Partners in unlisted companies must use the higher value between net equity or capitalization

Determining the transfer value of social shares in companies that are not listed on the stock exchange is a critical aspect for calculating capital gains or losses in Personal Income Tax (IRPF). A recent resolution from the Dirección General de Tributos (DGT) clarifies the procedure taxpayers must follow to avoid discrepancies with the Administration.

What the DGT has resolved

The inquiry addresses how to establish the transfer value of social shares not admitted to trading. The criterion establishes that the transfer value will, in principle, be the actual amount effectively paid in the transaction. However, for this amount to be accepted, it must be proven that it is what independent parties would have agreed upon under normal market conditions.

In the event that such market value cannot be proven, the regulations impose an alternative valuation method. In this scenario, the transfer value will be the higher of the following two amounts:

• The net equity of the last closed fiscal year.
• The result of capitalizing at 20 percent the average of the results of the three previous fiscal years.

The difference between this value and the acquisition price will determine the capital gain or loss, which will be included in the savings tax base.

What it means for you

If you are a partner in a limited company or a non-listed company, the burden of proof lies with you. It is not enough to declare the price agreed upon in the sale and purchase agreement; it is necessary to have elements that demonstrate that this price reflects the economic reality of the company and market conditions.

If the Administration considers that the agreed price is not real or its veracity cannot be demonstrated, it will automatically apply the criterion of the higher value between net equity or capitalization. This could artificially raise the transfer value and, consequently, increase the capital gain subject to taxation.

What should be done

In the event of a transfer of shares, it is fundamental to document the company's valuation. Having reports or elements that justify the sale price against the accounting or capitalization values is essential to mitigate tax risks. Since each corporate structure and each history of results is different, it is recommended to assess the specific situation of the company before formalizing the transaction.