Limitation of the 15% reduced rate for companies receiving activity from related parties
The application of the 15% reduced tax rate in Corporate Tax (Impuesto sobre Sociedades) is conditional upon the entity being newly created and developing its own economic activity. Recently, the Directorate General of Taxes (DGT) has clarified the limits of this benefit when there is a transfer of previous activity.
What the DGT has ruled
The query analyzed whether a company could benefit from the 15% reduced rate for the 2023 and 2024 fiscal years. The DGT's criterion is restrictive: an activity will not be understood to have been started if it was previously carried out by related persons or entities and subsequently transferred to the new entity.
In the specific case analyzed, there was a relationship between the company and the deceased (father of the partners). Upon finding that the activity, inventory, and fixed assets had been transferred, the administration concluded that the application of the reduced rate under Article 29 of the Corporate Tax Law (Ley del Impuesto sobre Sociedades) is not appropriate.
What this means for you
This criterion directly impacts companies established to provide continuity to family businesses or businesses of related persons. If the new entity does not start an activity from scratch, but instead assumes the structure, assets, and operations of a third party with whom it maintains a link, it will lose the right to the 15% tax rate.
The Administration seeks to prevent the creation of new companies from being used as a mechanism to access a lower tax rate when, in practice, what occurs is a succession of the pre-existing economic activity.
What you should do
It is necessary to analyze the nature of the company's incorporation and the origin of its economic activity. If the entity is going to receive assets, inventory, or the operations of a related person, the possibility that the Administration considers the activity not to be new must be evaluated, which would entail the application of the general Corporate Tax rate instead of the reduced one.
Frequently asked questions
- What requirements does the Corporate Tax Law (LIS) demand for the reduced rate?
- The entity must be newly created and develop its own economic activity.
- What happens if the company receives assets from a relative?
- If there is a relationship and the previous activity is transferred, the DGT considers that the activity is not new and does not apply the 15% rate.