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V1480-20 20 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
ISD · reducción en la base imponible

Requirements for 95% ISD reduction via share donation to children and application of regional law to non-residents

A taxpayer enquires about the application of a reduction in the Inheritance and Gift Tax upon donating shares in their companies to their children. The DGT examines the conditions of the LISD and LIP, and addresses the applicable legislation for a recipient resident in Switzerland.

The question raised

1.) Application of article 20.6 of Law 29/1987 to the donees.

The DGT's ruling

For the 95% reduction in the ISD, the holdings must be exempt from Wealth Tax, which requires economic activity in the entity and its subsidiaries. The donor must be 65 years of age or older and cease their management functions. The donees must maintain what was acquired and preserve the Wealth Tax exemption for ten years. In the IRPF, there is no capital gain if the requirements of art. 20.6 LISD are met.

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