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V3212-17 14 December 2017 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · obligaciones subordinadas

Tax treatment of subordinated bond conversion and issuance of new bonds in bank resolution processes

A taxpayer has requested clarification regarding the tax treatment of converting subordinated bonds into shares (which are immediately transferred without consideration) and the subsequent receipt of new bonds. The DGT has determined that the operation constitutes an amortisation of bonds and that the delivery of new bonds is treated as income in kind.

The question raised

Tax treatment in the 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 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 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 negative returns may be offset against positive returns generated by the delivery of the new bonds within the savings tax base.

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