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V1106-24 22 May 2024 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · plusvalía

Gains from land donations to municipalities exempt from corporate tax

A company asks whether capital gains from donating land to a municipality are tax-exempt. The DGT responds that such gains are exempt under the Mecenazgo Law.

The question raised

Whether the capital gains identified on the occasion of said donation would be exempt from taxation for Corporate Income Tax purposes.

The DGT's ruling

The difference between the market value of the donated land and its tax value constitutes income for Corporate Income Tax purposes. However, these capital gains are exempt from taxation when donations are made to Local Entities under Law 49/2002. The donation shall not be a deductible expense, but it shall entitle the taxpayer to a deduction in the gross tax liability of 40% (or 50% if recurrence requirements are met) subject to the limits of the patronage regulations.

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