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V0128-14 22 January 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRPF · transparencia fiscal internacional

Tax attribution of Hong Kong financial income under international fiscal transparency rules

A Spanish resident asks whether to include financial income from a Hong Kong company in their personal income tax. The DGT explains that participation and tax rate requirements must be met, and there are thresholds and business activity exemptions.

The question raised

1. Regarding the dividends that A will receive from Z, whether they are considered income derived from business activities for the purposes of Article 107 of the TRLIS.

The DGT's ruling

For Personal Income Tax (IRPF), the taxpayer must impute the income of the non-resident entity if they hold a stake exceeding 50% and the foreign tax rate is less than 75% of the Spanish rate, unless capital income is less than 15% of total income or 4% of revenue. In Corporate Income Tax, the dividend exemption requires that at least 85% of the income of the controlled entity derives from business activities abroad; if 50% of the income is generated in Spain, this requirement is not met.

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