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V3544-15 17 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidad de tenencia de valores extranjeros

Income from the transfer of shares may be exempt if Article 21 LIS requirements are met

A foreign holding company (ETVE) has requested clarification on whether income derived from the sale of its shareholding in a non-resident company is exempt, and whether profits distributed to non-resident shareholders are considered to be obtained outside of Spain. The DGT ruled that the exemption depends on meeting the participation and taxation requirements of the subsidiaries, and that the distribution of exempt profits to non-resident shareholders is not considered to be obtained in Spain if they originate from non-resident entities.

The question raised

Question raised 1) Whether the income obtained in the transfer by the inquirer of its shareholding in B would be exempt from taxation in Spain.

The DGT's ruling

Positive income from the transfer of a shareholding shall be exempt if the requirement of a minimum participation of 5% or an acquisition value exceeding 20 million euros is met, held uninterruptedly during the previous year, and if the participated entity is subject to an analogous foreign tax of at least 10% in all years of holding. Profits distributed from these exempt incomes in favor of non-resident partners shall not be understood to be obtained in Spanish territory, provided they originate from non-resident entities and the income can be unequivocally identified. The treatment of the share premium is identical to that of the distribution of profits.

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