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Practical Heritage Manual 2021.

Example: Exemption from holdings in certain entities

Mrs. VGC has obtained net income from work in the 2021 financial year amounting to 50,000 euros.

He has also obtained 120,000 euros in net income from the exercise of a professional activity that he carries out on a regular, personal and direct basis. The assets and rights related to the exercise of this activity are exempt from the Wealth Tax in said year when the requirements for this purpose are met.

Ms. VGC also holds a 33% stake in the share capital of the corporations "Alfa" and "Beta", which are not listed on the stock exchange and are not subject to the regime of asset-holding companies.

In both companies he performs management functions, receiving the following remuneration in the 2021 financial year as employment income:

  • SA "Alpha": 15,000 euros.
  • SA "Beta": 76,000 euros.

According to the accounting records of SA "Beta", duly audited, the net value of the entity's assets allocated to the development of economic activity amounts to 2,000,000 euros, in the year 2021 being 2,600,000 euros the total value of the entity's net assets in said year. Furthermore, according to the entity's accounting data, the value of Ms VGC's participation, for the purposes of the Wealth Tax, amounts to 150,000 euros.

Determine the value of the shares exempt from the Wealth Tax in the 2021 financial year.

Solution

1. Participation percentage:

The owner of the shares meets the minimum percentage of participation required for the application of the exemption in each of the two companies.

2. Percentage of remuneration for management functions performed within each entity:

  • SA "Alpha": 15,000 x 100 ÷ 65,000 = 23.08 per 100
  • SA "Beta": 76,000 x 100 ÷ 126,000 = 60.32 percent

The percentage of remuneration is calculated separately for each of the entities, without taking into account in either case the net income from the economic activity carried out by Ms. VGC, whose assets and rights are exempt from Wealth Tax, or those obtained in the other entity.

In view of the percentages obtained, only the exemption of the shares in SA "Beta" is appropriate, since the remuneration for the management functions performed in this company is greater than 50% of the net income from work obtained in the 2021 financial year.

3. Determination of the exempt amount of the participations:

Since there are assets and rights within the balance sheet of SA "Beta" that are not affected by the exercise of economic activity, the specific value of the exempt shares is determined as follows:

150,000 x 2,000,000 ÷ 2,600,000 = 115,384.62 euros.