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V2656-14 8 October 2014 · SG de Fiscalidad Internacional Criterion in force
IRNR · residencia fiscal

Dividends and capital gains from Irish-resident entity exempt in Spain

A Cayman-incorporated entity with Irish tax residency seeks advice on the exemption of interest and capital gains in Spain. The DGT confirms that interest is taxable only in Ireland, and capital gains may be exempt unless specific conditions relating to shareholding or immovable property are met.

The question raised

Application of the exemption provided for in article 14.1.c) and 14.1.i) of the recast text of the Non-Resident Income Tax Law to the interest and capital gains obtained by the Consultant (or, where applicable, the subsidiary) in relation to the financing and sale operations described.

The DGT's ruling

Interest paid from Spain to an entity resident in Ireland may only be taxed in Ireland according to the Convention. Capital gains from the sale of shares are exempt in Spain if obtained without a permanent establishment, unless the entity holds primarily real estate assets in Spain or has held at least 25% of the capital in the preceding 12 months. An exemption also exists for transfers on official secondary markets if the resident belongs to a State with an information exchange agreement.

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