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Practical manual for Income Tax 2021.

Special assumptions

A. Capital reduction and distribution of the issue premium carried out after 23 September 2010 by variable capital investment companies (SICAV)

Regulations: Art. 94.1.c) and d) and 94.2.b) Law IRPF

a. In the case of capital reduction of variable capital investment companies whose purpose is the repayment of contributions , the amount of this or the normal market value of the assets or rights received will be classified as income from movable capital, in accordance with the provisions of article 25.1 a) of the Personal Income Tax Law , with the highest limit of the following amounts :

  1. The increase in the net asset value of the shares since their acquisition or subscription until the time of the reduction of the share capital.

  2. When the capital reduction proceeds from undistributed profits, the amount of said profits . For these purposes, capital reductions, whatever their purpose, shall be deemed to affect first and foremost the portion of share capital that comes from undistributed profits, until their cancellation .

The excess over the aforementioned limit will reduce the acquisition value of the affected shares until their cancellation , in accordance with the terms established in article 33.3 a) of the Personal Income Tax Law .

In turn, any excess that may result will be integrated as income from movable capital from participation in the equity of any type of entity, in the manner provided for the distribution of the issue premium corresponding to securities admitted to trading on any of the securities markets of the European Union.

b. In the event of distribution of the issue premium on shares in variable capital investment companies , the entire amount obtained will be considered as income from movable capital, without the aforementioned reduction in the acquisition value of shares admitted to trading on any of the securities markets of the European Union, provided for in article 25.1 e) of the Personal Income Tax Law being applicable.

The provisions for SICAV shall also apply to collective investment undertakings equivalent to variable capital investment companies that are registered in another State, regardless of any limitations they may have with respect to restricted groups of investors, in the acquisition, transfer or redemption of their shares; In any case, it will apply to companies covered by Directive 2009/65/EC of the European Parliament and of the Council of 13 July coordinating the laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities [Art. 94.2.b) Law Income Tax ].

B. Dividends and profit sharing from certain borrowed securities

Dividends, profit shares and other income derived from borrowed securities referred to in the Eighteenth Additional Provision of Law 62/2003, of December 30, on fiscal, administrative and social order measures (BOE of the 31st) will be integrated into the borrower's income in accordance with the provisions of the aforementioned provision.

Regarding the tax regime for the lender of the remunerations and, where applicable, of the compensation for the economic rights derived from the securities lent during the term of the loan, it is discussed in this same Chapter.

Precision: Please note that Law 27/2014, of November 27, on Corporate Tax ( BOE of the 28th), has repealed, with regard only to said tax, with effect from January 1, 2015, section 2 of the Eighteenth Additional Provision of Law 62/2003, of December 30, which establishes the tax regime applicable to securities lending operations. Therefore, the tax treatment provided for in the aforementioned Eighteenth Additional Provision of Law 62/2003 when the lender or borrower is a taxpayer for the IRPF remains in force.

In particular, the borrower must include in its tax base the entire amount received from the securities borrowed. In particular, the total amount received on the occasion of a distribution of the issue premium or a capital reduction with return of contributions that affects the securities loaned must be integrated, as well as the market value corresponding to the subscription rights or free allocation awarded in the event of a capital increase.

The tax regime applicable to the acquisition or transfer of securities similar to those borrowed made by the borrower during the term of the loan is discussed in Chapter 11.