7.5.1.1. Entities in the income allocation system

The income corresponding to civil companies that are not subject to Corporate Tax, existing inheritances, communities of property and other entities referred to in article 35.4 of Law 58/2003, of December 17, General Tax, will be attributed to the partners, heirs, community members or participants, respectively, in accordance with the rules of the Personal Income Tax.

The income allocation regime will be applicable to entities incorporated abroad whose legal nature is identical or analogous to that of the income allocation entities established in accordance with Spanish laws.

The income of entities under the regime of attribution of income attributed to partners, heirs, community members or participants will have the nature derived from the activity or source from which they come.

The income allocation regime will not be applicable, among others, to agrarian transformation companies, to the investment funds of Collective Investment Institutions, Temporary Business Unions, Pension Funds, communities that own local forests and, to as of January 1, 2016 to civil companies with legal personality and commercial object subject to LIS . As of January 1, 2022, in order to avoid an inverted hybrid asymmetry, certain entities under the Spanish income attribution regime become IS taxpayers in Spanish territory due to certain income.