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V2358-23 31 August 2023 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · condonación de créditos

Debt forgiveness between companies with identical shareholders does not affect Corporate Income Tax taxable base

A query was raised regarding whether the forgiveness of a loan between two companies held by the same shareholders has any impact on Corporate Income Tax. The Directorate General for Taxes (DGT) ruled that, as the transaction constitutes a distribution and contribution of funds between shareholders, it has no tax implications for the entities involved.

The question raised

1. Whether the forgiveness of the credit between the consulting entities Y and X would have effects on the Corporate Income Tax taxable base of either of them. Likewise, whether the aforementioned forgiveness would produce tax effects at the level of natural persons.

The DGT's ruling

The forgiveness of a credit between dependent companies, held by the same shareholders in identical percentages, is considered a distribution of profits for the donor company and a contribution by shareholders for the recipient company. Therefore, it has no impact on the taxable base of either company. Likewise, the forgiveness of debts between companies does not constitute a taxable event for Transfer Tax due to the lack of consideration, nor for Stamp Duty as it is not an act registrable in public registries.

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