I

This Royal Decree-Law contains a series of tax measures to support companies and promote savings and investment. In particular, they affect the taxation of small and medium-sized enterprises, the tax treatment of contributions to pension schemes and the taxation of property gains and losses.

These promotion measures are necessary in the current economic situation, in order to guarantee the stable growth of the Spanish economy and to avoid the emergence of inflationary pressures. The achievement of this objective also makes it essential to implement the measures immediately.

In addition, the risk that the announcement of such reforms could lead to a halt in investment decisions, as well as the need for citizens to know with certainty and in good time. Tax consequences that will have such decisions, require the use of the Royal Decree-Law, thus achieving its effects immediately the measures described below.

II

First of all, a strong commitment is made to support small and medium-sized enterprises and innovation and business internationalisation initiatives, as a way to improve their competitiveness and therefore, guarantee of their survival in a rapidly changing and globalised environment.

As far as support measures are concerned for small and medium-sized enterprises, which are the real backbone of our economy and which are so important in growth and innovation, in the first place. The scope of the special scheme for corporate tax is significantly extended and a large number of companies will be able to benefit from the tax incentives established there and the regime of reinvestment of the company will be improved. business benefits.

On the other hand, given the importance of new technologies and the willingness to support the innovative and entrepreneurial spirit of our companies, a tax incentive is established for those actions that have the to improve their access and presence on the Internet, as well as the development of electronic commerce and the improvement, in general, of their processes through the incorporation of information and communications technologies.

Similarly, through new tax incentives in Corporate Tax or by improving existing ones, staff training in the use of new technologies, as well as investments in innovation, is encouraged. technology of companies. In the same line of support for new businesses, entrepreneurs and innovators, we must look at improvements in the risk capital regime, as a formula for financing initiatives.

III

With regard to the tax treatment of contributions to pension schemes, it should be remembered that the promotion of supplementary social welfare systems was one of the main points raised in the Toledo Pact. In this line, the present Royal Decree-Law introduces improvements in the tax regime of pension plans and, consequently, of social welfare mutual societies, as follows:

First, an increase is made to the general reduction limits in the tax base by contributions to pension plans and pension funds, as well as to those applicable in the case of higher-age participants. and of people with disabilities.

In particular, the general limits are set at 1,200,000 pesetas and 25 per 100 of net income from work and economic activities, which implies an increase of the absolute limit by 100,000 pesetas and relative in 5 percentage points. In the case of older people, the maximum contribution limit is raised by 300,000 pesetas and by 20 percentage points, respectively, in 2,500,000 pesetas and 40 per 100. Finally, in the case of people with disabilities, the absolute limit of 300,000 pesetas is raised, with a total of 2,500,000 pesetas.

Secondly, an extension of the tax regime of pension schemes to those spouses who do not work outside the family home is produced. The measure incorporated into the project implies a boost to family savings and responds to an existing social demand.

In this regard, it should be noted that the reduction limits for pension schemes are applied on the individual income of each taxpayer. This raises the question of the impossibility of reducing the number of spouses who do not work outside the family household to pension schemes, despite the fact that, on many occasions, they contribute, through domestic work, to obtaining of yields on the part of the Conguye.

With the amendment incorporated, it is possible that the contributions made to the pension plans of the spouses who obtain income from work and economic activities of less than 1,200,000 In the case of pesetas, they may be subject to a reduction in the taxable amount of the other spouse, with a ceiling of 300,000 pesetas per year.

In a manner consistent with the improvements introduced in the tax system of pension schemes, the taxation of benefits arising from life insurance is improved by increasing the reducing coefficients applicable to the pension scheme. determination of the corresponding net yield.

IV

With regard to the treatment in the Income Tax of the Physical Persons of the profits and property losses, first the inclusion in the special part of the tax base of the tax of those arising from the transfer of assets acquired more than one year in advance, which means a reduction of the two-year period up to now.

The main purpose of this measure is to prevent the making of investment decisions by the citizen from being drastically conditioned by the influence of the deadline provided for in the current legislation. In fact, the maintenance of investments for more than two years in order to ensure that the tax on this type of income is applied may be too long a deadline, and therefore its reduction contributes to greater efficiency. in the investment decisions of individuals.

At the same time, in line with the tax rebate carried out by Law 40/1998, of December 9, of the Income Tax of the Physical Persons and other Tax Rules, the tax time applicable to this tax is reduced. income type from 20 to 18 per 100, thus equating it with the minimum rate at which the general part of the tax base is taxed. The basis for this measure is twofold: on the one hand, it will undoubtedly contribute to making the alternative of saving to consumption more attractive and, on the other, it will ensure that no taxpayer can see the income that is integrated in the (a) special tax base at a higher rate than that corresponding to those in the general part of that base.

In line with the new tax rate, the withholding rate applicable to income earned as a result of transfers or repayments of shares or units in institutions is reduced to 18 per 100. collective investment.

