7.6.5.3. Exemption for reinvestment in newly created companies

1. Exemption

   Capital gains that arise from the transfer of shares or interests for which the deduction for investment in newly or recently created companies has been applied are exempt provided that the amount obtained from said transfer is reinvested in the acquisition of shares or interests in newly or recently created entity that meets certain requirements and conditions.

2. Full or partial reinvestment

   The exemption may be total, if the total amount obtained from the transfer of the shares is reinvested, or partial when the reinvested amount is less than the total amount received from the transfer. In the latter case, only the proportional part of the capital gain obtained that corresponds to the reinvested amount will be excluded from taxation.

3. Reinvestment period

   The reinvestment of the amount obtained from the sale must be carried out, in one go or successively, within a period not exceeding one year from the date of transfer of the shares or interests.

   Due to the state of emergency declared following the COVID-19 epidemic, the period foreseen for reinvestment has been suspended from March 14, 2020, the date of entry into force of Royal Decree 463/2020, until May 30, 2020.

   When the reinvestment is not carried out in the same year of the sale, the taxpayer will be obliged to state in the IRPF declaration of the year in which the capital gain is obtained his intention to reinvest under the conditions and deadlines indicated.

4. Excluded assumptions

   The reinvestment exemption will not apply:

   • When the taxpayer has acquired homogeneous securities in the year before or after the transfer of the shares. In this case, the exemption will not apply to securities that remain in the taxpayer's assets.

   • When the shares are transferred to the spouse, or to relatives in a direct or collateral line, by consanguinity or affinity, up to the second degree included.

   • When the shares or interests are transferred to an entity in respect of which any of the circumstances established in article 42 of the Commercial Code occur with the taxpayer or with any of the persons mentioned in the previous point.

5. Failure to comply with reinvestment conditions

   Failure to comply with any of the reinvestment conditions will result in the taxation of the corresponding portion of the capital gain.

   In such case, the taxpayer must allocate the non-exempt portion of the capital gain to the year in which it was obtained, by carrying out a supplementary self-assessment including late payment interest.

   The supplementary self-assessment must be submitted within the period between the date on which the breach occurs and the end of the regulatory declaration period corresponding to the tax period in which said breach occurs.