11.7.1.2 Taxation of Spanish economic interest groups and temporary business unions

Articles 43 and 45 of the LIS establish that Spanish economic interest groups and temporary unions of companies that apply this special tax regime will be taxed in accordance with the general rules of Corporate Tax. with the specialties established in article 43 of the LIS, although temporary business unions will not apply the valuation rule established in the second paragraph of article 43.4 of said Law.

When these entities pay taxes under this special regime, they must distinguish between the status of residents and non-residents in Spanish territory of their partners on the last day of the tax period subject to declaration, with the following tax effects:

1. Partners resident in Spanish territory or not resident in said territory, but with permanent establishment there.

   Spanish economic interest groups and joint ventures are subject to tax obligations arising from the application of the Corporate Tax Law, with the exception of the payment of the tax debt for the part of the tax base attributable to their partners.

   Likewise, these entities will not make installment payments on the part of the tax base attributable to their partners. In the event that these entities apply the modality of installment payments regulated in article 40.3 of the LIS, that part of the tax base attributable to their partners will not be part of the calculation basis for said installment payments.

   In no case will the refund of article 41 of the LIS relating to the deduction of withholdings, deposits on account and installment payments be applicable to that part of the tax base attributable to its partners.

   Economic interest groups and temporary joint ventures must allocate the following concepts to their partners:

   • The net financial expenses that these entities have not deducted in the tax period, in accordance with the provisions of article 16 of the LIS. The net financial expenses that are attributed to its partners will not be deductible by the entity.

   • The capitalization reserve that, in accordance with the provisions of article 25 of the LIS, has not been applied by these entities in the tax period. The capitalization reserve that is attributed to its partners cannot be applied by the entity, unless the partner is a taxpayer of the Personal Income Tax.

   • The positive tax bases , reduced or increased, where appropriate, in the equalization reserve referred to in article 105 of the LIS, or negative , obtained by these entities. Therefore, these entities will not be able to offset the negative tax bases that they attribute to their partners.

   • The bases of the deductions and bonuses in the quota to which the entity is entitled. The bases of the deductions and bonuses will be integrated into the partners' settlement, reducing the fee as appropriate by application of the Corporate Tax or Personal Income Tax rules.

   • The withholdings and payments on account corresponding to the entity.

   The equalization reserve of tax bases of article 105 of the LIS will be added, where appropriate, to the tax base of the economic interest group or the temporary union of companies.

2. Partners who are not resident in Spanish territory and do not operate through a permanent establishment there.

   Economic interest groups and joint ventures will be taxed by Corporate Tax on the part of the tax base attributable to their non-resident partners.

   In addition, these entities must make the corresponding payment in installments with respect to that part of the tax base attributable to their non-resident partners.

In the case of participations in temporary joint ventures, as established in article 45.1 of the LIS, the acquisition value will be reduced by the amount of the social losses that have been attributed to the partners.

In accordance with article 45.2 of the LIS, the member companies of a temporary union of companies that operate abroad, as well as the entities that participate in works, services or supplies that they make or provide abroad through collaboration formulas analogous to temporary unions , may be eligible for the exemption provided for in article 22 of the LIS or the deduction for double taxation provided for for income coming from abroad. in article 31 of the LIS, provided that the requirements established therein are met.

Temporary unions of companies formed by professionals to carry out any economic activity consisting of a work, service or supply, which may or may not participate in the contract with the Administration, but which, in any case, meet the requirements established in article 8 of the Law 18/1982, the following will be taxpayers of Corporate Tax:

• If they are not registered in the Special Registry of the Ministry of Finance, they will be subject to the general Corporate Tax regime.

• If they are registered in said registry, they will be taxed in the corresponding special regime in accordance with the provisions of article 45 of the LIS.