Transfer of subscription rights

Preferential subscription rights are rights that grant the shareholder preference over third parties to subscribe to new shares or interests, in proportion to the nominal value of the shares or interests they own at the time the company increases its share capital or issues convertible bonds.

In the transmission of subscription rights we must distinguish:

A. Tax regime applicable from January 1, 2017

As of January 1, 2017, the amount obtained from the transfer of subscription rights derived from securities admitted to trading that correspond to the taxpayer due to his status as a partner or participant in the capital of the entity is considered capital gain for the transferor in the tax period in which said transfer occurs.

In the transfer of these subscription rights, the depositary entity and, failing that, the financial intermediary or public notary who has intervened in the transfer will be obliged to withhold or pay into account for the IRPF . The withholding tax to be applied on capital gains derived from the transfer of subscription rights is 19% of the amount obtained in the transaction or, in the event that the party obliged to apply it is the depositary entity, on the amount received by it for delivery to the taxpayer.

Important: As of January 1, 2017, the tax treatment arising from the transfer of subscription rights will be equal, whether the rights are derived from securities admitted to trading or not admitted to trading. In both cases, the transfer of subscription rights will be taxed as capital gains in the year in which it occurs.

B. Tax regime applicable until December 31, 2016

Until December 31, 2016, the amount obtained from the transfer of subscription rights derived from this class of shares and participations reduced the acquisition value of the shares from which it came for the purposes of future transfers, and if the amount obtained from the transfer of the subscription rights turned out to be higher than the aforementioned acquisition value, then the difference was considered capital gain for the transferor.

This same regime, which was abolished as of January 1, 2017, was applicable to the amount obtained from the transfer of preferential subscription rights resulting from capital increases carried out with the aim of increasing the degree of diffusion of a company's shares prior to their admission to trading on any of the official secondary securities markets provided for in the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of October 23 ( BOE of October 24).

Remember: As of January 1, 2017, the tax treatment of the amount obtained from the transfer of subscription rights derived from securities admitted to trading was modified, which is now considered as capital gain. As a result of this modification, a transitional regime has been established that allows taxpayers to determine the acquisition value of securities admitted to trading by deducting the amount obtained from the transfers of subscription rights made up to December 31, 2016, with the exception of the amount of such rights that would have been taxed as capital gains.