Tax Bulletin January 2012


We comment on diverse consultations and recent judgments in which there are analyzed several aspects related in order taxation of the transmitted assets or those that are re-invested.

Tax benefits for reinvesting extraordinary income (now, a tax credit, a few years ago, an exemption, and later deferral relief) usually come under the taxman’s scrutiny because they reduce the effective tax rate. As things stand, the appropriate reinvestment can bring the effective tax rate for capital gains down from the 30%, standard rate to 18%.
Coming under examination are issues relating to transferred assets or the assets in which the reinvestment is made. The taxman looks in particular at whether the necessary requirements are fulfilled, such as whether the assets are being used in the business activity, whether they are indeed fixed assets, or whether the minimum holding percentages are met in cases of transfer or reinvestment in securities. Checks are also made as to whether the reinvestment periods have been observed, whether the income on which the tax credit is sought to be taken has been calculated correctly, and any other aspect that might affect this tax credit.
In this Newsletter, we will discuss various recent rulings and judgments that examine some of these aspects. For example, we discuss three recent judgments by the National Appellate Court, all dated December 1, 2011, which contain the following interpretation:


  • Transfers of stock options do not qualify for the tax credit, as those transactions do not imply the transfer of investments in equity but rather of options on the assets created by those investments (and the rights attached to them).
  • The fact of changing the accounting classification of the assets from fixed assets to assets held for sale before their transfer does not prevent the tax credit from being taken, as long as they were used as fixed assets in the business activity until they were reclassified.
  • The tax credit cannot be taken for transfers of assets initially acquired to be leased out if the leasing activity has not started (even if the taxpayer had intended to carry on the activity). The National Appellate Court has underlined the importance for these purposes of the assets actually being used in the activity, not simply the taxpayer’s intention to use them. 

Also discussed below is ruling V2802-11, of November 25, 2011, by the Directorate-General of Taxes (DGT), which takes a look at how to calculate the tax credit base and the amount to be reinvested in cases of transfers with deferred payment. Under accounting rules, the agreed price in these cases is treated as having a principal component (the actual value of the agreed price) and a financial component (the implicit interest derived from the deferred payment), and it is the principal component that can be reinvested and must be used to calculate the income on which the tax credit is determined.






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