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V0186-19 29 January 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimiento neto

Interest on loans to acquire company shares is not tax-deductible

An auditor inquired whether interest on a loan taken out to acquire shares in an auditing firm is deductible within their professional activity. The Directorate General for Taxes (DGT) ruled that this is not possible, as the shares are not considered assets tied to the economic activity.

The question raised

Whether the interest on the aforementioned loan can be considered deductible expenses for the determination of the net income of their professional activity, since in order to exercise the professional activity of auditing accounts through the auditing company, apart from holding the official title of auditor, it is mandatory, as stated by the taxpayer, to be a partner or shareholder of the company.

The DGT's ruling

Expenses derived from a loan to finance an asset require that said asset be used for the economic activity. However, the Personal Income Tax Law establishes that holdings in the equity of an entity are not considered assets used for the activity. Therefore, expenses incurred for their acquisition are not deductible from the economic activity.

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