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V3350-16 15 July 2016 · SG de Tributación de las Operaciones Financieras Criterion in force
IS · préstamo de última instancia

Lender's last resort loans generate investment income for tax purposes

A query was raised regarding the tax treatment of last resort securities lending conducted by a Central Counterparty (CCP) to resolve settlement failures. The DGT determines how both the lending entity and the defaulting seller are taxed under Corporate Tax and Personal Income Tax.

The question raised

Tax treatment of the lender of last resort

The DGT's ruling

For the lender under CIT, net remuneration and compensation for economic rights are financial income, unless dividends reduce the investment value. Under PIT, net remuneration and dividends are income from movable capital, whereas cash settlement due to lack of redemption constitutes a transfer of securities. For the borrower seller, remuneration and compensation are financial expenses under CIT and non-deductible financial expenses under PIT. The ECC is not required to withhold tax on these incomes, as the obligation lies with the participating entity that pays the end client.

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