Relevant aspects in the taxation of "inter vivos" transfers of shares and holdings of non-listed companies by individuals.
In the scope of our professional activity, we are frequently asked whether it is possible to sell for a symbolic price or even give away the shares that a businessman has in his company.
This question may be motivated by different circumstances, including: the adverse financial situation of the company, the identity of the acquirer (who is being favored) or, simply, trying to reduce the taxation of the operation.
The truth is that, in many cases, such a transaction will be reasonable from an economic standpointand perfectly legal from a commercial one. But are we sure that the taxation will be as low as we expect?
Certainly, the price stated in the deed does not necessarily have to be the value that will be taken into account when taxing the transfer, and in the tax field there are a whole series of rules that try to "correct" said amount, usually upwards.
We will briefly list the most relevant ones:
1. Donation of shares / holdings: in this case, the market value or fair value of these assets will be taken into account.
If we intend to give away our shares, we must bear in mind that, without prejudice to the fact that reductions or bonuses may be applied in some cases, this operation will be subject to Gift Tax for the acquirer, and is liable to be taxed as a Capital Gain in the Income of the donor, even though the latter does not receive a single euro for the transfer.
If the acquirer is a company, it will have to pay Corporation Tax.
2. Sale of shares / stakes: when the transfer is for consideration, even if for a symbolic price, the following must be taken into account:
a) VAT/ITP: Although this transaction is not subject to VAT, the acquirer may be liable for Transfer Taxif the company owns real estate or shares in companies that own real estate. In this case, the tax will not be calculated on the sale price of the shares, but rather on the value of the real estate.
b) Personal Income Tax (IRPF): Regarding the seller's Income Tax, the difference between the transfer value and the acquisition value will result in a capital gain or loss. This is usually deducted, but it is often overlooked.
– the possibility of applying the regulations on related-party transactions in certain cases where the acquirer is a company.
– that the Personal Income Tax Law includes a presumption whereby, regardless of the price recorded in the deed, the transfer value will take into account the value of the company's balance sheet and its ability to generate profits.
c) ISD: in those transfers where there is a noticeable disproportion between the value of what is transferred and its price, the acquirer may have to pay part of the Gift Tax.
As we have seen, tax regulations have introduced a series of rules in this area that modify the treatment that, from an instinctive point of view, would seem applicable to us.
The length of this article prevents us from going into details, exceptions, or nuances that are absolutely necessary when calculating the tax impact of each specific transaction; therefore, we invite you to ask us about your case.
We will be happy to assist you.
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A graduate in Law and with a Master's degree in Tax and Financial Management from the University of Barcelona, he also holds a Postgraduate Diploma in New Technologies Law from ESADE. He specializes in tax and corporate law.
Before joining Àmbit Assessor as manager in 1999, he worked as head of the Tax and Accounting department at the Busquets Terradellas law firm.
For years, he combined his work with teaching, serving as a professor of Public Finance and Tax Law at the Open University of Catalonia.
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