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Practical manual for Income Tax 2019.

Income not subject to imputation

Without prejudice to the above, the following incomes are not eligible for imputation:

  • Positive income corresponding to income derived from credit, financial, insurance or service provision activities, when more than 50% of the income corresponding to them has been made with persons or entities not related in the terms of article 18 of the LIS

  • The income provided for in letters b) and e) of the previous section income susceptible to imputation , in the case of securities derived from participation in the capital or equity of entities that grant at least 5% of the capital of an entity and are held for a minimum period of one year, for the purpose of directing and managing the participation, provided that the participating entity meets the following requirements:

    • That it has the corresponding organization of material and personal means, and

    • That its main activity is not the management of movable or immovable assets in the terms provided for in article 4.Eight.Two a) of Law 19/1991, of June 6, on the Wealth Tax.

    In the case of entities that form part of the same group of companies according to the criteria established in article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts, the requirements relating to the percentage of participation as well as the existence of management and direction of the participation will be determined taking into account all those that form part of the same.

  • Positive income referred to in the letters of the previous section when the sum of their amounts is less than 15% of the total income obtained by the non-resident entity, except for the income referred to in letter g) of said section which will be imputed in its entirety.

  • Dividends or profit shares, including interim dividends, in the part that corresponds to the positive income that has been imputed.

    In the event of distribution of reserves, the designation contained in the corporate agreement will be observed, with the last amounts paid being understood to be applied to said reserves.

Note: The same positive income may only be imputed once, regardless of the form and entity in which it is manifested.