Which civil companies are subject to the Corporation Tax?

With effect for tax periods beginning on or after 1-1-2016, civil companies with legal personality are taxpayers of IS provided that their purpose is commercial, that is, they are formed for the purpose of carrying out a commercial activity in the sense of intervening in the market by providing goods and services for profit and, in addition, their agreements are not kept secret between the partners, that is, when the company contracts in its own name with respect to third parties. In this regard, Article 7 of Law 27/2014 of 27 November on Corporation Tax (hereinafter, LIS) establishes who are taxpayers of the Tax, and specifically section 1.a) indicates that: "The following will be subject to this tax, when resident in Spanish territory: a) legal persons, excluding civil companies not having a commercial purpose. That is, civil companies with a commercial purpose are taxpayers of Corporate Tax.

With regard to when an entity has a commercial purpose, articles 325 and 326 of the Commercial Code indicate that a company has a commercial purpose "when it is intended to be carried out on a permanent basis, through a stable and appropriate organization for this purpose and for profit" . In short, "pooling money, goods or industry, with the aim of sharing the profits among themselves."

On the other hand, the Directorate General for Taxes, in various consultations, has expressed the following criteria regarding whether there is a commercial purpose or not: "(...) will be understood as the elaboration of an economic activity involving production, an exchange or a provision of services for the market, within a sector that is not excluded from the commercial sphere. Thus, entities engaged in agricultural, livestock, forestry, mining and professional activities are excluded from being taxpayers of corporation tax, as these activities are outside the commercial sphere".

In this regard, the Tax Agency's Legal Service states that: "the criterion for distinguishing the commercial nature of the purpose would be the existence of a set of material and personal elements organised by the business person for the exercise of a business activity. In other words, the activity must be carried out through a structured organisation in order to participate in commercial transactions, excluding occasionality. For these purposes, in line with various rulings of the Directorate General for Taxes on the subject, the commercial purpose is understood to be the performance of an economic activity of production, exchange or provision of services for the market in a sector not excluded from the commercial sphere. That said, it should be borne in mind that the current Commercial Code indicates that agricultural, forestry, mining and professional activities, regulated by Law 2/2007 of 15 March on Professional Companies, do not have a commercial purpose, as these activities are outside the commercial sphere".

Therefore, according to the queries of the DGT and the report of the Legal Service of the AEAT cited above, the commercial object will be the realization of an economic activity of production, exchange or provision of services, except for entities that are dedicated to agricultural, livestock, forestry, mining or professional activities.