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V1080-16 17 March 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · reducción de rentas

Income from licensing software logic or algorithms may be reduced by 40% subject to Article 23 LIS requirements

A company sought clarification on whether income from licensing a data management technology tool could qualify for the reduction under Article 23 of the Corporate Income Tax Act (LIS). The Directorate General of Taxes (DGT) indicates that this reduction applies only if the asset constitutes the underlying ideas and principles of the software, such as its logic or algorithms, provided all other legal requirements are met.

The question raised

Whether the income received by the taxpayer from the transfer of the right to use and exploit the described tool may benefit from the reduction provided for in Article 23 of the LIS.

The DGT's ruling

In order for the transfer of computer programming information to be considered know-how and allow for the 40% reduction, it must consist of the basic ideas and principles of the program (logic, algorithms, or programming techniques). Other ancillary information is not included. The application of the reduction is conditional upon compliance with the requirements of Article 23 of the LIS.

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