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Practical Income Manual 2021.

State deductions for amounts invested to subscribe for shares or participations in new or recently created companies

The right, in whole or in part, to the deduction for investment in new or recently created companies carried out in previous years is lost when any of the requirements demanded in article 68.1 of Law are not met. ##1##of Personal Income Tax . Among other assumptions:

  • When the entity becomes admitted to trading in an organized market during the years of ownership of the share or participation by the taxpayer.

  • When the entity does not have the personal and material means for the development of economic activity. In particular, when the management of movable or real estate assets referred to in article 4.8.Dos.a) of Law 19/1991, of June 6, on Wealth Tax, is carried out in any of the periods tax of the entity concluded prior to the transfer of the participation.

  • When the shares or participations are transferred without having remained in the taxpayer's assets for a period of more than three years and less than twelve years.

  • When the direct or indirect participation of the taxpayer, together with that held in the same entity by his spouse or any person linked to the taxpayer by kinship, in a straight or collateral line, by consanguinity or affinity, up to the second degree included, exceeds, during any day of the calendar years of holding the participation, 40 percent of the entity's share capital or its voting rights.

The taxpayer will be obliged to add to the state net amount all of the deductions unduly made plus the corresponding late payment interest.