The financial result for Corporate Income Tax purposes. Dividends and capital gains arising from the sale of shares. Special cases. Capital losses (and III)

Abstract

The present collaboration analyses the particular cases whereby capital gains arising from the sale of equity instruments are exempt and the recognition of capital losses, together with some practical cases. This will be the last part of the analysis of Article 21 of Law 27/2014. Without any doubt, it is one of the main pillars of Corporate Income Tax; this is logic, provided that it is a tax whose taxable base is formed upon the net accounting profit and, as such, has to resolve all distinction regarding equity and indebtedness and shall set forth an alternative formula to avoid economic double taxation.

Far beyond the fair tax praxis laid down in this section, its wording raises an intuition that a change in the Corporate Income Tax scheme aimed at CBIT, i. e. the taxation on the operating profit, would bring a great level of neutrality and simplicity, hence, of legal certainty, as well as immunity against illegal structures. And all of it with reduced tax rates, with similar collection results, but more in line with the stability function expected from a proper corporation tax.