Corporate merger: DGT clarifies the homogeneity of shares

Within the framework of corporate merger processes, doubts arise as to whether the shares of the absorbed entity and those of the absorbing entity can be considered homogeneous securities. This distinction is decisive in determining whether it is possible to apply the exception of not computing capital losses in Personal Income Tax (IRPF).

What the DGT has ruled

The Dirección General de Tributos (DGT) has analyzed whether the shares of company A and company B become homogeneous securities from the moment the general meeting agrees to the merger and sets an exchange ratio. The criteria establish that these shares do not meet the requirements demanded by Article 8 of the Personal Income Tax Regulation (RIRPF).

By not complying with said regulation, the administration determines that the exception provided for in Article 33.5 of the Personal Income Tax Law (LIRPF) cannot be applied, which prevents the computing of capital losses in certain cases of asset transformation.

What it means for you

This ruling has a direct impact on individuals who hold stakes in companies undergoing merger processes. The key lies in the management of capital losses derived from the sale of shares.

If the shares are not considered homogeneous securities, the taxpayer will not be able to avail themselves of the exception of not computing capital losses in the context of the merger. This implies that the tax treatment of the losses generated by the transfer of the shares of the absorbed company must strictly adhere to the general rules for offsetting income from movable capital.

What should be done

In the event of a corporate merger process, it is necessary to analyze the nature of the securities that will be received after the exchange. Since the homogeneity of the securities determines the possibility of offsetting capital losses or not, it is recommended to:

• Verify compliance with the requirements of Article 8 of the RIRPF before carrying out any operation.
• Evaluate the tax impact of the merger on the IRPF taxable base.
• Assess each particular situation to determine the most appropriate tax strategy according to current regulations.