On 12 May 2012, the Official Gazette published Royal Decree-Law 18/2012, of 11 May 2012, approving additional measures to improve the balance sheet of the financial entities that were adversely impacted by the loss of value of immovable assets.

The decree-law entered into force on the day of its publication, 12 May 2012.

The decree-law includes several tax measures in order to facilitate the contribution of immovable assets by the financial entities to new companies incorporated with the purpose of managing those assets.

The measures are summarized below.

Tax regime of the contribution of assets to joint stock corporations dealing with the management of those assets

• The special tax regime of mergers, divisions, contributions of assets and exchanges of securities, will be applicable to the transfer of immovable assets received as a payment of debts. According to the decree-law, those assets must be contributed by the financial entities to a joint stock company.
• The transfer of the shares received in exchange of the contribution of the assets is exempt from transfer tax.

Corporate income tax

Capital gains derived from the transfer of immovable urban property, classified in the balance sheet as non-current assets and acquired from 12 May 2012 until 31 December 2012, are 50% exempt from corporate income tax.

The exemption does not apply when the asset had been acquired or transferred to an entity forming a group for accounting purposes, as established in article 42 of the Commercial Code.

Individual income tax

Capital gains, derived from the transfer of immovable urban properties acquired from 12 May 2012 until 31 December 2012, are 50% exempt from individual income tax.

The exemption will not apply where property had been acquired or transferred to the spouse or any other relatives within the second degree of relationship.

Non-resident’s income tax

Capital gains obtained without a permanent establishment and derived from the transfer of immovable urban property located in Spain, acquired from 12 May 2012 until 31 December 2012, are 50% exempt from non-resident’s income tax.

The exemption does not apply when:

• Where the taxpayer is a company, the asset had been acquired or transferred to an entity forming a group for accounting purposes, as established in article 42 of the Commercial Code.
• Where the taxpayer is an individual, the assets had been acquired or transferred to the spouse or any other relatives within the second degree of relationship.

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