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V1789-19 11 July 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · rendimientos del capital mobiliario

Conversion and transfer of subordinated bonds generate negative returns, while issuance of new bonds generates positive returns

A taxpayer held subordinated bonds that were converted into shares and immediately transferred without consideration. The DGT ruled that this constitutes a redemption of bonds with negative returns, and that the subsequent delivery of new bonds is considered a return on movable capital in kind.

The question raised

Tax treatment in Personal Income Tax (IRPF) of the aforementioned operations.

The DGT's ruling

The conversion of bonds into shares for immediate transfer without consideration is considered a single bond redemption operation, generating a negative return on movable capital due to the difference between the acquisition value and the redemption value (zero euros). The delivery of new bonds as compensation is classified as a return on movable capital as provided for in Article 25.2 of the Personal Income Tax Law (LIRPF), valued at its normal market value as it constitutes a benefit in kind. These positive returns may be offset against the negative returns generated by the redemption of the original bonds.

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