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V1609-15 26 May 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · capitalización de deudas

Capitalisation or write-off of shareholder debts does not generate taxable income under specific conditions

A Spanish company asks whether capitalising loans from its Dutch shareholders or writing off these debts generates taxable income. The DGT responds that such operations do not constitute taxable income for the entity receiving the capital contribution or debt forgiveness.

The question raised

Question posed: Whether, in view of the foregoing, the accounting income that will arise from the difference between the nominal value and the fair value of the loans that the Dutch entities H1 and H2 are going to contribute to the equity of their Spanish subsidiary, the consulting entity, with the objective of restoring the situation of patrimonial imbalance existing as of December 31, 2013, will not result in taxable income in the Corporate Income Tax of the consulting entity, regardless of the existence of a tax or accounting impairment of the loan at the level of the current lenders and regardless of what the tax treatment of the loans has been at the level of the lenders.

The DGT's ruling

The capitalization of debts for the amount of the existing debt does not generate income in the entity increasing its capital, provided that the debt was acquired at its nominal value. In the event of the forgiveness of credits between a shareholder and the company, if the operation is proportional to the shareholding, no taxable income is generated in the borrower. The possible accounting impairment of the credit right does not alter this treatment, as the forgiveness reflects the conversion of an existing credit right into equity.

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