Skip to main content
Practical Handbook for Companies 2021

Profit-making and corporate transfers:application of market value

According to the provisions of article 17.4 of the LIS, the following assets are valued at their market value :

  1. Those transmitted or acquired for profit.Grants shall not be considered as such.

  2. The contributed to entities and the securities received in consideration, unless the regime provided for in Chapter VII of Title VII of the LIS is applicable or in the case of operations to increase capital or equity by offsetting credits.

  3. The transmitted to the shareholders due to dissolution, separation of shareholders, reduction of capital with return of contributions, distribution of share premium and distribution of profits.

  4. Those transferred by virtue of merger and total or partial spin-off, unless the regime provided for in Chapter VII of Title VII of the LIS is applicable.

  5. Those acquired by swap.

  6. Those acquired by exchange or conversion, unless the regime provided for in Chapter VII of Title VII of the LIS is applicable.

Filling in form 200

The taxpayers involved in the operations referred to in the previous letters must include in the boxes [00347] and [00348] "Transfers for profit and corporate:application of market value (art. 17.4 LIS)" from page 12 of form 200, the adjustments derived from applying the following rules:

  • The transferring entity must include in its tax base the difference between the market value of the transferred items and their tax value.

  • The partners of this entity will include in their taxable income the difference between the market value of the shareholding received and the tax value of the cancelled shareholding.

    Remember:

    Market value shall be understood to be that which would have been agreed under normal market conditions between independent parties, and any of the methods envisaged in article 18.4 of the LIS may be accepted.