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V0264-16 25 January 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · doble imposición

Double taxation relief may be applied to dividends that reduce the tax value of a holding

The taxpayer inquired whether the double taxation relief provided for in the Twenty-Third Transitional Provision of the Corporate Income Tax Act (LIS) could be applied to dividends distributed from shares acquired in 2006. The Directorate General for Taxes (DGT) ruled that this regime is applicable, allowing dividends to be excluded from the taxable base, thereby reducing the tax value of the holding and generating a right to tax relief.

The question raised

1) Whether the deduction to avoid double taxation regulated in the Twenty-Third Transitional Provision of Law 27/2014, of November 27, on Corporate Tax, is applicable to the dividend distribution described.

The DGT's ruling

Dividends corresponding to the positive difference between the acquisition price and the value of the contributions shall not be considered income and shall reduce the tax value of the holding. The taxpayer shall be entitled to a deduction of 100% of the gross tax liability if they prove that an equivalent amount was included in the tax base of the Corporate Tax or the Personal Income Tax of the transferors. In the specific case, the deduction shall be partial if the proof of taxation is partial or if the transferors applied deductions for the reinvestment of extraordinary profits.

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