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V4133-15 23 December 2015 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · nuda propiedad

Application of the 95% reduction on the donation of bare ownership of shares and its consolidation

The taxpayer inquires about the valuation of the bare ownership of shares and the application of the 95% reduction for Inheritance and Gift Tax. The DGT clarifies that the benefit applies if the requirements of Law 29/1987 and the Wealth Tax exemption are met.

The question raised

Question posed: Value of the bare ownership, settlement of Inheritance and Gift Tax to be carried out by the bare owners, taxation at the time of consolidation of ownership, and applicability of Article 20.6 of the Inheritance and Gift Tax Law

The DGT's ruling

The donation of bare ownership of shares allows for the application of the 95% reduction in the taxable base if the requirements of Article 20.6 of Law 29/1987 and the exemption of Article 4.Eight.Two of Law 19/1991 are met. The value of the bare ownership is the difference between the fair market value of the shares and that of the usufruct. Upon consolidation of ownership due to the death of the usufructuary, taxation as a donation shall be carried out based on the value the shares held at the time of the dismemberment of ownership. In this case, the remainder of the reduction shall be applied if it could not be fully applied at the time of acquisition due to insufficient taxable base.

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