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Form 200. Corporate Income Tax Declaration 2019

7.2.5 International double taxation deductions LIS

This block includes the deductions to avoid international double taxation referred to in articles 31 and 32 of the LIS generated in the tax periods 2015, 2016, 2017, 2018 and 2019, and they could or could be carried over to future tax periods due to insufficient quota.

Each of the rows or lines that make up said block respond to one of the two deduction modalities to avoid international double taxation referred to in the aforementioned articles 31 and 32 of the LIS:

Analysis of the structure of this section

DI international previous periods

In column "Pending deduction" it must be taken into account that if it is a deduction generated in any of the tax periods prior to the one that is subject to settlement and beginning in 2015, 2016, 2017, 2018 or 2019(*), from the block «DI internac. previous periods", the balance of the corresponding deduction that was pending application at the beginning of the tax period that is the subject of settlement will be entered in the respective key of this column. In any case, said balance must be the one corresponding to applying the tax rate of the tax period in which the deduction was generated.

Therefore, in column "Tax type/generation period" the type of tax for which the reporting entity and beneficiary of the deduction was taxed in the period in which it generated. This column does not exist for cases in which the tax period for generating the deduction corresponds to the tax period for settlement.

The purpose of row "Tax rate 2019" is to collect the tax rate for which the reporting entity is taxed in the tax period being declared.

In column "2019 pending deduction" the amounts referring to pending deductions from previous periods must be recorded.

In the column "Applied in this settlement" the part (or the entirety, if applicable) of the amount corresponding to the previous column "2019 pending deduction" that is applied in the corresponding settlement will be collected. to the period under settlement.

For these purposes, according to the provisions of section 2 of the fifteenth Additional Provision of the LIS, in periods beginning on or after January 1, 2016, for taxpayers whose net turnover is at least 20 million euros during the 12 months prior to the date on which the tax period begins, this amount may not exceed 50 percent of the taxpayer's full amount.

The code [00571] will contain the total of the amounts entered in the Column "Applied in this settlement" which must be transferred to page 14 of form 200 referring to the settlement of the Tax.

Finally, in column "Pending application in future periods" the part of the corresponding deduction in the column "2019 pending deduction" that was not included in the key corresponding to the "Applied in this settlement" column. That is, it refers to the part of the deduction that, because it has not been applied in the settlement of the tax period being declared, remains pending to be applied in future tax periods.

For these purposes, for tax periods beginning on or after January 1, 2016, section 2 of the fifteenth Additional Provision of the LIS establishes that taxpayers whose net turnover is at least 20 million euros during the 12 months prior to the date on which the tax period begins, they must take into account that the amount of the deductions to avoid international double taxation provided for in articles 31, 32 and section 11 of article 100 of the LIS, as well as those deductions to avoid double taxation referred to in the twenty-third transitional provision of this Law, may not jointly exceed 50 percent of the taxpayer's full amount.

international DI 2019

This block includes the amounts corresponding to the deductions to avoid international double taxation referred to in articles 31 and 32 of the LIS, generated in the period subject to settlement and to which the reporting entity is entitled.

Each of the rows or lines that make up said block respond to one of the two deduction modalities to avoid international double taxation referred to in the aforementioned articles 31 and 32 of the LIS:

Legal DI: Tax borne by the taxpayer (art. 31 LIS)

This deduction is applied to positive income obtained and taxed abroad by entities resident in Spanish territory.

In the event that said income is taxed in the country where it was obtained and subsequently, when integrated into the taxpayer's tax base, is taxed by Corporate Tax in Spanish territory, double taxation occurs, which we try to avoid with the application of this deduction.

In this sense, article 31 of the LIS establishes that when positive income obtained and taxed abroad is included in the taxpayer's tax base, the lower of the following two amounts will be deducted from the full tax:

  • The effective amount of what was paid abroad due to a tax of a nature identical or analogous to this Tax.

    • Tax not paid because of exemptions, allowances or any other tax benefit will not be deducted.

    • If an agreement to avoid double taxation is in force, the deduction may not exceed the amount specified therein.

  • The amount of the full amount that would be payable in Spain for the aforementioned income if it had been obtained in Spanish territory (In determining this amount, the reduction of income from certain regulated intangible assets must be taken into account, where applicable. in article 23 of the LIS).

Consequently, the entire tax paid abroad will be included in the tax base, even if part of it is not deductible from the full amount.

