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V2788-18 24 October 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · donación

Reduction for donation of company shares applicable if Wealth Tax exemption is met

A query was raised regarding whether the reduction in Inheritance and Gift Tax applies to the donation of shares in a holding company to children. The Directorate General for Taxes (DGT) ruled that it is possible provided the statutory requirements are met, including the exemption of the donated shares from Wealth Tax.

The question raised

Applicability of the reduction provided for in the Inheritance and Gift Tax.

The DGT's ruling

To apply the reduction provided in Article 20.6 of Law 29/1987, each donor must meet the requirements of the regulation, highlighting the exemption from Wealth Tax on the shares subject to donation. In this case, as the requirements regarding economic activity, percentage of ownership, management functions, and remuneration levels are met, the wealth tax exemption applies. The reduction is applicable to both the donation of full ownership and bare ownership.

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