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V2110-19 12 August 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención

Corporation Tax exemption may apply to the transfer of shares if Art. 21 LIS requirements are met

An entity has enquired whether it can apply for an exemption regarding the transfer of shares in a company engaged in vehicle trading. The DGT has ruled that this is possible provided that the requirements concerning shareholding percentage, holding period, and tax residence are satisfied.

The question raised

In the event that the transfer of shares in entity C generates positive income for its two majority shareholders and considering the specific economic activity carried out by entity C, whether the consulting entity could apply to the capital gains deriving from the sale the exemption provided for in article 21 of Law 27/2014, of November 27, on Corporate Income Tax, given that the percentage of participation held for more than one year is greater than 50%.

The DGT's ruling

In order for the positive income from the transfer of a shareholding to be exempt pursuant to art. 21.3 LIS, the requirements of letters a) and b) of paragraph 1 must be met. The minimum holding requirement must be met on the date of the transfer, whereas the taxation requirement of the investee entity must be met throughout all fiscal years of ownership. If the investee entity is a resident in Spain, it is not necessary to analyze the requirement of taxation abroad.

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