Investors in startups must repay the tax deduction if they do not maintain the investment

The application of the tax deduction for investment in newly or recently created companies entails holding obligations which, if not met, result in direct economic consequences for the taxpayer in their IRPF return.

What the DGT has ruled

The Dirección General de Tributos (DGT) has specified the scope of the requirements for holding the shares or interests subject to the deduction. For the tax benefit to be legitimate, the taxpayer must maintain said holdings in their assets for a period that is, simultaneously, longer than three years and shorter than twelve years from the date of acquisition.

In the event that the investor transfers the holdings before completing the third year, or maintains the investment beyond the twelve-year period without carrying out the transfer, a breach of current regulations occurs. According to the tax authority's criteria, the consequence is the obligation to add to the state net tax liability the total amount of the deductions that were improperly applied, in addition to the corresponding late-payment interest according to general regulations.

What this means for you

If you are an individual who has opted for this tax incentive, the deduction is not a definitive benefit from the moment of investment, but is instead conditioned on the long-term management of your assets. Failure to comply with the holding periods transforms a legitimate deduction into a debt with the Tax Agency (Hacienda Pública).

• Minimum period: You must hold the holdings for more than three years.
• Maximum period: The transfer must be carried out before twelve years have elapsed.
• Consequence: The repayment of the deduction is accompanied by late-payment interest.

What should be done

It is necessary to perform rigorous monitoring of the acquisition dates and possible capital exits from the companies in which the investment has been made. The planning of the investment exit must strictly adhere to the time margins established by the IRPF Law to avoid unexpected adjustments to the net tax liability. It is recommended to assess each situation of transfer or maintenance of assets to ensure that the requirements of the applicable tax regulations are met.