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V1702-14 3 July 2014 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · obligaciones subordinadas

Conversion of subordinated debt into shares generates income from movable capital for Income Tax purposes

A query was made regarding the tax treatment of converting subordinated bonds into shares following a FROB resolution. The DGT ruled that the transaction generates income from movable capital based on the difference between the repurchase price and the acquisition value.

The question raised

Tax treatment of this operation under Personal Income Tax.

The DGT's ruling

The conversion generates a return on movable capital determined by the difference between the repurchase price set by the FROB and the acquisition value of the repurchased securities. This return constitutes savings income and is included in the savings tax base. If the return is negative, it shall be offset against positive returns on movable capital from the same period or the following four years. The shares received shall have as their acquisition value the subscription price set in the resolution.

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