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Practical manual for Income Tax 2020.

Special case of integration of income obtained from the transfer to third parties of own capital from related entities

Regulations: Art. 46 a) Personal Income Tax Law

When the income obtained from the transfer of own capital to third parties comes from entities linked to the taxpayer, the following must be taken into account:

The valuation of these returns must be carried out at market value.

These returns are included in the general and savings bases according to the following rules:

  • General tax base: the general tax base will include the amounts corresponding to excess of the amount of equity transferred to a related entity with respect to of the result of multiplying by three the equity, in the part corresponding to the taxpayer's participation, of the latter.

    For the purposes of calculating this excess, the amount of the equity of the related entity reflected in the balance sheet corresponding to the last fiscal year closed prior to the accrual date of IRPF and the percentage of the taxpayer's participation existing on this date must be taken into consideration.

  • Taxable base for savings: The difference between the market value of these returns and the amount of the part of the return to be integrated into the general tax base as indicated above is included in the taxable savings base.

Associated persons or entities:

To determine when there is a link, the provisions of article 18.2 of Law 27/2014, of November 27, on Corporate Tax ( BOE of the 28th) must be taken into account, in which the following are considered linked persons or entities:

  • An entity and its partners or shareholders.
  • An entity and its directors or administrators, except with regard to remuneration for the performance of their functions.
  • An entity and the spouses or persons related by kinship, in a direct or collateral line, by consanguinity or affinity up to the third degree of the partners or participants, directors or administrators.
  • An entity and the directors or managers of another entity, when both entities belong to a group.

In cases where the link is defined based on the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25%. The reference to administrators will include those de jure and those de facto. In cases where the link is not defined based on the relationship between partners or participants-entity, the percentage of participation to be considered will be 25%.

In these cases, the taxpayer of IRPF must comply with the documentation obligations of related-party transactions under the terms and conditions established in Chapter V (articles 13 to 16) of the Corporate Tax Regulations, approved by Royal Decree 634/2015, of July 10 ( BOE of the 11th).

See the practical application of this assumption in example on the calculation of the net return on movable capital in the case of those obtained by the transfer of own capital to third parties, which appears in the following section.