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Practical manual for Income Tax 2023.

1. Existence of an alteration in the composition of the taxpayer's assets

As an example, the following constitute alterations in the composition of the assets of the taxpayer:

  • Onerous or lucrative transfers of assets or rights. Examples of the former include sales of homes, commercial premises, parking spaces, rural properties, shares, etc. and, among the latter, inheritances, legacies and donations.

  • The incorporation into the taxpayer's assets of money, assets or rights that do not derive from a prior transfer. This is the case, among others, of obtaining prizes of any kind, whether cash or in kind, subsidies, etc.

  • The exchange of goods or rights.

  • Duly justified losses in assets.

On the contrary, the Law considers that there is no alteration in the composition of the assets and, therefore, there will be no capital gain or loss in the following operations, provided that the award corresponds to the respective ownership share:

  1. Division of the common thing.

  2. Dissolution of the community property or termination of the matrimonial economic regime of participation.

  3. Dissolution of community property or separation of commoners.

    Excess allocation in the dissolution of property communities or separation of co-owners

    In order for the exercise of the action of division of the common thing or the dissolution of the community of goods not to imply an alteration in the composition of the assets, it is necessary that the awards that are carried out when the indivision is dissolved or in the extinction of the condominium correspond to the ownership share, since, in the event that assets or rights are attributed to one of the co-owners or co-owners for a greater value than that corresponding to their ownership share, there will be a patrimonial alteration in the other co-owner or co-owners, which may generate, where appropriate and depending on the variations in value that the property may have experienced, a capital gain or loss regardless of whether or not there is cash compensation, the amount of which will be determined, in accordance with the provisions of article 34 of the Personal Income Tax Law, by the difference between the acquisition and transfer values, values ​​that are defined in articles 35 and 36 of the Personal Income Tax Law. PIT, for onerous and lucrative transmissions, respectively, which are developed in the section “Determination of the amount of capital gains or losses: general rules ” of this Chapter.

    The above has been confirmed by the Supreme Court in its Judgment of October 10, 2022, issued in cassation appeal No. 5110/2020 ( ROJ : STS 3585/2022). The issue of cassation interest in the aforementioned ruling was to determine in which cases the compensation received by the co-owner, to whom the property is not awarded when a joint venture is dissolved, entails for him the existence of a capital gain subject to the PIT, taking into account the possible difference in valuation of that asset between the time of its acquisition and the time of its award and, where applicable, that compensation was greater than the value of the proportional part that corresponded to it in that asset.

    In its third legal basis, the Supreme Court proceeds to answer the aforementioned question, establishing its interpretative criterion, in the sense that the compensation received by a co-owner, to whom the property is not awarded when the condominium is dissolved, will entail for said co-owner the existence of a capital gain subject to the PIT, when there is an update in the value of that asset between the time of its acquisition and the time of its award and that difference in value is positive. 

    This judicial doctrine has been recently reiterated by the Supreme Court in its Judgment of December 5, 2023, issued in cassation appeal No. 6962/2022 ( ROJ : STS 5535/2023).

    Regarding the excesses in the awarding the Resolution of the Central Economic-Administrative Court (TEAC) of June 7, 2018, Claim No. must be taken into account. 00/02488/2017, appeal for unification of criteria, the criteria of which are included in the summary table which can be accessed at the end of the chapter.

    In these three cases (division of common property, dissolution of the community property or termination of the matrimonial economic regime of participation and dissolution of community property or separation of co-owners) the values of the assets or rights received cannot be updated, so they will retain their original values and dates of acquisition.

  4. Likewise, in accordance with the provisions of the Eighteenth Additional Provision of Law 62/2003, of December 30, on fiscal, administrative and social order measures ( BOE of December 31), it will be estimated that there is no alteration in the composition of the assets in the delivery of the securities on loan or in the return of other homogeneous securities at the maturity of the loan in the terms and with the requirements established in the aforementioned Additional Provision.

    Please note that Law 27/2014, of November 27, on Corporate Tax ( BOE of November 28), has repealed, with regard to said tax only, 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 PIT remains in force.