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V0326-16 27 January 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · doble imposición interna

Partial application of the domestic double taxation relief based on the nature of the income

A query was raised regarding the application of domestic double taxation relief on capital gains when evidence of undistributed profits is partial. The DGT rules that the relief shall be applied proportionally, based on the portion of the income that was entitled to such relief during the previous transfer.

The question raised

Clarification on how to apply the double taxation deduction under Article 30.6 of the consolidated text of the Corporate Income Tax Law.

The DGT's ruling

The deduction for internal double taxation under Article 30.6 of the TRLIS shall be applied partially when the evidence of undistributed profits is partial. To determine the amount, a proportion shall be applied based on the ratio between the positive income for which the deduction was entitled in the previous transfer and the total positive income generated in said transfers. In the specific case, the consulting entity shall not apply the deduction to dividends corresponding to reserves and profits prior to the transfer, but shall apply it to those corresponding to the premium for profits generated after the economic closing date.

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