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V1136-25 30 June 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
ISD · reducción en la base imponible

Requirements for the 95% reduction in Inheritance and Gift Tax for the donation of shares

Heirs inquire whether they can benefit from a reduction in the taxable base due to share donation from a holding company and which regional legislation applies. The DGT states that to qualify for the reduction, the donor must meet exemption criteria under the Wealth Tax.

The question raised

1.) Whether the consultants will be entitled to the relief established in Article 20 of Law 29/1987, of December 18, on Inheritance and Gift Tax for the donation of the shares they are to receive, as well as the delimitation of the connecting factors for Inheritance and Gift Tax. 2.) Whether the provisions of Article 33.3.c) of the Personal Income Tax Law may be applicable to the parents.

The DGT's ruling

To apply the 95% reduction in the taxable base of the Inheritance and Gift Tax, the donor must meet the exemption requirements for Wealth Tax (economic activity, minimum shareholding, and management functions) and the donee must retain the acquired assets for ten years. The competent Autonomous Community is that in which the donee has resided for the greatest number of days during the five years prior to the accrual. For Personal Income Tax purposes, there shall be no capital gain or loss for the donor if the requirements of section 6 of article 20 of the LISD are met.

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