V

With the aim of supporting the initiatives of internationalization of our companies, the regime is modified to avoid the double international economic imposition by the business activities developed abroad to through subsidiaries or through permanent establishments located abroad. The application of the exemption method for these

rents favor the internationalization of Spanish companies by improving their competitive position in the international arena. However, the modification of the scheme to avoid double taxation is accompanied by anti-abuse measures which seek to prevent the artificial relocation of business activities.

Also, a new tax incentive is established in the Corporate Tax that complements the measures aimed at encouraging the implementation of Spanish companies abroad, allowing to defer the payment of this tax. in cases where investments are made abroad through the taking of shares in the capital of non-resident companies which carry out business activities. In particular, it is permissible for the taxable person to be able to reduce his taxable amount in the amount of the investment made, by integrating into the tax base of the subsequent tax periods the amount deducted.

VI

Finally, other measures of great economic and social importance are also addressed in this Royal Decree-Law.

First of all, with the aim of completing the reform of the Income Tax of the Physical Persons as regards the treatment of habitual housing and taking into account the complementary nature of the have the Tax on the Heritage, the exemption is established in this last tax of the habitual housing of the taxpayer, at least in so far as its tax value does not exceed 25,000,000 of pesetas.

Second, the regime is established in the Tax on the Income of the Physical Persons and in the Tax on Companies of the Loan of Securities, in order to facilitate the realization of these operations in the markets Spanish financiers.

In its virtue, in the use of the authorization contained in Article 86 of the Constitution, and after deliberation by the Council of Ministers at its meeting on June 23, 2000,

D I S P O N G O:

TITLE I

Measures relating to small and medium-sized enterprises and innovative enterprises

Article first. Scope of application of the special scheme for companies with a reduced size in the company tax.

With effect for the tax periods beginning from the entry into force of this Royal Decree-Law, Article 122 of Law 43/1995, of 27 December, of the Company Tax, is worded as follows: way:

" Article 122. Scope: Business figure.

1. The tax incentives provided for in this Chapter shall apply provided that the net amount of the turnover in the previous immediate tax period is less than EUR 3 million (pesetas 499,158,000).

2. Where the entity is newly established, the amount of the turnover shall relate to the first tax period in which the activity actually takes place. If the previous immediate tax period has been shorter than the year, or the activity has been carried out for a period also lower, the net amount of the turnover shall be raised per year.

3. Where the institution is part of a group of companies within the meaning of Article 42 of the Trade Code, the net amount of the business figure shall relate to the set of entities belonging to that group. This criterion shall also apply where a natural person alone or in conjunction with other natural persons joined by direct or collateral, consanguine or affinity links, to the second degree inclusive, find in relation to other entities of which they are partners in any of the cases referred to in Article 42 of the Trade Code.

For the purposes of this paragraph, it is understood that the cases of Article 42 of the Code of Commerce are those referred to in Section 1.a of the first chapter of the rules for the formulation of the annual accounts consolidated, approved by Royal Decree 1815/1991 of 20 December 1991. "

Article 2. Incentives for reinvestment in small-scale enterprises.

With effect for the tax periods beginning from the entry into force of this Royal Decree-Law, Article 127 of Law 43/1995 of 27 December of the Tax on Societies is drawn up by the next way:

" Article 127. Depreciation of property assets subject to reinvestment.

1. The elements of the immobilised material affected by economic holdings in which the reinvestment of the total amount obtained in the onerous transfer of items of the tangible fixed assets, also affected by economic holdings, materializes, made in the tax period in which the conditions of Article 122 of this Law are met, may be amortised on the basis of the coefficient resulting from multiplying by 3 the maximum linear depreciation coefficient provided for in the Officially approved depreciation. Reinvestment must be made within the time limit referred to in Article 21.1 of this Law.

2. Where the amount invested is higher or lower than the amount obtained in the transmission, the amortisation referred to in the preceding paragraph shall apply only to the amount of such transmission that is the subject of reinvestment.

3. The deduction of the excess amount of depreciation resulting from the provisions of this Article in respect of the depreciation actually given shall not be conditional upon its accounting imputation on the profit and loss account. '

Article 3. Deduction for the promotion of the use of new technologies by small-scale enterprises.

With effect for tax periods starting from the entry into force of this Royal Decree-Law, a new Article 33a is added in the

Law 43/1995 of 27 December of the Company Tax, which is worded as follows:

" Article 33a. Deduction for the promotion of information and communication technologies.

1. Institutions which comply with the requirements laid down in Article 122 of this Law shall be entitled to a deduction in the full quota of 10 per 100 of the amount of the investment and the expenditure of the period relating to the improvement of their capacity access and management of commercial transaction information over the Internet, as well as the improvement of its internal processes through the use of information and communication technologies, which are specified below:

a) Internet access, which will include:

Acquisition of equipment and terminals, with their associated "software" and peripherals, for Internet connection and access to email facilities.

Acquisition of specific communications equipment to connect internal computer networks to the Internet.

Installing and deploying these systems.

