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V1816-24 19 July 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Donation of company shares to a City Council is exempt from Personal Income Tax

A taxpayer inquired whether the capital gain arising from the donation of shares in a limited company to a City Council is exempt from Personal Income Tax (IRPF). The Directorate General of Taxes (DGT) ruled that such a gain is exempt as it constitutes a donation to a local authority.

The question raised

Whether the capital gain that could be generated would be exempt from Personal Income Tax (IRPF).

The DGT's ruling

The donation of assets other than money generates a change in net worth that may result in a gain or a loss. Capital gains from donations to entities under Article 68.3 of the Personal Income Tax Law (LIRPF) are exempt. Since the City Council is a local entity, the gain from donating shares in a limited liability company is exempt from tax.

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