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Reduction of taxation of income from certain intangibles approved by EU commission

Spain
30 Apr 2008

The European Commission has approved the tax relief in Spain consisting of a reduction in income from certain intangible assets, as provided for in Article 23 of the Revised Corporate Income Tax Law, on the ground that it did not constitute State aid.

For further details please speak to either Ricardo Gomez (ricardo.gomez@garrigues.com) or Vicente Bootello (vicente.bootello@garrigues.com) at Garrigues.

The European Commission has approved the tax relief in Spain consisting of a reduction in income from certain intangible assets, as provided for in Article 23 of the Revised Corporate Income Tax Law, on the ground that it did not constitute State aid.

The approved relief consists of a 50% reduction in gross income from licensing the right to use or work patents, designs or models, plans, formulas or secret procedures, and rights to information on industrial, commercial or scientific know-how, for the purpose of calculating the corporate income tax base.

The claiming of the approved incentive is subject to fulfillment of a number of requirements:

  • The incentive may only be claimed by the entity that created the licensed assets.
  • The incentive is capped at six times the cost of the asset created.
  • The licensee must exercise the rights to use or work the assets in an economic activity that does not generate a delivery of goods or the provision of services to the licensor that give rise to deductible expenses for the licensor (where they are related parties).
  • The licensee must not reside in a tax haven or territory with nil taxation.
  • The taxpayer must have the necessary accounting records to identify the revenues and expenses relating to the licensed asset.
  • Where an agreement includes ancillary obligations, such obligations must be differentiated.

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