Companies donating assets to their sole shareholder cannot apply patronage incentives

The application of tax incentives intended for patronage requires the existence of an intent to donate or a liberality. However, the Dirección General de Tributos (DGT) has clarified the tax treatment when the operation occurs between a company and its own shareholder.

What the DGT has resolved

The ruling analyzes the treatment in Corporate Tax (Impuesto sobre Sociedades) of the donation of assets made by a public limited company to its sole shareholder. The binding body determines that these operations, when carried out from subsidiaries in favor of their parent companies, must be considered a distribution of equity, whether through reserves, share premiums, or capital.

Since there is no animus donandi (intent to donate), the operation is not classified as an act of liberality. Consequently, it is not possible to apply the benefits provided for in Law 49/2002. This implies that:

• The exemption of capital gains derived from the delivery of the asset does not apply.
• The deduction in the full tax liability of Corporate Tax is not applicable.

What this means for you

This criterion directly affects companies intending to make donations of assets to their shareholders, including public entities or city councils, with the aim of obtaining tax benefits through patronage. If the corporate structure implies that the beneficiary is the sole shareholder or the parent company, the Administration will understand that an equity movement is being made rather than a disinterested donation.

For the donating company, this means that the delivery of the asset will have the usual tax consequences of a transfer, without the possibility of opting for patronage regulations to reduce the tax burden.

What should be done

In operations involving the transfer of assets between companies within the same group or towards their shareholders, it is necessary to analyze the legal nature of the transaction. The classification of the operation will determine whether it is a distribution of equity or a real donation. It is recommended to assess the structure of the operation to avoid contingencies in Corporate Tax arising from an incorrect application of the incentives in Law 49/2002.