Find out if this tax regime is right for you if you own a Group of Companies
Tax consolidation is one of the special tax regimes that tax groups can voluntarily access. Last year we explained the advantages of the special VAT regime for groups of entities. This time, we would like to present another special regime with similar characteristics, but this time applicable to Corporate Income Tax.
To be considered a tax group for corporate income tax purposes, it is essential that there be a parent company that directly or indirectly owns more than 75% of the shares of the other companies. Since 2015, it is no longer necessary for the parent company to be resident in Spain, unless it is resident in a tax haven. In this case, the tax group would consist of the companies in which it holds more than 75% of the shares.
The application of this special regime implies that the different companies that make up the group are considered, for the purposes of Corporate Income Tax, as a single taxpayer , with the group being taxed on the sum of the taxable bases of all the companies that make up the group and allowing the profits and losses obtained by the different companies in the group to be automatically offset
Therefore, the group's taxable base would be calculated by adding the individual taxable bases of all the companies. The following operations are then performed on the resulting amount:
– the necessary eliminations are carried out.
– the capitalization reserve is applied at the group level and
– expenses not deducted in previous years for provisions for certain impairments.
– the compensation of negative tax bases of the group is carried out.
– the compensation of the individual tax bases that would have remained pending compensation at the time of inclusion in the group is carried out, although these only with the profits that the company itself has generated.
Thus, this tax regime has, among others, the following advantages:
a) The possibility of offsetting losses between the different companies in the group without having to wait for the loss-making companies to start making profits.
b) It is not necessary to withhold taxes on transactions between companies within the group.
c) It is not necessary to document related-party transactions .
This is a system that, in certain cases, can be very beneficial if you own a group of companies. We invite you to consult with us about your specific situation. We would be happy to assist you.
Marc Ivars,
Tax Area
Àmbit Assesor
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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