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V0693-22 30 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

No capital gains tax on share donations if LISD requirements are met

Elderly parents wish to donate company shares to their children while retaining their management positions. The DGT has ruled that no capital gains tax will be due for Income Tax purposes, provided the requirements of the Inheritance and Gift Tax Act are satisfied.

The question raised

Question posed: Whether the provisions of Article 33.3.c) of the Personal Income Tax Law are applicable to the donation.

The DGT's ruling

In order for no capital gain or loss to exist in the transfer, the requirements of Article 20.6 of the LISD must be met. This includes that the donor meets the age or disability conditions and that, if they perform management functions, they cease to receive them (not counting mere membership in the Board of Directors). Furthermore, the exemption from Wealth Tax must exist and the donee must maintain the right to said exemption for ten years. The contribution of the donated shares to a holding company does not breach the maintenance requirement, provided that the value and the right to the Wealth Tax exemption are preserved.

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