Training of the company's staff for use.

b) Internet Presence, which will include:

Acquisition of equipment, with "software" and associated peripherals, for the development and publication of "Web" pages and portals.

Performing jobs, internal or contracted to third parties, for the design and development of "Web" pages and portals.

Installing and deploying these systems.

Training of the company's staff for use.

c) Electronic commerce, which will include:

Acquisition of equipment, with its "software" and associated peripherals, for the implementation of e-commerce through the Internet with the appropriate guarantees of security and confidentiality of the transactions.

Acquisition of equipment, with its "software" and associated peripherals, for the implementation of e-commerce through closed networks formed by groups of clients and suppliers.

Installing and deploying these systems.

Training of the company's staff for use.

d) Incorporation of information and communications technologies to business processes, including:

Acquisition of specific software packages and equipment for the interconnection of computers, voice and data integration, and the creation of Intranet configurations.

Acquisition of "software" packages for applications to specific management, design, and production processes.

Installing and deploying these systems.

Training of the company's staff for use.

2. This deduction shall be incompatible for the same investments or expenses with the other investments provided for in this Chapter. The investment party or the grant-financed expenditure shall not be entitled to the deduction. " Article 4. Deduction for staff training expenses in the use of new technologies.

With effect for the tax periods starting from the entry into force of this Royal Decree-Law, a new paragraph 3 is added to Article 36 of Law 43/1995 of 27 December of the Tax on Companies, with the following wording:

" 3. The deduction shall also apply for expenditure incurred by the institution for the purpose of having employees used in the use of new technologies. These expenses are included in the costs incurred in financing their connection to the Internet and the equipment for access to the Internet, even when the use of the same by the employees can be carried out outside the place and working hours. The expenditure referred to in this paragraph shall be taken into account for the purposes of taxation, expenditure on staff training and shall not determine the performance of the work for the employee. "

Article 5. Modification of the deduction for activities of scientific research and technological innovation in the Corporate Tax.

With effect for the tax periods beginning from the entry into force of this Royal Decree-Law, Article 37 of Law 43/1995, of 27 December, of the Company Tax, is worded as follows: way:

" Article 37. Rules common to the deductions provided for in this Chapter.

1. The deductions provided for in this Chapter shall be made once the deductions and allowances of Chapters II and III of this Title are made.

The amounts corresponding to the tax period not deducted may be applied in the settlements of the tax periods that are concluded in the immediate and successive five years.

However, the amounts corresponding to the deductions referred to in Articles 33 and 33a of this Law may be applied in the settlements of the tax periods concluded in the immediate ten years and successive.

The calculation of the time limits for the application of the deductions provided for in this Chapter may be deferred until the first financial year in which, within the period of limitation, positive results occur, in the following cases: cases:

a) In the newly created entities.

(b) In institutions that heal losses from previous years by the effective contribution of new resources, without the application or capitalization of reserves being considered as such.

The amount of the deductions provided for in this Chapter referred to in this paragraph, applied in the tax period, shall not be more than 35 per 100 of the full share held in the deductions for avoid internal and international double taxation and bonuses. However, the limit shall be raised to 45% where the amount of the deduction provided for in Articles 33 and 33a, corresponding to expenditure and investments effected in the tax period itself, exceeds 10% of the total quota, This is the case in the case of the Commission.

2. The same investment may not result in the application of the deduction in more than one entity.

3. The assets assigned to the deductions provided for in the preceding Articles shall remain in operation for five years or during their lifetime if they are lower.

Jointly with the fee corresponding to the tax period in which the non-compliance with this requirement is manifest, the amount deducted shall be entered in addition to the interest on the delay. "

Article 6. Reduction to one year of the term for the bonus of capital gains made by companies and venture capital funds.

With effect for the tax periods beginning from the entry into force of this Royal Decree-Law, Article 69 of Law 43/1995 of 27 December of the Tax on Societies is drawn up by the next way:

" Article 69. Capital-risk companies and funds.

1. Companies and venture capital funds, regulated in Law 1/1999 of 5 January, regulating risk capital institutions and their management companies, shall enjoy partial relief for the income they obtain in the transmission of shares and shares in the capital of undertakings, as referred to in Article 2.1 of that Law, in which they participate, according to the year of transmission computed from the time of the acquisition. This exemption shall be 99 per 100 from the beginning of the second year and up to the twelfth year, inclusive.

An extension of the latter period may exceptionally be permitted until the 17th year, including. Regulations shall determine the assumptions, conditions and requirements that they enable for such enlargement.

With the exception of the assumption referred to in the previous paragraph, in the first year and from the twelfth the exemption shall not apply.

2. Dividends and, in general, shares in profits received from the companies which the venture capital companies and funds promote or encourage will enjoy the deduction provided for in Article 28.2 of this Law whichever is the percentage of shares and holding time of shares/units.

