Share Deal

A share deal is a business acquisition in which the buyer purchases the shares (participaciones or acciones) of the target company rather than its individual assets. The legal subject of the transaction is the company itself — the buyer steps into the shoes of the seller as shareholder and the target company continues to exist with all its assets, liabilities, contracts, employees and tax history unchanged.

Tax treatment for the seller

Corporate seller: if the seller is a Spanish company holding at least 5% of the target’s capital for at least one year, the gain on the sale of shares benefits from the 95% exemption under Article 21 LIS. Effective IS rate: 1.25% on the total capital gain. This is the single most important tax advantage of a share deal for a corporate seller.

Individual seller: the gain is subject to IRPF at the savings-rate brackets (19% on the first €6,000, 21% from €6,000 to €50,000, 23% from €50,000 to €200,000, 27% from €200,000 to €300,000, 28% above €300,000). This is typically lower than the IS that would apply to the equivalent gain in an asset deal at the company level.

Tax treatment for the buyer

No goodwill amortisation: in a share deal, the purchase price premium over the target’s book value is not reflected in the target’s accounts and generates no IS deduction. There is no stepped-up basis for the target’s assets.

Inherited tax liabilities: the buyer assumes the target’s complete tax history. All open AEAT years (four years for IS/VAT, ten years for BINs), disputed assessments, undisclosed contingencies and AEAT relationships transfer with the company. This is why comprehensive tax due diligence is indispensable in share deals.

BINs transfer: the target’s tax loss carry-forwards transfer with the company. However, Article 26.4 LIS contains an anti-trafficking rule: the AEAT can deny the use of BINs if it determines that the acquisition was principally motivated by the BINs rather than by the acquisition of the underlying business.

Transfer Tax exemption (Article 314 TRLMV)

Share transfers are generally exempt from Transfer Tax (ITP) and Stamp Duty (AJD) under Article 314 of the Securities Market Law. The key exception: where the target company holds more than 50% of its assets in Spanish real estate not used in a business activity and the acquisition results in the buyer obtaining control, the transfer is treated as a real estate acquisition and ITP applies at the relevant regional rate.

Related terms: Asset Deal | Due Diligence

Related service: Tax Due Diligence in Spain