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V1970-15 23 June 2015 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · nuda propiedad

Application of the 95% reduction in the donation of bare ownership of shares and in its consolidation

A query is made regarding the valuation and application of reductions in the donation of bare ownership of shares and the subsequent consolidation of ownership. The DGT clarifies that the double tax benefit may be applied and how taxation must be handled upon the death of the usufructuary.

The question raised

Question posed: Valuation and settlement in Inheritance and Gift Tax regarding the acquisition of bare ownership of shares. Taxation at the moment of consolidation of ownership. Application of the reduction both upon the acquisition of bare ownership and upon the consolidation of ownership upon the death of the usufructuary. Receipt by the donor and usufructuary of remuneration for the performance of representative and executive functions in subsidiary entities.

The DGT's ruling

In the donation of bare ownership, the value is the difference between the real value and the usufruct, applying the average tax rate of the full value. Upon consolidation of ownership due to death, taxation is based on the value attributed to the bare ownership at its inception, applying the average tax rate and any remaining reductions. The double tax benefit is possible if the requirements of Law 29/1987 and the Wealth Tax exemption are met. Performing management functions in subsidiaries does not prevent the reduction if the business activity requirements are met within the donated entity.

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