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The Government is considering the possibility of progressively eliminating this tax at centralgovernment level, although since it is a tax that the Autonomous Community Governments areresponsible for collecting, it has already been eliminated in practice by some AutonomousCommunity Governments (Cataluña, Cantabria, the Basque Country and Madrid).Transfer tax and stamp taxCorporate TransactionsTransactions such as incorporation, reduction at companies, are subject to a general tax rate 1%.The Corporate Law has eliminated the cases in which tax is levied on mergers, spin-offs, assetcontributions and exchanges of securities, these transactions being defined in accordance withthe Corporate Income Tax Law (special tax neutrality regime).Since December 2010, specific commercial operations such as the incorporation and socialcapital increase of companies are not subject to this tax.Transfers of Real EstateReal estate transfers are subject to a general tax rate 6%. The Autonomous Communities areentitled to apply a different rate in certain cases. Most of them have decided to apply a 7% to a10% rate to real estate transfers and a 1% to 2% rate of Stamp Tax to certain transactions.However, if the vendor is a company, the transfer of build or the first supply of buildings is taxedunder VAT. Second and subsequent supplies of real estate by companies, traders, orprofessionals in the course of their activity may opt to pay either transfer tax or VAT. Thisoption is applicable if the acquire is a trader or professional who can deduct all his VAT.Transfers of shares of Spanish companies are generally exempt from any indirect taxation, exceptwhen more than 50 % of the capital stock of a company is transferred (or shares increasing thestake in a certain entity when the acquirer already has more than 50 %) and at least 50 % of theassets of such company consist of real estate located in Spain: in this case the transaction will beconsidered for indirect taxation purposes to be a transfer of real estate subject to transfer tax.Transfer tax is a cost to the acquirer/beneficiary.Transfers of Movable Assets and Administrative Concessions.Such transfers are subject to a general tax rate of 4%.Mercantile Law Public Deeds36