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V1895-15 16 June 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · etve

Transfer of shares in a foreign holding company may be exempt from corporate tax

A Spanish resident entity under the foreign holding entity regime asks whether the sale of its share in a UK holding company is exempt. The DGT determines that exemption applies if the requirements of shareholding, residence and business activities under article 21 of the TRLIS are met.

The question raised

Question raised 1) Whether the income obtained by the taxpayer from the transfer of its interests in B would be exempt from taxation in Spain.

The DGT's ruling

The transfer of the interest in entity B shall be entitled to the exemption under Article 21 of the TRLIS if the requirements regarding the percentage of participation, taxation abroad, and the requirement that the subgroup's income derives from business activities are met. For the exemption to be valid, at least 85% of the subgroup's income must be foreign business income, calculating the income of the subsidiaries in proportion to the percentage of participation. Profits distributed from these exempt incomes and the distribution of the share premium to non-resident partners shall not be deemed obtained in Spanish territory, unless the recipient resides in a tax haven.

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