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V0219-14 30 January 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · bases imponibles negativas

No limitation on offsetting tax loss carryforwards if the company maintains economic activity

A company sought clarification on whether its tax loss carryforwards would be limited following a restructuring in which a group of related shareholders increased their stake from 23.2% to 100% of the capital. The Directorate General for Taxes (DGT) ruled that the limitation does not apply because the company is not considered inactive, as it maintains the necessary material and human resources for its management.

The question raised

Confirmation that following the shareholding restructuring operations of the consulting entity planned to be undertaken in 2013, which will entail that companies B, G, and E (of group B) pass from holding 23.2% to 100% (or a percentage lower but always above 50%), the limitations on the compensation of negative tax bases provided for in article 25.2 of the consolidated text of the Corporate Income Tax Law will not apply at the level of the consulting entity.

The DGT's ruling

For the reduction of the negative tax base due to a change of control to apply, three simultaneous requirements must be met: acquisition of the majority of the capital by related parties, that these held a stake of less than 25% prior to the change, and that the entity did not carry out economic activities in the preceding six months. In the case of a holding company with an organization of material and human resources for the management of its subsidiaries, the lack of economic activity does not occur, and therefore the limitation of article 25.2 of the TRLIS is not applied.

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