Income to be attributed to the taxable base

Regulation: Article 100.2 and 3 LIS

1. Article 100.2 of the LIS establishes that taxpayers will allocate the total income obtained by the non-resident entity in Spanish territory, when it does not have the corresponding organization of material and personal means for its realization , even if the operations are recurring.

   Total income will be understood as the amount of the tax base that results from applying the criteria and principles established in the Corporate Tax Law, as well as in the remaining provisions related to this Tax for the determination of that.

   The imputation referred to in this section, will not apply when the taxpayer proves that the aforementioned operations are carried out with the material and assets existing in a non-resident entity in Spanish territory belonging to the same group, within the meaning of article 42 of the Commercial Code, regardless of its residence and the obligation to prepare consolidated annual accounts, or that its constitution and operations respond to valid economic reasons.

   However, if the non-resident entity obtains dividends, shares in profits or income derived from the transfer of the shares, the non-imputation rules included in article 100.4 of the LIS.

2. In the event that the provisions of the previous section are not applied, the provisions of article 100.3 of the LIS will apply, according to which only the positive income will be imputed obtained by a non-resident entity that comes from each of the following sources:

   1. Ownership of rural and urban real estate or real rights that rest on them, unless they are assigned to an economic activity, or transferred in use to non-resident entities belonging to the same group, in the meaning of article 42 of the Commercial Code, regardless of their residence and the obligation to prepare consolidated annual accounts, and are also involved in an economic activity.

   2. Participation in own funds of any type of entity and transfer of own capital to third parties, in the terms provided for in sections 1 and 2 of article 25 of Law 35/2006, of 28 November, of the Personal Income Tax and partial modification of the laws on Corporate Taxes, on Non-Resident Income and on Wealth.

      The positive income that comes from the following financial assets will not be understood to be included in this letter b) :

      • Those held to comply with legal and regulatory obligations arising from the exercise of economic activities.

      • Those that incorporate credit rights arising from contractual relationships established as a consequence of the development of economic activities.

      • Those held as a consequence of the exercise of intermediation activities in official securities markets.

      • Those held by credit institutions and insurance companies as a result of the exercise of their activities, without prejudice to the provisions of letter g) below.

        The positive income derived from the transfer of own capital to third parties will be understood to come from the carrying out of credit and financial activities referred to in the letter g) following when the transferor and the transferee belong to a group of companies within the meaning of article 42 of the Commercial Code, regardless of residence and the obligation to prepare consolidated annual accounts, and the transferee's income comes from, at least in 85 percent, of the exercise of economic activities.

   3. Capitalization and insurance operations, that have the entity itself as beneficiary.

   4. Industrial and intellectual property, technical assistance, movable property, image rights and leasing or subleasing of businesses or mines, in the terms established in section 4 of article 25 of Law 35/2006 .

   5. Transmission of the assets and rights referred to in letters a), b), c) and d) above that generate income.

   6. Derivative financial instruments, except those designated to cover a specifically identified risk derived from the performance of economic activities.

   7. Credit, financial, insurance and service provision activities carried out, directly or indirectly, with persons or entities resident in Spanish territory , and related in the sense of article 18 of the LIS, as soon as they determine tax deductible expenses in said resident entities.

   It should be taken into account that ## only the income that is positive ## from each of the indicated sources will be included in the tax base ##1## ##2##.