Personal Income Tax exemption for the donation of company shares by individuals over 65

The Dirección General de Tributos (DGT) has analyzed the taxation in Personal Income Tax (IRPF) arising from the donation of company shares by an individual over 65 years of age who holds the position of director in the transferred company.

What the DGT has ruled

The inquiry focuses on determining whether the transaction must be taxed as a capital gain or loss in the IRPF, considering that the donor is over 65 years old, is a director of the company, and will cease to receive remuneration following the donation, which represents more than half of their total income. The analysis is based on the Personal Income Tax regulations and Law 29/1987 on Inheritance and Gift Tax.

The key point lies in the application of Article 20.6 of the Inheritance and Gift Tax Law, which establishes specific conditions so that the transfer of assets by persons over 65 years of age does not generate a capital gain subject to taxation in the IRPF.

What it means for you

For a taxpayer who holds shares in a company, this criterion is relevant if a gratuitous transfer is being considered. If the legal requirements are met, the donation of these shares could avoid generating a capital gain that must be declared in the income tax return. This is especially relevant for executives or owners planning a transition in the ownership and management structure of their company, and who see how their income structure changes after the operation.

The direct relevance falls on the donor, who could avoid the tax burden in the IRPF as long as the operation falls strictly within the provisions of the inheritance and gift tax regulations.

What should be done

In the event of a possible transfer of shares, it is necessary to verify strict compliance with the requirements demanded by current regulations. The donor's income situation and their position in the company are determining factors in the tax classification of the operation. It is recommended to assess each particular situation to ensure that the exemption is applicable and to avoid contingencies with the Tax Administration.