Taxpayers

Civil companies with legal personality and commercial purpose

For tax periods beginning on or after 1 January 2016, civil companies with legal personality and commercial purpose are no longer subject to income attribution and are now taxpayers of the Corporate Tax.

In this regard, the General Directorate of Taxes has established in numerous consultations the necessary requirements for civil companies to be considered taxpayers of Corporate Tax. Specifically, it considers that it is necessary to determine, firstly, in which cases a civil company is considered to acquire, from the point of view of Corporate Tax, legal personality and, secondly, to establish what is to be understood by commercial purpose.

Regarding the first question, in accordance with the provisions of article 1669 of the Civil Code, the civil company has legal personality provided that the agreements between its partners are not secret. Civil society therefore requires a willingness on the part of its members to act towards third parties as an entity. No specific solemnity is required for its constitution, but it is necessary that the agreements not be secret. Translating the above into the tax area, it can be concluded that in order to be considered a taxpayer of Corporate Tax, it is necessary for the civil society to have declared itself as such before the tax authorities. For this reason, in order to be considered as taxpayers of Corporate Tax, civil companies must be incorporated in public deed or in private document , provided that in the latter case, said document has been submitted to the Tax Authority for the purposes of assigning the tax identification number of legal persons and entities without legal personality, in accordance with article 24.2 of Royal Decree 1065/2007, of July 27, which approves the General Regulations of the actions and procedures of tax management and inspection and the development of the common rules of the procedures for the application of taxes. Only in such cases will the entity be considered to have legal personality for tax purposes.

Additionally, consideration as a taxpayer of the Corporate Tax requires that the civil society has a commercial purpose. For these purposes, a commercial purpose shall be understood as the performance of an economic activity of production, exchange or provision of services for the market in a sector not excluded from the commercial scope. Therefore, entities engaged in agricultural, livestock, forestry, mining, fishing and professional activities, to which Law 2/2007 on professional companies applies, will be excluded from being taxpayers of Corporate Tax, since these activities are outside the commercial sphere.