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V2971-15 7 October 2015 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción por empresa familiar

The 95% reduction in Inheritance Tax may be applied if the company benefits from an exemption in Wealth Tax

The taxpayer asks whether the family business reduction is applicable in Inheritance Tax following the death of a spouse in a real estate leasing company. The DGT responds that it is possible provided that the requirements for exemption in Wealth Tax and the specific conditions of the inheritance rule are met.

The question raised

Question posed: Applicability, in the event of the taxpayer's death, of the reduction provided for in Article 20.2.c) of the Inheritance and Gift Tax Law.

The DGT's ruling

To apply the 95% reduction under Article 20.2.c) of Law 29/1987, it is a necessary condition that the assets (company, business, or shares) were previously exempt from Wealth Tax. In the case of a leasing company, the wealth tax exemption requires that the entity's main activity is not the management of real estate assets and that the requirements for participation and management functions are met. If these conditions and the permanence requirements are met, the reduction is applicable.

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