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Spain: Deduction of technical provisions confirmed for EU insurers (Supreme Court decision)

EU insurers without a permanent establishment in Spain may deduct technical provisions directly linked to Spanish-source dividends

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february 18, 2026

The Spanish Supreme Court in November 2025 issued its judgment confirming that European Union (EU) insurers without a permanent establishment in Spain may deduct technical provisions directly linked to Spanish-source dividends, provided the correlation is duly evidenced. This judgment dismisses the appeal filed by the State Attorney and supports the National High Court’s approach in a case involving a German insurance company seeking a refund of Spanish withholding tax (WHT) applied in excess.

Historically, Spanish tax authorities have rejected the deductibility of technical provisions for nonresident insurance companies. The Supreme Court's decision establishes a mandatory doctrine allowing EU insurers to treat expenses related to technical provisions as tax deductible, provided they are directly related to the income obtained in Spain and have a direct economic link with the activity carried out in Spain.

Read a January 2026 report prepared by the KPMG member firm in Spain

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