Specifically: Distribution of the share premium and capital reduction with return of contributions
Regulations: Articles 25.1.e) and 33.3.a) Law Personal Income Tax
We must distinguish between:
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Securities admitted to trading on any of the stock markets of the European Union
In the case of distribution of the share premium and the reduction of capital with return of contributions corresponding to securities admitted to trading the amounts obtained will reduce, until their cancellation, the acquisition value of the affected shares or participations and any excess that may result will be taxed as income from movable capital not subject to withholding or deposit on account.
However, when the capital reduction comes from undistributed profits, the entire amount received for this concept will be taxed as a dividend. For these purposes, capital reductions, whatever their purpose, will be considered to first affect the part of the share capital that does not come from undistributed profits, until their cancellation.
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Securities not admitted to trading on any of the stock markets of the European Union
In the case of distribution of the share premium and capital reduction whose purpose is the return of contributions and does not come from undistributed profits , corresponding to securities not admitted to trading in any of the regulated securities markets defined in Directive 2004/39/ EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, and representative of the participation in own funds of companies or entities, when the difference between the value of the own funds of the shares or participations corresponding to the last financial year closed prior to the date of the distribution of the premium or that of the capital reduction and its acquisition value is positive, the amount obtained or the normal market value of the goods or rights received will be considered return on capital with the limit of the aforementioned positive difference .
If the difference is negative or zero, the amount received will reduce the acquisition value of the shares or participations until it is nullified.
For the purposes of calculating the positive difference, the value of own funds will be reduced, where appropriate, by the following amounts:
- In the amount of profits distributed prior to the date of the distribution of the share premium or the date of the capital reduction, coming from reserves included in the aforementioned own funds.
- In the amount of legally unavailable reserves included in said own funds that would have been generated after the acquisition of the shares or participations.
The excess over this limit will reduce the acquisition value of the shares or participations until it is nullified and the part of said excess that exceeds the acquisition value will be taxed as income from movable capital not subject to withholding or deposit on account.
Likewise, in order to avoid cases of double taxation, if the distribution of the share premium or the reduction of capital whose purpose is the return of contributions and does not come from undistributed profits, returns on capital stock were determined for the aforementioned difference between the acquisition value and that of the own funds, and subsequently the taxpayer obtained dividends or participation in profits from the same entity in relation to shares or participations that had remained in its assets since the distribution of the share premium or since the reduction of capital, the amount of these will reduce the acquisition value of the same, with the limit of the returns on the movable capital previously computed by the distribution of the share premium or by the reduction of capital with return of contributions.