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V2146-19 13 August 2019 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidad de nueva creación

15% reduced rate inapplicable if company is part of a corporate group

A newly established consultancy firm inquired whether it could be taxed at the 15% reduced rate during its initial financial years. The Directorate General of Taxes (DGT) ruled that this reduced rate cannot be applied because the company is considered part of a group, as it is controlled by an entity resident in the United Kingdom.

The question raised

Whether the applicant entity could be taxed in Corporate Income Tax, in the first tax period in which its taxable base is positive and in the following one, at the rate of 15 percent, as it is a newly created company and an activity that will be developed in Spain for the first time by it or by any of its partners.

The DGT's ruling

Newly created entities carrying out economic activities are taxed at 15% in the first period with a positive base and in the following one. However, this reduced rate does not apply to entities that form part of a group pursuant to Article 42 of the Commercial Code. As there is a company that holds control over the applicant, both are considered a group and the benefit of the reduced rate is excluded.

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