Companies must pay tax on the difference between the market value and the tax value of assets distributed

The process of dissolution and liquidation of a company involves the distribution of remaining assets among the partners. The Dirección General de Tributos (DGT) has specified the tax treatment that must be applied to both the entity and its participants in this scenario.

What the DGT has resolved

The tax authority determines that the entity must include in its Corporate Income Tax (Impuesto sobre Sociedades) tax base the difference between the market value of the elements transferred to the partners due to dissolution and their tax value. This adjustment ensures that the delivery of assets is valued according to their economic reality at the time of liquidation.

Regarding the situation of the partners, the regulations establish that the capital gain or loss will be determined by comparing the value of the company's liquidation quota or the market value of the assets received against the acquisition value of their shareholding in the company.

What this means for you

If you are in a corporate liquidation process, the valuation of assets cannot be limited exclusively to their previous book or tax values. The application of the DGT's criteria implies that:

• For the company: The difference between the market value of the real estate or asset delivered and its tax value generates a tax base that must be taxed in the liquidation period.
• For the partners: The determination of their capital gain or loss will depend on the market value of the assets received compared to the historical cost of their shareholding.

What should be done

Given the relevance of market valuation in this process, it is necessary to perform a technical analysis of the assets that form part of the liquidation quota. The correct determination of these values is fundamental to avoid contingencies with the Tax Administration. It is recommended to value each dissolution situation individually to ensure compliance with the Corporate Income Tax Law (Ley del Impuesto sobre Sociedades) and the Personal Income Tax Law (Ley del Impuesto sobre la Renta de las Personas Físicas).