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V2356-20 9 July 2020 · SG de Fiscalidad Internacional Criterion in force
IRNR · enajenación de acciones

Spain may tax share transfers at 10% if by a physical person

A Mexican resident owning a Mexican company with a stake in a Spanish company asks whether transferring shares from the Spanish company to the Mexican one is tax-exempt in Spain. The DGT rules that the exemption does not apply because the transferor is a physical person and the protocol requires transfers between members of a group of companies.

The question raised

It is asked whether the exception in paragraph 9 of Article XVII of the Protocol to the Spanish-Mexican Convention can be applied.

The DGT's ruling

The exemption that grants exclusive taxing rights to the country of residence is not applicable because paragraph 9 of Article XVII of the Protocol refers to disposals between members of a 'group of companies'. According to the Commercial Code, a group of companies is composed exclusively of companies and not of natural persons. Therefore, as the transferor is a natural person, they cannot be considered part of a group of companies and shared taxation applies, allowing Spain to tax with a limit of 10% of the gain.

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