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Practical manual for Income Tax 2023.

General scheme

Specific valuation standard

When merger operations occur between one or more entities and another existing entity (merger by absorption) or between two or more entities giving rise to a new entity (merger into a new company), as well as in operations involving the splitting (total or partial) of an entity, the shareholders of the merged or absorbed companies deliver their shares and receive in exchange other shares from the companies acquiring the corporate assets of those companies. This leads to a change in the composition of the partners' assets, which may result in a capital gain or loss. Such capital gain or loss will be computed as the difference between:

  • Acquisition value of the titles, rights or securities representing the participation of partner , and

  • Market value of the securities, cash or rights received or the market value of those delivered .

Shares acquired before December 31, 1994

In this case, if a capital gain is obtained, the part of the capital gain generated before January 20, 2006 (the only one to which the reduction or abatement coefficients are applicable) must be distinguished from that generated after said date, to which the reduction or abatement coefficients are not applicable.

The determination of the capital gain generated prior to January 20, 2006 and the application, where applicable, of the reduction coefficients will be carried out in accordance with the distribution rules discussed in section " Determination of the amount of capital gains or losses: general rules ", of this same Chapter.