Law 27/2014 on Corporation Tax introduced important changes regarding the consolidation regime under which certain groups of companies may be taxed. It is important to analyze the situation of the tax group and determine the effects of these changes in each particular case, as it may depend on the desirability of continuity in the consolidation regime or not. The interest of this regime is precisely offsetting tax losses (losses) of the tax group from previous periods and other advantages that we will see below.
The tax consolidation regime regulated by law and regulation for the new income tax (IS), it is one of the special schemes who have access on a voluntary basis (this is an optional regime) tax groups, i.e groups entities that meet the requirements. The application of this special regime implies the absence of taxation on individual IS regime of the entities included in the group.
The tax consolidation regime regulated by law and regulation for the new income tax (IS), it is one of the special schemes who have access on a voluntary basis (this is an optional regime) tax groups, i.e groups entities that meet the requirements. The application of this special regime implies the absence of taxation on individual IS regime of the entities included in the group.
What is your main advantage?
The tax consolidation regime assumes that the various companies that make it up are considered for the purposes of income tax as a single taxpayer, paying the group in the amount of taxable income of all the companies that comprise it, allowing compensate automatically profits and losses obtained by the companies in the group.
Definition of group of companies or tax groups
For a group of companies can benefit from the tax consolidation regime there must be a dominant company and other subsidiaries directly or indirectly dependent on at least 75% (70% in case of listed companies). Moreover, until 2014 they had to meet two requirements:
- The parent company must be an established in Spain and belonged to the tax group company.
- They could not join the group subsidiaries whose indirect participation of the parent company was achieved through intermediate companies that were not within the group (whether being foreign, being in competition or give any other requirements that it prevented).
Developments in the tax consolidation regime
From the 01/01/2015 with the new Corporate Income Tax Law (LIS) these two requirements have been relaxed. If your company is part of a tax group or be one arises, you may need to include companies which, with the previous law, had not been part of the group.
With the tax reform it has substantially changed the composition of the tax groups, expanding the number of companies that can access this system, because until the year 2014 alone could form a consolidated tax group if there was a Spanish dominant parent company; but from fiscal 2015 tax reform has extended the scope of the tax groups, allowing them to form a consolidated tax group are companies which are affiliated directly or indirectly at least 75% by the same partner nonresident Spain.
They may also be integrated into tax groups existing Spanish societies that so far could not be part of the group or by relying directly from a non-resident or society because the Spanish company reached an indirect interest to consolidate fiscally through a company not resident.
In addition, the parent company of the group can not be a resident in a tax haven country and must also possess the majority of the voting rights of the subsidiaries.
requirements
The delimitation of the tax group presupposes compliance by all entities that, in addition to specific requirements form depending on whether the dominant or dependent, some basic common requirements, which are:
- should be corporations, limited or limited by shares resident in Spanish territory;
- should be resident in Spanish territory;
- should not be exempt from the IS;
Had it not been declared at year end in receivership, or companies involved in the event of asset imbalance losses that reduce its net assets to less than half of the share capital, unless this situation is exceeded in the year they are approved the bills; taxed at the same tax rate, coincident with that of the representative (with exceptions for credit institutions).
- have the same fiscal year as that of the representative;
- they can not be part of a group entities that have chosen to apply the special tax regime for REITs.