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V1912-18 28 June 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

95% Inheritance Tax reduction applicable to the donation of company shares

A taxpayer inquired about whether the reduction in the taxable base applies to the donation of shares in a commercial entity to their children. The Directorate General for Taxes (DGT) confirmed that the reduction is applicable, provided the requirements of the Inheritance and Gift Tax Law are met and the previous exemption from Wealth Tax has been satisfied.

The question raised

Applicability of the reduction provided for in Article 20.6 of the Inheritance and Gift Tax Law.

The DGT's ruling

To apply the 95% reduction in the inter vivos transfer of shares to descendants, the exemption from Wealth Tax must concurrently apply. The donor must be 65 years of age or older (or have absolute incapacity/severe disability) and, if performing management functions, must resign from them and cease to receive remuneration for them. The donee must maintain the acquired assets and be entitled to the Wealth Tax exemption for ten years.

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