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V2214-14 8 August 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · deducción por doble imposición

Deduction for double taxation applicable to dividend portions

A company inquired whether the double taxation deduction could be applied to both the portion of dividend recognised as income and the portion reducing the investment's carrying amount. The DGT confirms that such deduction may be applied in both cases if it can be proven that the equivalent amount was previously taxed at the donor level.

The question raised

Whether, according to a literal interpretation of Article 30.6 of the consolidated text of the Corporate Income Tax Law, the application of the deduction for double taxation of dividends regulated by said provision is appropriate, taking into consideration both the portion of the dividend that is recorded against the acquisition cost, as well as the totality of the dividend received and recorded as income in the 2013 fiscal year.

The DGT's ruling

The deduction for double taxation of dividends may be applied to the portion of the dividend that is not included in the tax base because it is not considered income, provided that it is proven that an equivalent amount has previously been taxed in Spanish territory by the transferor. For the portion that reduces the book value of the investment, Article 30.4.e) of the TRLIS applies, and for the portion recognized as income, Article 30.6 of the TRLIS applies. If the transferor applied the deduction for reinvestment of extraordinary profits, the double taxation deduction shall be limited to 18% of the corresponding portion.

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