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V0201-22 8 February 2022 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

Reduction for donation of shares requires compliance with Wealth Tax exemption

A taxpayer inquired about proving the performance of management functions to apply a reduction in Inheritance and Gift Tax. The DGT clarified that the management requirement can be met by any member of the family group and that partial retirement does not prevent the exemption.

The question raised

First question raised: Whether, for the purpose of proving the performance of management functions, the minutes of shareholders' meetings approving the management functions exercised by both the father and the applicant would constitute adequate means of proof, as well as the employment contracts signed and approved in the shareholders' meeting specifying the functions and the remuneration received for them.

The DGT's ruling

For the reduction under art. 20.6 LISD, exemption from Wealth Tax is required. The performance of management functions may be evidenced by any member of the family group, provided they receive remuneration exceeding 50% of their income. The relevant factor is that the position entails management and administration functions, regardless of the title. For the calculation of income, those from the last tax period prior to the donation must be considered.

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