3. Dividends and, in general, shares in profits received from companies and capital-risk funds shall enjoy the deduction provided for in Article 28.2 of this Law, irrespective of the percentage of the holding and the time of the holding of shares or shares. '

TITLE II

Measures relating to pension and life insurance plans

Item seventh. Increase of the reduction limits in the tax base of the Income Tax of the Physical Persons by contributions to pension plans. Extension of the tax regime for pension schemes to the spouses of the recipients of the income.

New wording is given to the number 4. º and two new numbers are added 5. º and 6. to Article 46 (1) of Law 40/1998, of December 9, of the Income Tax of the Physical Persons and other Tax Rules, in the following terms:

" 4th The contributions made by the participants in pension plans, including the contributions of the promoter who had been imputed to them in terms of performance of the work.

5. º The maximum set of these reductions will be the smallest of the following amounts:

(a) 25 per 100 of the sum of the net income of the work and of the economic activities received individually in the financial year.

For these purposes, income from economic activities shall be considered to be the income of the transparent companies governed by Article 75 (1) (b) and (c) of Law 43/1995 of 27 December 1995 on the tax on Companies, to their partners, who, in fact, exercise their activity through them as professionals, artists or sportspersons.

However, in the case of participants over fifty-two years, the percentage above will be 40 per 100.

b) 1,200,000 pesetas (7,212,15 euros) per year.

However, in the case of participants over fifty-two years, the above limit will be increased by an additional 100,000 pesetas (601,01 euros) for each year of the participant's age in excess of fifty-two, 2.500,000 pesetas (15.025.30 euros) for participants aged sixty-five years or more.

6. In addition to the reductions made in accordance with the above limits, taxpayers whose spouse obtains net income from work and economic activities of less than 1,200,000 pesetas (7,212,15 euros) may reduce in the tax base the contributions made to pension schemes for which the spouse is involved, with the maximum limit of 300,000 pesetas (1,803,04 euros) per year. "

Article 8. Lifting of the limits applicable to pension schemes and social welfare insurance schemes constituted in favour of persons with disabilities.

The amounts of 1.100,000 pesetas (6,611.13 euros) and 2,200,000 pesetas (13,222,27 euros) referred to in the additional 17th of Law 40/1998 of 9 December of the Income Tax of Persons Physical and other Tax Standards, are raised to 1,200,000 pesetas (7,212.15 euros) and 2,500,000 pesetas (15,025.30 euros), respectively.

Article ninth. Lifting of the contribution limits to pension schemes.

New wording is given to Article 5 (3) of Law 8/1987, of 8 June, of Regulation of Pension Plans and Funds, which will be drawn up in the following terms:

" 3. The maximum annual contributions to the pension schemes covered by this Law, including, where appropriate, those which the promoters of such schemes impute to members, may in no case exceed 1,200,000 pesetas (7,212,15%). euro).

However, in the case of participants over the age of fifty-two years who are not sufficiently in age, the above limit will be increased by an additional 100,000 pesetas (601,01 euros) for each year of age. of the total number of participants exceeding fifty-two, with a total of 2,500,000 pesetas (15.025.30 euros) for participants aged 60 and five years.

The maximum limit set in this paragraph shall be applied individually to each integrated participant in the family unit. "

Article 10. Increase in the reduction coefficients applicable to income from life insurance contracts.

In Articles 17 (2) (c) and (d) and (d) and (c) of Law 40/1998 of 9 December 1998 on the Income Tax of the Physical Persons, the percentages of 60 per 100 and 70 per 100 are, respectively, of the 65 per 100 and 75 per 100.

TITLE III

Measures relating to property gains and losses

Item 11th. Reduction to one year of the deadline for integrating the property gains and losses into the special part of the tax base.

Article 39 (1) of Law 40/1998 of 9 December 1998 on the Income Tax of Physical Persons and other Tax Rules shall be worded as follows:

" 1. The special part of the tax base shall consist of the positive balance resulting from the exclusive integration and compensation of the profits and losses incurred in each tax period, which is apparent on the occasion of the transfers of acquired assets or improvements made to them, more than one year in advance of the date of transmission or of the subscription rights corresponding to securities acquired at the same time. "

Article twelfth. Reduction of the rates of excise duty for the determination of the full state quota.

Article 53 of Law 40/1998 of 9 December of the Income Tax of Physical Persons and other Tax Rules shall be worded as follows:

" Article 53. Special rates of charge.

1. The special liquidable base will be taxed at the rate of 15.30 per 100.

2. The special liquidable taxpayer base referred to in Article 9 (2) and (3) of this Law shall be taxed at the rate of 18 per 100. "

Article 13th. Reduction of special rates for the determination of the autonomous full quota.

Article 63 of Law 40/1998 of 9 December of the Income Tax of Physical Persons and other Tax Rules shall be worded as follows:

" Article 63. Type of special charge.

The special liquidable base will be taxed at the rate of 2.70 per 100. "

Article 14. Reduction of the percentage of retention and payment to account applicable to the income obtained as a result of the transmission or redemption of shares or units in collective investment institutions.

