Modifications introduced to the Personal Income Tax by the Entrepreneur Law

Abstract

This paper discusses the modifications made to the Personal Income Tax (PIT) by the law known as Entrepreneur Law, which can be summarized as a regulation of a double fiscal incentive for the investments devoted to the creation of new businesses and the establishment of the special features for its implementation in the range of the PIT of the deduction due to the investment of profits which, being regulated by the rules of the Corporate Income Tax, may be applicable to small-sized businesses.

Regarding the fiscal incentive which is established in order to encourage investments in small or newly created business, it should be noted that it is to be applied in two stages:

• In a first phase, as a deduction in the fee when investing in the newly or recently created businesses by means of a subscription of shares.
• In a second phase, as an exemption when reinvesting the profits derived from the transfer of the above mentioned shares.

And is meant to substitute the rules for exemption, not subject to reinvestment, of the profits derived from the transfer of shares from newly or recently created businesses that, added as a matter of urgency, becomes suppressed (and improved), notwithstanding its implementation in the transitional regime which is established.