STORIES

6 October, 2017

The new tax on luxury assets held by companies – Law 6 / 2017

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The establishment of this new tax has been justified, in part, on the purpose of reducing tax evasion practices consisting of shifting private assets into company structures.

On May 12 the Catalan Official Gazette published Law 6 / 2017 which rules the new tax on luxury assets held by companies.

The establishment of this new tax has been justified, in part, on the purpose of reducing tax evasion practices consisting of shifting private assets into company structures.

This tax levies the holding of qualifying luxury assets located in Cataluña, despite the wording of the Law does not clarify whether it applies only to companies located in this region or also out of it.

Although this rule has already entered into force, the tax form has not been approved yet, as it is informed in the web page of the Agencia Tributaria de Cataluña, an approval which is not expected to take place before 2018.

The assets levied by this tax, located in Cataluña, are the following:

  • Real estate.
  • Motor vehicles with horsepower equal to or greater than 200.
  • Recreational boats.
  • Airplanes.
  • Art objects and antiques.
  • Jewellery.

The following assets are qualified as non – productive, despite the rules do not establish during which period or at which moment in time these requirements need to be met:

  • Assets ceded without consideration for the private use to the shareholders of the company or tax –related parties, unless a fringe benefit is declared for the purposes of Personal income tax.
  • Assets ceded for a price to the shareholders or tax – related parties, unless a market price is paid, they effectively work for the company and get paid a remuneration higher than the assignment price.
  • Assets not affected to any economic activity or public service.

This is a tax very similar to the already existing Wealth tax which levies individuals, (it is even subject to the same tax rates), and which could generate cases of double taxation as the companies’ shares are also levied by Wealth tax. It is, therefore, important to follow its development in the short term as well as its implications in companies holding assets which may qualify as non – productive.

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