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V2301-17 12 September 2017 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · cesión de participaciones

Free transfer of shares may be subject to Inheritance and Gift Tax

A query was raised regarding whether the transfer of shares in a commercial entity should be subject to Inheritance and Gift Tax or Property Transfer Tax. The Directorate General for Taxes (DGT) indicates that free transfers are subject to Inheritance and Gift Tax, unless they are deemed to be a donation of real estate.

The question raised

Liability for Inheritance and Gift Tax or for Transfer Tax and Stamp Duty

The DGT's ruling

The gratuitous transfer of shares is subject to Inheritance and Gift Tax pursuant to Article 3.1.b) of Law 29/1987. Notwithstanding, if the entity holds real estate assets and the avoidance requirements of Article 314.2 of the Recast Text of the Securities Market Law are met, the donation shall be deemed a transfer of real estate. In such case, the connecting factor of the Autonomous Community where the real estate is located shall apply.

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