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1. Collective of bondholders

A) Bondholders who accept loyalty bonds

  1. Treatment and integration of the amortization of the obligations of Banco Popular Español SA:

    • TAXATION : A negative return on capital is generated from the transfer of financial assets and will be computed as the difference between the transfer value (zero) and the acquisition value of the securities, to be included in the taxable savings base.

    • INCOME 2017 : This performance is included in box [0029] “Income from the transfer, amortization or reimbursement of other financial assets (unless they must be recorded in box [0032])”.

  2. Treatment of the delivery of the loyalty bonds to the bondholders in compensation for said negative capital return:

    • TAXATION : A return on movable capital is generated at its normal market value, subject to payment on account - which is passed on to the purchaser - which will be included in the taxable savings base, which enables the compensation of the previous negative return.

    • INCOME 2017 : This performance is included in box [0029] “Income from the transfer, amortization or reimbursement of other financial assets (unless they must be recorded in box [0032])”.

  3. Tax treatment of interest they receive on the same and, where applicable, of the sale of the loyalty bonds

    • TAXATION: Returns on movable capital will be generated, computing the interest for its full amount, and the sale of the bonds for the difference between the transfer value and the acquisition value, which will be the market value indicated in the previous point.

    • These interests are paid in 2018, so they should not be included in the income tax return for the 2017 financial year. They must be included from the 2018 financial year declaration.

B) Bondholders who do not accept loyalty bonuses

Treatment and integration of the amortization of the obligations of Banco Popular Español SA: 

  • TAXATION: A negative return on capital is generated from the transfer of financial assets and will be computed as the difference between the transfer value (zero) and the acquisition value of the securities, to be included in the taxable savings base.

  • INCOME 2017 : This performance is included in box [0029] “Income from the transfer, amortization or reimbursement of other financial assets (unless they must be recorded in box [0032])”.