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 participating 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 carry out economic activities

   As a general rule, the resident partner must allocate the positive income obtained by the non-resident entity from the following sources to the general part of the tax base:

   1. Ownership of real estate and property rights that fall on them not affected by business activities.

   2. Participation in the equity of any type of entity and transfer of equity to third parties.

   3. Capitalization and insurance operations with the entity itself as beneficiary.

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

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

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

   7. Insurance activities, 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 related to the determination of tax-deductible expenses in said resident persons or entities, with some 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 comes from operations carried out with persons or entities not related within the meaning of article 18 of the Corporate Tax Law.

   The above 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, the income referred to in letter i) shall be imputed in all cases, without prejudice to the fact that it shall also be taken into consideration for the purposes of determining the sum referred to in the preceding paragraph.

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

   Dividends or profit shares 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 carry out economic activities

   The total income obtained will be imputed unless the taxpayer proves that the operations are carried out with the material and personal resources existing in an entity not resident in Spanish territory belonging to the same group within the meaning 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 taxable base.

For these purposes, the exchange rate in effect at the close of the financial year of the entity not resident in Spanish territory will be used.

When the participating 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 participating 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, equity or voting rights of the entity.

Tax period to which 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 as lasting more than 12 months.