Taxation of capital reductions
The regime of taxation of capital reductions is no longer a favorable system for remunerating members of a company.
In previous posts in this series, we reviewed some ways for partners to enter the profits generated by a corporation. Occasionally, that remuneration is presented as a prelude to the output member and the entry of a new shareholder in the company.
In addition to the distribution of profits and the sale of shares, we consider this entry reductions in capital.
And as noted in other reviews, Given the changing regulatory and economic importance of these issues, I highly recommend the advice by a professional.
Until the year 2014, capital reductions had a very favorable tax regime, where the reception returns generated by the company by way of capital reduction was practically tax-free.
However, from 2015, regime change, so that both the distribution of the share premium as capital reductions with refund of contributions relating to securities not admitted to hiring, taxed as income from capital: The amount is obtained, considered movable capital performance and it is set as taxable limit, the positive difference between the value of the equity of the shares or shares corresponding to the last year before the date of the capital reduction or distribution of raw, and acquisition cost.
The scheme provided for in Article 33.3 Income Tax Act:
"When the difference between the value of equity shares or units corresponding to the last financial year prior to the date of the capital reduction and acquisition value is positive, the amount obtained or the market value of the assets or rights received will be considered investment income to the limit of that positive difference.
A estos efectos, the value of equity in the preceding paragraph refers to funds will be reduced by the amount of profits distributed prior to the date of the capital reduction, from reserves included in the quoted equity, as well as the amount of legally restricted reserves included in those own funds that would have been generated subsequent to the acquisition of the shares "
Veamos un ejemplo:
The company "XXX SLU" has a capital of € 900,000 and the year-end 31 December 2014 It had equity of € 1.4 million.
The owner decides to make a capital reduction to remove 300.000 euro of the company.
Therefore, Once the reduction, stay in the capital 600.000 euros.
The purchase price It would therefore be of 900.000 euros.
The limit of the "return on investments" is the difference between equity and capital: 1.400.000 euros – 900.000 euros = 500.000 euros.
As the capital reduction of 300.000 euros below the limit of 500.000 euros, the 300.000 euros taxed as income from capital.
For the capital reduction It would have been higher, put on 600.000 euros, tributarían como income from capital the limit, namely, 500.000 euros, and 100.000 euro difference would reduce the purchase price instead of being 900.000 euros, stay in 800.000 euros, for if in the future new transmissions of shares they occur.
Ultimately, to 2014 the regime was very favorable, but from 2015, taxation of the capital reduction is almost that of other income from capital.
When assessing between alternatives, to output a partner in a sale of shares, we must make the numbers the different possibilities, as may be the dividend or capital reduction (to lower the selling price) and sale of shares and choose the most appropriate for each situation.