Regulates article 1 of the Law 19/1991, of June 6, of the Wealth Tax (hereinafter, LIP) that the purpose of the tax is to tax the net assets of natural persons, this being the set of assets and rights of economic content. Regarding the set of goods and rights, not all of them are taxed, but the LIP establishes a valued list of those that are considered exempt for tax purposes, among them, social participations.

Article 4. Eight. LIP says: “the assets and rights of natural persons necessary for the development of their business or professional activity will be exempt from the tax, provided that these are exercised in a habitual, personal and direct manner by the taxable person and constitute their main source of income. . For the purposes of calculating the main source of income, neither the remuneration of management functions performed in entities that do not meet all the requirements, nor any other remuneration that arises from participation in said entities will be counted. ”. Regarding the requirements, briefly, the LIP establishes the following:

  1. That the entity, whether corporate or not, does not have as its main activity the management of movable or real estate assets
  2. That the participation of the taxpayer in the capital of the entity is at least 5 percent computed individually, or 100 percent jointly with his or her spouse, ascendants, descendants or second-degree collateral, whether the relationship originates in consanguinity, affinity or adoption
  3. That the taxable person effectively exercises management functions in the entity, thereby receiving remuneration that represents more than 50% of the total business, professional and personal work income.

These last two sections have been and continue to be “a problematic point” and where the call arises “compass theory”. In 2021, the General Directorate of Taxes consolidated the change in administrative criteria in relation to the person who must serve as a reference to delimit the perimeter of the family group, applying a restrictive interpretation.

Notwithstanding the above, a recent Judgment of June 16, 2023 of the Regional Economic-Administrative Court of Catalonia, more positive, has resolved in relation to the remuneration requirement the following: “It is not required that the person who exercises management functions has to be the owner of the shares, and these may belong to the family group. […] It cannot be accepted that in the case of sole proprietorships there is no family group, since it is an interpretation that is excessively attached to the literal of the law […], “family” compliance with the requirement provided for in letter c) of the art. 4. Eight. TWO LIP in the case of sole proprietorshipss. »

In short, in the case of sole proprietorships, the remuneration requirement will be deemed to have been met even when these are carried out by another relative of the family group, and the sole partner, a taxable person, may apply the exemption provided for in article 4. Eight. LIP, as well as the reduction of article 20.2.c) of the LISD, without receiving any remuneration from the company.

Kristina rubanenko

Tomarial Tax Area

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