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V1043-14 14 April 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · consolidación fiscal

Application of double taxation relief in the tax year following dividend distribution

A company within a tax group has enquired whether it can apply double taxation relief to a dividend distributed in 2013, given that the income from the preceding transfer is only included in the group's tax base in 2014. The Directorate General for Taxes (DGT) has ruled that the relief may be applied in 2014, provided that the prior taxation of the income at the level of the transferors can be proven.

The question raised

1. Confirmation of the application of the double taxation corrective mechanism contained in Articles 30.4.e) and 30.6 of the TRLIS, regardless of whether the taxation associated with the income obtained by the previous holders of A is to be partially offset in the Corporate Tax return of the tax group through negative taxable bases or tax credits generated by the tax group.

The DGT's ruling

The double taxation deduction under Article 30.4.e) of the TRLIS requires proof that an amount equivalent to the dividend was previously taxed in Spanish territory at the level of the previous owners. In the case of tax consolidation, if the income from the previous transfer is not included in the group until a subsequent fiscal year, the deduction cannot be applied in the year the dividend is distributed. However, the deduction may be applied in the fiscal year in which the inclusion of said income occurs, provided that the legal requirements are met. Furthermore, there is no obligation to withhold tax on the distribution of dividends between companies that are part of a tax consolidation group.

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