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Debt Forgiveness: 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

Settled doctrine High confidence 34 rulings · 2014–2026

Current position

In Corporate Income Tax (IS), debt forgiveness between companies with identical shareholder participation is treated as a contribution by shareholders to equity, generating no expense for the donor nor income for the debtor. In Personal Income Tax (IRPF), debt forgiveness with the intent to be gratuitous (ánimo de liberalidad) does not allow for the recognition of capital losses. In Value Added Tax (IVA), debt forgiveness modifies the tax base due to an alteration in the transaction price.

The DGT's position remains stable regarding Corporate Income Tax (IS), treating debt forgiveness between linked companies as an equity operation with no effect on the tax base. The evolution shows a diversification of the analysis toward other taxes, specifying the treatment in IRPF regarding the intent to be gratuitous and in IVA concerning the rectification of the tax base.

Turning points

  1. V1812-16

    Establishes the distinction between the portion of the debt coinciding with the shareholders' participation (contribution to equity) and the excess (non-deductible expense due to being a gift and taxable income).

  2. V2316-19

    Specifies that the intent to be gratuitous for Inheritance and Gift Tax (ISD) is not presumed and must be indisputably evident.

  3. V1386-26

    Determines that debt forgiveness produces a modification of the IVA tax base due to an alteration in the transaction price.

Analysis based on 29 of 34 rulings with a stated position. Updated 23 September 2026.

Rulings on this topic

24
V0324-24 5 Mar 2024

Absorption merger may qualify for tax neutrality if valid economic reasons exist

SG de Impuestos sobre las Personas Jurídicas
fusión por absorciónneutralidad fiscalbases imponibles negativascondonación de deudareestructuración empresarial LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 17
Affects CompanyExpat · Non-residentIndividual
V0337-17 7 Feb 2017

No retention of IRNR on debt forgiveness to a US entity under the treaty

SG de Fiscalidad Internacional
condonación de deudaganancia patrimonialbeneficio empresarialretenciónconvenio de doble imposición TRLIRNR — RDLeg 5/2004 del IRNR art. 13.1.i) 4ºTRLIRNR — RDLeg 5/2004 del IRNR art. 13.3
Affects CompanyExpat · Non-residentIndividual
V5469-16 28 Dec 2016

Fiscal treatment of debt forgiveness between a parent and 100% owned subsidiary

SG de Impuestos sobre las Personas Jurídicas
condonación de deudaaportación a fondos propiosderechos de créditovalor razonablecoste amortizado LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 11
Affects CompanyExpat · Non-residentIndividual

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