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V5299-16 14 December 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención por doble imposición

Dividend exemption for a Uruguayan entity may apply if a double taxation treaty exists

A Spanish company owning 100% of a subsidiary in Uruguay has requested clarification on whether it can apply the double taxation exemption to dividends received. The Directorate General of Taxes (DGT) has ruled that this is possible, provided the participation requirements are met and the double taxation treaty between Spain and Uruguay applies.

The question raised

Question posed: Whether the exemption to avoid double taxation set forth in Article 21 of Law 27/2014, of November 27, on Corporate Income Tax, would apply to the dividend received by the consulting entity from entity B.

The DGT's ruling

To apply the exemption under Article 21.1.a) of the LIS, the entity must hold at least 5% of the capital uninterruptedly during the year preceding the distribution. Regarding letter b), the requirement that the non-resident entity be subject to a foreign tax of at least 10% is considered met if the investee entity is resident in a country with a double taxation treaty with Spain that includes an exchange of information clause. In this case, by applying the treaty between Spain and Uruguay, said requirement would be understood to be met.

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