Income subject to imputation

Only the positive income obtained by the non-resident entity that comes from each of the sources indicated in article 91.2 of the Personal Income Tax Law will be imputed. When the investee entity is resident in countries or territories that are considered non-cooperative jurisdictions, it will be presumed, unless proven otherwise, that the income obtained comes from said sources.

In summary, the sources from which the positive income to be imputed must come are:

1. Income obtained from entities that develop economic activities

   In general, the resident partner must allocate in the general part of the tax base the positive income obtained by the non-resident entity that comes from the following sources:

   1. Ownership of real estate and real rights that rest on the same that are not affected by business activities.

   2. Participation in own funds of any type of entity and transfer of own capital to third parties.

   3. Capitalization and insurance operations that have the entity itself as beneficiary.

   4. Industrial and intellectual property, technical assistance, personal property, image rights and leasing or subleasing of businesses or mines.

   5. Transfer of previous assets and rights that generate income.

   6. Financial instruments derived from the performance of economic activities.

   7. Insurance, credit activities, financial leasing operations and other financial activities except in the case of income obtained in the exercise of economic activities, without prejudice to the provisions of letter i).

   8. Transactions on goods and services carried out with related persons or entities in which the non-resident entity or establishment adds little or no economic value

   9. Credit, financial, insurance and service provision activities carried out, directly or indirectly, with persons or entities resident in Spanish territory and linked as soon as they determine tax deductible expenses in said resident persons or entities, with exceptions.

      The positive income provided for in this letter will not be included when at least two thirds of the income derived from credit, financial, insurance or service provision activities carried out by the non-resident entity come from operations carried out with persons or entities not linked in the meaning of article 18 of the Corporate Tax Law.

   Previous income will not be imputed when the sum of their amounts is less than 15% of the total income obtained by the non-resident entity.

   However, in all cases the income referred to in letter i) will be imputed without prejudice to the fact that they will also be taken into consideration for the purposes of determining the sum referred to in the previous paragraph.

   The tax or taxes of a nature identical or similar to the Corporate Tax actually paid by the non-resident company for the part of income to be included will not be imputed to the taxpayer's tax base.

   Dividends or participation in profits will not be included in the tax base in the part that corresponds to the positive income that has been imputed. The same treatment will apply to interim dividends.

2. Income obtained from entities that do not develop economic activities

   The total income obtained will be imputed unless the taxpayer proves that the operations are carried out with the material and personal means existing in a non-resident entity in Spanish territory belonging to the same group in the sense of article 42 of the Commercial Code.

Amount of positive attributable income

The amount of positive income to be imputed will be calculated in accordance with the principles and criteria established in the Corporate Tax regulations for determining the tax base.

For these purposes, the exchange rate in effect at the end of the financial year of the non-resident entity in Spanish territory will be used.

When the investee entity is a resident of countries or territories classified as non-cooperative jurisdictions, it will be presumed, unless proven otherwise, that the income obtained by the investee entity is 15% of the acquisition value of the participation.

The imputation will be made in proportion to the participation of the resident natural person in the results of the non-resident entity and, failing that, to the participation in the capital, own funds or voting rights of the entity.

Tax period to which the income is attributed

The imputation will be made in the tax period that includes the day on which the non-resident entity has concluded its fiscal year which, for these purposes, cannot be understood to last longer than 12 months.