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Practical Income Manual 2020.

Entities in the income allocation system

Positive delimitation

Regulations: Articles 8.3 and 87 Law Personal Income Tax . See also article 35.4 of Law 58/2003, of December 17, General Tax and arts. 6 of the LIS and 37 consolidated text Law IRNR  

The following are considered entities subject to the special income allocation regime:

  • Civil societies that do not have legal personality.
  • Civil companies with legal personality that do not have a commercial purpose (as of January 1, 2016).

    Until January 1, 2016, the income attribution regime of Personal Income Tax was applied to all civil companies. However, as of that date, civil companies with legal personality that have a commercial purpose cease to be taxed under the indicated regime and become subject to Corporate Tax.

    As a consequence of the above, the following civil companies continue to be taxed under the regime of entities attributing income to Personal Income Tax , as long as their activities are outside the commercial sphere:

    • Those dedicated to agricultural, livestock, forestry, mining activities
    • Those of a professional nature (second section of the Tax on Economic Activities).

    Note: The only taxpayer that is included in the Corporate Tax are civil companies with legal personality and commercial purpose. The reform does not affect the communities of property or other entities without personality of article 35.4 of the General Tax Law, which continue to pay taxes as entities in attribution of income in accordance with the special regime regulated in Section 2 of Title X of the Law of Personal income tax

  • Unsettled estates.
  • Communities of goods.
  • Any entity lacking legal personality that constitutes an economic unit or separate assets susceptible to taxation.
  • Entities incorporated abroad whose legal nature is identical or analogous to that of the entities attributing income constituted in accordance with Spanish laws

    The basic characteristics that an entity incorporated abroad must meet to be considered in Spain as an entity in attribution of income for the purposes of Personal Income Tax, Corporation Tax and Non-Resident Income Tax , are the following:

    1. That the entity is not a taxpayer of personal income tax in the State of incorporation.
    2. That the income generated by the entity be fiscally attributed to its partners or participants, in accordance with the legislation of its State of incorporation, with the partners or participants being the ones who pay taxes on them in their personal tax. This attribution must occur by the mere fact of obtaining the income by the entity, without it being relevant for these purposes whether or not the income has been effectively distributed to the partners or participants.
    3. That the income obtained by the entity in the attribution of income and attributed to the partners or participants retains, in accordance with the legislation of its State of incorporation, the nature of the activity or source from which it comes for each partner or participant.

    Note: See in this regard the Resolution of February 6, 2020, of the General Directorate of Taxes, on the consideration as entities under the regime of attribution of income to certain entities incorporated abroad (BOE of 13).

Note: Non-resident entities that lack NIF will enter in box [ 1562] the Identification Number assigned to the aforementioned entities in the Country of residence and they will check the box [1563] to indicate this circumstance.

Negative delimitation

Regulations: Art. 7 LIS

The following entities, among others, are not included in the special income allocation regime:

  • Investment funds, regulated in Law 35/2003, of November 4, on Collective Investment Institutions.
  • Temporary unions of companies, regulated in Law 18/1982, of May 26, on the tax regime of groups and temporary unions of Companies and Regional Industrial Development Companies.
  • Pension funds, regulated in the consolidated text of the Law on the Regulation of Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29.
  • The communities holding neighborhood forests in common hands regulated by Law 55/1980, of November 11, on neighborhood forests in common hands, or in the corresponding regional legislation.
  • Agrarian transformation companies, regulated in Royal Decree 1776/1981, of August 3, which approves the Statute that regulates Agrarian Transformation Companies.
  • As of January 1, 2016, civil companies with legal personality and commercial purpose are subject to Corporate Tax.

    Commercial object is understood as the carrying out of an economic activity of production, exchange or provision of services for the market in a sector not excluded from the commercial sphere.

    For these purposes, the property rental activity may have a commercial nature, regardless of whether or not the definition of economic activity provided for in articles 27.2 of the Personal Income Tax Law and 5.1 Corporate Tax Law ( LIS ), so civil companies with legal personality whose activity is the leasing of real estate are taxpayers of Corporate Tax.

Note: The entities included in the income attribution regime are not subject to Corporate Tax.