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Form 200. Corporate Income Tax Declaration 2019

4.2.51 Codes 02186 and 02187 exemption on income obtained in the cases of article 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 division, capital reduction, non-monetary contribution or global transfer of assets and liabilities, will be exempt when:

  • 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 participations 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 year of holding the participation.

Partial exemption

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

Special rules

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

  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 into the tax base of this Tax, or the Tax on Non-Resident Income, 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 other assets other than shares in the capital or own funds of entities.

    In this case, the exemption will not apply to the deferred income in the transferring entity as a consequence of the contribution transaction, unless it is proven that the acquiring entity has integrated that 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 personal income tax base, 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 extinction of the investee entity will be tax deductible, unless it is a consequence of a restructuring operation.

In this case, the amount of the negative income will be reduced by the amount of the dividends or participation in profits received from the investee entity in the ten years prior to the date of extinction, provided that the aforementioned dividends or participation in profits 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

    Regarding the income obtained in the event of liquidation of the entity, separation of the partner, merger, total or partial division, capital reduction, non-monetary contribution or global transfer of assets and liabilities of resident entities, it must be included in the 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, completing, where appropriate, their corresponding breakdown boxes, the amount of positive income obtained in these cases that are exempt for complying with the requirements of the article 21.3 of the LIS.

    In the code [02186] «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, completing, where appropriate, their corresponding breakdown boxes, the amount of negative income obtained in the cases of article 21.3 of the LIS other than of the transfers of shares of resident entities that are not included in the tax base.

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

Common note to 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. To income obtained by Spanish and European economic interest groups, and by temporary joint ventures of companies, when at least one of their partners has the status of a natural person.

  3. To income from a foreign source that the entity integrates into 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.