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V0013-21 8 January 2021 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

The Wealth Tax exemption may be applied if a family member exercises management of the entity

The taxpayer asks whether his holdings in a real estate leasing company would be exempt from Wealth Tax if his son-in-law were to exercise management on a part-time basis with remuneration exceeding 50% of his total income. The DGT responds that the exemption is possible if the requirements of economic activity, ownership, and management by a family member are met.

The question raised

Question posed: Whether the taxpayer could consider the holdings in the entity exempt from Wealth Tax if the current general manager of the entity (the taxpayer's son-in-law) were to take over management functions on a part-time basis, receiving remuneration representing more than 50 percent of the total of his business, professional, and personal labor income.

The DGT's ruling

For the exemption of holdings in Wealth Tax, the entity must carry out an economic activity, which occurs in real estate leasing if at least one person is employed under a full-time employment contract. The taxpayer must hold at least 5% of the capital and the management functions must be exercised by him or by someone within his family group. It is not necessary for the manager to work full-time, provided that his position involves effective intervention in decisions and his remuneration exceeds 50% of his total income.

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