Skip to main content
Practical Manual of Companies 2021.

International tax transparency

Article 65.Five of Law 11/2020, of December 30, on the General State Budgets for the year 2021, with effects for tax periods that begin on January 1, 2021 that have not concluded as of entry into force of this Law (01-01-2021) and validity indefinitely, modified sections 10 and 12 of article 100 of the LIS (later, Law 11/2021, of 9 of July, on measures to prevent and combat tax fraud, the numbering changed and these sections became numbers 9 and 11, respectively):

  1. Section 10 (currently, section 9) is modified, which establishes that dividends or shares in profits will not be included in the tax base in the part that corresponds to the positive income that has been included in the tax base, incorporating, that these effects, the amount of dividends or shares in profits will be reduced by 5 percent as management expenses related to said shares , unless the circumstances established in article 21.11 of the LIS.

  2. Section 12 of article 100 of the LIS is also modified (currently, section 11), which establishes that to calculate the income derived from the transfer of the participation, direct or indirect, the acquisition value will be increased by the amount of the social benefits. that, without effective distribution, correspond to income that had been attributed to the partners as income from their shares or participations in the period of time between their acquisition and transmission, incorporating, for these purposes, that the amount of the social benefits referred to in this section will be reduced by 5 percent as management expenses related to said shares .

Subsequently, Law 11/2021, of July 9, on measures to prevent and combat tax fraud, with effects for tax periods starting on January 1, 2021, with the aim of transposing the Directive ( EU ) 2016/1164, of the Council, of July 12, 2016, introduces the following modifications to article 100 of the LIS:

  1. Section 1 is modified to establish that the imputation of income that occurs by application of the international tax transparency regime, not only affects those obtained by entities owned by the taxpayer, but also those obtained by its establishments. permanent abroad . It is also specified, in section 7, that in the case of permanent establishments, the imputation will be made in the tax period in which the income is obtained. Likewise, section 12 is modified to add the documentation that must be provided along with the Corporate Tax declaration, for the income obtained by said permanent establishments.

  2. Section 2 is also modified to eliminate rule relating to dividends, participations or income derived from the transfer of participations contained in the previous article 100.4 of the LIS.

  3. Likewise, section 3 is modified to introduce various types of income that may be subject to imputation in this regime of international tax transparency, such as those derived from financial leasing operations or from activities of insurance, banking and other financial activities. Furthermore, in relation to income from credit, financial, insurance and service provision activities regulated in letter i) of article 100.3 of the LIS, the percentage that means that they are not included is modified, going from 50 percent. to 2 thirds.

  4. is deleted in section 4 of the rule by virtue of which ## the income provided for in letter b) and e) of the original wording of section 3 of article 100 of the LIS, when they are securities derived from participation in the capital or own funds of entities that grant, at least, 5 percent of the capital of an entity and are held for a minimum period of one year, for the purpose of directing and managing the participation.

  5. It is specified in section 5 that the income from letter i) of section 3 of article 100 of the LIS will be taken into consideration for the purposes of determining whether the sum of the amounts of the income provided for in this regime is less than 15 percent of the income obtained by the non-resident entity or permanent establishment.

  6. It is modified in section 15 (previously, section 16), by deleting the reference to the accreditation that the constitution and operation responds to valid economic reasons. It is also noted that the regulation provided for in this article is not applicable when the non-resident entity or permanent establishment is resident or located in another Member State of the European Union or is part of the Agreement of the European Economic Area.