Fishermen’s guild: deductible expenses and Corporation Tax

Under Article 1 of Royal Decree 670/1978 of 11 March, fishermen’s guilds are public-law corporations with legal personality. They are therefore taxpayers for Corporation Tax. However, because they act as consultative and collaborative bodies with the Administration on matters of general interest, where they are non-profit entities within the meaning of Article 9.3(a) of the former Consolidated Text of the Corporation Tax Act (TRLIS), they are subject to the tax regime for partially exempt entities under Articles 120 to 122 of the TRLIS.

The exemption does not cover income the guild may obtain from carrying on business activities, from its assets, or from transfers other than those referred to in Article 121(1) of the TRLIS.

On the facts described, the guild’s activities appear to constitute an economic activity, even if some services are provided to members. Accordingly, all its income is subject to Corporation Tax and not exempt, including members’ dues.

As regards deductible expenses, Article 122(1) of the TRLIS provides that the taxable base of partially exempt entities is determined under the rules in Title IV of that Act. Paragraph 2 provides:

2. In addition to the expenses specified in Article 14 of this Act, the following are not deductible for tax purposes:

a) Expenses attributable exclusively to exempt income...

b) Amounts constituting an appropriation of profits...

In short, the general rules in the TRLIS apply when determining the fishermen’s guild’s taxable base, in particular Articles 10 to 25.