This benefit is an incentive for the recapitalization of companies through the reinforcement of their equity structure.
A Personal Income Tax (IRS) taxpayer who makes capital contributions in cash to a company in which he holds shares and who is deemed to have lost half of the share capital (under article 35 of the Commercial Companies Code) may deduct up to 20% of those contributions from the gross amount of the profits made available by that company or – should those shares be sold – from the balance between the capital gains and losses.
This 20% deduction will be applied when calculating the taxable income for the year in which the aforementioned constributions are made and in the following five years.
A Personal Income Tax (IRS) taxpayer who makes capital contributions in cash to a company in which he holds shares and who is deemed to have lost half of the share capital (under article 35 of the Commercial Companies Code) may deduct up to 20% of those contributions from the gross amount of the profits made available by that company or – should those shares be sold – from the balance between the capital gains and losses.
This 20% deduction will be applied when calculating the taxable income for the year in which the aforementioned constributions are made and in the following five years.