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V3404-15 5 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención por doble imposición

Corporation Tax exemption may apply to dividends from the sale of shareholdings

A holding company enquired whether it could apply the international double taxation exemption to dividends received from a Dutch subsidiary, where such dividends originated from the sale of shares in another Spanish company. The DGT ruled that the exemption can be applied provided that the requirements regarding shareholding and foreign taxation are met.

The question raised

If entity B sells part of the shares of the Spanish company S, and agrees on the distribution of dividends derived from this operation, can the dividend recipient entity A apply the exemption under Article 21 of Law 27/2014, of November 27, on Corporate Income Tax.

The DGT's ruling

Dividends distributed by a holding company originating from the transfer of interests in another entity may benefit from the exemption under Article 21.1 of the LIS. To this end, the origin of the income of the investee entity must be analyzed, as well as whether it meets the holding company condition (more than 70% of income from capital income). If the significant participation percentage and the requirements of foreign residence and taxation are met, the exemption is applicable.

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