Transfer of shares in a company made up of real estate

Company made up of real estate

In the transfer of shares in a company made up of real estate, it must be kept in mind, from the point of view of the Tax Compliance, the tax avoidance that may arise from this and which is regulated in the Law.

When the transfer of corporate shares is carried out, the acquirer will acquire not only the ownership of the corporate shares (which makes him/her the owner of the company in the corresponding percentage) but also the ownership of the real estate. in question, without paying the corresponding taxes as if it were a sale; which could translate into a tax simulation regulated in article 16 of the General Tax Law.

The General Directorate of Taxes in its Consultation V2166/22 has established that there is no tax avoidance behavior on the part of a company that has acquired the 100% of shares of another company whose assets include more than fifty properties owned and which are subleased to an external company that manages the leasing of the properties and issues invoices for it.

Based on this, the DGT recalls that "if the transfer of securities to be qualified is not carried out with the aim of avoiding the payment of VAT or ITPAJD to which the transfer of the properties owned by the entity represented by said entities would be subject values (whose proof corresponds to the Tax Administration), and the cases of presumption of the intention of evasion of payment of the corresponding tax are not incurred (whose proof to the contrary corresponds to the taxpayer), the exception to the exemption from the tax will not be applicable. that the transfer of securities is subject to and, consequently, it will not be taxed on it.”

The DGT therefore recalls that the criterion of impact to be taken into account in the case of properties used for economic activities is VAT and not personal income tax.

Thus, article 314 of the Securities Market Law leaves the transfer of securities subject and exempt. However, as the article itself establishes: "if through the transfer of securities an attempt had been made to avoid paying the taxes that would have been levied on the transfer of the properties owned by the entities that represent said securities", that is, as stated The DGT Consultation “will come into play with the special rule, according to which said transfer will be subject to the evaded tax, and no longer as a transfer of securities, but as a transfer of real estate; which implies that from that moment on, the transfer of the securities in question will be treated in the applicable tax as a transfer of real estate for all purposes (first paragraph of article 314.2 of the TRLMV).”

Requirements

The application of this special rule requires the concurrence of three requirements:

1. That it is a transfer of securities carried out in the secondary market, which excludes the acquisition of newly issued securities, which would occur in the primary markets.
2. That the transferred securities are not admitted to trading in an official secondary market, which excludes the transfers of securities admitted to trading in said market (without prior admission time requirement).
3. The intention or intention to evade the payment of taxes that would have been levied on the transfer of the properties owned by the entities that represent said securities ("animus defraudandi"), which constitutes a question of fact that cannot be determined a priori by this Management Center, but must be sufficiently proven by the competent tax administration for the management of the applicable tax.

The DGT concludes that "if the transfer of securities to be qualified is not carried out with the intention of avoiding the payment of VAT or ITPAJD to which the transfer of the properties owned by the entity that these securities represent would be subject (the proof of which corresponds to the Tax Administration), and the cases of presumption of the intention of evasion of payment of the corresponding tax are not incurred (whose proof to the contrary corresponds to the taxpayer), the exception to the exemption of the tax to which the transfer is subject will not be applicable. of securities and, consequently, it will not be taxed on it.”

Therefore, in the case of the transfer of corporate shares, their taxation will be subject to and exempt from the payment of ITP. However, in the event that the companies are made up of real estate, the provisions of article 314 LMV must be complied with in relation to the involvement of the real estate with the economic activity of the company itself.

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