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V0869-16 9 March 2016 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del capital mobiliario

Distributions from investment recovery in UCITS are deemed investment income subject to withholding tax

A fund management company has requested a ruling on the tax classification of amounts distributed to investors following the recovery of part of a failed investment in an Irish sub-fund. The Directorate General for Taxes (DGT) has ruled that these amounts constitute investment income for individuals and computable income for companies.

The question raised

Tax classification of the amounts that, in accordance with the description of facts, are received by natural or legal persons who are tax residents in Spain from the collective investment institutions managed by the applicant, and whether or not there is an obligation to apply withholding tax on such distributions.

The DGT's ruling

Distributions derived from the recovery of investments that were valued at zero in 2008 constitute returns on movable capital through participation in equity (Art. 25.1 LIRPF). For natural persons, these are imputed to the period in which they become due and are subject to withholding. For corporations, they are integrated into the tax base as computable income. In the event of the death of the holder, the income is imputed to the final period of the deceased, and the amount constitutes a taxable event for Inheritance and Gift Tax for the successors.

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