Cooperatives with special tax rate regimes cannot be dominant entities of a tax group

The configuration of tax groups requires that the dominant entity and its subsidiaries share a common regulatory framework, especially regarding the applicable tax rate. A recent resolution from the Dirección General de Tributos (DGT) has delimited the scope of this requirement when the parent entity possesses a special tax regime.

What the DGT has ruled

The inquiry analyzes whether a cooperative acting as the dominant entity of a commercial group can also be considered a dominant entity for tax purposes, according to Article 58 of the Law on Corporate Income Tax (LIS). The DGT has ruled that it is not possible to integrate these types of structures into a tax consolidation regime under such a parent company.

The criterion is based on the application of the exclusion provided for in Article 58.4.e) of the LIS. As it is a cooperative fiscally protected by Law 20/1990, it possesses a tax rate regime different from that of the commercial companies that could form part of its group. This disparity in taxation prevents the cooperative from assuming the role of the dominant entity of the tax group.

What it means for you

This criterion directly impacts the planning of corporate groups where the parent is a cooperative. If an entity seeks to fiscally consolidate its subsidiaries to optimize results management, it must verify that the parent is not subject to a differentiated tax rate regime.

In the case analyzed, the subsidiary commercial entity will retain its own status as a dominant entity as long as it meets the requirements of Article 58 of the LIS, but it will not be able to integrate into a group led by the aforementioned cooperative. The impossibility of consolidation arises from the incompatibility of the taxation regimes between the cooperative parent and its commercial subsidiaries.

What should be done

Companies operating under corporate group structures should evaluate the tax nature of their parent company before opting for tax consolidation. It is necessary to check whether the controlling entity is subject to special regimes that, due to their tax rate, block the possibility of applying the group regime. It is recommended to analyze the ownership structure and the tax regimes applicable to each member of the group to determine the most appropriate tax strategy.