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V2978-18 19 November 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción por transmisión de empresa

Business transfer tax reduction requires donor to cease management functions

A query was raised regarding whether the 95% reduction in Inheritance and Gift Tax can be applied if the donor, after gifting their pharmacy, is hired as an assistant or auxiliary pharmacist. The DGT ruled that the donor must cease exercising management functions and receiving remuneration for them from the date of the transfer.

The question raised

Possibility of applying the reduction provided for in Article 20.6 of the Inheritance and Gift Tax Law, if, following the donation, the donor is hired by the donee either as an assistant pharmacist or as a pharmacy assistant, prior to entering a state of active retirement.

The DGT's ruling

To apply the reduction, if the donor performs management functions, they must cease to perform them and cease to receive remuneration for such functions from the date of the transfer. The DGT cannot determine whether the duties of an assistant pharmacist or pharmacy assistant involve management functions or not, as this is a factual assessment that must be carried out by the managing body according to the circumstances.

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