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V1953-21 21 June 2021 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidad de nueva creación

Societies in a group cannot apply 15% tax rate

The consultant asks whether creating a subsidiary or joint venture would allow the reduced corporate tax rate. The DGT responds that, where there is control and the companies form a group under Commercial Code article 42, the reduced rate cannot be applied.

The question raised

Question posed: Whether, in both proposed options, both in the case of the incorporation of the subsidiary company and in the case of the incorporation of a joint venture, the consulting entity A and the entities resulting from the proposed legal transactions will be considered newly created entities and, consequently, will be taxed, in the first tax period in which the taxable base is positive and in the following one, at the rate of 15 percent.

The DGT's ruling

Newly created entities carrying out economic activities are taxed at 15% during the first two periods with a positive base, unless they are part of a group pursuant to Article 42 of the Commercial Code. If a company incorporates a 100% subsidiary or acquires a majority stake of 58%, both entities become part of a group. In these cases, the affected companies may not apply the reduced rate of 15%.

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