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V2706-14 9 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención por doble imposición económica

Exemption of foreign dividends and capital gains under foreign holding entity regime

A company asks whether dividends and capital gains from a Colombian multinational may be exempt from Corporate Tax. The DGT explains the requirements of participation, foreign taxation and source of income to apply the exemption.

The question raised

1. Whether the dividends and capital gains from foreign sources that the consulting company will receive will be subject to the exemption to avoid international economic double taxation.

The DGT's ruling

To apply the exemption, a minimum percentage of participation (or an acquisition value exceeding 6 million euros) must be met, the participated entity must be taxed abroad or have a treaty with an exchange of information clause, and the profits must derive from business activities (minimum 85% of income of this type). In the event of non-compliance with the activity or taxation requirements in any fiscal year, the exemption shall not apply to the portion of income corresponding to said period. Regarding the share premium, this constitutes equity for the company and an increase in the value of the participation for the shareholder, without implications for the taxable base.

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