In gifts of family businesses from parents to children, in which assets not linked to the activity are included, the donor will be subject to income tax (IRPF) on a capital gain based on the proportion that these assets represent in the assets of the company.
This approach is reflected in a decision of the Central Economic Administrative Court (TEAC) of May 29, 2023, which has not yet been repeated and therefore does not constitute a consolidated doctrine. According to various tax advisors consulted, this represents a new disincentive factor for the transfer of companies during the life of the donors.
Therefore, taxation on the remaining assets is postponed, and if the related assets are held continuously for at least five years prior to the date of the transfer, the donor will not be subject to further taxation. In case of sale, the taxable person will be the recipient of the donation.
The approach adopted by the TEAC, supported by the Treasury, is based on the interpretation of Article 33.3 c) of the Personal Income Tax Law, which refers to Article 20.6 of the ISD Law, and the latter refers to Article 4 Eight of the IP Law. These provisions require that all assets of the estate of the entity whose shares are donated be related to the economic activity.
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