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V1778-25 3 October 2025 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · donación

Gift of property to a municipality exempt from corporate tax and allows charitable deduction

A consultancy firm plans to donate a flat from a development to a municipality. The DGT rules that the generated capital gain is exempt from corporate tax and that the company can claim a charitable deduction, although the expense is not deductible.

The DGT's ruling

Capital gains arising from the donation of real estate to a City Council are exempt from Corporate Income Tax pursuant to Law 49/2002. The entity is entitled to a deduction in the gross tax liability amounting to 40% of the deduction base, provided that the donation is irrevocable, unconditional, and absolute. Notwithstanding, the donation is not considered a tax-deductible expense for the purposes of the taxable base.

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