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V1528-25 21 August 2025 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción estatal

Requirements for the 95% reduction on the donation of social shares (Art. 20.6 LISD)

The inquirer asks whether the donation of shares in a family company by their parents allows for a 95% reduction in Inheritance and Gift Tax. The DGT rules that this is possible provided that the donors meet the age requirements, cease their management roles, and the donee maintains eligibility for Wealth Tax exemptions for ten years.

The question raised

Question posed: Treatment for Inheritance and Gift Tax purposes of the donation received by the taxpayer of the shares in company A owned by his parents. Specifically, it is intended to determine whether said transfer meets the requirements of Article 20.6 of the LISD, for the purpose of applying the 95 percent state reduction.

The DGT's ruling

To apply the 95% reduction provided in Article 20.6 of the LISD in the transfer of shares, requirements regarding the kinship, age, or incapacity of the donors must be met, and they must cease to perform management functions. Likewise, the donee must retain the acquired assets and be entitled to the exemption from Wealth Tax during the ten years following the donation. The exemption from Wealth Tax requires that the entity does not primarily manage real estate or movable property, that the ownership percentages are met, and that management functions are performed with appropriate remuneration.

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What is published here, applied to a company or a specific case. The first meeting is free.

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