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V2783-15 25 September 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · dividendos

Dividends from accumulated reserves may be exempt if Article 21 LIS requirements are met

A requesting entity asks whether dividends paid from accumulated reserves held until 2014 by a subsidiary are exempt from taxation. The DGT indicates that, based on the facts, the requirements regarding participation and the taxation of the subsidiary appear to be met to apply the exemption.

The question raised

Question posed: Whether dividends charged against reserves accumulated until December 31, 2014, which B intends to distribute, would be exempt from taxation in Spain, in accordance with the provisions of Article 21.1 of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

For the exemption of dividends pursuant to Article 21 of the LIS, a minimum holding of 5% or an acquisition value exceeding 20 million euros is required, held uninterruptedly. In the case of non-resident entities, the subsidiary must have been subject to a foreign tax of a similar nature with a nominal rate of at least 10%. The exemption applies to the portion of the dividends that meets these requirements, even if the subsidiary derives income from other entities.

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