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V2879-16 22 June 2016 · SG de Fiscalidad Internacional Criterion in force
IRNR · sociedades matrices y filiales

No exemption from IRNR for dividends from Spanish subsidiary to Luxembourg parent without valid economic reasons

A Spanish company (E1) asks whether dividends paid to a Luxembourg company (E2) are exempt from IRNR under the parent-subsidiary regime. The DGT concludes that the requirements are not met because the structure lacks valid economic or substantial business reasons.

The question raised

Whether, in accordance with the provisions of Article 14.1.h) of the TRLIRNR, the dividends distributed by E1 to E2 in 2015 and future financial years would be exempt from IRNR.

The DGT's ruling

The exemption under Article 14.1.h) of the TRLIRNR is not applicable when the majority of the voting rights of the parent company are held by a natural person not resident in the EU, unless the constitution and operation of the parent company respond to valid economic motives and substantive business reasons. In this case, the interposition of the Luxembourg parent company does not provide cost savings or economies of scale, but rather duplicates resources and seeks a tax advantage compared to the withholding tax that the partner would suffer directly.

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