Example: Onerous transfers of unlisted securities

Example

Mrs. GCA On 03-01-1991, it subscribed to 1,500 shares in SA "Beta", which is not listed on the Stock Exchange, for an amount equivalent to 9,000 euros. On 21-12-2000 he acquired 2,000 shares of the same company, paying 25,000 euros for this purpose.

On 05-11-2020, 3,000 shares were sold for 66,000 euros. The share capital of SA "Beta" is made up of 12,000 shares, and the results obtained by the aforementioned entity in the last three financial years closed prior to 31-12-2020 were 80,000, 60,000 and 40,000 euros, respectively.

The value of the net assets corresponding to the securities transferred resulting from the balance sheet for the 2019 financial year ended in July 2020 is 21 euros/share.

Determine the capital gain or loss obtained in the event that the taxpayer does not have sufficient evidence that the amount of the transfer corresponds to what independent parties would have agreed under normal market conditions and taking into account that no transfer of assets has been made since January 1, 2015 to whose gain the ninth transitional provision of the Tax Law was applicable

Solution :

To determine the capital gain or loss obtained, it is necessary, first of all, to identify the shares sold within the total number of those owned. To do this, the legal criterion must be applied that the shares sold are those that were acquired first (FIFO criterion). That is to say, the 3,000 shares sold correspond to the 1,500 subscribed on 01-03-1991 and to 1,500 of those acquired on 12-21-2000.

1. Determination of the total capital gain or loss :

Information	Acquired on 03-01-1991	Acquired on 21-12-2000
Number of shares sold (3,000)	1,500	1,500
Transmission value (1) (1,500 x 25)	37,500	37,500
Cost price	9.000	18.750
Capital gains	28,500	18.750

2. Determination of the capital gain generated prior to 20-01-2006 :

Since part of the shares were acquired prior to 31-12-1994, the part of the capital gain generated prior to 20-01-2006 must be determined in order to apply the appropriate reduction or abatement coefficients.

Profit generated until 20-01-2006: (28,500 ÷ 10,899) x 5,496 ⁽²⁾ = 14,371.59

3. Calculation of reduction

1. Profit generated prior to 20-01-2006 susceptible to reduction ⁽³⁾

   Maximum limit: 400,000.00

   ∑ Transfer value of assets with the right to reduction from 01-01-2015: 0

   Transfer value of the asset to which DT9 Law of IRPF applies = 37,500

   Capital gain susceptible to reduction = 14,371.59

2. Applicable reduction

   Number of years of stay until 31-12-1996: 6 years

   Reduction by abatement coefficients (57.12% s/14,371.59) = 8,209.05

3. Reduced capital gain

   Reduced capital gain (14,371.59 – 8,209.05) = 6,162.54

5. Determination of non-reducible capital gain (generated from 20-01-2006):

Profit generated as of 20-01-2006: (28,500 ÷ 10,899) x 5,403 ⁽⁴⁾ = 14,128.41

6. Determination of the computable capital gain :

(6,162.54 + 14,128.41 + 18,750.00) = 39,040.95

Notes on the example

⁽¹⁾ Since the taxpayer does not have proof that the amount of the transfer corresponds to the market value, that is, to what independent parties would have agreed upon under normal market conditions, the transfer value may not be less than the highest of the following:

1. Agreed value in the transmission: 22 euros/share.
2. The value of the net worth corresponding to the values transferred according to the balance sheet of the last fiscal year: 21 euros/share.
3. At 20% of the average of the results of the last three closed fiscal years:

   (80,000 + 60,000 + 40,000) ÷ 3 = 60,000

   (60,000 x 100) ÷ 20 = 300,000

   300,000 ÷ 12,000 = 25 euros/share ^(Back)

⁽²⁾ The capital gain generated between the date of subscription of the shares (01-03-1991) and January 19, 2006, both inclusive, is determined by proportionally distributing the capital gain corresponding to said shares (28,500) between the number of days elapsed between the date of subscription and the date of transmission thereof, which was 11-05-2020 (10,899 days), with respect to the total number of days between the date of subscription of the shares and 01-19-2006, both inclusive (5,496). ^(Back)

⁽³⁾ Since the maximum applicable limit on the transfer value is 400,000 euros and, in this case, the transfer value of the shares entitled to the application of reduction coefficients is 37,500 euros without any other transfer having occurred in fiscal year 2020 (or in the two previous years) with the right to the application of the ninth transitional provision of the Tax Law, the reduction coefficients will be applied to the entire amount of the capital gain generated prior to 20-01-2006. ^(Back)

⁽⁴⁾ The capital gain generated from 20-01-2006 is determined by proportionally distributing the capital gain corresponding to said shares (28,500) between the number of days elapsed between the subscription date and the date of transmission thereof (10,899 days), with respect to the total number of days between 20-01-2006 and the date of transmission thereof (05-11-2020), which amounts to 5,403 days. ^(Back)