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V2566-20 28 July 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IS · novación modificativa

Replacement of issuer with its guarantor constitutes a modifying novation

An insurer asks whether replacing the issuing company with its parent company, which is already a guarantor, results in the extinction of existing securities and the creation of new ones, or merely a modification. The DGT responds that, as conditions remain unchanged and the new debtor is already a guarantor, it constitutes a modifying novation.

The question raised

Whether the substitution of the issuing company of the bonds, as debtor, by the listed parent company, which is the guarantor of said securities, while the remaining conditions of the issuance remain unchanged, would, for the purposes of possible tax implications for the taxpayer, result in the cancellation of said securities and their replacement by new ones, or whether it should be considered as only a merely modificatory novation in the aforementioned securities.

The DGT's ruling

The agreement to substitute the principal debtor with the guarantor entity, without altering other conditions of the securities and with the consent of the creditor, constitutes a merely modificatory novation. As the extinction of the original obligation and the creation of a new one do not occur, the securities are considered to subsist. Therefore, this change does not generate effects for the Corporate Income Tax of the holding entity.

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