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V3451-19 16 December 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · reducción en la base imponible

The 95% reduction in Inheritance Tax may be applied to the donation of shares if the exemption requirements for Wealth Tax are met

The applicants inquire whether they may apply a 95% reduction in Inheritance and Gift Tax for the donation of company shares. The DGT explains that for this to occur, the shares must be exempt from Wealth Tax and conditions regarding the donor's age, their cessation from management duties, and the tenure of the donees must be fulfilled.

The question raised

Question posed Whether the 95 percent reduction provided for in Article 20.6 of Law 29/1987, of December 18, on Inheritance and Gift Tax is applicable.

The DGT's ruling

To apply the 95% reduction in I&GT for the donation of shares, these must be exempt from Wealth Tax, which requires the entity to carry out an economic activity and meet participation and management requirements. The donor must be 65 years of age or older or be in a state of incapacity, and must cease to perform management duties and receive remuneration for them. The donees must maintain the acquired assets and preserve the right to the Wealth Tax exemption for ten years.

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