Donation of shares: no minimum holding period required

The transfer of social shares of family businesses to descendants is a key operation in succession planning. Recently, the Directorate General of Taxes (DGT) has issued a relevant ruling regarding the holding period required to access the reduction provided for in the Inheritance and Gift Tax Law (LISD).

What the DGT has ruled

The query concerned how much time must elapse following a capital increase (through the contribution of real estate from the community property) so that the subsequent donation of shares to a child can benefit from the reduction under article 20.6 of the LISD.

The DGT has ruled that a specific period of holding the shares in the donors' assets is not necessary. The criterion establishes that the exemption requirements must be met at the time the donation accrues, i.e., the day the act or contract is executed. In the case of inter vivos acquisitions, the family control percentage requirement must exist during the tax period preceding the donation.

What this means for you

This criterion is fundamental for donors seeking to transfer control of their businesses to their children with tax benefits. The resolution confirms that the law does not require a waiting or maturation period for the ownership of the shares before proceeding with the donation.

However, it is important to note that the capital structure and the company's activity are elements that directly influence compliance with the exemption requirements. The validity of the tax benefit will depend on whether, at the time of the donation, the control and activity conditions required by current regulations are met.

What you should do

Since the application of the reduction depends on the fulfillment of specific requirements at the time of accrual, it is necessary to analyze the asset situation and the company structure before formalizing the transfer. Each scenario of capital increase or change in shareholding composition must be evaluated to ensure that the family control percentages required by Law 29/1987 are met.