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V3412-15 6 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRNR · etve

Dividends from exempt profits of a foreign holding company may be exempt from Spanish tax

A foreign holding company asks whether dividends paid to a shareholder in Curaçao are subject to non-resident income tax when derived from exempt profits of other companies. The DGT responds that such dividends will not be taxable if the ETVE regime requirements are met and the exempt income can be clearly identified.

The question raised

Question raised 1. Whether dividends distributed by X to S are considered to be obtained in Spanish territory to the extent they correspond to profits obtained by Y, to which this entity may have applied the exemptions provided for in Articles 21 or 22 of the Corporate Income Tax Law, by virtue of originating from non-resident entities in Spanish territory. In the negative case, whether the rule of non-subjectivity to Non-Resident Income Tax would apply if Y were to adopt the regime for foreign holding companies.

The DGT's ruling

Dividends distributed by an ETVE to a non-resident without a permanent establishment in Spain shall not be deemed to be obtained in Spanish territory if they derive from exempt income from holdings in non-resident entities or from permanent establishments abroad. This treatment is applicable even if the holdings are owned indirectly through instrumental sub-holdings, provided that an unequivocal identification of the income is possible. For this non-subjectivity to apply, it is necessary that the intermediate entities have opted for the ETVE regime. The first distributed profit shall be understood to derive from exempt income.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

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