The percentage applicable to income obtained as a result of the transmission or redemption of shares or units in collective investment institutions, for the calculation of deductions and other payments on account of the Tax on the Income of the Physical Persons or the Tax on Societies, will be 18 per 100.

This percentage may be modified.

TITLE IV

Business internationalization support measures

Item 15th. Measures to prevent the double taxation of international corporation tax.

With effect for the tax periods beginning from the entry into force of this Royal Decree-Law, two new articles, 20a and 20b, are incorporated into Law 43/1995 of 27 December of the Tax on Companies, with the following wording:

" Article 20a. Exemption to avoid double international economic taxation on dividends and foreign-source capital gains.

1. Dividends or shares in profits of non-resident entities on Spanish territory shall be exempt, where the following requirements are met:

(a) That the percentage of direct or indirect participation in the capital or in the own funds of the non-resident entity is at least 5 per 100.

The corresponding share must be held uninterruptedly during the year preceding the day on which the profit to be distributed or, in the absence thereof, will be required to be maintained for the time necessary to complete this deadline. For the purposes of calculating the time limit, account shall also be taken of the period in which the holding has been held uninterruptedly by other entities meeting the circumstances referred to in Article 42 of the Code of Trade to be part of the group of companies.

(b) That the participating entity has been taxed by a tax of an identical or similar nature to that tax in the year in which the profits are made or are being taken into account.

For these purposes, account shall be taken of foreign taxes which have been used to impose the income obtained by the participating entity, even in part, irrespective of the purpose of the tax. is the same as the income, income or any other element of that income.

This requirement shall be presumed to be met, unless otherwise proved, when the participating entity is resident in a country with which Spain has an agreement to avoid international double taxation, application and containing information exchange clause.

c) That the benefits that are distributed or in which it is involved come from the realization of business activities abroad.

This requirement will only be considered met when at least 85 per 100 of the revenue from the exercise corresponds to:

(a ') Rentas that have been obtained abroad and which are not included among those income classes referred to in Article 121 (2) as being liable to be included in the taxable amount by application of the International tax transparency regime.

In no case shall the provisions of this article apply when the participating entity that obtains such income is resident in a country or territory that is regulated as a tax haven.

In particular, for these purposes, income from the following activities shall be deemed to be obtained abroad:

wholesale trade, where the goods are made available to the acquirers in the country or territory in which the participating entity resides or in any other country or territory other than Spanish, provided that the operations are carried out through the organisation of personal and material means available to the participating entity.

Services, when used in the country or territory in which the participating entity resides or in any other country or territory other than Spanish, provided that they are carried out through the organization of personal means and the material available to the investee.

Credit and financial assets, when loans and loans are granted to persons or entities resident in the country or territory in which the participating entity resides or in any other country or territory other than Spanish, provided that the operations are carried out through the organisation of personal and material means available to the participating entity.

insurers and reinsurers, where the insured risks are in the country or territory in which the participating entity resides or in any other country or territory other than Spanish, provided that they are carried out through the organisation of personal and material means available to the participating entity.

b ') Dividends or shares in profits of other non-resident entities in respect of which the taxable person has the percentage of participation provided for in point (a), where the profits meet the requirements set out in this paragraph. Also gains arising from the transmission of the participation in such non-resident entities, where the requirements of the following paragraph are met.

It will not be integrated into the tax base of the entity that receives dividends the depreciation of the participation derived from the distribution of the same, in the terms provided for in Article 30 (5) of this Law.

For the application of this article, in the case of distribution of reserves, the designation contained in the social agreement will be considered and, failing that, the last amounts paid to those reserves will be considered applied.

2. The positive income obtained in the transmission of the participation in a non-resident entity in Spanish territory shall be exempt, where the requirements set out in the previous paragraph are met. The same scheme shall apply to the income obtained in the case of separation of the partner or dissolution of the institution.

The requirements set out in points (b) and (c) shall be met in each and every exercise of the tenecia of the holding. The requirement referred to in point (a) shall be understood as referring to the day on which the transmission occurs.

The exemption shall not apply where the acquirer resides in a country or territory that is regulated as a tax haven.

In the following scenarios, the application of the exemption will have the following specialties:

(a) Where the market value of the shares in entities resident in Spanish territory and of the assets located in that territory held by the non-resident entity, directly or indirectly, exceeds 15% of the the market value of its total assets.

In this case, the exemption will be limited to that part of the income obtained that corresponds to the net increase of the undistributed profits generated by the participating entity during the holding time of the participation.

(b) Where the taxable person had made any value correction on the transmitted share which would have been fiscally deductible.

In this case, the exemption shall be limited to the excess of the income obtained in the transmission on the amount of such correction.

