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Practical Income Manual 2022.

Entities in the income allocation system

Positive delimitation

Regulations: Articles 8.3 and 87 Law Personal Income Tax . See also arts. 35.4 LGT , 6 LIS and 37 consolidated text Law IRNR  

They are considered entities subject to the special income allocation regime, among others:

  • 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, and 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 communities of property or other entities without personality of article 35.4 of the LGT , which continue to pay taxes as entities attributing income in accordance with the special regime regulated in Section 2 of the Title X of the Personal Income Tax Law .

    In relation to LGT see Law 58/2003, of December 17, General 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 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 February 13th).

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 LIS , so civil companies with legal personality whose activity is the rental of real estate are taxpayers of Corporate Tax.

  • As of January 1, 2022 , the entities under the income attribution regime defined below and for the positive income that they generate will be taxed in the Corporate Tax, as taxpayers. They indicated.

    1. They must be entities in attribution of income in which :

      • one or several entities, linked to each other in the sense of section 13 of article 15.bis of the LIS , participate directly or indirectly on any day of the year, in the capital, in the funds own, in the results or in the voting rights in a percentage equal to or greater than 50 percent and

      • are residents in countries or territories that qualify the entity under the attribution regime as a taxpayer for a personal income tax,

    2. These entities under the income attribution regime will be taxed by the Corporate Tax, as a taxpayer, for the following positive income that corresponds to be attributed to all participants residing in countries or territories that they consider to be the entity in attribution of income as a taxpayer for personal income taxation:

      • Income obtained in Spanish territory that is subject to and exempt from non-resident income tax.

      • Income from a foreign source that is not subject to or exempt from taxation by a tax imposed by the country or territory of the entity or entities paying such income.

    The rest of the income of entities under the income attribution regime will be attributed to the partners, heirs, community members or participants and will be taxed in accordance with what is established for this regime in the Personal Income Tax Law , which It is discussed in this same Chapter 10 in the following sections.