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V0594-24 9 April 2024 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

95% Inheritance and Gift Tax reduction denied due to failure to meet Wealth Tax exemption requirements

A query was raised regarding whether a 95% reduction in Inheritance and Gift Tax applies to the donation of shares in a real estate leasing company. The Directorate General for Taxes (DGT) ruled that this is not possible because the company does not meet the requirements for exemption from Wealth Tax.

The DGT's ruling

To apply the 95% reduction in Inheritance and Gift Tax, the donor must be entitled to the exemption in Wealth Tax. In the case of real estate leasing, the activity is only considered economic if at least one person is employed under a full-time employment contract. It is not possible for the same person to perform management functions (commercial link) and, simultaneously, fulfill the employment contract requirement for the leasing activity. Furthermore, management functions must be remunerated to comply with the exemption requirements.

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