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Practical manual for Income Tax 2023.

f) Delivery to workers of shares or participations of the company itself or of other group of companies

In general

Regulations: Art. 43 Regulation Income Tax

  • The delivery to active workers, free of charge or at a price below the normal market price, of shares or interests in the company itself or in other groups of companies is exempt from Personal Income Tax ##2##, in the part that does not exceed, for the total amount delivered to each worker, 12,000 euros per year, provided that the offer is made under the same conditions for all workers of the company, group or subgroup of companies.

  • In the event that the company in which the worker provides his/her services is part of a group of companies in which the circumstances provided for in article 42 of the Commercial Code occur, the beneficiaries may be the workers of the companies that form part of the same group with the following conditions :

    1. When shares or interests in a group company are delivered, the beneficiaries may be the employees of companies that form part of the same subgroup.

    2. When shares or interests in the parent company of the group are delivered, the beneficiaries may be the employees of any company in the group.

  • In both cases, delivery may be made either by the company in which the employee provides services, or by another company belonging to the group or by the public entity, state company or Public Administration that owns the shares.

  • In order for the delivery of the aforementioned shares or participations to be exempt in kind following requirements must also be met:

    • That the offer is made under the same conditions for all employees of the company and contributes to their participation in the company . In the case of groups or subgroups of companies, the aforementioned requirement must be met in the company to which the employee to whom the shares are delivered provides services.

      However, this requirement will not be deemed to have been breached when, in order to receive the shares or interests, the workers are required to have a minimum seniority, which must be the same for all of them, or that they are taxpayers under the IRPF .

    • That each of the workers, together with their spouses or relatives up to the second degree, do not have a participation , direct or indirect, in the company in which they provide their services or in any other company in the group, greater than 5%.

    • That the remain valid for at least three years

      Failure to comply with this deadline will result in the worker being required to submit a supplementary self-assessment, with the corresponding late payment interest, within the period between the date on which the requirement is not met and the end of the regulatory declaration period corresponding to the tax period in which the failure occurs.

Assessment:

The acquisition value of the shares delivered to the employee that were exempt performance in kind, for the purposes of calculating the capital gain obtained from their subsequent sale, will be the same as if said delivery had been taxed as performance in kind, being in both cases the normal market value of said shares at the time of their delivery which, in the case of shares of a listed company, is their market value.

Specialty: Delivery of shares or interests to employees of emerging companies

The delivery of shares or interests granted to employees of a start-up company referred to in Law 28/2022, of December 21, on the promotion of the start-up ecosystem, has the following special features.

  • The exemption, for the set of shares delivered to each worker, will be 50,000 euros per year.

  • The offer will not need to be made under the same conditions for all employees, but it must be made within the company's general remuneration policy and contribute to the participation of employees in the latter.

  • In the event that the delivery of shares or equity interests derives from the exercise of purchase options on shares or equity interests previously granted to employees by the start-up company, the requirements for consideration as a start-up company must be met at the time the option is granted.

Assessment:

See the special rules for the valuation of these shares and participations in section “ Computation of income from work in kind in this chapter ”

Temporary imputation of non-exempt amount

A special imputation rule is established for income from work in kind derived from the delivery of shares or interests in a start-up company that, meeting the required requirements, are not exempt because they exceed 50,000 euros per year for the total amount delivered to each worker.

See within the section “ temporary imputation of employment income ” the specific imputation rule for this case and the summary table of the tax treatment of the delivery of shares for free or at a price below the normal market price by the company to its employees .

Startups

According to Law 28/2022, of December 21, on the promotion of the ecosystem of emerging companies, “emerging company” means any legal entity, including technology-based companies created under Law 14/2011, of June 1, on Science, Technology and Innovation, which simultaneously meets the following conditions:

  1. Be newly created or, not being newly created when the following circumstances occur ,

    • As a general rule, when no more than five years have elapsed since the date of registration in the Commercial Registry, or competent Registry of Cooperatives, of the public deed of incorporation, or

    • In the case of companies in biotechnology, energy, industrial and other strategic sectors or those that have developed their own technology, designed entirely in Spain, which will be determined through the order referred to in article 4.1 of Law 28/2022, when no more than seven years have elapsed.

  2. Not having arisen from a merger, spin-off or transformation operation of companies that are not considered emerging companies. The terms concentration or segregation are considered to be included in the previous operations.

  3. Not distributing or having distributed dividends , or returns in the case of cooperatives.

  4. Do not trade on a regulated market.

  5. Have its registered office, registered office or permanent establishment in Spain .

  6. Have at 60 per 100 of the workforce with an employment contract in Spain . In cooperatives, worker members and working members whose relationship is of a corporate nature will be counted within the workforce for the sole purposes of the aforementioned percentage.

  7. Develop an innovative entrepreneurship project that has a scalable business model, as provided for in article 4 of Law 28/2022.

When the company belongs to a group of companies defined in article 42 of the Commercial Code, the group or each of the companies that comprise it must comply with the above requirements .

Entrepreneurs who wish to benefit from the special features of this law must obtain the "certification of innovative and scalable entrepreneurship of the business model" referred to in article 4 of the Law and be registered as such in the Commercial Registry or in the competent Registry of Cooperatives.