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Practical Income Manual 2022.

Estimated returns on capital and related operations

Regulations: Articles 6.5, 40 and 41 Law Personal Income Tax

The benefits of goods or rights capable of generating income from movable capital are presumed to be remunerated, unless proven otherwise . In the absence of evidence to the contrary, the valuation of the estimated returns will be carried out at the market value, this being understood as the consideration that would be agreed between independent parties, unless proven otherwise, of a lower value.

If it is loans and operations to raise external capital in general , the normal market value will be understood as the legal interest rate on money that is in force on the last day of the tax period, 3 per 100 for fiscal year 2022.

In the case of operations between related persons or entities , the valuation will be carried out at the market value, in the terms provided in article 18 of the LIS . This same Chapter discusses the integration into the tax base of the income obtained from the transfer of own capital from related entities to third parties.

Regarding LIS see Law 27/2014, of November 27, on Corporate Tax.

In accordance with article 18 of the LIS the linking relationships occur in the operations carried out between:

  • An entity and its partners or participants,
  • An entity and its legal and de facto directors or administrators,
  • An entity and the spouses or persons united by kinship relations 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 administrators of another entity, when both entities belong to a group .

When the relationship is defined based on the partner-company relationship, the partner's participation must be equal to or greater than 25 percent.

The Tax Administration may verify that the operations carried out between related persons or entities have been valued at their market value and will make, where appropriate, the valuation corrections that may be appropriate with respect to the operations subject to Corporate Tax, at IRPF or the Income Tax of non-residents that have not been valued at their market value. To this end, the taxpayer of Personal Income Tax must comply with the documentation obligations of related-party transactions in the terms and conditions established in Chapter V (articles 13 to 16) of the Corporate Tax Regulations. , approved by Royal Decree 634/2015, of July 10 ( BOE of July 11).