BROSETA analyzes the implications of the tax reform on the structures of Business Financing

The new tax law represents a new regulation for economic entities, the tax treatment of financial expenses and taxation of shareholders.

BROSETA has held the Conference “Funding the Company within the new Corporation Tax”, a meeting in which the changes introduced by the new law 27/2014 have been analysed.

The Conference, organized by the Tax Law Department of BROSETA, took place at the headquarters of CIERVAL, and welcomed the participation of Javier López Mora, Secretary-General of CIERVAL, at the opening of the session. Also, attending as speakers were Begoña Garcia-Rozado, Deputy Director-General of Taxes on Legal Entities at the Ministry of finance; and Enrique Beaus, Head of the Tax Department of the Valencia Office of BROSETA. Carlos Diéguez, Partner and Head of the tax Department of BROSETA, moderated the Symposium after the presentations.

During the session, Begoña García-Rozado outlined the main changes and fundamental objectives of the new tax law, aimed at “encouraging self-funding and increasing employment”, and highlighted the details of some measures and incentives such as the capitalisation reserve, the unavailable reserve and the treatment of double taxation.

For his part, Enrique Beaus spoke about tax treatment of the structures of business financing after the tax reform, emphasizing the doubts generated by the impact of new consideration of company assets, the limitation of the deduction of expenses, the exemption of double taxation of dividends and exemption from double taxation of capital gains. Beaus pointed out, moreover, that the new law “Doesn’t clarify criteria for related transactions in equity partner loans for private individuals/companies, on which issue there is still conflict”.

Amongst other issues, Beaus highlighted the doubts generated by the concept of valid economic reason, since according to the regulation, financial expenditures with amounts owed to group companies aimed at the acquisition of companies, except for valid economic reasons of accreditation are not deductible. In this sense, he highlighted other risks of conflict in the application of the standard, such as participatory loans from third parties or partners that are individuals. As Beaus points out, “not included in the article are those things that are considered tax-deductible, so we understand that it is of general application”.

The Conference concluded with a round table moderated by Carlos Diéguez, who  raised a debate about the complexity of the tax law on companies that have been recently modified. Managers of companies, tax consultants and managers of financial assets from various sectors attended the event and had the opportunity to raise questions, reflections and enquiries on the new regulation and its practical implications for the company, with particular attention to aspects relating to corporate financing.