Specialties in the taxation of personal income tax paying partners of civil companies that have become corporate tax payers

Regulations: Thirty-second transitional provision.3 and 4 LIS

In the transfer by taxpayers of IRPF of their participation in civil companies that as of January 1, 2016 are subject to Corporate Tax, it is necessary to distinguish between:

A. Civil companies that have kept accounting adjusted to the Commercial Code in the years 2014 and 2015 in accordance with the provisions of article 68 of the Regulation of the IRPF

The difference between the acquisition or ownership value of the shares and their transfer value will be computed as capital gain or loss. To this end:

Acquisition value (AV): It is the price or amount paid for its acquisition.

Ownership Value (Reserves) (VT): It is the result of making, where appropriate, two adjustments to the acquisition value:

Addition of the share corresponding to the partner of the amount of the social benefits, which, without effective distribution, would have been obtained by the company during the tax periods in which the income attribution regime was applied in the period of time between its acquisition and disposal (VT1).
Subtraction of the profits distributed to the partner, which were obtained by the company during the tax periods in which the income attribution regime was applied in the period of time prior to the acquisition by the partner of his participation in the company (VT2).

In short:

VT=VA + VT1 - VT2

B. Civil companies that have not kept accounting in accordance with the Commercial Code

Since no accounting has been kept, no amount can be attributed to the accounting reserves or to the equity items on the balance sheet, and consequently there are no contributions from partners or recorded profits.

Consequently, a special rule equivalent to the previous one is established for these civil companies for the calculation of the acquisition value of the shares, taking into account the absence of accounting and without there being in this case adjustments to the acquisition value derived from the cost of ownership, which consists of understanding that as of January 1, 2016, for tax purposes, all of their equity is made up of contributions from the partners, with the limit of the difference between the value of tangible fixed assets and real estate investments, reflected in the corresponding registration books, and the liabilities payable, unless the existence of other assets is proven.

Therefore, the acquisition value of the shares as of January 1, 2016 will be determined by the difference between the value of tangible fixed assets and real estate investments, reflected in the corresponding record books, and the liabilities payable, unless the existence of other assets is proven.

Example

Civil company X with legal personality and commercial purpose, which has kept accounts in accordance with the Commercial Code in 2014 and 2015, was established in 2007, with the partners paying taxes from that moment on under the income attribution regime and starting to pay taxes on corporation tax as of January 1, 2016.

The RC partner On 1 June 2015, he acquired a 30% stake in the civil company from another partner, for which he paid 30,000 euros.

On March 2, 2023, the partner transferred his share for 45,000 euros.

Calculate the ownership value (VT) of the transferred share, taking into account that on the date of the transfer, the civil company had recorded reserves of 20,000 euros, of which 16,666.66 corresponded to profits generated from June 1, 2015 and for which the company had paid taxes under the income attribution regime, and that on February 2, 2023, the shareholder RC reserves amounting to 4,200 euros were distributed to it, of which 4,000 euros corresponded to profits obtained by the company prior to 1 June 2015 and for which the company had paid taxes under the income attribution regime.

Solution:

1. Transmission value : 45,000

2. Ownership value

Acquisition value of the shares (VA) = 30,000

Amount of undistributed profits at the date of the transfer, generated by the company between the acquisition and the transfer (VT1) ⁽¹⁾ (0.30 X 16,666.66) = 5,000

Amount of profits distributed to the partner, generated by the company prior to the acquisition (VT2) ⁽²⁾ = 4,000

Ownership value (Reserves) VT = VA + VT1 – VT2

VT = (VA) 30,000 + (VT1) 5,000 – (VT2) 4,000 = 31,000

3. Capital gain = Transfer value – Ownership value (VT) = 14,000

Capital gain = 45,000 – 31,000 = 14,000

Notes to the example:

⁽¹⁾The RC partner has already paid taxes on the reserves generated from the date of acquisition of its share and which were attributed to it by application of the income attribution regime, so the acquisition value of its share must be corrected by that amount to avoid double taxation. Since the total amount of said reserves is 16,666.66 and the partner has a 30% stake in the company, the acquisition value must be corrected by 5,000 (0.30 X 16,667). ^(Back)

⁽²⁾Partner RC has not paid taxes on the distribution of profits made on February 2, 2023, as its distribution is exempt, and has not paid taxes on said profits either by application of the income attribution regime, as the company obtained the profits prior to the acquisition of its participation by RC. Consequently, the acquisition value must be reduced by said amount to avoid the avoidance of taxation on said income. ^(Back)