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V0042-22 12 January 2022 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción por empresa familiar

Family business relief in inheritance tax is maintained if acquisition value is preserved through reinvestment

The taxpayer asks whether a reduction in the entity's capital affects the requirement to maintain the investment for Inheritance Tax purposes. The DGT rules that there is no substantial reduction if the acquisition value is preserved within the estate through reinvestment in other assets.

The question raised

Whether the entity's capital reduction operation would affect the requirement for the maintenance of the investment.

The DGT's ruling

The maintenance of value required by Article 20.2.c) of Law 29/1987 does not require the continuity of the activity, but rather the maintenance of the acquisition value. Reinvestment in real estate, shares, investment funds, deposits, or financial products is permitted to avoid a substantial reduction in value. If the partner maintains the value of their corresponding share within their assets, it is not considered that a reduction in the acquisition value has occurred.

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