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V3058-23 23 November 2023 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · exención

Exemption on shareholdings depends on whether the investee entity's assets are used for its business activity

A taxpayer has enquired whether the exemption on their shareholdings in an entity can include the value of an art collection held by a subsidiary. The DGT has ruled that the exemption on shareholdings depends on whether such assets are necessary for the entity's economic activity.

The question raised

Question posed: Whether the scope of the exemption in Wealth Tax on the holdings in the taxpayer's entity A, as referred to in the last paragraph of Article 4.Eight.Two of Law 19/1991, must also extend to the value that proportionally corresponds to said collection of works of art with respect to the total value of the holdings in entity A.

The DGT's ruling

To determine the scope of the exemption in Wealth Tax on holdings, it must be identified which assets are used for business activity. In the case of a controlled entity, it must be determined whether the assets (such as an art collection) are necessary for the development of its economic activity. The assessment of this use is a factual matter that must be determined by the Tax Administration.

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