(c) Where the participation in the non-resident entity has been acquired from another entity which meets the circumstances referred to in Article 42 of the Trade Code to be part of the same group of companies, apply the following specialties:

(a ') The negative income obtained in the transmission of the holding in the non-resident entity shall be reduced by the amount of the positive income obtained in the transfer of the same holding to which the exemption.

b ') The positive income obtained in the transmission of the participation in the non-resident entity shall be taxed up to the amount of negative income obtained in previous transmissions which had been integrated into the tax base of this tax.

3. The scheme provided for in this Article shall not apply:

(a) In those tax periods in which the taxable person has the consideration of a transparent company.

b) To dividends or capital gains in respect of which the institution applies the deduction provided for in Articles 29 or 30 of this Law.

c) In relation to those subsidiary entities which carry out their activity abroad for the principal purpose of enjoying the tax regime provided for therein. It shall be presumed that this circumstance is present when the same activity as the subsidiary of the foreign subsidiary, in relation to the same market, has been developed with

in Spain by another entity, which has ceased the activity concerned and which is in keeping with any of the relations referred to in Article 42 of the Trade Code, unless the existence of another valid economic reason. " Article 20b. Exemption from certain income earned abroad through a permanent establishment.

1. Positive income obtained abroad shall be exempt through a permanent establishment located outside the Spanish territory where the following requirements are met:

(a) That the income of the permanent establishment proceeds from the conduct of business activities abroad, in accordance with Article 20a (1) (c) of this Law.

(b) That the income obtained by the permanent establishment has been taxed by a tax of an identical or similar nature to that tax, in the terms of the preceding article, and which is not situated in a country or territory qualified as a tax haven.

2. Where, in previous tax periods, the permanent establishment had obtained net negative income which would have been integrated into the entity's taxable base, the exemption provided for in this Article shall apply only to positive income. obtained after the moment when they exceed the amount of those negative income.

3. For this purpose, an entity shall be deemed to be operating by means of a permanent establishment abroad where, by any title, it has, on a continuous or regular basis, outside the Spanish territory of facilities or workplaces in those who perform all or part of their activity. In particular, it shall be understood that they constitute permanent establishments as referred to in Article 12 (1) (a) of Law 41/1998 of 9 December 1998 on the Income Tax of Non-residents.

4. The arrangements provided for in this Article shall not apply where the circumstances referred to in the last paragraph of the previous Article are given in respect of the taxable person or of the income obtained abroad. The option referred to in point (b) of that paragraph shall be exercised for each establishment situated outside the territory of Spain, even if there are several in the territory of a single country. '

Article sixteenth. Extension of the time limit for the calculation of deductions to avoid international double taxation.

With effect for the tax periods starting from the entry into force of this Royal Decree-Law, the seven-year period referred to in Articles 29 (4) and 30 (4) of Law 43/1995, 27 December, of the Tax on Societies, becomes ten years.

Article seventeenth. Deduction in Corporate Tax on the establishment of companies abroad.

With effect for the tax periods starting from the entry into force of this Royal Decree-Law, a new article, 20c, is added in Law 43/1995 of 27 December of the Corporate Tax, with the following wording:

" Article 20c. Deduction for investments for the implementation of companies abroad.

1. The amount of the investments actually made in the financial year for the acquisition of shares in the own funds of non-resident companies in Spanish territory in order to reach the majority of the the voting rights in them, provided that the following requirements are met:

(a) That the participating company develops business activities abroad, in accordance with the terms set out in Article 20a (1) (c) of this Law. The deduction shall not be allowed where the principal activity of the investee is a real estate, financial or insurance undertaking, or where it consists in the provision of services to related entities resident in Spanish territory.

b) That the activities developed by the participating company are not previously exercised under another ownership.

(c) That the participating company does not reside in the territory of the European Union or in any of the territories or countries that are regulated as a tax haven.

This deduction will not be conditional upon your accounting implementation in the profit and loss account.

2. The maximum annual amount of the deduction shall be 5 000 million pesetas, without exceeding 25% of the taxable amount of the tax period prior to the calculation of the tax.

The amount of the deduction shall be reduced by the amount of the depreciation of the value of the holding held in non-resident companies that has been fiscally deductible.

The amount deducted in the tax base shall not entitle the deduction established in Article 34 of this Law.

3. The amounts deducted shall be integrated into the taxable amount, by equal parts, in the tax periods concluded in the following four years. If, in any of these tax periods, the depreciation of the value of the holding in those companies is produced, the amount of such depreciation which has been fiscally deductible shall be included in the tax base of the company. complete the amount of the deduction.

The degree of participation and the other requirements required for the deduction must be met for at least four years. If this is not the case, in the tax period in which the non-compliance occurs, the whole amount of the amount deducted which is pending such integration shall be integrated into the tax base.

4. The provisions of this Article shall not apply in relation to those subsidiary entities which carry out their activity abroad for the principal purpose of enjoying the deduction provided for therein. It shall be presumed that this circumstance is present when the same activity as the subsidiary of the foreign subsidiary, in relation to the same market, has been developed in Spain by another entity which has ceased such activity and to keep with that one of the relations referred to in Article 42 of the Trade Code, unless there is evidence of another valid economic motive. "

Article eighteenth. Modification of the regime of foreign securities holding entities.

