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V0415-18 19 February 2018 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención

Income from entity liquidation may be exempt if Article 21 LIS requirements are met

A company inquired whether income arising from the difference between contributions and amounts received during the liquidation of a subsidiary was exempt. The DGT ruled that the exemption may apply provided the requirements regarding participation and residence are satisfied.

The question raised

Whether the exemption provided in Article 21.3 of the LIS applies to the income to be imputed to the consulting entity for the difference between the amount contributed at incorporation and the amount received as a dissolution and liquidation quota, whereby the entirety of the income would be exempt from taxation, or whether, on the contrary, the provisions of Article 21.5 of the LIS must be applied. And in the event that the provisions of Article 21.5 of the LIS are applied, what would be the exempt portion of the income to be imputed by the consulting entity.

The DGT's ruling

The entity may apply the exemption provided in Article 21 of the LIS to the income obtained from the dissolution and liquidation of the investee entity if it holds a participation percentage exceeding 5% uninterruptedly during the year prior to the transfer. Likewise, the requirement of letter b) is deemed fulfilled if the investee entity is a tax resident in Spanish territory.

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