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V0013-17 3 January 2017 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidades transparentes

Dividends from sales of German KG shares may be taxable in Spain and Germany

A Spanish company asked whether the sale of shares in German KG entities should be treated as a transfer of shares or real estate assets. The DGT states that, under the Double Taxation Agreement, income may be taxable in both countries and the transaction is considered a capital gain from share transfer.

The question raised

1. Regarding the transfer, whether the transfer must be considered, for Spanish tax purposes, as a transfer of shares or as a transfer of real estate assets.

The DGT's ruling

German KGs have a nature analogous to entities under the income attribution regime; therefore, their transfer is treated as capital gains pursuant to the Spanish-German Convention. The entity carries out an economic activity even if management is subcontracted, meaning it is not a holding company. Consequently, the transfer of shares may qualify for the exemption under Article 21 of the LIS if the requirements regarding participation and holding periods are met. Furthermore, the result of the transfer is included in the operating profit for the purpose of the financial expense deductibility limit.

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