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V1288-22 7 June 2022 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Wealth Tax exemption applies only to direct holdings, not indirect ones

A taxpayer inquired whether the Wealth Tax exemption could be applied to holdings within a holding company and its controlled subsidiaries. The Directorate General for Taxes (DGT) ruled that the exemption is only available to the holding entity itself, as holdings in subsidiary companies do not appear directly in its assets.

The question raised

Whether there is a right to apply the exemption to Wealth Tax in the various entities in which the taxpayer participates directly and indirectly.

The DGT's ruling

To access the exemption, the requirements regarding economic activity, percentage of participation, and management functions must be met. The exemption only applies to holdings of which the taxable person is the direct owner, and therefore does not apply to indirect holdings in subsidiary entities. The scope of the exemption is limited to the proportion of assets necessary for the business activity according to the valuation rules of the law.

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