Companies transferring assets to shareholders cannot apply donation incentives

The legal nature of operations between a company and its shareholders has been clarified by the Tax Administration. In a recent binding ruling, the applicable tax treatment has been delimited for when an entity transfers assets to a shareholder for profit.

What the DGT has resolved

The Dirección General de Tributos (DGT) determines that transfers for profit carried out by a company in favor of its shareholder should not be classified as pure and simple donations. Instead, these operations must be understood as distributions of equity, whether through the allocation of reserves, capital, or share premiums.

This technical distinction has direct consequences on the application of current regulations:

• Law 49/2002: As it is not a donation, the operation does not allow access to the tax incentives provided for in this law.
• Corporate Income Tax: The classification of the operation as a distribution of equity determines the resulting tax cost for the entity.
• ITPAJD: The operation remains exempt in its modality of documented legal acts.

What it means for you

If your company carries out transfers of assets to its shareholders, it cannot count these deliveries as donations to obtain tax benefits or deductions linked to Law 49/2002. The Administration considers that the movement of assets toward the shareholder is, in essence, a way of returning or distributing the value accumulated in the company (equity).

This criterion closes the possibility of using the figure of donation to optimize the entity's tax burden, forcing the transaction to be treated under the rules of capital or reserve distribution.

What should be done

It is necessary to analyze the nature of the asset transfers that the company makes to its shareholders to ensure that the accounting and tax treatment is correct. Given that the classification of the operation directly affects the tax cost and the impossibility of applying incentives, it is recommended to assess each movement of assets under this criterion of equity distribution to avoid contingencies with the Tax Agency.