With effect for the tax periods beginning from the entry into force of this Royal Decree-Law, Articles 129 to 132 of Law 43/1995 of 27 December of the Tax on Societies will be drafted. as follows:

" CHAPTER XIV

Foreign Securities Holding Entities ' Regime

Article 129. Entities holding foreign securities.

1. Institutions whose social object includes the management and administration of securities representative of the own funds of non-resident entities on Spanish territory may be eligible under the scheme provided for in this Chapter. corresponding organisation of material and personal means.

The representative values of the shares in the capital of those institutions shall be nominative. Transparent companies will not be able to enjoy the scheme of this chapter.

2. The option for the regime of foreign securities holding entities shall be communicated to the Ministry of Finance. The scheme shall apply from that tax period ending after that communication.

Article 130. Income derived from the holding of securities representing the own funds of non-resident entities on Spanish territory.

dividends or participations in profits of non-resident entities in Spanish territory, as well as positive income derived from the transmission of the corresponding share, shall be exempt under the conditions and with the requirements laid down in Article 20a of this Law.

For the purposes of applying the exemption, the minimum participation requirement referred to in Article 20a (1) (a) shall be deemed to be met if the acquisition value of the holding is greater than 6%. EUR million (pesetas 998,316,000).

Article 131. Profit distribution.

Transmission of the participation.

1. The benefits distributed from the exempt income referred to in the previous article shall be treated as follows:

(a) When the recipient is an entity subject to this Tax, the perceived benefits shall entitle the deduction by double taxation of dividends in the terms laid down in Article 28 of this Act.

b) When the recipient is a taxpayer of the Income Tax of the Physical Persons, the distributed benefit shall not entitle the deduction for double taxation of dividends, but the deduction may be applied for double international taxation in the terms of Article 67 of Law 40/1998 of 9 December 1998 on the Income Tax of Physical Persons in respect of taxes paid abroad by the securities holding entity and which correspond to the exempt income which has contributed to the formation of the benefits received.

(c) When the recipient is a non-resident entity or natural person in Spanish territory, the distributed benefit shall not be understood as obtained on Spanish territory. In the case of a permanent establishment situated on Spanish territory, the provisions of point (a) shall apply. The distribution of the emission premium will have the treatment provided for in this letter for profit distribution.

For these purposes, the first benefit to be distributed shall be deemed to be from exempt income.

2. The following treatment shall be given to the income obtained in the transfer of the holding in the securities holding entity or in the case of separation of the entity's partner or settlement:

(a) Where the recipient is an entity subject to this Tax or a permanent establishment located in Spanish territory, it may apply the exemption provided for in Article 20a of this Law in relation to differences in value attributable to holdings in non-resident entities which meet the requirements referred to in paragraph 1 of that Article, and the rest of the income obtained shall entitle the deduction for double taxation of capital gains, in the terms set out in Article 28 of this Law.

(b) Where the recipient is an entity or a natural person not resident in Spanish territory, the income corresponding to the reserves with the exempt income to which the recipient is not resident shall not be understood to be obtained in Spanish territory. refers to Article 20a or to differences in value attributable to holdings in non-resident entities which meet the requirements referred to in paragraph 1 of that Article.

3. The securities holding entity shall mention in the memory the amount of the exempt income and the taxes paid abroad corresponding to it, and provide its partners with the information necessary to enable them to comply with the provided for in the preceding paragraphs.

4. The provisions of paragraph 1 (c) and point (b) of paragraph 2 of this Article shall not apply where the recipient of the income resides in a country or territory which is regulated as a tax haven.

Article 132. Implementation of this scheme.

1. The enjoyment of the scheme shall be conditional upon the fulfilment of the factual assumptions relating thereto, which shall be tested by the taxable person at the request of the tax administration.

2. The non-cash contributions of the securities representing the own funds of non-resident entities in Spanish territory shall be subject to the arrangements provided for in Article 108 of this Law, irrespective of the percentage of participation in the the holding of securities which such contributions confer, provided that the income derived from such securities is able to benefit from the scheme provided for in Article 20a of this Law. '

Article nineteenth. Tax consultations in relation to the regime of foreign securities holding entities.

A new letter (g) is incorporated in Article 107 (4) of Law 230/1963 of 28 December, General Tax, with the following wording:

"g) Interpretation and application of the regime established for foreign securities holding entities in the Company Tax Act."

Article 20. Exemption in the Income Tax of the Physical Persons for the income received for work carried out abroad.

With effect for the tax periods starting from the entry into force of this Royal Decree-Law, Article 7 (p) of Law 40/1998 of 9 December of the Income Tax of Persons Physical and other Tax Rules, read as follows:

" p) The income from work perceived by work actually done abroad, with the following requirements:

1. That such works are carried out for a non-resident company in Spain or a permanent establishment based abroad.

2. º that in the territory in which the works are carried out, a tax of an identical or similar nature to that of this tax is applied and is not a country or territory that has been regulated as a paradise tax.

