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Practical manual for Income Tax 2019.

Special case of integration of income obtained from the transfer to third parties of own capital from related entities

Regulations: Art. 46 a) Personal Income Tax Law

When the returns obtained from the transfer of own capital to third parties come from entities related to the taxpayer, whose valuation must be carried out by the market value, the corresponding to the excess of the amount of own capital transferred to a related entity with respect to the result of multiplying by three the equity, in the part that corresponds to the taxpayer's participation, of the latter will form part of the general tax base.

For the purposes of calculating said excess, the amount of the related entity's own funds reflected in the balance sheet corresponding to the last financial year closed prior to the accrual date of the excess must be taken into consideration. PIT and the percentage of taxpayer participation existing on this date.

Associated persons or entities:

To determine when there is a link, the provisions of article 18.2 of Law 27/2014, of November 27, on Corporate Tax ( BOE of the 28th) must be taken into account, in which the following are considered linked persons or entities:

  • An entity and its partners or shareholders.
  • An entity and its directors or administrators, except with regard to remuneration for the performance of their functions.
  • An entity and the spouses or persons related by kinship, in a direct or collateral line, by consanguinity or affinity up to the third degree of the partners or participants, directors or administrators.
  • An entity and the directors or managers of another entity, when both entities belong to a group.

In cases where the link is defined based on the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25%. The reference to administrators will include those de jure and those de facto. In cases where the link is not defined based on the relationship between partners or participants-entity, the percentage of participation to be considered will be 25%.

In these cases, the taxpayer of the PITmust comply with the documentation obligations of related-party transactions under the terms and conditions established in Chapter V (Articles 13 to 16) of the Corporate Income Tax Regulations, approved by Royal Decree 634/2015, of July 10 (BOE (from the 11th).