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Practical Handbook for Companies 2021

Hybrid asymmetries

Con efectos para los períodos impositivos que se inicien a partir del 1 de enero de 2020 y que no hayan concluido a 11 de marzo de 2022, la Ley 5/2022, de 9 de marzo, por la que se modifican la Ley 27/2014, de 27 de noviembre, del Impuesto sobre Sociedades, y el texto refundido de la Ley del Impuesto sobre la Renta de no Residentes, aprobado mediante Real Decreto Legislativo 5/2004, de 5 de marzo, en relación con las asimetrías híbridas, introduce un nuevo artículo 15 bis en la LIS, con la consiguiente derogación del artículo 15 j) de la LIS, con el objeto de transponer la Directiva (UE) 2016/1164 del Consejo, de 12 de julio de 2016, en la redacción dada por la Directiva (UE) 2017/952 del Consejo, de 29 de mayo de 2017, en lo relativo a las asimetrías híbridas que tienen lugar entre España y otros Estados Miembros y entre España y terceros países o territorios.

The new Article 15a states in its paragraph 1, that expenses corresponding to transactions with related persons or entities resident in another country or territory which, as a result of a different tax classification of the expense or transaction in those countries or territories, do not generate income, generate exempt income or are subject to a reduction in the tax rate or to any tax deduction or refund other than a deduction for the avoidance of double taxation, are not tax deductible.

If the income arises in a tax period beginning within twelve months of the end of the tax period in which the expenditure accrued to the taxpayer, such expenditure shall be tax deductible in the tax period in which the income is included in the taxable income of the recipient.

On the other hand, in paragraph 2 of the aforementioned article 15 bis of the LIS, it is established that expenses corresponding to transactions with related persons or entities resident in another country or territory which, as a result of a different tax classification of the taxpayer in that country or territory, do not generate income, in the part that is not offset by income that generates double inclusion income, will not be tax deductible.

The amount of the expenses not deducted by application of the provisions of the preceding paragraph may be deducted in tax periods ending within three years of the end of the tax period in which such expenses were incurred, to the extent that se offset by income of the taxpayer that generates double-inclusion income.

The amount corresponding to transactions carried out with related persons or entities resident in another country or territory which, as a result of a different tax classification of these, have been considered as tax deductible expenses in that other country or territory, will be included in the tax base, in the part that is not offset by income generating double-inclusion income.

The amount included in the tax base by application of the provisions of the preceding paragraph may be deducted from the tax base of the tax periods ending within three years of the end of the tax period in which the income was included, to the extent that such expenditure is offset in the other country or territory by income of the related person or entity generating double-inclusion income.

Likewise, article 15 bis of the LIS in its section 3, states that expenses corresponding to transactions with related persons or entities resident in another country or territory which, as a result of a different tax classification of these in that country or territory and in that of their participant or investor, do not generate income, are not deductible for tax purposes.

The provisions of the preceding paragraph shall also apply where a connection relationship exists exclusively between the taxpayer and the aforementioned participant or investor.

The paragraph 4 of article 15 bis of the LIS establishes that expenses corresponding to transactions carried out with or by related persons or entities resident in another country or territory which, as a result of their different tax classification, are also tax deductible expenses in those related persons or entities, insofar as they are not offset by income generating double-inclusion income, are not tax deductible.

The amounts not deducted in accordance with the provisions of the previous paragraph may be deducted in the tax periods ending in the three years following the end of the tax period in which such expenses accrued, to the extent that they are offset against income of the related person or entity generating double-inclusion income.

Expenses corresponding to transactions carried out by the taxpayer shall not be tax deductible when they are also considered tax deductible in the country or territory of a related person or entity as a result of a different tax classification of the taxpayer, in the part that is not offset by income generating double-inclusion income.

The amounts not deducted in accordance with the previous paragraph may be deducted in the tax periods ending three years after the end of the tax period in which such expenses were incurred, to the extent that they are offset against income of the taxpayer that generates double-inclusion income.

Specifically, paragraph 5 of article 15 bis of the LIS, indicates the following expenses that are not tax deductible:

  1. Expenses corresponding to transactions carried out with a permanent establishment of the taxpayer or of a related entity, or with a related entity that has permanent establishments, where as a result of a tax difference in their attribution between the permanent establishment and its head office, or between two or more permanent establishments, they do not generate income.

  2. Expenditure corresponding to transactions carried out with a permanent establishment of the taxpayer or of a related person or entity which, because the establishment is not recognised for tax purposes by the country or territory, does not generate income.

  3. Estimated expenditure of internal transactions carried out with a permanent establishment of the taxpayer, where such expenditure is recognised in an applicable international double taxation agreement, and where, under the law of the country or territory of the permanent establishment, it does not generate income, in the part that it is not offset by income of the permanent establishment which generates double-inclusion income.

    The amount of expenses not deducted by application of the preceding paragraph may be deducted in the tax periods ending within the following three years, to the extent that they are included in the taxable income of the taxpayer with income of the permanent establishment which generates double-inclusion income.

