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Practical Handbook for Companies 2021

SICAV:Capital decreases and distribution of the share premium

The article 17.6 of the LIS establishes that in the reduction of capital with return of contributions the excess of the market value of the items received over the tax value of the shareholding will be included in the taxable base of the shareholders.

The same rule shall apply in the case of distribution of share premium of shares or units.

However, in the case of transactions carried out by open-end investment companies governed by Law 35/2003, of 4 November, on Collective Investment Undertakings, which are not subject to the general tax rate, the total amount received in the capital reduction up to the limit of the increase in the net asset value of the shares from their acquisition or subscription until the time of the capital reduction, shall be included in the shareholder's taxable income without the right to any deduction in the gross tax payable.

Whatever amount is received by way of distribution of the share premium made by such open-ended investment companies, it shall be included in the shareholder's taxable income without any right to deduction from the gross tax payable.

The above shall apply to collective investment undertakings equivalent to open-ended investment companies which are registered in another State, irrespective of any limitations they may have in respect of restricted groups of investors, in the acquisition, disposal or redemption of their shares;shall in any case apply to companies covered by Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities.

Filling in form 200

In application of the provisions of Article 17.6 of the LIS, the taxpayer must include in box [00371] "SICAV:Reductions of capital and distribution of share premium (art. 17.6 LIS)" from page 12 of form 200, the amounts to be included in their tax base by the shareholders (corporate taxpayers) on the occasion of the reductions of capital with return of contributions and distribution of share premium carried out by open-ended investment companies regulated in the Law on Collective Investment Institutions not subject to the general rate of taxation and by collective investment undertakings equivalent to these companies that are registered in another State.