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V2402-19 12 September 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

95% reduction on donation of shares applicable if Wealth Tax exemption is met

The taxpayer enquires whether they can apply regional reductions from the Valencian Community alongside the state reduction for the donation of shares. The DGT states it lacks jurisdiction over Valencian regulations and outlines the requirements for the state reduction.

The question raised

Whether the reduction established by Law 13/1997, of December 23, of the Generalitat Valenciana, or, failing that, Article 20.6 of Law 29/1987, of December 18, on Inheritance and Gift Tax, may be applied.

The DGT's ruling

To apply the 95% reduction in the tax base for the donation of shares (Art. 20.6 Law 29/1987), it is a prerequisite that the shares enjoy the exemption from Wealth Tax. This exemption requires that the entity does not primarily manage movable or immovable property, that the kinship group holds at least 20% of the capital, and that at least one of them performs management functions with remuneration exceeding 50% of their income. Furthermore, the requirements regarding the age or incapacity of the donor and the maintenance of the acquisition by the donee must be met.

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