Income to be attributed to the taxable base

Regulation: Article 100.2 and 100.3 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 or the permanent establishment of the corresponding organization of material and personal means to carry it out, even if the operations have recurring character.

   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.

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 originated by 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 i) 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 i) 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, at least in 85 percent, of the exercise of economic activities.

   3. Capitalization and insurance operations , which 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 article 25.4 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. Insurance, credit activities, financial leasing operations and other financial activities except in the case of income obtained in the exercise of economic activities, without prejudice to the provisions of letter i) below.

   8. Transactions on goods and services carried out with related persons or entities within the meaning of article 18 of the LIS, in which the non-resident entity or establishment adds little or no economic value.

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