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V0542-16 9 February 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · etve

Income distributed by an ETVE to a non-resident shareholder in Curaçao may be exempt from Spanish tax

A consulting entity has inquired whether income from a Colombian fund (FCP) acting as a permanent establishment of a Spanish ETVE is exempt for its non-resident shareholder. The DGT analyses the nature of the fund, the existence of a permanent establishment, and the shareholder's residence.

The question raised

Question posed: Whether the income obtained by the non-resident shareholder through its participation in the Spanish company seeking to opt for the special ETVE regime, which derives from exempt income arising from the activity of the permanent establishment in Colombia through the FCP, will not be subject to taxation in Spain in accordance with the provisions of Article 108 of the Corporate Income Tax Law.

The DGT's ruling

If the Spanish company opts for the ETVE regime and the income from the Colombian FCP meets the exemption requirements of Article 22 of the LIS, the distribution of profits to the non-resident shareholder may apply the treatment of Article 108. In this case, as the shareholder is from Curaçao (not considered a tax haven) and the income originates from a permanent establishment, the distributed profit shall not be understood as being obtained in Spanish territory. To this end, the FCP must be analogous to an entity under a pass-through tax regime and the permanent establishment must meet the requirements of the Double Taxation Convention with Colombia.

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