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V2096-16 13 May 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidades sin fines lucrativos

Inability to apply Law 49/2002 if non-exempt economic activity exceeds 40% of income

An association enquired whether it could continue to benefit from Law 49/2002 if its turnover from non-exempt economic activities exceeded 40% of its total income. The Directorate-General for Tax (DGT) ruled that such an excess would constitute a failure to meet the requirements for non-profit status.

The question raised

Whether the association could continue to apply Law 49/2002, of December 23, in the future event that the net amount of the turnover from the non-exempt economic activity, which forms part of its statutory purpose and objectives, exceeds 40% of the entity's total income.

The DGT's ruling

To benefit from Law 49/2002, the entity must comply with the requirements of Article 3, including that the turnover from economic activities unrelated to its purpose does not exceed 40% of total income. If the activity does not fall within the exemptions of Article 7 and exceeds this 40%, the requirement is breached and the special regime cannot be applied. In that case, the entity shall be considered a partially exempt entity pursuant to Article 9.3 of the LIS.

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