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V4564-16 24 October 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · préstamo participativo

Returns on participating loans between group companies may qualify as exempt dividends

A company sought clarification regarding the tax treatment of interest received from cash contributions made to another entity in which it holds shares. The DGT explains that, under certain conditions, these interest payments may be treated as exempt dividends.

The question raised

Whether this procedure is correct.

The DGT's ruling

The returns on participating loans granted after June 20, 2014, shall be dividends or profit shares exempt from tax if three requirements are met: that the loan is between entities of the same group pursuant to Article 42 of the Commercial Code, that it was granted after the indicated date, and that its distribution does not generate a tax-deductible expense for the paying entity. If the loan predates said date, the returns shall be classified as financial income.

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