11.8.1.2 Joint taxation regime with Navarra

This section (on page 26 of Form 200) must be completed by all Corporate Tax payers who must jointly pay taxes to the State Administration and the Foral Community of Navarre, provided that they are also subject to State regulations. This group of taxpayers are those who meet one of the following two circumstances:

1. That, having their tax domicile in common territory, they carry out operations in both territories (common and regional) during the tax period and that their volume of operations in the immediately preceding year has exceeded 7,000,000 euros.

2. That, having their tax domicile in the regional territory, they carry out operations in both territories (common and regional) during the tax period, their volume of operations in the immediately preceding year has exceeded 7,000,000 euros and that the total of the operations carried out in the common territory constitute at least 75% of the total of those carried out in the previous year.

The above criteria are also applicable to taxpayers of the Non-Resident Income Tax who obtain income subject to it through a permanent establishment.

Split payments will be made in proportion to the volume of operations carried out in each territory in accordance with the proportion determined in the last tax return-settlement.

To determine the taxation of tax groups, the following rules will apply:

1. The tax consolidation regime will be that corresponding to that of the Foral Community when the parent company and all subsidiaries are subject to Foral regulations under an individual taxation regime, and will be that corresponding to the tax consolidation regime of the common territory when the parent company and all subsidiaries are subject to the tax regime of the common territory under an individual taxation regime. For these purposes, companies that are subject to the other regulations will be considered excluded from the tax group.

2. Tax groups in which the dominant entity is subject to the local regulations under an individual tax regime will be treated in the same way as tax groups in which the dominant entity is not resident in Spanish territory.

3. In any case, the same regulations as those established at any given time by the State for the definition of tax group, parent company, dependent companies, degree of ownership and internal operations of the group will apply.

Furthermore, and in accordance with the provisions of the seventeenth transitional provision of the Economic Agreement between the State and the Autonomous Community of Navarre, added by Law 14/2015, which establishes that:

• Tax groups subject to common regulations in tax periods beginning before January 1, 2015, which include dependent entities subject to the Navarra tax regulations under an individual regime, may choose to keep said entities in the tax group in tax periods that begin thereafter, provided that the start date of these is not later than December 31, 2024 and the requirements established in article 58 of LIS are met.

• The option indicated in the previous paragraph must be exercised in the first tax period starting from January 1, 2015 and will be communicated to the Tax Authority of Navarra and the State Tax Administration. Once the option has been exercised, the tax group will be bound by it during the following tax periods, as long as the requirements of article 58 are met and as long as its application is not waived. The waiver must be exercised within 2 months from the end of the last tax period of its application and must be communicated to both Administrations.

Likewise, the tax regime for economic interest groups and temporary business associations will correspond to Navarre when all the entities that comprise them are subject to regional regulations, without prejudice to the distribution of the profit of said business groups being carried out in accordance with the criteria indicated, for the purposes of Corporate Tax, in the Economic Agreement between the State and the Foral Community of Navarre.

In the event that the activity begins in the financial year, the figure of 7,000,000 euros will be calculated based on the volume of operations carried out in said financial year. If this financial year is less than one year, for the purposes of calculating the previous figure, the operations carried out will be increased to one year. Until the volume and location of the above operations are known, those estimated by the taxpayer based on the operations that he plans to carry out during the year in which the activity begins will be taken as such for all purposes.

In this section (on page 26 of form 200), the percentages of taxation for each Administration are calculated in the cases of joint taxation to the State and the Provincial Councils of the Basque Country and/or the Foral Community of Navarre, as well as the breakdown for each of these Administrations of the data corresponding to the quota, fractional payments and others necessary to calculate the net amount to be paid or returned to each of them.

In accordance with the provisions of the Economic Agreement with the Autonomous Community of the Basque Country (Law 12/2002, of May 23, amended by Law 28/2007, of October 25 and by Law 7/2014, of April 21) and the Economic Agreement between the State and the Foral Community of Navarra (Law 28/1990, of December 26, amended by Law 48/2007, of December 19 and by Law 14/2015, of June 24), joint taxation regimes apply between the State and the Foral Administrations for the distribution of Corporate Tax according to the volume of operations carried out in each of the territories.