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V1178-18 9 May 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención en el impuesto sobre el patrimonio

Eligibility for Wealth Tax exemption and Inheritance and Gift Tax reductions

The applicant inquires whether shares in a commercial company received via gift may qualify for Wealth Tax exemption and reductions in Inheritance and Gift Tax. The DGT confirms that both the wealth tax exemption and the gift tax reduction would apply, provided all legal requirements are met.

The question raised

Exemption from Wealth Tax on shareholdings and applicability of the reduction provided for in the Inheritance and Gift Tax Law.

The DGT's ruling

The exemption from Wealth Tax applies if the entity does not primarily manage movable or immovable property, the holding is at least 5% individually or 20% within a family group, and the taxpayer performs management functions receiving more than 50% of their business, professional, or employment income. Likewise, the 95% reduction in the taxable base of the Inheritance and Gift Tax is applicable to inter vivos transfers in favor of a spouse, descendants, or adoptees, provided that the requirements regarding the donor's age or incapacity, the cessation of management functions, and the maintenance of the wealth tax exemption by the donee for ten years are met.

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