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V1816-18 21 June 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · adquisición mortis causa

Selling an asset used for business purposes to settle a debt may lead to the loss of the family business relief

A query was raised regarding whether selling an asset used for economic activity to repay a debt triggers the loss of the family business relief under Inheritance Tax. The DGT indicates that the law requires the acquisition value to be maintained and that acts of disposal which substantially reduce said value are not permitted.

The question raised

If the sale of an asset used in the economic activity to settle a debt does not affect said activity, would it entail the loss of the right to the reduction applied.

The DGT's ruling

The legal requirement to maintain the acquisition refers to maintaining the value for which the reduction was applied. Acts of disposal that, directly or indirectly, could lead to a substantial reduction of said value are prohibited. It is not possible to determine whether the sale to settle a debt constitutes a substantial reduction without knowing its relative importance.

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