Application of the Reduced Rate of 15% in Corporate Income Tax

Binding Consultation from the General Tax Office (DGT).

The General Tax Office (GTO) has issued a binding consultation shedding light on the application of the reduced tax rate of 15% in Corporate Income Tax for newly established entities. The inquirer, a company established in 2017, has meticulously met the requirements to apply for this tax benefit in 2022 by commencing economic activities, not being part of a business group during that period, and avoiding any disqualifying circumstances.

The GTO emphasizes its stance on the timing of evaluating the requirements for the special rate, drawing a significant contrast with inspection practices. According to the GTO, the latter has adopted a restrictive and unjustified interpretation regarding the past participation of the company exceeding 50% (GTO V2203-23).

The significance of this consultation lies in clarifying the requirements and the crucial timing for applying the 15% reduced rate in Corporate Income Tax. The inquiring company, by meeting the criteria set by the GTO, benefits from reduced tax burden, which is essential for its development and economic growth.