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V1090-19 21 May 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

No capital gains or losses shall be recognised on the donation of a business activity if certain requirements are met

A taxpayer over the age of 65 has requested clarification on whether the donation of their property rental business to their children triggers capital gains or losses for Personal Income Tax (IRPF) purposes. The Directorate General of Taxes (DGT) has ruled that if the requirements of the Inheritance and Gift Tax Law for the business transfer reduction are met, no capital gain or loss shall be recognised for the donor.

The question raised

Whether the donation would give rise to a capital gain or loss in the Personal Income Tax of the donor.

The DGT's ruling

The transfer of assets used in an economic activity generates a capital gain or loss for the donor. However, the non-existence of a capital gain or loss shall be presumed if the transfer concerns a company or shares under the terms of Article 20.6 of Law 29/1987. To this end, the assets must have been used in the activity uninterruptedly for at least five years prior to the transfer and the requirements of said inheritance and gift tax regulation must be met.

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