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Practical Income Manual 2021.

Requirements and conditions for the application of the exemption

The requirements and conditions for the application of this exemption are discussed below:

A. Total 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 amount reinvested is less than the total received in 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.

B. Reinvestment term

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

Note: For the purposes of this one-year period provided for the reinvestment of the amount obtained in new shares, please note that the calculation of the same has been paralyzed since March 14, 2020, the date of entry into force of Real Decree 463/2020, until May 30, 2020, by virtue of the provisions of the ninth Additional Provision of Royal Decree-Law 11/2020, of March 31, by which urgent complementary measures are adopted in the social and economic sphere to confront COVID-19 (BOE of April 1) and the modification of the temporal references provided for in the first Additional Provision of Royal Decree-Law 15/2020, of April 21, on urgent measures complementary measures to support the economy and employment (BOE of 22).

C. Reinvestment in a year other than that of the disposal

When the reinvestment is not carried out in the same year as the sale, the taxpayer will be obliged to state in the tax return Personal Income Tax for the year in which the capital gain is obtained his intention to reinvest under the conditions and deadlines indicated.

D. Excluded assumptions

The rollover exemption will not apply :

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

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

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

E. Failure to comply with the conditions of the reinvestment

Failure to comply with any of the conditions of the reinvestment determines the subjection to taxation of the corresponding part of the capital gain.

In such case, the taxpayer must allocate the part of the capital gain that is not exempt to the year of its obtaining, carrying out, for this purpose, complementary self-assessment including late payment interest.

The complementary self-assessment will be submitted within the period between the date on which the non-compliance occurs and the end of the regulatory declaration period corresponding to the tax period in which said non-compliance occurs.