Back to index
V0788-19 12 April 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · transmisiones lucrativas

Dividend distribution does not affect family business tax relief if the acquisition value is not reduced

A query was raised regarding whether dividend distributions in a donated company affect the tax benefits for the donor (Income Tax) and the donees (Gift and Inheritance Tax). The DGT ruled that it does not, provided the operation does not result in a substantial reduction in the acquisition value upon which the relief was applied.

The question raised

Possible effects of said distribution on the tax benefits applied by the donor and the donees in Personal Income Tax and in Inheritance and Gift Tax.

The DGT's ruling

In order for the donor not to realize a capital gain or loss for Personal Income Tax purposes, the requirements of Article 20.6 of the Inheritance and Gift Tax Law must be met. Regarding the donees, the distribution of dividends does not affect the requirement of maintaining the value for ten years, provided that it does not result in a reduction of the acquisition value for which the reduction was applied. This is applicable regardless of whether the dividends originate from results prior to or subsequent to the donation.

Book your free first meeting