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V1996-18 3 July 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción por donación

Wealth Tax exemption is a prerequisite for the reduction on donation of shares

A query was raised regarding whether the requirements for the 95% reduction in Inheritance and Gift Tax are met when donating company shares to children. The DGT indicates that exemption from Wealth Tax is a necessary condition to access this reduction.

The question raised

Compliance with the requirements for the exemption from Wealth Tax and for the reduction provided for in the Inheritance and Gift Tax Law.

The DGT's ruling

The application of the reduction provided for in Article 20.6 of Law 29/1987 requires, as a necessary condition, compliance with the requirements for the exemption from Wealth Tax. The requirements for the wealth exemption must be determined at the time the tax accrues, except for the calculation of income, which shall be based on the last tax period prior to the donation. Furthermore, in donations of common assets of the marital partnership, two separate donations are considered, and the donor must have reached 65 years of age at the time of the transfer.

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