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V1773-14 8 July 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · operaciones societarias

Contribution of Spanish real estate to a Mexican company not subject to ITP and AJD corporate transactions

Mexican residents inquire whether the contribution of Spanish properties to their Mexican company via capital increase is subject to ITP and AJD corporate transaction rules. The DGT confirms the operation is not subject to such rules and, as it is not a taxable transfer, the variable AJD rate applies.

The question raised

Whether, if it is understood that the Mexican entity carries out economic activity in Spain, either through a person resident in said territory or through a permanent establishment, for the purpose of determining whether in such case the contribution to the Mexican company would be subject to the corporate operations modality, either by virtue of Article 6.2.B) or Article 20, and in either case, exempt from said modality by application of Article 45.I.B.11 of the Recast Text of the Transfer Tax Act.

The DGT's ruling

The contribution of real estate to a company based outside of Spain does not constitute a corporate operation subject to Transfer Tax (ITP). However, if the act is not subject to onerous asset transfers or corporate operations, the variable rate of Stamp Duty (AJD) shall apply provided that the requirements of Article 31.2 of the Recast Text of the Transfer Tax and Stamp Duty Act (TRITPyAJD) are met, such as being a first copy of a notarial deed with a valuable and registrable object in the Property Registry.

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