The exemption will have a maximum limit of 10,000,000 pesetas per year (60,101.21 euros).

The amount may be modified.

This exemption will be incompatible, for taxpayers destined abroad, with the regime of excesses excluded from taxation provided for in Article 8.A. 3.b) of the Regulation of this Tax, approved by Royal Decree 214/1999, of 5 February, whichever is the amount.

The taxpayer may choose to apply the excess regime to replace this exemption. "

Article twenty first. Option to pay for personal obligation in the Tax on the Heritage of workers displaced abroad.

Article 5 (1) (a) of Law 19/1991 of 6 June of the Heritage Tax is worded as follows:

" (a) By personal obligation, natural persons who have their habitual residence on Spanish territory, requiring the tax for the whole of their net worth regardless of the place where they are located property or the rights may be exercised.

When a resident in Spanish territory becomes resident in another country, they may choose to continue to pay for personal obligation in Spain. The option shall be exercised by the filing of the declaration by personal obligation in the first financial year in which it is no longer resident in the Spanish territory. ' Additional provision first. Exemption from habitual housing in the Tax on Heritage.

1. A new number 9 is added to Article 4 of Law 19/1991 of 6 June, with the following content:

" Nine. The habitual residence of the taxpayer as defined in Article 55.1.3.o of Law 40/1998 of 9 December of the Income Tax of the Physical Persons up to a maximum amount of 25,000,000 pesetas (150,253,03 euros). "

2. A new number 3 is added to Article 25 of Law 19/1991 of 6 June, with the following content:

" 3. In no case shall the debts incurred for the acquisition of exempt goods or rights be deducted. Where the exemption is partial, the proportion of the debts shall be deductible, where appropriate. "

Additional provision second. Tax regime in the Corporate Tax and in the Income Tax of the Physical Persons of certain securities loans.

In the terms that are determined to be determined, they will not give rise to changes in assets, in the income tax of the physical persons or in the company tax corresponding to the lender, the transactions of securities lending that meet the requirements set out in Article 36.7 of Law 24/1988 of 28 July of the Securities Market and in its development regulations.

Additional provision third. Transfers between spouses to make contributions to pension plans in accordance with Article 46.1.6.o of the Income Tax Law of the Physical Persons.

Transmissions between spouses occurring as a result of the provisions of Article 46.1.6.o of Law 40/1998 of 9 December of the Income Tax of Physical Persons and other Tax Rules, shall be subject to the Tax on Successions and Donations up to the limit laid down in that provision.

First transient disposition. Scheme applicable to the disabled persons who are not yet able to compensate in the Income Tax of the Physical Persons, generated between one and two years.

The net property losses referred to in point (b) of Article 38 of Law 40/1998 of 9 December of the Income Tax of the Physical Persons and other Tax Rules corresponding to the tax period 1999 to be found pending compensation on 1 January 2000 and which would have been revealed on the occasion of the transfer of acquired assets or improvements made to them, with more than one year and up to two years ' In advance of the date of transmission, they shall continue to be compensated in accordance with the provisions of the said Article 38, point (b).

Second transient disposition. Deductions to be applied from Articles 29a and 30a of the Companies Tax Act.

The dedutions referred to in Articles 29a and 30a of Law 43/1995, of 27 December,

of the Company Tax, pending after the completion of the current tax period on the entry into force of this Royal Decree-Law, will be deducted in the tax periods completed after that the conditions and requirements laid down therein.

Transitional provision third. Adaptation to the new regime of foreign securities holding entities.

1. The entities which, at the entry into force of this Royal Decree-Law, have granted the regime of the entities holding foreign securities may waive the application of the regime of Chapter XIV of Title VIII of Law 43/1995, of 27 of December, in the Company Tax, in the terms established by this Royal Decree-Law, communicating it to the Ministry of Finance before the end of the first tax period ending after its entry into force.

2. The conversion into nominatives of the securities representative of the shares in the capital of the entities which, at the entry into force of this Royal Decree-law, have been granted the regime of the entities holding foreign securities shall be be carried out within the first tax period in which the new scheme applies.

First repeal provision. Repeal of Articles 29a and 30a of the Companies Tax Act.

With effect from 1 January 2001, Articles 29a and 30a of Law 43/1995 of 27 December 1995 on Corporate Tax are repealed.

However, the provisions of the aforementioned articles will apply to determine the deduction of income corresponding to tax periods initiated before the entry into force of this Royal Decree-Law, even if is obtained after that date.

Final disposition first. Regulatory development.

The Government is empowered to dictate how many provisions are necessary for the development and implementation of this Law.

Final disposition second. Entry into force.

This Royal Decree-law shall enter into force on the day following that of its publication in the "Official State Gazette".

Given in Madrid on June 23, 2000.

JOHN CARLOS R.

The President of the Government, JOSÉ MARÍA AZNAR LÓPEZ