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Form 200. Corporate Income Tax Declaration 2018

4.2.51 Keys 02186 and 02187 exemption on income obtained in the cases of Art. 21.3 LIS other than transfers of securities of entities, resident entities

Article 21.3 of the LIS establishes that the positive income obtained in the cases of liquidation of the entity, separation of the partner, merger, total or partial spin-off, capital reduction, non-monetary contribution or global transfer of assets and liabilities, will be exempt when the following is met:

  • The requirement provided for in letter a) of article 21.1 of the LIS on the day on which the transmission occurs.

  • Additionally, in cases of transfer of shares of non-resident entities, the requirement provided for in letter b) of article 21.1 of the LIS must be met in each and every one of the years of holding the share.

Partial exemption

This exemption can also be applied partially in the same way as we have indicated in the case of the exemption on income obtained from the transfer of securities from entities resident and non-resident in Spanish territory.

Special rules

In the following cases, the application of this exemption will have the following specialities:

  1. When the participation in the entity had been valued in accordance with the rules of the special regime of Chapter VII of Title VII of this Law and the application of said rules had determined the non-integration of income in the taxable base of this Tax, or of the Income Tax of Non-Residents, derived from:

    1. The contribution of participation in an entity that does not meet the requirement of letter a) or, totally or partially at least in some financial year, the requirement referred to in letter b) of section 1 of this article.

    2. The non-monetary contribution of assets other than shares in the capital or equity of entities.

    In this case, the exemption will not apply to the deferred income in the transferring entity as a result of the contribution transaction, unless it is proven that the acquiring entity has integrated this income into its tax base.

  2. When the participation in the entity had been valued in accordance with the rules of the special regime of Chapter VII of Title VII of the LIS and the application of said rules had determined the non-integration of income in the taxable base of the Personal Income Tax, derived from the contribution of participations in entities.

    In this case, when such holdings are subject to a transfer in the two years following the date on which the operation took place, the exemption will not be applied to the positive difference between the fiscal value of the shares received by the acquiring company and the market value at the time of the acquisition, unless proof is provided that the natural persons have transferred their holdings in the company during the aforementioned period.

Negative income

Negative income generated in the event of the dissolution of the participating entity will be tax deductible, unless it is the result of a restructuring operation.

In this case, the amount of negative income will be reduced by the amount of dividends or profit shares received from the participating entity in the ten years prior to the date of extinction, provided that the aforementioned dividends or profit shares have not reduced the acquisition value and have been entitled to the application of an exemption or deduction regime for the elimination of double taxation, for the amount thereof.

Settings

In relation to the exemption on income obtained in cases of article 21.3 of the LIS other than the transfer of securities, the following adjustments must be made:

  1. Resident entities

    With regard to income obtained in the event of liquidation of the entity, separation of a partner, merger, total or partial spin-off, capital reduction, non-monetary contribution or global transfer of assets and liabilities of resident entities, the amount of positive income obtained in these cases that is exempt by complying with the requirements of article 21.3 of the LIS must be included in key [02187] "Exemption on income obtained in the cases of art. 21.3 LIS other than transfers of securities of resident entities" on page 13 of form 200.

    In key [02186] "Exemption on income obtained in the cases of article 21.3 LIS other than transfers of securities of resident entities" on page 13 of form 200, the amount of negative income obtained in the cases of article 21.3 of the LIS other than transfers of shares of resident entities that are not included in the tax base must be included.

  2. Non-resident entities (See codes 02188 and 02189)

Common note on the exemptions of article 21.3 of the LIS

The exemption provided for in article 21.3 of the LIS will not apply:

  1. To the income distributed by the public regulation fund of the mortgage market.

  2. Income obtained by Spanish and European economic interest groups and by temporary business associations, when at least one of their partners is a natural person.

  3. To income from foreign sources that the entity includes in its tax base and in relation to which it chooses to apply, if applicable, the deduction established in articles 31 or 32 of this Law.