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V1339-19 10 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IS · reducción por transmisión de participaciones

Holdings granting at least 5% of voting rights are not treated as non-business assets under certain conditions

A query was raised regarding the application of reductions in Inheritance and Gift Tax following the donation of shares and its impact on Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) clarifies that for Wealth Tax exemptions, certain holdings are not counted as non-business assets if management requirements are met, and that the absence of capital gains for IRPF purposes depends on compliance with the requirements of the Inheritance and Gift Tax Law.

The question raised

1.) Application of the reduction provided for in Article 20.6 of Law 29/1987, of December 18, on Inheritance and Gift Tax.

The DGT's ruling

For the exemption from Wealth Tax, holdings in entities shall not be computed as non-business assets if they grant at least 5% of voting rights, are held for the purpose of directing and managing the holding, material and human resources are available, and the investee entity does not manage a portfolio of movable or immovable property. In Personal Income Tax (IRPF), the non-existence of capital gains or losses in lucrative transfers is estimated if the requirements of Article 20.6 of the LISD are met, regardless of whether the donee applies the reduction. The assignment of assets to the economic activity is determined according to the IRPF.

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