  4. Expenses corresponding to transactions carried out with or by a permanent establishment of the taxpayer which are also tax deductible in that permanent establishment or in an entity related to it, in the part that is not offset by income from said permanent establishment or related entity which generates double-inclusion income.

    The amounts not deducted in accordance with the provisions of the preceding paragraph may be deducted in the tax periods ending in the three years following the end of the tax period in which such expenses were accrued, to the extent that they are offset against income of the related permanent establishment or entity generating double-inclusion income.

The paragraph 6 of article 15 bis of the LIS establishes that the provisions of article 22 of the LIS shall not apply in the case of income obtained through a permanent establishment which is not recognised for tax purposes by the country or territory of location.

In accordance with paragraph 7 of article 15 bis of the LIS, the expenses corresponding to a transaction or series of transactions carried out with related persons or entities resident in another country or territory will not be tax deductible when they finance, directly or indirectly, deductible expenses incurred in the framework of operations that generate the effects derived from the hybrid mismatches referred to in the previous paragraphs of this article, except when one of the countries or territories affected has made an adjustment to avoid deducting the expense or subjecting the income to taxation, under the terms set out in those paragraphs.

In section 8 of article 15 bis of the LIS, it is stipulated that will be deductible in the full amount of this tax the amount of the withholding made on account thereof in the proportion that corresponds to the income included in the tax base obtained in a hybrid transfer made with a related person or entity not resident in Spanish territory.

For these purposes, is considered as a hybrid transfer any transaction relating to the transfer of a financial instrument where the underlying return on the financial instrument transferred is treated for tax purposes as being earned simultaneously by more than one of the parties to the transaction.

The paragraph 9 of Article 15a of the LIS specifies that the provisions of the previous paragraphs of this Article 15a shall also apply when the transactions to which they refer, whether between related or unrelated persons or entities, take place within the framework of a structured mechanism.

For these purposes, is considered to be a structured arrangement any agreement, legal arrangement, scheme or transaction in which the tax advantage arising from the hybrid mismatches referred to in those paragraphs in the terms indicated therein is quantified or considered in its terms or considerations or which is designed to produce the results of such mismatches, unless the taxpayer or a person or entity related to it could not reasonably have known about them and does not share in the tax advantage indicated.

The paragraph 10 of article 15 bis of the LIS establishes that expenses or losses that are tax deductible in another country or territory in which the taxpayer is also a tax resident, in the part that is offset against income that does not generate double-inclusion income, are not tax deductible.

Where such expense is offset in the other country or territory in a tax period subsequent to the deduction of the expense or loss on the taxpayer, the taxpayer must include the amount corresponding to the aforementioned amount in the tax period in which this occurs.

The provisions of the previous paragraph shall not apply when the other country is a Member State of the European Union with which Spain has signed an agreement to avoid international double taxation by virtue of which the taxpayer is considered a tax resident in Spanish territory.

The paragraph 11 of article 15 bis of the LIS introduces the following explanation, stating that for the purposes of the provisions of this article 15 bis, income is considered to generate double inclusion income when it is subject to taxation under this Law and the legislation of the other country or territory.

Likewise, paragraph 12 of article 15 bis of the LIS explains that, for the purposes of the application of the provisions of this article 15 bis, the reference to related persons or entities shall include:

  1. Related persons or entities in accordance with the provisions of article 18 of the LIS.

  2. An entity which holds, directly or indirectly, an interest of at least 25 per cent in the voting rights of the taxpayer or is entitled to receive at least 25 per cent of the profits of the taxpayer, or in which the taxpayer holds such an interest or rights.

  3. The person or entity in respect of which the taxpayer acts jointly with another person or entity regarding the voting rights or ownership of the capital of the latter, or the person or entity acting jointly with another person or entity regarding voting rights or ownership of the capital of the taxpayer.

    For these purposes, the taxpayer or, in the second case, the person or entity, shall be treated as the holder of an interest in respect of all voting rights or ownership of the capital of the entity or the taxpayer, respectively, owned by the other person or entity.

  4. An entity over whose management the taxpayer has a significant influence or an entity that has a significant influence over the management of the taxpayer.For these purposes, it is considered that there is significant influence when an entity has the power to intervene in the financial and operating policy decisions of another entity, but does not control or exercise joint control over that entity.

Finally, article 15 bis in its section 13 states that, the provisions of the previous sections shall not apply when the hybrid mismatch is due to the beneficiary being exempt from tax, occurs within the framework of an operation or transaction based on a financial instrument or contract subject to a special tax regime, or when the difference in the imputed value is due to valuation differences, including those deriving from the application of the rules on related transactions.

Filling in form 200

In application of the provisions of article 15 bis of the LIS, the taxpayer must make the following adjustments in the boxes [02469] and [02470] "Hybrid asymmetries (art. 15 bis LIS)" on page 12 of form 200:

  • In the tax period in which non-deductible expenses or losses are booked, in accordance with the provisions of Article 15 bis of the LIS, a positive adjustment must be made to the accounting result in box [02469].

  • In the tax period in which the circumstances set out in Article 15 bis of the LIS, occur and taking into account the time limits established therein, a negative adjustment must be made in box [02470].