Delisting from a stock exchange does not automatically generate a capital loss for Personal Income Tax

The situation of companies that stop trading on an official secondary market raises questions regarding the tax treatment for shareholders. Recently, the Dirección General de Tributos (DGT) issued a ruling that delimits when a company that stops trading can give rise to a deductible capital loss in Personal Income Tax (IRPF).

What the DGT has ruled

The inquiry analyzes whether the delisting of a company allows its shareholders to reflect a capital loss in their income tax return. The binding body has determined that exclusion from an official secondary market does not automatically entail a capital loss for the partners.

For it to be possible to compute such a loss under the assumption of article 37.1, e) of the IRPF Law, it is a necessary condition that the dissolution and liquidation of the company occurs beforehand. The DGT emphasizes that the tax period for declaring this loss will be the one in which the liquidation is formalized, and that this circumstance must be proven through the means of evidence admitted by law.

What this means for you

If you are an individual shareholder holding securities of a company that has stopped trading, you cannot assume that the loss in value of your shares is immediately deductible following the delisting from the market. The regulations require a complete corporate process that ends with the liquidation of the entity for the economic impact to be transformed into a fiscally recognizable capital loss.

What you should do

In this scenario, it is fundamental to distinguish between the loss of market value and the fiscal capital loss. It is recommended to:

• Verify the legal status of the company following the delisting.
• Check if the dissolution and liquidation processes provided for in the Consolidated Text of the Capital Companies Law have been initiated.
• Assess your particular situation regarding the holding of securities with a specialist to determine the appropriate time for declaration.