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V3275-14 5 December 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención

Exemption possible in transfer of shares if TRLIS conditions met

A company asked whether the gain from selling its share in a foreign society (HolCo) could be exempt from Corporate Tax. The DGT explains that exemption is possible if the percentage, foreign taxation and real economic activity requirements are met.

The question raised

Whether the income obtained from the transfer of their shareholding in the company HolCo could fully benefit from the exemption provided in Article 21.2 of the consolidated text of the Corporate Income Tax Law.

The DGT's ruling

The exemption for the transfer of shares requires holding at least 5% of the capital uninterruptedly during the previous year. The participated entity must have been taxed by an analogous foreign tax and its profits must derive from business activities abroad. Mere prospecting, exploration, or development is not considered an economic activity, as the activity must have been effectively commenced. If the taxation or activity requirements are not met in any fiscal year, the exemption shall be applied proportionally.

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