TAXATION
The transfer of investment fund shares receives the tax treatment of capital gain or loss, for the amount of the difference between the sale or transfer value and the acquisition or purchase value:
Capital Variation = (Sale value) - (Acquisition value)
Taxation of variations in capital occurs at the time of transfer or sale. From a fiscal point of view, this variation is qualified as a capital gain, if the difference is positive, and a capital loss, if it is negative.
Personal Income Tax
- Capital gains derived from the repayment of shares in investment funds are taxed on the taxable savings base, which is taxed on personal income tax at 19.00% on the first €6,000, at 21.00% between €6,000 and €50,000, and at 23.00% for amounts greater than €50,000. The current retention rate is 19.00%.
- If there are different acquisition prices because homogeneous shares were acquired at different times, for tax regulation purposes it is understood that the first shares to be sold are the first that were acquired; i.e., the First In First Out (FIFO) valuation method is followed.
- With regard to the capital gains reduction coefficients generated by the transfer of shares acquired before 31 December 1994, the application of the reduction coefficients (14.28 % of the capital gain obtained for each year older than two years up to 31 December 1996) to the section of the total capital gain generated before 20 January 2006 is respected and the application concerning the section of the capital gain generated as from that date, is eliminated. From 2015, the repayment coefficients are maintained, although their application is limited to capital gains derived from the sale of goods with a maximum transfer value of €400,000.
- Transfers between investment funds are exempt from taxation, i.e. when the amounts obtained as a result of the transfer (total or partial reinvestment) of shares in investment funds are destined for other funds or investment companies, the capital gain or loss obtained will not be included in the calculation, and the new shares or holdings will retain the value and acquisition date of those transferred. For a transfer to take place, the holder of the shares may not be a company or legal person, nor a natural person subject to non-resident income tax.
- The investment fund holder, in the case of natural persons, will not pay taxes until his investment is repaid. In addition, they can carry out transfers between funds with different investment policies depending on the economic situation without causing a retention or outflow of capital gains. The tax regime will depend on the individual circumstances of each customer and may vary in the future, so we advise you to consult with your tax advisor before carrying out any transactions.n.
- Such taxation depends on the personal circumstances of the taxable person and on the tax regulations in force at the time.
Wealth tax
Current legislation establishes that shares and holdings in the capital stock or equity of collective investment institutions will be calculated by the net asset value at the date of accrual of the tax. At present, the minimum amount exempt from payment of wealth tax is set at €700,000.
Inheritance and gift tax
Since 1 January 1992, capital gains or losses generated by the death of the holder of the shares, regardless of the beneficiary of the succession, are considered exempt from taxation for personal income tax purposes, i.e. the heirs will not be taxed for the deceased taxpayer. However, when the heirs distribute the shares of the fund, they will be subject to inheritance and gift tax.
When the heirs transfer the shares awarded by inheritance, they must quantify the wealth variation by the difference between the transfer value and the acquisition value (the latter determined in accordance with the inheritance and gift tax), and also take into account the tax corresponding to the shares transferred.
Corporate Income Tax
The capital gain or loss will be calculated as the difference between the sale price and the acquisition price, and will be taxed in the year in which the reimbursement takes place. For the purpose of determining the purchase price, the weighted average cost criterion shall be used. On the other hand, at the time of reimbursement, the capital gain generated is subject to retention on account of corporate income tax, which is generally set at 19.00% of its amount. However, for the calculation of the retention base, the FIFO criterion is applied (according to which the shares sold are considered to be the oldest). As a result of the various accounting criteria set out below, the capital gains on which the retention is made may differ from those which should ultimately be included in the taxable base of the tax.
Unlike in the case of individuals, where there is no taxation until the sale or transfer of investment fund shares, in corporate income tax the increase or depreciation of the value of an investment fund share has tax implications, provided that the relevant income or expense has been recorded for accounting purposes.
Non-resident income tax
For tax purposes, an individual is considered to be non-resident in Spanish territory when neither of the following two conditions are met:
- Permanent residency for more than 183 days (including sporadic absences) during the calendar year (from 1 January to 31 December) in Spain.
- His or her economic activities or interests are directly or indirectly based in Spain.
In general, capital gains or losses obtained by non-residents in Spanish territory as a result of the sale of shares are taxed at the general rate of 19.00%.
However, capital gains derived from the transfer or reimbursement of investment fund shares obtained by a resident of another European Union country or by a resident of a State that has a double taxation agreement with Spain, with an information exchange clause, are not subject to taxation in Spain.
This exemption does not apply if the capital gain is obtained through a territory or country qualified as a tax haven.
