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V1834-14 10 July 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · concesión de obra pública

No withholding tax should be applied to surplus payments in a public works concession to a local council

A query was raised regarding whether surpluses in the economic results of a public works concession should be considered returns on movable capital subject to withholding tax. The DGT has determined that these payments relate to the transfer of management and operation of the works, rather than a joint venture agreement.

The question raised

Whether the income corresponding to surpluses in the economic result of the operation is considered return on movable capital as a non-managing partner in a joint venture, by way of a participating interest, and therefore should be subject to withholding.

The DGT's ruling

The consideration for surpluses in a public works concession is understood to be provided through the transfer of the management and operation of the center. No withholding tax should be applied as the recipient is a City Council, an entity included in Article 9.1 of the TRLIS, and according to Article 59 of the Corporate Tax Regulations, there is no obligation to withhold.

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