Corporate Tax 2010 - BMR Advisors

Cuatrecasas, Gonçalves Pereira
Spain
Spain
listed in organised secondary markets are tax deductible up
to a limit of the overall decline in value undergone during the
tax period by the fixed return securities owned by the
taxpayer which are listed on such markets.
Provisions to cover the decline in value of publishing,
phonographic and audiovisual funds belonging to entities
which carry on the corresponding production activity are
only tax deductible when two years have elapsed since the
respective productions were placed on the market.
4.5 Are there any tax grouping rules Do these allow for relief
in Spain for losses of overseas subsidiaries
There are tax grouping rules in Spain according to which the
entities that belong to the tax group are taxed on a consolidated tax
base.
The main aspects to be considered with regard to the tax grouping
regime are the following: (i) the controlling entity (which may also
be a permanent establishment) must hold a minimum, direct or
indirect, participation of 75% in the dependent entities’ share
capital; (ii) all entities must be subject and not exempt from CIT and
taxed at the same rate; (iii) the controlling entity may not be
controlled by a Spanish resident entity which in turn may be
considered a controlling entity; (iv) all entities must have the same
tax period; and (v) entities in bankruptcy cannot belong to the tax
group.
Application for this special tax regime must take place before the
start of the tax year in which the tax group regime shall apply.
territory. CIT taxpayers with a turnover below €1 million are
exempt.
Tax on real estate: annual real estate property tax levied on
the ownership of real estate. The tax base is the “cadastral
value” which is a value established by the local authorities,
which basically depends on the location of the real estate
property. The general tax rate ranges from 0.3% to 1.10%.
This may be raised by the local authorities.
Business tax on income: annual tax levied on registered legal
persons conducting business, professional or artistic
activities in Spain.
Tax on urban land appreciation: tax levied on the increase in
value of land classified as urban land. It becomes due when
a property transfer takes place. The tax base is based on the
“cadastral value” and the holding period of the urban land.
Tax on construction and installation projects: tax levied on
those constructions done in a municipality for which a
licence is required.
5 Capital Gains
5.1 Is there a special set of rules for taxing capital gains and
losses
There are no special rules for taxing capital gains and losses.
5.2 If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
Tax is imposed at the same rate upon distributed profits and retained
earnings (30%).
Dividends distributed by a Spanish resident company to another
Spanish resident company are taxed at the level of the recipient at
the general CIT rate of 30%. In order to avoid double taxation, the
recipient is entitled to a 50% tax credit of the CIT due
corresponding to such dividends. If such dividends derive from a
participation of at least 5% that has been held uninterruptedly
during the year prior to the dividend distribution date, the tax credit
is of 100% of the CIT due.
Capital gains derived by a Spanish resident company from the
transfer of a participation in a Spanish resident company are taxed
at the level of the transferor at the general CIT rate of 30%. In order
to avoid double taxation, the transferor is entitled to a tax credit of
100% of the retained earnings generated during the holding period
of the participation if the capital gain derives from the transfer of a
participation of at least 5% that has been held uninterruptedly
during the year prior to the transfer.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Net worth tax is not levied in Spain on the net worth of companies.
4.8 Are there any local taxes not dealt with in answers to
other questions
Capital gains are taxed as business profits at the general corporate
income tax rate.
5.3 Is there a participation exemption
Capital gains derived from the transfer of a participation in a nonresident
company may be exempt if the requirements summarised
below are fulfilled during the whole shareholding period:
A direct or indirect participation of at least 5% in a nonresident
company has been held for one year prior to its
transfer.
The non-resident company is subject to a tax comparable to
Spanish CIT. This requirement is deemed to be met if the
non-resident company is resident in a jurisdiction with which
Spain has signed a tax treaty.
At least 85% of the profits of the non-resident company
derive from business activities in a foreign country other than
a tax haven.
Limitations to the exempt capital gain apply under the following
circumstances:
If at least 15% of the assets of the non-resident company are
located in Spain.
If the acquisition value of the non-resident company was
adjusted for tax purposes.
If the stake in the non-resident company was acquired to a
related entity that deducted a loss as a result.
If in a previous transfer the stake in the non-resident
company was valued according to the special rules provided
by the Spanish implementation of the EU Merger Directive,
and lead to no taxation.
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The main local taxes are the following:
Tax on economic activities: annual tax levied on the
development of economic activities within the Spanish
5.4 Is there any special relief for reinvestment
The Spanish CIT legislation provides for a 12% rollover relief
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