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V2945-21 19 November 2021 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Wealth Tax exemption requires meeting activity, ownership, and management requirements in each entity

The taxpayer inquired whether they could apply for the exemption on holdings in companies under the Special Tax Regime (STM) while owning the entity indirectly through QQI. The Directorate General for Taxes (DGT) ruled that indirect ownership cannot be counted towards the STM exemption and that the requirements for activity, ownership, and management must be met separately for each entity.

The question raised

Application of Article 4.Eight.Two of Law 19/1991. It is also requested to determine whether, in addition to effectively exercising management functions at STM, the remuneration exceeding 50 percent of the total professional, business, and personal work income must derive from this company or may derive from QQI, the administrator of the former, given that the sole function of the undersigned is the management of STM as a representative of QQI.

The DGT's ruling

To access the exemption provided in Article 4.Eight.Two of the LIP, it is necessary to individually satisfy the requirements regarding economic activity, percentage of participation, and management functions in each entity. Indirect participation in a company does not allow for compliance with the minimum ownership requirement of 5 percent. Likewise, for the entity where management functions are exercised, the taxpayer must receive remuneration representing more than 50 percent of their business, professional, and personal work income.

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