxes.

• taxable net income + withholding taxes * tax rates.

• Gross income * tax rates.

• None of answers is correct.

Which factors are not considered important when determining ordinary tax residence of individuals?

• The frequency, regularity and duration of stay.

• The individuals’ citizenship.

• The location of the individual’s family, business and social ties.

• Whether the individual maintains a place of abode.

Which of the following is considered employment income for tax purposes?

• Reimbursement of EUR 3,000 for work related expenses.

• Provision of a car for work and for private use.

• Income from your own business.

• None of the above.

If a French tax resident has a savings account in HSBC (UK) and earns interest, are those interest payments subject to taxation in France, the UK, or both?

• It is only taxable in France because he is a French tax resident.

• It may be taxed in the UK and/or France depending on the UK/France Double Tax Treaty.

• It is taxable only in the UK because it is UK source income.

• It will be taxed in France and may be taxed in the UK by the application of the Model Tax treaty.

Luis is a Spanish tax resident and owns a villa in Italy. He decides to sell it to a Portuguese Family. Where does this transaction has a tax impact?

• Only in Italy, since the villa is located there.

• Only in Spain, since he is Spanish tax resident.

• Only in Portugal, since the buyer is in Portugal.

• None of the above is correct.

According to the tie-breaker rules for individuals of the OECD Motel Tax Convention, if an individual does not have a permanent home in any of the two Contracting States:

• In case of a tax residence conflict, the individual will not be able to apply the tie-breaker rules because she or he is not a resident of any of the two Contracting States.

• He or she may be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests).

• He may be deemed to be a resident only of the State where he has family (habitual abode).

• None of answers are correct.