Skip to content
Back to index
V0011-24 13 February 2024 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

95% reduction in Inheritance and Gift Tax may apply to share transfers under specific requirements

A taxpayer has enquired whether the 95% reduction in Inheritance and Gift Tax can be applied when receiving shares from their mother. The Directorate General for Taxes (DGT) states that this requires compliance with Wealth Tax exemptions and other specific conditions.

The question raised

Whether the 95 percent reduction in the taxable base of the Inheritance and Gift Tax provided for in article 20.6 of the ISD Law is applicable. And for this purpose, whether the requirements for the application of the exemption in Wealth Tax provided for in article 4.Eight.Two of the LIP are met.

The DGT's ruling

To apply the 95% reduction in the taxable base of the ISD Law, it is a necessary condition that the holdings are exempt from Wealth Tax. The performance of management functions for the wealth tax exemption is determined by the nature of the functions and not solely by the position, calculating the remuneration from the last fiscal year of Personal Income Tax prior to the donation. The contribution of the holdings to a new holding company does not breach the requirement to maintain what was acquired, provided that no operations are carried out that substantially diminish the value of the acquisition.

Book your free first meeting