Skip to content
Back to index
V0077-15 13 January 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · doble imposición interna

Application of internal double taxation deduction in share transfer and property division

The consultation examines whether the holder of transferred shares can claim the internal double taxation deduction on undistributed profits increase. The DGT confirms this is possible if participation and temporality requirements are met, and clarifies that the usufructuary is entitled to a 100% deduction on dividends received.

The question raised

1) Whether a shareholder proceeding with the transfer of shares may apply the deduction for domestic double taxation under paragraph 5 of Article 30 of the recast text of the Corporate Income Tax Law approved by Royal Legislative Decree 4/2004, of March 5, for the portion of the net increase in undistributed profits corresponding to the transferred interest, generated by the investee entity during the period of holding said interest.

The DGT's ruling

The shareholder may apply the deduction set forth in paragraph 5 of Article 30 of the TRLIS regarding the lesser of the two amounts: the net increase in undistributed profits generated during the holding period or the amount of income computed for the transfer. For the usufructuary, a deduction of 100% of the total tax liability may be applied to the dividends received if the requirements of paragraph 2 of the aforementioned article are met. Regarding the bare owner, the deduction may be applied for the portion of the increase in undistributed profits if the requirements of Article 30 of the TRLIS are met.

Book your free first meeting