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V0654-25 10 April 2025 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención de dividendos

Dividend exemption thresholds and indirect participation rules

A Spanish holding company asks whether it can benefit from dividend exemption on its shareholding in a French company (A), which in turn holds another company (B). The DGT states that if dividend and capital income from company A do not exceed 70% of its consolidated income, there is no need to assess indirect participation in A's subsidiaries.

The question raised

Whether the minimum holding requirement is met so that the applicant may apply the exemption provided for in article 21.1.a) of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

To apply the exemption under art. 21.1.a) LIS, a minimum holding of 5% must be maintained uninterruptedly. If the participated entity is the parent of a group and derives more than 70% of its income from dividends or capital income, the taxpayer must also meet the minimum holding requirement in the indirect entities. However, if said 70% threshold is not exceeded, it is not necessary to analyze the indirect holding in the subsidiaries of the directly participated company. In the case of non-resident entities, the requirement of minimum taxation or the existence of a double taxation treaty must be met.

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