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V3840-16 12 September 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
OTRO · reducción de capital

No retention required on capital reductions unrelated to undistributed profits

A company asks whether it must withhold IRPF, IS or IRNR when reducing capital to return contributions to shareholders. The DGT states that, as this does not involve undistributed profits, no retention is required under any of the three taxes.

The question raised

Is there an obligation to apply withholding tax for Personal Income Tax, Non-Resident Income Tax, and Corporate Income Tax in cash refunds resulting from capital reduction due to the amortization of holdings?

The DGT's ruling

In Corporate Income Tax, withholding tax is not applicable to capital reduction refunds as they do not constitute income under Article 60 of the RIS. For Personal Income Tax, there is no obligation to withhold if the return of contributions does not derive from undistributed profits, although there is a duty to file the informative return under Article 69.5 of the RIRPF. In Non-Resident Income Tax, withholding is also not required unless the income derives from undistributed profits.

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