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V1582-14 17 June 2014 · SG de Fiscalidad Internacional Criterion in force
IRNR · dividendos

Dividend payment to a Swedish parent may be exempt from IRNR

A Spanish company asked whether dividend distributions to its Swedish parent were exempt from IRNR under article 14.1 h) of the TRLIRNR, given that the parent is now part of an American group. The DGT confirmed the exemption, as the Swedish parent has legitimate economic reasons and was not established for abuse of the regime.

The question raised

Whether the distribution of dividends is exempt from Non-Resident Income Tax pursuant to Article 14.1 h) of the TRLIRNR.

The DGT's ruling

The exemption under Article 14.1 h) of the TRLIRNR is applicable if the requirements regarding participation, legal form, and tax liability are met. Even if the majority of voting rights belong to an entity not resident in the EU (USA), the exemption is not lost if the parent company demonstrates valid economic reasons and that it was not established to unduly benefit from the regime. In this case, the seniority of the Swedish parent company and the subsequent acquisition by the US group validate the existence of economic reasons.

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