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Practical Handbook for Companies 2021

Joint taxation system with Navarra

This section on page 26 of form 200 should be completed by all those corporate income taxpayers who must jointly pay tax to the State Administration and to the Autonomous Community of Navarre, provided that is also subject to State regulations. This group of taxpayers is made up of those who meet one of the following two criteria:

  • Who, having their tax domicile in common territory, carry out operations in both territories (common and foral) during the tax period and that their volume of operations in the immediately preceding financial year has exceeded 7 million euros.

  • If, having their tax domicile in the foral territory, they carry out operations in both territories (common and foral) during the tax period, their volume of operations in the immediately preceding financial year has exceeded 7 million euros and that the total of the operations carried out in common territory constitute, at least, 75 per cent of the total of those carried out in the preceding financial year.

The above criteria are also applicable to non-resident income taxpayers who obtain income subject to non-resident income tax through a permanent establishment.

The following rules apply to determine the taxation of tax groups :

  • The instalment payments will be made in proportion to the volume of transactions carried out in each territory in accordance with the proportion determined in the last tax return.

  • The tax consolidation regime will correspond to that of the Comunidad Foral when the parent company and all its subsidiaries are subject to foral regulations under the individual taxation regime.On the other hand, it will be the tax consolidation regime of common territory when the parent company and all subsidiaries are subject to the common territory tax regime under individual taxation.For these purposes, it will be considered excluded from the tax group companies that were subject to the other regulations.

    The tax groups in which the parent entity is subject to the foral regulations under the regime of individual taxation, will be treated in the same way as the tax groups in which the parent entity is a non-resident in Spanish territory.

    In any case, it is applied identical regulations to that established in each time by the State to the definition of group, parent company, subsidiaries, degree of ownership and internal operations of the group.

    On the other hand, and in accordance with the provisions of seventeenth transitional provision of Law 28/1990, of 26 December, approving the Economic Agreement between the State and the Autonomous Community of Navarre, added by Law 14/2015, of 24 June:

    • The tax groups subject to the common regulations in tax periods commencing prior to 1 January 2015 that include dependent entities subject to Navarre's foral regulations on an individual basis, may opt to maintain these entities in the tax group in tax periods commencing thereafter, provided that the commencement date of these is no later than 31 December 2024 and the requirements established in article 58 of the LIS are met.

    • The option indicated in the previous paragraph must be exercised in the first tax period starting on or after 1 January 2015 and will be communicated to the Tax Authorities of Navarre and the State Tax Administration.Once the option has been exercised, the tax group will be bound by it during the following tax periods, as long as the requirements of Article 58 of the LIS are met and as long as its application is not waived.The renunciation must be exercised within 2 months from the end of the last tax period of its application and must be communicated to both Administrations.

  • The tax regime of the economic interest groupings and temporary joint ventures will correspond to Navarre when all the entities that make up the groupings are subject to provincial legislation, without prejudice to the distribution of the profits of these groupings of companies being carried out in accordance with the criteria indicated, for corporate tax purposes, in the Economic Agreement between the State and the Autonomous Community of Navarre.

A tener en cuenta:

In the event of starting the activity in the financial year, for the calculation of the figure of 7 million euros, the volume of operations carried out in that financial year shall be taken into account.

In the event that this financial year is less than one year, for the purpose of calculating the above figure, the operations carried out shall be per year.

Until the volume and place of the above transactions are known, will be taken as such, for all purposes, those that the taxpayer estimates on the basis of the transactions he expects to carry out during the financial year in which the activity commences.

See table-summary on the criteria for determining the applicable regulations for corporate income tax purposes in Navarre.