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V3204-18 17 December 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · permuta de cuotas

Exchange of co-ownership shares is subject to Transfer Tax

Two married couples and a mother, who are co-owners of several estates, sought clarification on whether the allocation of these properties through a new redistribution of shares is exempt from Transfer Tax. The DGT ruled that, as the joint ownership is not being extinguished but rather the shares are being exchanged, the transaction constitutes an onerous transfer subject to tax.

The question raised

Whether the described allocations are exempt from tax under the Transfer Tax, being subject only to the Documented Legal Acts Tax.

The DGT's ruling

The allocation of assets that does not extinguish the community of property, but merely changes the distribution of ownership shares while maintaining co-ownership, constitutes a swap of shares. In this case, the dissolution of the community of property does not occur; therefore, the participants must pay tax under the concept of onerous transfers of property. The exemption for the dissolution of communities of property not engaged in business activities is not applicable if there is no extinction of the undivided interest.

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