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V3561-15 18 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención de dividendos

Dividends from a Dutch entity exempt if reserves from prior transfer from Spanish subsidiary

The consultant asks whether dividends paid by a Dutch company from reserves obtained through the sale of a Spanish subsidiary are exempt. The DGT confirms that exemption under Article 21 of the LIS is possible if participation and residency requirements are met.

The question raised

Question posed: Whether the exemption under Article 21 of the Corporate Income Tax Law will be applicable to the dividends that H distributes to X, from reserves accumulated in the Netherlands arising from the disposal of the shares of E. Such distribution will not generate a tax-deductible expense in entity H.

The DGT's ruling

The exemption under Article 21 of the LIS is applicable to dividends distributed from reserves arising from the disposal of a shareholding. The shareholding requirement is deemed met if the requesting entity held an indirect shareholding exceeding 5% in the transferred entity for at least one preceding year. Likewise, the requirement for taxation abroad is met if the participated entity is a resident in a country with a double taxation and information exchange agreement with Spain.

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