The withholder must withhold and pay to the Treasury the nonresident's tax due.

Who has to withhold tax ?
Among the organizations obliged to withhold tax -or to collect and deposit it on account of in-kind payments- from the income they pay to nonresidents are:
•Organizations that are resident in Spain (also those in flow-through tax regime).
• Individuals that are resident in Spain and running business.
• Nonresidents with a permanent establishment.
• Nonresidents without a permanent establishment, with respect to the salaries, wages and other payments they pay for dependent personal services.

What income types must be collected:
Generally speaking, any income subject to nonresident income tax is subject to withholding.

Exceptions to the duty to withhold

• Income that is exempt (see specific section for exemptions). In spite of the above, there is an obligation to withhold with respect to the income referred to in point 11 of the specific section of exemptions.
• Income exempt by means of an Agreement to avoid double taxation.
• Income obtained by nonresidents with no permanent establishment when payment of the tax is shown by the nonresident.
The nonresident is entitled file and pay his income tax. If this circumstance is shown, there is no obligation to withhold.
• Capital gains. Nevertheless, there is an obligation to withhold tax with respect to:
- Prizes received from participating in games, competitions, stakes or other types of betting.
- Transfer of real estate assets located in Spain.
- Income derived from the transfer or reimbursement of stocks or shares which represent capital or equity in collective investment institutions, except those listed investment funds regulated by section 49 of Regulation 35/2003 regarding mutual investment institutions, passed by Royal Decree 1309/2005.

How much to withhold ?
The amount withheld should be equivalent to the tax liability.
However, the withholder will collect on the gross amount, without accounting for the following expenses or deductions (which will be later applicable when calculating the tax): salaries and wages; supplies acquired for economic activities performed without a permanent establishment; the quota of the special tax on real estate assets of non-resident organizations, and charitable contributions.

Obligation to report
Generally, the withholder must file a return and pay the amount withheld using Form 216. Likewise, the withholder must file an annual summary using Form 296.