The dividend exemption is denied if the payment is deductible for the payer. Spain denies the deduction of a payment made to a related company if the hybrid mismatch rise a non income, an exempt income or an income not sufficiently tax (10%). The article 21.2.3 of the law 27/2014 has a rule for restricting tax credits under a hibrid transfer. 

The key measures are:
1.	Denial of dividend exemption where the payment is deductible for the payer under foreign rules (hybrid instruments).
2.	Denial of deduction of payments to related parties if the hybrid mismatch results in non taxable income, exempt income, or income taxed at an effective rate below 10% at the recipient level.
3.	Restriction of foreign tax credits in hybrid transfer arrangements, in accordance with Article 21.2.3 of the Corporate Income Tax (CIT) Law.

These rules aim to neutralize double non taxation arising from hybrid instruments or entities.