Measures to avoid double taxation

Deduction of the net IRPF quota

Regulations: Art. 91.9 Law Income Tax

The tax or levy actually paid abroad due to the distribution of dividends or profit shares, in accordance with an to avoid double taxation or in accordance with the internal legislation of the country or territory in question, will be deductible from the net quota of ##1## IRPF ##1##, in the part that corresponds to the positive income included in the taxable base.

This deduction may be made even when the taxes or levies correspond to tax periods other than the one in which the inclusion was made, without its amount exceeding the full amount that would have to be paid in Spain for the positive income included in the tax base.

In no case will taxes paid in countries or territories classified as non-cooperative jurisdictions be deducted.

This deduction may not exceed the full amount that would be payable in Spain for the positive income imputed in the tax base.

The amount that, in accordance with the above, is deductible must be entered in box [0589] of the declaration.

Remember: Dividends or profit shares are not included in the taxpayer's tax base in the part that corresponds to the positive income that has been imputed and that the same positive income may only be imputed once, regardless of the form and entity in which it is manifested.

Transfer of the taxpayer's share

Regulations: Art. 91.10 Law Income Tax

In order to determine the capital gain or loss arising from the transfer of shares, direct or indirect, in non-resident entities whose income has been imputed, the Law provides for the application of specific valuation rules analogous to those that can be used in the case of the transfer of shares in companies that were taxed as asset companies [article 35.1.c) of the consolidated text of the Personal Income Tax , approved by Royal Legislative Decree 3/2004, of March 5, in force on December 31 2006], with the exception that the imputed and undistributed corporate profits referred to in the Law in the case of asset companies must be understood to be replaced in this case by the positive income imputed in the tax base.

In accordance with the above, from the transfer of direct or indirect shares in non-resident entities whose income has been imputed, the gain or loss will be computed by the difference between the acquisition and ownership value and the transfer value of the former.

For this purpose, the acquisition and ownership value will be estimated as consisting of:

(+) The price or amount paid for its acquisition.

(+) The amount of corporate profits that, without effective distribution, would have been obtained by the non-resident company during the tax periods in which the taxpayer would have included in its tax base positive income from its participation in it.

The transfer value to be computed will be, at a minimum, the theoretical value resulting from the last closed balance sheet, once the net book value of the assets has been replaced by the value they would have for the purposes of the Wealth Tax, or by their market value if it were lower.