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V2717-23 6 October 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · pacto de mejora

No tax on capital gains from asset transfers via improvement pacts

A taxpayer inquired whether transferring a property to their children through an improvement pact (under Galician civil law) is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that these types of succession pacts are considered gratuitous transfers by reason of death.

The question raised

Impact of the transfer on the Personal Income Tax liability of the beneficiary.

The DGT's ruling

The transfer of assets in the present through an improvement pact is considered a gratuitous transfer mortis causa for the application of Article 33.3.b) of the Personal Income Tax Law. Therefore, it is estimated that there is no capital gain or loss subject to tax. This criterion extends to other succession pacts with present effects under various regional laws.

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