It is a common situation in family groups. One company lends money to another owned by the same person, years go by, the borrower cannot repay it and the debt is waived to clean up the balance sheet. It is often assumed to be an internal move with no tax consequences. Binding ruling V0867-26 of 21 April 2026, issued by the Spanish Directorate General for Taxation (DGT), is a reminder that it is not, whenever the ownership percentages do not match.
The facts submitted
An individual holds 50% of company A and 90% of company B. Company A granted a loan to company B and, faced with the borrower's inability to repay it, is considering waiving the debt. The ruling request asks about the tax consequences for both companies and for the common shareholder.
The preliminary step: confirming that a loan actually existed
Before analysing the waiver itself, the Directorate General for Taxation introduces a caveat of real practical weight. Given the time elapsed between the granting of the funds and the waiver, substance must prevail over form when determining whether the original transfer had the features of a genuine loan agreement under Recognition and Measurement Standard 9 of the Spanish General Accounting Plan. It is relevant to check whether a maturity date and an interest rate existed, and whether the cash flows typical of a loan actually took place.
If the original transfer of funds was not made as a loan, the correct course is to restate it as an accounting error under Recognition and Measurement Standard 22, which leads to a different outcome from the one set out below. The ruling notes that this characterisation is not for the Directorate General to determine, and that its answer proceeds on the assumption, stated by the applicant, that a genuine financing transaction existed.
The accounting treatment of the waiver
A debt waiver is governed by the rules on gifts under article 1,187 of the Spanish Civil Code, so its accounting treatment follows Recognition and Measurement Standard 18 of the Spanish General Accounting Plan, which sets out a general rule and a special rule for gifts made by shareholders.
Where the transfer takes place between two companies controlled by the same shareholder, the report from the Spanish Accounting and Audit Institute (ICAC) attached to the ruling applies the special rule in paragraph 2 of that standard by analogy, in line with reply 4 of ICAC's Official Bulletin (BOICAC) number 79 and article 9 of the ICAC Resolution of 5 March 2019. The underlying economic reality is twofold: a distribution of funds by the lending company and a simultaneous contribution to the borrowing company, in proportion to the shareholder's holding.
That proportionality is the key point. The shareholder treatment reaches only the percentage the shareholder holds in each entity. The excess is accounted for under the general rules on gifts, because for that portion the accounting rules treat the shareholder as acting as a third party, not as a shareholder.
Applying this to the case and its tax effects
Company A derecognises the receivable at its book value and records the waiver as a charge to reserves for 50%, the common shareholder's holding, and as an expense for the remaining 50%, since that portion represents a loss of value for the other owners.
Company B derecognises the debt with a credit to the shareholder contributions equity account for 90% and recognises income for the remaining 10%, which represents a gain for the owners other than the common shareholder.
The effects for corporate income tax purposes are asymmetric. The lending company's expense is not deductible, since it is characterised as a gift or gratuitous transfer under article 15.e) of Law 27/2014. The borrowing company's income, however, is included in its taxable base under article 10.3 of the same Act. The waiver is not neutral: the portion exceeding the shareholder's holding creates a non-deductible expense on one side and taxable income on the other.
The ruling also notes that both entities are related parties, since the same shareholder holds more than 25% of the capital of each, which triggers the arm's-length valuation rules under article 18.
What the ruling leaves unanswered
It is worth highlighting a limitation the ruling itself sets out. Relying on article 88.1 of the General Tax Act, the Directorate General for Taxation states that it does not rule on taxpayers other than the applicant entities, even though the question raised also concerned the shareholder. That taxpayer's position is left unanswered, and it is no minor point: under the scheme described, the individual receives a distribution of reserves from the lending company and then makes a contribution to the equity of the borrowing company.
Practical implications and conclusion
Three recommendations follow from the ruling. Review the ownership percentages before deciding, since they determine which portion falls outside the shareholder treatment and bears a tax cost. Check the documentation of the original loan, since without a maturity date, agreed interest and actual cash flows, characterising it as financing is difficult to sustain. And weigh up alternatives before signing, starting with capitalising the receivable.
The position is clear as regards the companies, but it rests on a starting assumption taken from the applicant and leaves the shareholder's situation unanswered. Both points call for an individual analysis before deciding.
At Lex·on we advise on taxation of family groups and wealth reorganisation from Palma de Mallorca and Manacor. If you have outstanding loans between companies to resolve, we can review how they fit before you decide.
Source: Binding ruling V0867-26 of 21 April 2026, Spanish Directorate General for Taxation, Sub-Directorate for Corporate Income Tax.
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This article is for information purposes only and reflects the administrative position in force on the date of publication. It does not constitute legal or tax advice and does not replace an individual analysis of each case.