Spanish tax consolidation scheme permits the taxation as a unique taxpayer of entities forming part of the group perimeter.
However, companies that have obtained accounting losses that have reduced their net equity to an amount lower than half its share capital cannot be part of such perimeter, except if this situation is overcome on the last day of the fiscal year in which the annual accounts are approved.
The Spanish tax authorities have issued a report dealing with the main administrative and Case law criteria affecting this cause of exclusion, which we summarize below.
✔The report of the Spanish tax consolidation scheme is focused on the following matters:
- Scope of the Tax authorities faculty to apply this cause of exclusion: are the Tax authorities entitled to assess or recalculate the company’s net equity?
- How does this exclusion operate: is a Shareholders agreement (or judicial competent authority) required?
- Temporary aspects related with this cause of exclusion: in which fiscal year does it operate?
✔The report conclusions are the following:
- The Spanish tax consolidation scheme audit must use the net equity reflected in the company’s annual accounts, thus, not being entitled to rectify it.
- The exclusion of the group does not require any type of legal agreement, as the text of the applicable regulations do not specify this requirement. This cause of exclusion also applies to permanent establishments, cooperatives or banking foundations.
- The exclusion operates in the first fiscal year in which the equity requirement is not met. However, its effects are conditioned to the fact that such situation is maintained upon closing of the subsequent fiscal year. We remind you that the non-compliance of the equity requirements must happen in two different moments: upon closing of the fiscal year and upon closing of the subsequent fiscal year, when the annual accounts of the previous fiscal year are approved. The company will be back into the group in the fiscal year previous to the one in which it has overcome the equity unbalance.
✔ It is strongly recommendable to annually review the equity situation of the companies forming part of the group given the important tax consequences that derive from exiting it.