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V2295-20 7 July 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · transmisión lucrativa

No capital gains or losses shall be recognised on the donation of a business if ISD Law requirements are met

A retired pharmacist enquires whether donating his business to his son allows for the exemption of capital gains or losses. The DGT rules that the donation of stock is taxed as income from economic activity, but fixed assets may not trigger taxation if the requirements of the Inheritance and Gift Tax Law are satisfied.

The question raised

Application of the exemption provided for in article 33.3.c) of the Personal Income Tax Law to the donation of a business.

The DGT's ruling

The donation of inventory generates full income from economic activity valued at market price. Regarding fixed assets, the non-existence of capital gains or losses shall be estimated if the requirements of section 6 of article 20 of Law 29/1987 are met. To this end, the assets must have been used uninterruptedly for at least five years prior to the transfer. The receipt of a retirement pension does not prevent the application of this tax benefit.

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