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V2186-19 14 August 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

95% reduction in gift tax on shares applicable if Wealth Tax exemption is met

A taxpayer inquired whether a 95% reduction could be applied to the donation of shares in a family company. The Directorate General for Taxes (DGT) ruled that for this reduction to apply, it is an essential requirement that the shares be exempt from Wealth Tax.

The question raised

Possibility of applying the 95% reduction provided for in the Inheritance and Gift Tax Law to the proposed gift.

The DGT's ruling

To apply the 95% reduction in the inter vivos transfer of shares to descendants, the exemption in Wealth Tax must be met. In the case of joint holdings, the requirement to perform management functions and receive the corresponding remuneration may be fulfilled by one of the members of the kinship group. In this ruling, this management requirement is understood to be met as it is exercised by the donor's son.

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