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V0758-15 9 March 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · consolidación fiscal

Capitalisation of debts between 100% sister companies does not generate taxable income under certain conditions

A query was raised regarding whether the assignment of credits, their capitalisation through capital increases, and the subsequent acquisition of treasury shares within a tax consolidation group generate taxable income or require adjustments. The DGT ruled that, provided certain conditions regarding fiscal value and shareholding are met, these operations do not generate taxable income and therefore do not require adjustments in the tax consolidation process.

The question raised

1. Whether the aforementioned operations, all carried out within the tax consolidation regime, are considered neutral from a tax perspective and, in application of Article 72 of the recast text of the Corporate Income Tax Law, the positive result generated by company S in the sale of shares of company A should be eliminated and not computed for tax purposes, with said positive result being deferred until a transfer to third parties outside the tax consolidation group occurs.

The DGT's ruling

The capitalization or forgiveness of a credit between a lender and a borrower with a 100% shareholder-company relationship does not generate taxable income if both maintain the same tax value of the credit right, regardless of accounting impairment. In a capital increase through the offsetting of credits, the entity receiving the credit does not recognize income if the debt has not been acquired from third parties. Under the tax consolidation regime, the results from these internal operations are eliminated to determine the consolidated tax base.

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