The sale and purchase of shareholdings in a private limited company is a legal transaction that involves transferring part of the company’s share capital, together with all the rights and obligations attached to it.
This process is influenced by factors such as attractive offers from potential buyers, the macroeconomic situation or disagreements between partners, as well as by the legal and tax particularities surrounding it.
Sale of shareholdings: Direct taxes
Tax treatment differs depending on who transfers the shareholdings. When the seller is an individual, any gain is taxed as a capital gain under Personal Income Tax and is subject to a progressive rate.
When the seller is a company, the amount obtained must be included in the Corporate Income Tax base as the difference between the purchase price and the sale price.
- Up to €6.000, the rate is 19 percent.
- From €6.000 to €50.000, 21 percent.
- Above €50.000, 23 percent.
When a Private Limited Company is incorporated, the intention is for it to operate over the long term, although various circumstances throughout the company’s life cycle may lead a partner to consider selling their shares.
In Public Limited Companies, the transfer of shares is unrestricted, but in Private Limited Companies, the Capital Companies Act imposes certain limitations. Unless the Articles of Association provide otherwise, the transfer of shares between partners, spouses, ascendants, descendants and companies within the same group is unrestricted. In other situations, specific rules and limits must be considered.
It is also important to understand the taxation applicable to these transactions, both direct and indirect. The tax implications of selling shareholdings can be decisive for the decision and for the final outcome of the operation. A detailed understanding of these aspects is therefore essential for any partner considering selling their stake in a private limited company.
Sale of shareholdings: Indirect taxes
The sale of shareholdings, whether in full or in part, is exempt from both Transfer Tax and Value Added Tax.
Although the sale of shareholdings is exempt from Transfer Tax and VAT, there are important exceptions. For example, transfers of shares in entities whose assets consist of 50% or more real estate located in Spain are subject to taxation, as are transfers made in exchange for contributions of real estate if at least three years have not passed between the contribution and the transfer.
- Transfers of shareholdings in companies, funds and other entities whose assets consist of at least 50% real estate in Spain.
- Transfers of shareholdings made in exchange for contributions of real estate for the purposes of incorporating or increasing the share capital of companies, if a minimum period of 3 years has not elapsed between the contribution and the transfer.
To prevent fraud, Article 37 of the Personal Income Tax Act limits the valuation of the transfer. Its value cannot be lower than:
- The net asset value corresponding to the transferred shares, as shown in the balance sheet of the last financial year closed prior to the date on which the tax is due.
- The result of capitalising at 20 percent the average of the last three financial years.
Given the continuous legislative changes, the number of factors involved and the potentially more advantageous alternatives, it is advisable to consult a tax adviser.
We will analyse your situation professionally and personally so you can make the best decision.