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V0583-22 21 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · pacto de mejora

No capital gains or losses on property transfers via improvement pacts

A taxpayer enquired whether transferring a property to their daughter through an improvement pact under Galician civil law is subject to Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that this transaction is considered a gratuitous transfer by reason of death and, therefore, does not generate any capital gain or loss.

The question raised

Taxation of the operation under Personal Income Tax.

The DGT's ruling

The transfer of assets through a pact of improvement is considered a gratuitous transfer mortis causa for the application of Article 33.3.b) of the Personal Income Tax Law. This criterion extends to other succession pacts with present effects under various regional laws. In these cases, it is estimated that no capital gain or loss subject to tax exists.

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