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Practical Income Manual 2021.

Example 2: Determination of the amount of gain derived from the onerous transfer of listed shares acquired prior to December 31, 1994

Don BPT, in addition to the chalet we referred to in the previous example, sold on the stock market on October 30, 2021, 300 shares of the TASA Public Limited Company for an amount of 75,000 euros. These shares were acquired on May 31, 1991 for a total amount of 57,000 euros.

The value of these shares for the purposes of the Wealth Tax corresponding to the financial year 2005 amounted to 66,000 euros.

Determine the amount of the capital gain or loss obtained in said operation.


1. Determination of total capital gain or loss :

Share transfer value: 75,000

Acquisition value of the shares: 57,000

Total equity gain: 18,000

2. Determination of the capital gain generated prior to 01-20-2006 :

As the transfer value of the shares admitted to trading is higher than their valuation for the purposes of the Wealth Tax corresponding to the financial year 2005, which amounts to 66,000 euros, the part of the capital gain that is understood to have been generated with prior to January 20, 2006, which is the only one to which the reducing coefficients are applicable.

This determination is made in the following way:

Value for the purposes of the 2005 Wealth Tax (transmission value): 66,000

Acquisition value: 57,000

Capital gain generated before 01-20-2006 (66,000 -57,000) = 9,000

3. Reduction calculation

  1. Profit generated prior to 01-20-2006 subject to reduction

    Maximum limit: 400,000.00

    ∑ Accumulated transfer value of assets with the right to reduction since 01-01-2015 = 335,000.00

    Transfer value of the asset element to which DT9 Law of Personal Income Tax ## applies (1) = 65,000

    Capital gain subject to reduction (9,000 x 65,000) ÷ 75,000 = 7,800

  2. Applicable reduction

    Number of years of tenure as of 12-31-1996: up to 6 years

    Reduction by abatement coefficients (100% x 7,800) = 7,800

  3. Reduced capital gain

    Reduced capital gain (9,000 – 7,800) = 1,200

4. Determination of non-reducible capital gain (generated as of 01-20-2006):

Transfer value: 75,000.00

Value for the purposes of the 2005 Wealth Tax (acquisition value): 66,000

Non-reducible capital gain (75,000 - 66,000) = 9,000

5. Determination of computable capital gain: (1,200 + 9,000) (2) = 10,200

Notes to the example:

(1) Although the value of the transmission is 75,000.00 euros, since of the limit of 400,000 euros, 335,000 euros were already used in the previous transmission (the chalet in example 1), only 65,000 euros remain to be used in the current transmission. Therefore, the part of the profit generated before 01-20-2006 that corresponds proportionally to a transmission value of 65,000 euros is susceptible to reduction. In the next transfer that is made, even if the asset was acquired by the taxpayer before December 31, 1994, the reductions of the ninth transitional provision of the Personal Income Tax Law cannot be applied ##1##. (Back)

(2) This last amount can also be determined directly by the difference between the total capital gain obtained and the reduction applied. That is to say: (18,000 – 7,800 = 10,200). (Back)