BackFrom now on, donors will no longer be able to apply the capital losses suffered between the acquisition and the donation of the property to reduce the tax base, although they will be obliged to include the gains in the IRPF, in case they have occurred.
This decision of the Supreme Court invalidates the previous interpretation of the High Court of Justice (TSJ) of the Valencian Community and results in a strong fiscal impact on donations of real estate, shares, participations or companies to family members.
The resolution establishes that “the capital losses that are produced by a lucrative transfer inter vivos [donation in life] should not be computed in the taxable base of the IRPF of the transferor, even if in unity of act capital gains derived from the same type of transfers are declared”.
The Supreme Court thus interprets Article 33.5.c of the Personal Income Tax Law, which establishes that those “due to lucrative transfers by inter vivos acts or liberalities” shall not be computed as capital losses. This interpretation contradicts the position of the SCJ of the Valencian Community, which considered that capital losses should be computed, arguing that the exclusion of the article referred only to the capital loss and not to the tax loss.
The Supreme Court held that taxing the gains but not allowing the losses generated by this type of transfer would be contrary to the principles of equity and contributive capacity. However, the Supreme Court rejects this argument and holds that the wording of the article leaves no room for doubt: capital losses should not be computed in the personal income tax base of the transferor.
With this ruling, the Supreme Court concludes a legal debate that has generated concern among tax experts. The repercussions of the ruling affect all taxpayers who make donations to family members, especially those who pass on assets prone to variations in value between the time of acquisition and the donation, such as shares or stocks.
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