Commercial companies sometimes need to "remove" assets from their assets to put them in the name of partners and/or administrators or other companies. The fact that a businessman has his habitual residence, an apartment on the beach or in general assets unrelated to his activity in the name of the "company" is more frequent than desirable.
The causes that give rise to such needs are very diverse, although from experience, the most frequent cause that is usually alleged is that there really was no legal-economic motivation, and that it was done because it was thought to be the best.
However, the passage of time usually reveals the error of such approaches and unfortunately, sometimes they are problems that are transferred to other people.
The moments is that this need to "remove" certain assets from the assets of the companies is revealed, essentially, when you want to organize the succession, or when a company is sold.
In succession matters, there are many wills in which assets that were thought to be their own by the testator and that were actually in the name of companies are left, which if there is no good will from all the heirs, become poisoned weapons.
Likewise, when a company is sold, the buyer wants the productive unit, and for this reason, assets unrelated to the activity and/or the accumulated treasury must be removed from the balance sheet of the company..
The means available to carry out this "cleansing" of societies are varied, and we will refer to them in the following lines.
The best option will depend on the analysis of the specific case, both on the fiscal cost, and on the consequences for the partners who receive the assets, in the form of possible liabilities, and we will leave aside business restructuring figures (splitting, segregations...) insofar as Through them, it is intended to remove economic units and not specific goods. We will also make this brief analysis based on the assumption of the limited liability company.
A.- The sale of assets by the company to the partner.
It is probably the most intuitive way, but also the least recommended when the goods have a certain value and especially when they are real estate, due to the need to justify the means of payment. Its operations and taxation would be like an ordinary sale.
b.- The capital reduction.
By means of the capital reduction, assets can be attributed to a partner, equivalent to the value of their contributions (and revaluations) that they have made to the company, and even if they were not the contributor of the assets that are returned to them, which may have been acquired directly by the company or contributed by another partner.
It is essential to take into account the need for equivalence between the value of the partner's share in the partnership and the value of the assets received. I say this because of the deeply rooted idea of returning only the nominal amount, when the accumulated reserves corresponding to the shares and/or company shares of the partner must be returned in addition to that nominal amount.
b.1.- The legal aspect. Partner Agreement and Responsibility.
From the strictly legal point of view, the capital reduction requires an agreement of the Shareholders' Meeting, which must be adopted with respect, to the legal and statutory provisions, but due to requirements of the principle of equal treatment and the need for the consent of the partners awarded the goods (other than money), this agreement will necessarily become unanimous. (articles 329 and 330 LSC)
The agreement must be formalized in a public deed, registered in the commercial registry, in the property registry, when real estate is restored, and in the pertinent administrative records, such as traffic, if vehicles are restored.
The main problem posed by this capital reduction is the necessary protection of creditors, so we can consider three scenarios:
1.- That the real or fair value of the shares is equal to or greater than their face value. In this case, ex article 331 LSC, the partners to whom all or part of the value of their contributions had been restored jointly and severally among themselves and with the company for the payment of the corporate debts contracted prior to the date on which the reduction was opposable to third parties (publication in the BORME), up to the limit of what is received as restitution of the social contribution.
Without prejudice to the fact that liability may be avoided when, upon agreeing to the reduction, a reserve is charged to profits or free reserves for an amount equal to that received by the partners as restitution of the social contribution, or when provided for in the bylaws creditors are notified, so that they can oppose the reduction, until the amount of their credits is paid or guaranteed.
2.- That the real or fair value of the company shares is less than their nominal value, which is an indication that the company has losses, which could lead to the impossibility of returning contributions.
This would be the case raised in the resolution of the DGRN of April 26, 2013, which states that the reduction can be verified through one of these three ways: either by adjusting to the capital reduction requirements for losses; either by constitution or increase of voluntary reserve; or by establishing or increasing the amortized capital reserve.
b.2.- The tax aspect.
For a better understanding of the matter, it may be highly advisable to read consultation V3840-16 of September 12 from the General Directorate of Taxes. But, in any case, a difference must be made between taxation in the company and in the partners who receive the goods.
b.2.1.- The company that reduces capital, in corporation tax The difference between the normal market value of the items transferred and their book value will be included in their tax base.
In addition, the municipal surplus value can be accrued
b-2.2.- For his part, the partner who receives the goods:
a) if it is a company in the corporation tax The excess of the normal market value of the elements received over the book value of the participation will be included in the tax base of the partners.
b) If it is a natural person, if the amount returned exceeds the acquisition price, the excess is considered return on movable capital.
Whether the partner is a natural or legal person, they must pay VAT, when what is received are assets of the business or professional assets of the company, which reduces capital, and in any case the tax on "company operations (1% of the value received).
c.- The adjudication of goods in payment of dividends. The dividend in kind.
c.1.- The legal aspect.
