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V2720-18 15 October 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción por empresa familiar

95% Inheritance Tax reduction applicable to company shares

A query was raised regarding whether heirs can apply the family business reduction if they were neither owners nor managers prior to the deceased's death. The DGT has ruled that they can, provided the deceased met the exemption requirements for Wealth Tax.

The question raised

Applicability of the reduction provided for in Article 20.2.c) of the Inheritance and Gift Tax Law. Requirements regarding share ownership, management functions, and remuneration upon the death of the deceased.

The DGT's ruling

The 95% reduction under Article 20.2.c) of Law 29/1987 requires that the deceased met the exemption requirements for Wealth Tax. It is not necessary for the heirs to have been shareholders prior to the death, nor for them to hold management positions or receive remuneration following the acquisition. The ten-year maintenance requirement refers to the acquisition value, allowing for disposal if the value is maintained in other assets.

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