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V2583-18 21 September 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · nuda propiedad

Applicability of the 95% reduction on the donation of bare ownership of shares and subsequent consolidation of title

The taxpayer inquires about applying the 95% reduction to the donation of bare ownership of shares and the taxation upon the consolidation of full ownership. The DGT rules that a double tax benefit is possible, provided the requirements of the Inheritance and Gift Tax Act and the Wealth Tax Act are met.

The question raised

Question posed: Determination of the value for the purposes of the Inheritance and Gift Tax Law. Settlement for the donation. Settlement in the event of consolidation of ownership and the applicability in such case of the 95% reduction provided for in Article 20.6 of the Tax Law. Corporate operation or divestment in subsidiaries with reinvestment in the business group and effects on compliance with the provisions of Article 20.6.c) of the cited Law.

The DGT's ruling

In the donation of bare ownership of shares, the value is the difference between the fair market value and the value of the usufruct. Upon consolidation of ownership, taxation for the donation is carried out using the value the shares held at the time of the dismemberment of ownership. The 95% reduction may be transferred upon consolidation if it was not entirely exhausted during the acquisition of the bare ownership. The maintenance requirement necessitates preserving the acquisition value in the shares where the reinvestment is materialized.

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