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V3263-20 30 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · reducción de capital

Repayment of contributions via capital reduction may be taxed as investment income or excluded from taxable income

A shareholder has enquired about the taxation of the company's acquisition of their shares for cancellation through a capital reduction. The DGT clarifies that the nature of the income depends on whether the repayment stems from contributions or undistributed profits, and how the rules for patrimonial companies apply.

The question raised

Taxation of the transaction for the taxpayer.

The DGT's ruling

If the capital reduction is intended for the return of contributions, the amount that does not derive from undistributed profits reduces the acquisition value or is taxed as income from movable capital subject to specific limits. The amount corresponding to undistributed profits is taxed as income from movable capital. However, if the profits originate from fiscal years in which the company applied the patrimonial companies regime, such profits shall not be included in the recipient's personal income tax (IRPF) income.

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