The dividend is configured in the law as the right to receive an amount of money, although there is no right for the partners unanimously (as we have indicated before for the capital reduction) to agree that it be paid in other types of assets .
A different issue would be the possibility of the statutory clause, by which the Board is expected to pay the dividend in goods other than money, an assumption raised by the DGRN resolution of July 30, 2015, or the modern formulas of the script dividers, by virtue of which the partners can demand the payment of the dividend in money or in newly issued shares of the company.
From a legal point of view, the payment of the dividend is a dation in payment; and so the Credit that the partner has recognized against the company by reason of the agreed dividends is paid through the award of assets of equivalent value.
The payment of the dividend in kind (when the nature of the assets requires it) must be made in a public deed, and be registered, in the property registry, when real estate is returned and in the pertinent administrative records, such as traffic, if Vehicles are returned.
The limitations on the awarding of assets in payment of the dividend are the general ones for all distributions of dividends, and thus it can only be carried out with a charge to profits for the year, to unrestricted reserves, if the value of net worth is not, or as As a result of the distribution, it is not less than the amount of share capital. Assets could also be awarded on account of the result of the year, under the terms established by the Capital Companies Law
c.2.- The tax aspect.
For a better understanding of the matter, it may be highly advisable to read consultation V3301-15 of October 27 from the Directorate General of Taxes.
c.2.1.- The company that pays the dividend, in corporation tax The difference between the normal market value of the items transferred and their book value will be included in their tax base.
In addition, the municipal surplus value can be accrued
c-2.2.– For his part, the partner who receives the goods:
a) if it is a company in the corporation tax The amount of the agreed dividend will be included in the tax base of the partners
b) if it is a physical person, the dividend received is the return on movable capital.
Whether the partner is a natural or legal person, they must pay VAT, when what is received are assets of the business or professional assets of the company, which distributes the dividend, or if the property transfer tax is not applicable (10% in Catalonia). .
d.- The distribution of the issue premium.
d.1.- The legal aspect.
The distribution of the share premium is similar from the legal point of view to the distribution of dividends.
On the one hand, the share premium is not a capital contribution in the strict sense, but it is not considered a benefit either. It is rather a kind of contribution that must appear on the liabilities side of the company's balance sheet, as part of its own resources.
On the other hand, although the premium does not properly constitute a reserve, since it does not come from profits obtained by the company, its use is similar to that of a voluntary reserve and, as such, available and thus the General Accounting Plan treats it, including it within of corporate reserves, in account number 110.
Accordingly, the issuance premium can be used as one more voluntary reserve, and in this way used for the award of goods to the partners.
d.2.- The tax aspect.
However, from a tax point of view, the distribution of the share premium is more similar to the operation that we have indicated, with respect to the capital reduction.
d.2.1.- The company that distributes the premium, in corporate tax The difference between the normal market value of the items transferred and their book value will be included in their tax base.
In addition, the municipal surplus value can be accrued
d-2.2.- For his part, the partner who receives the goods:
a) If it is a company in the corporation tax, article 17.6 LIS 6 tells us that it will be included in the tax base of the partners, the capital reduction with refund of contributions will be included in the tax base of the partners the excess of market value of the elements received over the fiscal value of the participation. The same rule will be applied in the case of distribution of the issuance premium of shares or participations.
b) if it is a natural person when the difference between the value of the equity of the shares or participations corresponding to the last year closed prior to the date of the distribution of the premium and its acquisition value is positive, the amount obtained or the normal market value of the goods or rights received The return on movable capital will be considered up to the limit of the aforementioned positive difference (...) the excess over the aforementioned limit will reduce the acquisition value of the shares or participations….”.
Whether the partner is a natural or legal person, they must pay VAT, when what is received are assets of the business or professional assets of the company, which distributes the share premium, or if the property transfer tax is not applicable (10% in Catalonia).
e.- What is the best option.
With this entry we do not intend to advocate the advantages of one option over another, but to highlight various channels for the same objective. The final decision in most cases will depend on the fiscal cost, which depends on many factors to take into account. Anyway, I would venture to say:
That in the event that the partners who receive the goods are individuals, the cheapest formula will normally be the capital reduction.
However, when the partners who receive the assets are legal persons, the awarding of assets in payment of a dividend may be very interesting, for two reasons:
a) VAT, when due, is a recoverable tax, and in the case of subject and exempt operations, it will always be possible to waive the exemption with the consequent inversion of the taxpayer, which will mean that the cost of VAT, with the correlative obligation to pay the AJD.
b) Because the benefit, if we enter into any of the cases of article 21 of the Corporation Tax Law, could be exempt, since dividends or shares in the profits of entities are declared exempt, in a series of cases, which with Quite often they can occur in companies, as is the case of having a participation greater than 5% and a holding period of more than one year.
In Lleida on November 9, two thousand and seventeen