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V0230-14 30 January 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción por donación de participaciones

Applicability of the 95% reduction on donations of shares subject to management function requirements

A family group has enquired whether they can apply the 95% reduction to the donation of corporate shares. The DGT has ruled that this requires meeting the legal requirements regarding management functions and remuneration, regardless of the type of relationship or contract held with the entity.

The question raised

Applicability of the 95% reduction provided for in Article 20.6 of the Inheritance and Gift Tax Law.

The DGT's ruling

To apply the 95% reduction in the transfer of shares, the requirement must be met that the donee is entitled to the exemption in the Wealth Tax. This requires that management functions are effectively exercised and that the legally required remuneration is received, being irrelevant the manner in which they are made effective or the designation of the position. Effective intervention in company decisions is a factual matter that must be assessed by the Management Office.

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