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V2769-21 11 November 2021 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Proceeds from sale of shares do not count as non-business assets for Wealth Tax exemption purposes

The taxpayer asks whether funds obtained from the sale of shares in an entity should be classified as non-business assets when determining eligibility for tax exemptions. The Directorate General for Taxes (DGT) rules that, through a purposive interpretation, these funds are not counted as non-business assets provided that the entity sold carries out an economic activity.

The question raised

Confirmation that for the purposes of determining whether entity JB meets the requirement of being an entity whose primary activity does not consist of the management of movable or immovable property, the cash generated from the transfer of its shareholding in the capital stock of entity PT shall not be counted as securities or elements not used for economic activity.

The DGT's ruling

To determine whether an entity's primary activity is the management of movable or immovable property, cash, investment funds, or similar financial products obtained from the sale of holdings in entities engaged in an economic activity shall not be counted as non-business assets or elements. This interpretation treats income from the transfer of holdings as analogous to dividends derived from economic activities. However, the determination of which assets are used for economic activity for the purposes of the exemption is referred to the Personal Income Tax regulations.

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