Examples

Example 1: Donation of shares

Mrs. PSM On December 1, 1998, he acquired a package of shares in the Public Limited Company “Z” for an amount equivalent to 6,000 euros. On October 30, 2022, he donated them to his son, on the occasion of his twentieth birthday.

The valuation of the shares on the aforementioned date, according to their official market price, amounted to 7,500 euros, an amount that the son declared as their value for the purposes of the Inheritance and Gift Tax.

Solution:

This transaction has produced two capital gains:

• The first of them is the one obtained by Mrs. PSM since, despite having donated the shares to her son and not having received anything in return, the market value of the same during the time in which they were in her possession increased by 1,500 euros, an amount that constitutes a capital gain subject to IRPF , which must be understood as attributable to Mrs. PSM when transmitting them.

• The second gain is obtained by his son and amounts to 7,500 euros, an amount that coincides with the market value of the shares received. However, this gain is not subject to IRPF , but to the Inheritance and Gift Tax in which the child is considered a taxpayer.

Example 2: Dissolution of community property without alteration of assets

Mrs. RLM and Mrs. GLM They are sisters and in June 1995 they acquired a rural property through inheritance from their father, the value of which for the purposes of Inheritance and Gift Tax amounted to an amount equivalent to 3,000 euros, with notary, registry and Inheritance and Gift Tax fees amounting to the equivalent of 500 euros.

In March 2022, they decided to divide the property into two equal plots and each one was awarded full ownership of the corresponding plot, which was valued in the public deed of division at 30,000 euros.

Solution:

Since the action carried out by the sisters consisted solely of dividing the common property, each of them being awarded a plot corresponding to their share of ownership, no alteration of assets occurred in this act and, therefore, there is no capital gain for any of them. Each of the plots into which the property has been divided is incorporated into the assets of each sister for its original value, (3,000 + 500) ÷ 2 = 1,750 euros, and with the seniority of June 1995.

Example 3: Dissolution of communities of property with excess allocation

The same example above if one of the sisters were awarded the entire property, compensating the other in cash for half the amount at which it is valued in the public deed of division of the same.

Solution:

In this case, there would have been an excess of allocation, understood as the difference in value, which generates a change in assets.

The compensation received by the sister to whom the asset is not awarded when the common property is divided would entail for her a capital gain subject to IRPF , since there is an update of the value of that asset between the time of its acquisition (3,500 ÷ 2 = 1,750 euros) and the time of its award (30,000 ÷ 2 = 15,000 euros) and this difference in value is positive (15,000 - 1,750 = 13,250 euros).

See in this regard the Supreme Court ruling of October 10, 2022, issued in cassation appeal no. 5110/2020. (RED: STS 3585/2022).

Example 4: Individual business donation 

Mr. JVC, 65, has donated his sole proprietorship founded 30 years ago to his son. The company meets the requirements set out in the Wealth Tax Law for its exemption, as well as those required for the application of the 95% reduction provided for in the Inheritance and Gift Tax Law.

Solution:

In the lucrative transfer of the company, the son (donee) may apply the 95% reduction contemplated in article 20.6 of the Inheritance and Gift Tax Law.

The father (donor) will not obtain any capital gain or loss in the transfer of his company, the donee being subrogated in the position of the donor with respect to the values and dates of acquisition of the assets comprising the company. In short, there is a deferral of taxation that will become apparent when the recipient transfers the respective assets.

Example 5: Transfer of habitual residence by persons over 65 years of age

The marriage formed by Mr. MPT and Mrs. JLC, aged 70 and 68, respectively, sold their habitual residence on May 25, 2022 for an amount of 250,000 euros.

The property was acquired by both spouses under a community property regime on 13 March 1980 for an amount equivalent to 60,000 euros, including the expenses and taxes inherent to the acquisition.

Determine the tax consequences of such transfer.

Solution:

Since both spouses are over 65 years old, the capital gain derived from the transfer of their habitual residence is exempt from IRPF