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V1341-19 10 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
ISD · reducción por donación de participaciones

95% Inheritance and Gift Tax reduction applicable if Wealth Tax exemption requirements are met

A taxpayer over 65 has enquired about the application of the reduction for the donation of shares, the nexus point in Inheritance and Gift Tax, and the tax benefit regarding Personal Income Tax. The DGT clarifies that the reduction is contingent upon meeting the exemption requirements for Wealth Tax and analyses whether the donation could be classified as real estate to determine regional jurisdiction.

The question raised

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

The DGT's ruling

To apply the reduction provided in Article 20.6 of the LISD, it is essential to meet the exemption requirements of Article 4.Eight.Two of the LIP for Wealth Tax. Regarding the nexus in the donation of securities, the general rule is the residence of the donee, unless the securities are not admitted to trading on an official secondary market and there is an intent to evade tax through the transfer of real estate. Finally, for the donor, the non-existence of capital gains or losses in the IRPF shall be presumed if the requirements for the LISD reduction are met, regardless of whether the donee applies the regional reduction.

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