01 April 2016 Spanish Supreme Court confirms Brazilian Interest on Net Equity payments benefit from participation exemption The Spanish Supreme Court (Tribunal Supremo) issued a decision on March 16, confirming that the legal nature of income received by Spanish entities from Brazilian subsidiaries in the form of Interest on Net Equity payments is equivalent to a distribution of profits and thus can utilize the Spanish domestic participation exemption for dividends as applicable for tax years starting prior to January 1, 2015. While the criterion set forth by the Supreme Court needs to be confirmed by another judgment to become mandatory case law, multinational groups may need to re-evaluate their tax provisions, if any, based on this precedent. A Tax Alert prepared by EY's Global Tax Desk Network, and attached below, provides additional details. Document ID: 2016-0601 |
