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V2373-20 10 July 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · donación pura y simple

Donations to meet employment reserve may be pure and simple if no conditions or obligations are attached

A foundation asks whether corporate donations to meet the alternative employment reserve requirement are irrevocable pure and simple donations and whether they entitle to tax deduction. The DGT states that since such donations are not legal obligations but options, they may be pure and simple if they meet the conditions of generosity and absence of conditions.

The question raised

1) Whether the donations received by companies that make them with the objective of complying with the obligation established in letter c) of paragraph 1 of Article 2 of Royal Decree 364/2005 of April 8 are considered an irrevocable pure and simple donation or if, on the contrary, by being made as consideration for the fulfillment of an obligation, they are not considered an irrevocable, pure and simple donation.

The DGT's ruling

Donations made as an alternative measure to fulfill the employment reserve quota are not a legal obligation, but rather an option. If these donations are not subject to conditions nor encumbered by any charge, they shall be considered pure and simple. In such case, they generate a right to deduction in Corporate Income Tax pursuant to Article 17 of Law 49/2002, provided that the recipient entity is a non-profit entity that meets the requirements of said law.

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