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V0220-14 30 January 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reducción de ingresos

Reduction in income from intangibles may apply if the assignee is a Ministry of Defence or Armed Forces

An aircraft manufacturer has enquired whether it can apply the 60% reduction on income from the assignment of intangibles when the assignee is a Ministry of Defence or an Armed Force. The DGT ruled that, although these entities do not carry out an economic activity in the strict sense, the use of intangibles in their defence functions allows for compliance with the legal requirement.

The question raised

Whether the application of article 23 of the TRLIS regarding the reduction of income derived from certain intangible assets complies with paragraph 1.b of the aforementioned precept in cases where the transferee entity is a ministry of defense or armed forces.

The DGT's ruling

The use of intangibles by a Ministry of Defense or Armed Forces in the performance of their protection and security functions allows for compliance with the requirement of use in economic activity under article 23.1.b) of the TRLIS. This particularity does not prevent the application of the incentive in the transferring entity, as the intangibles generate added value towards third parties. For the application of the incentive, the remaining requirements provided for in the precept must also be met.

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