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V2516-24 10 December 2024 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · condonación de deuda

Debt forgiveness by a shareholder does not constitute income for the company

A company sought clarification on whether the forgiveness of its debt by its sole shareholder should be recorded as income. The DGT ruled that, under accounting regulations, it must be recorded directly in equity as other shareholder contributions.

The question raised

Whether it is correct to forgive all of the company's debt by transferring it to account 118 Partner contributions, with the subsequent approval of the General Meeting of partners, and whether this fact has any kind of tax effect or is considered income for the company or, if applicable, how it should be handled.

The DGT's ruling

The forgiveness of debt carried out by partners or owners does not constitute income and must be recorded directly in equity under the heading of other partner contributions. As it is not income, this operation has no impact on the taxable base of the Corporate Income Tax of the beneficiary entity.

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