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V3535-19 23 December 2019 · SG de Tributación de las Operaciones Financieras Criterion in force
IRNR · cesión temporal de activos financieros

Repo contract returns classified as capital gains from share capital transfer

A investment society seeks clarification on the tax treatment of temporary asset transfer contracts with a buyback agreement ('repos'). The DGT determines that gains from price differences are capital gains arising from the transfer of own capital.

The question raised

1. Treatment of these operations under the domestic regulations governing Non-Resident Income Tax.

The DGT's ruling

Income from 'repos' for non-residents constitutes returns on movable capital from the transfer of own funds, and is considered to be obtained in Spain if the entity making the payment is a resident. The taxable base is the difference between the repurchase price and the initial acquisition price. Exemptions exist for Spanish public debt and specific private debt, as well as for EU residents under certain conditions. The withholding obligation depends on whether the operation is carried out through accounts based on transactions on assets with explicit yield.

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