Doctrine by topic · DGT Observatory

Forgiveness of Credits: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Refined position High confidence 10 rulings · 2014–2024

Current position

The forgiveness of credits between related companies is treated as a distribution of profits for the donor and a contribution of equity for the recipient if sufficient reserves exist. If the forgiveness does not correspond to the effective shareholding of the partners, the excess is included as income in the tax base pursuant to article 11 of the LIS (Corporate Income Tax Law). The treatment depends on the company's ability to qualify the operation as a distribution of reserves.

The DGT's position has moved from considering the forgiveness of debt between companies within the same group as a mere conversion of debt into equity without income, to requiring an analysis based on the distribution of reserves. The most recent rulings specify that the tax impact depends on the proportion of the partners' shareholding and the existence of reserves to qualify the operation as a distribution of profits.

Turning points

31 August 2023 V2358-23

Establishes that the forgiveness between companies with the same partners is considered a distribution of profits for the donor and a contribution from partners for the recipient.
15 October 2024 V2210-24

Introduces the distinction that the excess over the effective shareholding of the partners must be computed as income in the tax base pursuant to article 11 of the LIS.

Analysis based on 9 of 10 rulings with a stated position. Updated 28 September 2026.

Rulings on this topic

10

V2210-24 15 Oct 2024

Income from debt forgiveness to shareholders split between dividend distribution and other financial income

SG de Impuestos sobre las Personas Jurídicas

condonación de créditosdistribución de beneficiosingreso financieroreservasparticipación efectiva LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 11

Affects CompanyExpat · Non-residentIndividual

V2358-23 31 Aug 2023

Debt forgiveness between companies with identical shareholders does not affect Corporate Income Tax taxable base

SG de Impuestos sobre las Personas Jurídicas

condonación de créditosbase imponibleaportación de sociosdistribución de beneficiostransmisiones patrimoniales LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 5LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3

Affects CompanyExpat · Non-residentIndividual

V1067-21 23 Apr 2021

Debt forgiveness between subsidiary companies does not generate income for the beneficiary if it is a contribution from the parent company

SG de Impuestos sobre las Personas Jurídicas

condonación de créditossociedades dependientesdistribución de reservasaportación de fondos propiosbase imponible LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 17

Affects CompanyExpat · Non-residentIndividual

V0133-17 23 Jan 2017

Credit forgiveness between group companies may not create taxable income if it amounts to share capital contributions

SG de Impuestos sobre las Personas Jurídicas

consolidación fiscalcondonación de créditoscapitalización de deudaaportación de fondos propiosgastos financieros netos LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 16

Affects CompanyExpat · Non-residentIndividual

V0118-17 23 Jan 2017

Debt forgiveness between a parent company and its wholly-owned subsidiary does not generate tax income or expenses

SG de Impuestos sobre las Personas Jurídicas

condonación de créditosaportación a fondos propiosrelación socio-sociedadvalor de mercadodeterioro contable LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LGT — Ley 58/2003 General Tributaria art. 88.2

Affects CompanyExpat · Non-residentIndividual

V2278-15 20 Jul 2015

The forgiveness of a loan from a company to its shareholder must be valued at market value

SG de Impuestos sobre las Personas Jurídicas

condonación de créditosentidades vinculadasvalor de mercadorendimientos del capital mobiliarioliberalidades LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 15.e

Affects CompanyExpat · Non-residentIndividual

V1609-15 26 May 2015

Capitalisation or write-off of shareholder debts does not generate taxable income under specific conditions

SG de Impuestos sobre las Personas Jurídicas

capitalización de deudascondonación de créditosfondos propiosvalor razonabledeterioro contable LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 17.2

Affects CompanyExpat · Non-residentIndividual

V3272-14 4 Dec 2014

Debt forgiveness from a parent company to a second-tier subsidiary results in an increase in equity

SG de Impuestos sobre las Personas Jurídicas

condonación de créditosfondos propiosbases imponibles negativasexplotación económicasociedad dependiente TRLIS — RDLeg 4/2004 (derogado por la Ley 27/2014) art. 10.3TRLIS — RDLeg 4/2004 (derogado por la Ley 27/2014) art. 25.2.c

Affects CompanyExpat · Non-residentIndividual

V0212-14 29 Jan 2014

Tax treatment of debt forgiveness between related companies based on shareholder participation

SG de Impuestos sobre las Personas Jurídicas

condonación de créditossociedades vinculadasbase imponiblefondos propiosvalor de mercado TRLIS — RDLeg 4/2004 (derogado por la Ley 27/2014) art. 10.3TRLIS — RDLeg 4/2004 (derogado por la Ley 27/2014) art. 15

Affects CompanyExpat · Non-residentIndividual

V0192-14 28 Jan 2014

Forgiveness or capitalisation of a loan between subsidiaries of the same group does not generate tax income under specific conditions

SG de Impuestos sobre las Personas Jurídicas

condonación de créditoscapitalización de préstamosfondos propiosvalor de mercadodeterioro contable TRLIS — RDLeg 4/2004 (derogado por la Ley 27/2014) art. 10.3TRLIS — RDLeg 4/2004 (derogado por la Ley 27/2014) art. 15.2

Affects CompanyExpat · Non-residentIndividual

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