A deductible expense will be considered that part of the amount of the tax paid abroad that is not subject to deduction in the full tax due to the application of what is stated in the previous section, provided that it corresponds to the performance of economic activities abroad.

In cases where the taxpayer has obtained several incomes from abroad during the tax period, the deduction will be made by grouping those from the same country except for income from permanent establishments, which will be computed separately for each of these.

Finally, it must be taken into account that the application of this deduction is limited to the amount of the full installment that appears in code [00562] on page 14 of form 200.

For these purposes, for tax periods beginning on or after January 1, 2016, section 2 of the fifteenth Additional Provision of the LIS establishes that taxpayers whose net turnover is at least 20 million euros during the 12 months prior to the date on which the tax period begins, they must take into account that the amount of the deductions to avoid international double taxation provided for in articles 31, 32 and section 11 of article 100 of the LIS, as well as those deductions to avoid double taxation referred to in the twenty-third transitional provision of this Law, may not jointly exceed 50 percent of the taxpayer's full amount.

Amounts not deducted due to insufficient full quota may be deducted in subsequent tax periods.

Economic international DI: dividends and participation in profits (art. 32 LIS)

Article 32 of the LIS regulates this deduction for international double taxation, which seeks to avoid international double taxation that arises in cases in which a parent company resident in Spanish territory receives dividends or shares in profits from its subsidiary entities resident in Spain. the foreigner, and the profit obtained has been taxed in the territory of the subsidiary and is subsequently taxed in the territory of the parent company when it receives it.

For these purposes, article 32 of the LIS establishes that this deduction will be applied when the tax base includes dividends or shares in profits paid by an entity not resident in Spanish territory.

The amount of this deduction will be the tax actually paid by the non-resident entity in Spanish territory with respect to the profits from which the dividends are paid, in the corresponding amount of such dividends, provided that said amount is included in the tax base. of the taxpayer.

To apply this deduction, it will be necessary to meet the following requirements:

  1. That the direct or indirect participation in the capital of the non-resident entity is at least 5 percent, or that the acquisition value of the participation is greater than 20 million euros.

  2. That the participation had been held uninterruptedly during the year prior to the day on which the benefit to be distributed becomes payable or, failing that, that it is maintained for the time necessary to complete a year. To calculate the term, the period in which the participation has been held uninterruptedly by other entities that meet the circumstances referred to in article 42 of the Commercial Code to form part of the same group of companies will also be taken into account, regardless of residence and the obligation to prepare consolidated annual accounts.

In the case of distribution of reserves, the designation contained in the corporate agreement will be followed and, failing that, the last amounts paid to said reserves will be considered applied.

Dividends or participation in profits will be considered those derived from securities representing the capital or own funds of entities, regardless of their accounting consideration.

This deduction will not be applied in relation to dividends or shares in profits received whose amount must be delivered to another entity on the occasion of a contract that deals with the securities from which they come, recording an expense for this purpose. The entity receiving said amount may apply said deduction to the extent that it maintains the accounting record of said values and they meet the conditions established for this.

With effects for tax periods beginning until December 31, 2016, the negative income obtained in the transfer of the participation in an entity that had previously been transferred by another entity that meets the circumstances referred to in article 42 of the Code of Commerce to form part of the same group of companies with the taxpayer, regardless of residence and the obligation to prepare consolidated annual accounts, will be reduced by the amount of the positive income obtained in the preceding transfer and to which it would have been applied an exemption regime.

Common note to the deductions of Articles 31 and 32 of the LIS

The deduction of article 32 of the LIS is compatible with the deduction of article 31 of said Law with respect to dividends or participation in profits, with the joint limit of deductibility of the full quota that would correspond to be paid in Spain for these incomes if they had been obtained in Spanish territory. The excess over said limit will not be considered a tax-deductible expense, without prejudice to the provisions of article 31.2 of the LIS.

In case of insufficient full quota to apply the deductions of articles 31 and 32 of the LIS, these may be deducted in the following tax periods.

The Administration has the right to verify these deductions for double taxation applied or pending application. This right will expire after 10 years, counting from the day following the day on which the established period for submitting the declaration or self-assessment corresponding to the tax period in which the right to apply was generated.

After this period, the taxpayer must prove the deductions whose application they intend to apply, by displaying the liquidation or self-assessment and the accounting, with proof of their deposit during the aforementioned period in the Commercial Registry.