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V2192-14 6 August 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

No capital gains tax on share donations if Article 20.6 LISD requirements are met

A query was raised regarding whether the donation of shares in a family business allows for exemptions from Wealth Tax, reductions in Inheritance and Gift Tax (IGT), and the non-taxation of capital gains for Personal Income Tax purposes. The DGT confirms that these tax benefits apply provided the requirements of the IGT regulations are satisfied.

The question raised

Whether the provisions of Article 33.3.c) of the Personal Income Tax Law are applicable to the gift, which establishes the non-existence of capital gains or losses for the lucrative transfers of companies or holdings referred to in the aforementioned paragraph 6 of Article 20 of the Inheritance and Gift Tax Law, and whether the aforementioned exemption in Wealth Tax and reduction in Inheritance and Gift Tax are also applicable.

The DGT's ruling

To qualify for the exemption from Wealth Tax, the requirements regarding economic activity, minimum shareholding, and management functions must be met. In Inheritance and Gift Tax, a 95% reduction applies if the donor is 65 years of age or has a disability and the donee maintains the right to the wealth tax exemption for ten years. Regarding Personal Income Tax, no capital gain or loss arises for the donor if the requirements of Article 20.6 of the Inheritance and Gift Tax Law are met, regardless of whether the donee applies the reduction or not. The donee is subrogated into the position of the donor regarding the values and acquisition dates.

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