At this time of year, most Spanish companies whose fiscal year coincides with the calendar year are engaged in their annual audit process as well as in the calculation of their annual Corporate income tax expense.

If your company has portfolio investment in companies of the group (when there is a control relationship of more than 50% of the voting rights), associated (when there is significant influence without reaching a control position, with more than 20% but less than 50%) or multigroup (if it manages the participated entity, together with a third party unrelated legal entity, with a 50% interest each) you may find different situations depending on whether the investment has generated profits or its accounting value exceeds the recoverable value and it must be subject to impairment.

The Corporate income tax treatment in relation to these investments does not always coincide with the accounting treatment. Besides learning it, you should not forget to review which are the tax consequences for your company in this fiscal year closing.

✔ If your company owns portfolio in companies, either resident or not, that meet the requirements of article 21 of Spanish Corporate income tax Law, positive income, either derived from dividends or gains from their transfer, is exempt from this tax. The main requirements for it are:

  • A minimum continued 5% interest, in the participated entity.
  • If this latter is not resident in Spain, a minimum Corporate taxation of 10% of nominal rate.


✔ In the event that the participated entity meets the mentioned requirements for the exemption, the accounting impairment, that may be recognised in fiscal years starting as from Jan. 01, 2013, is not tax deductible. Besides and in relation to impairment amounts that were considered as tax deductible prior to such date, there is a mandatory reversion of 20% that has to be declared in fiscal years 2016 through to 2020. This reversion operates as a minimum that can be exceeded if the equity of the participated entity recovers from the losses or if there is a dividend distribution.


✔ As a general rule and if the subsidiary is transferred, the loss is not tax deductible if this entity meets the exemption requirements. Notwithstanding this, if the participated entity is liquidated, the eventual loss will be tax deductible, except if this is due to a restructuring process. Such loss must be reduced by the amount of dividends received in the last 10 fiscal years, prior to the subsidiary’s extinction, if these were eligible for the exemption system or the double taxation tax credit.


In summary, this complex regulations aim at establishing a symmetry in the tax treatment of positive income and losses, as it does not permit the tax deduction of impairment or definitive losses deriving from the transfer of portfolio when these investments qualify for the exemption on positive income.

Publicado el 03-2019 por PBS