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V0580-14 5 March 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

Inapplicability of the 95% Inheritance Tax reduction due to failure to meet Wealth Tax exemption requirements

A query was raised regarding whether a son, acting as a proxy for a company, could benefit from the reduction applicable to the donation of shares by his father. The Directorate General for Taxes (DGT) ruled that this is not possible because the donor fails to meet the Wealth Tax exemption requirements, as he does not receive remuneration for management functions.

The question raised

Applicability of the reduction provided for in Article 20.6 of the Inheritance and Gift Tax Law and Article 33.3.c) of the Personal Income Tax Law.

The DGT's ruling

To apply the 95% reduction to the taxable base of the donation of shares, the donor must be entitled to the exemption in Wealth Tax. In this case, the donor does not meet the condition of performing management functions while receiving remuneration exceeding 50% of their income. The fact that the donee is an attorney-in-fact does not allow for the joint application of the exemption if they do not hold ownership of the capital.

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