Exempt amount

Once the aforementioned requirements and conditions have been met, the exemption extends to the total value of the shares , provided that the entire net worth of the entity is allocated to the economic activity carried out.

In this case, the following rules must be taken into account to determine the amount of the exemption:

• The value of both the assets and the debts of the entity will be that which is deduced from its accounting, provided that this faithfully reflects the true financial situation of the entity, determining said values, in the absence of accounting, in accordance with the criteria of the Wealth Tax.

• To determine whether or not an asset is affected by an economic activity, the provisions of articles 29 of the Personal Income Tax Law and 22 of its Regulations will apply.

• In securities lending transactions, the securities loaned are not counted by the lender for the purposes of this exemption.

However, if the entity's assets contain assets and rights that are not related to the development of any economic activity, the exemption will only apply to the value of the shares in the part that corresponds to the proportion existing between the assets related to the exercise of an economic activity, less the amount of the debts derived from the activity, and the total value of the entity's net worth.

For these purposes, those elements intended exclusively for the personal use of the taxpayer or any of the members of the family group referred to in number 3 above, or those that are transferred for a price below the market price to related persons or entities in accordance with the provisions of article 18 of the LIS are not considered to be affected elements.

In such cases, the following formula may be used to determine the value of the exempt shares:

Value of the shares x (net value of the affected assets ÷ net equity value of the activity)