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V0363-16 1 February 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reducción de rentas

40% tax reduction inapplicable to software licensing and technical assistance services

A technology consultancy queried whether the transfer of a technology license (algorithms and languages) alongside bespoke software and maintenance services qualified for the reduction under Article 23 of the Corporate Income Tax Act. The Directorate General for Taxes (DGT) ruled that these earnings cannot benefit from the incentive as they derive from technical assistance services and software is expressly excluded.

The question raised

1. Whether any of the concepts invoiced by the applicant to B by virtue of the license agreement are considered an assignment of any of the intangibles defined in Article 23 of the LIS. And whether, if applicable, the reduction provided for in said article would apply and what the amount of the income eligible for reduction would be.

The DGT's ruling

Income from the assignment of use of custom-developed software and the provision of additional services cannot benefit from the reduction under Article 23 of the LIS, as they are considered technical assistance services. Furthermore, the assignment of the base technology (algorithms and languages) is considered an accessory and inseparable element of the software, which is expressly excluded from said tax incentive.

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