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V2724-17 24 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · condonación de préstamo

Forgiveness of a loan between companies has no impact on partners' Personal Income Tax, unless part of a global transaction

An individual has enquired whether the forgiveness of a loan between two companies in which they hold shares affects their Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) indicates that, as a general rule, the transaction has no effect on the partners as they are not parties to the loan. However, it warns that if the forgiveness is part of a more complex global transaction, the entire operation must be analysed as a whole.

The question raised

Whether the forgiveness of the loan made between companies A and B would affect the Personal Income Tax of the taxpayer.

The DGT's ruling

The forgiveness of a loan between two companies does not have effects on the Personal Income Tax of the individual shareholders, as they are external to the loan. Rule 18 of the registration and valuation standards of the General Accounting Plan, which would imply a higher acquisition value and dividend income, does not apply. However, if the forgiveness is not an isolated transaction but is part of a global transaction (such as a purchase of shares), the transaction must be analyzed in its entirety and not in isolation.

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