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V2126-19 12 August 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · tipo reducido

Ineligibility for the 15% reduced rate if a new entity acquires activity from a related party

A query was raised regarding whether a newly created entity can apply the 15% reduced rate for Corporate Income Tax. The DGT ruled that it cannot apply this rate if the activity was previously carried out by a related party and subsequently transferred to the new company.

The question raised

Whether it is possible for entity B to apply the reduced rate of 15 percent of Corporate Income Tax for newly created entities.

The DGT's ruling

To apply the reduced rate of 15%, the entity must carry out an economic activity and must not have received the activity from a related party. If a natural person owns 50% of entity A and 30% of entity B, both are related parties. In this case, if entity B acquires the stock, premises, trade name, suppliers, and customers of entity A, it is understood that there is a transfer of activity which prevents the use of the reduced rate.

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