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Substantial reduction: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Refined position High confidence 10 rulings · 2014–2023

Current position

Maintaining the value required by the Law does not require the continuity of the activity, but rather the maintenance of the acquisition value. To avoid substantial reduction, the taxpayer may reinvest the proceeds in real estate, shares, investment funds, deposits, or financial products. If the value is maintained within the taxpayer's assets through these assets, no substantial reduction occurs.

The DGT's position has moved from a restrictive approach focused on the total loss of the right due to a lack of proportionality in the transfer, to a more flexible criterion. Currently, it is confirmed that maintaining the value does not require continuity of the activity and allows for reinvestment in various financial products to avoid reduction.

Turning points

  1. V0042-22

    Clarifies that maintaining the value does not require the continuity of the activity and allows for reinvestment in various financial products to avoid substantial reduction.

  2. V1462-23

    Confirms that in the event of a capital reduction, if the heir maintains the acquisition value within their assets through other assets, no substantial reduction occurs.

Analysis based on 10 of 10 rulings with a stated position. Updated 29 September 2026.

Rulings on this topic

10
V2419-14 12 Sept 2014

Selling a pharmacy share below its acquisition value may result in the loss of tax relief

SG de Impuestos Patrimoniales, Tasas y Precios Públicos
reducción por empresa familiarminoración sustancialadquisición mortis causaparticipación indivisarequisito de permanencia LISD — Ley 29/1987 de Sucesiones y Donaciones art. 20.2.cLISD — Ley 29/1987 de Sucesiones y Donaciones art. 20.6
Affects CompanyExpat · Non-residentIndividual

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