SUPREME COURT SENTENCE MAY 26, 2016.
SOURCE: LEGAL NOTICES.
For the application of the 95% bonus on the taxable amount of the Inheritance Tax, by transmission of a family business (article 20. 2. c) of Law 29/1987, of December 18), it is not required that The heir holds shares of the company at the time of the accrual, provided that the requirement is fulfilled to exercise effective management functions in the company and is part of the family group.
This was reiterated by the Third Chamber of Administrative Litigation of the Supreme Court in two rulings issued today (judgments number 1204/2016, May 26 and 1776/2016, July 14, respectively, of which has been rapporteur The judge Martínez Micó).
The issue that is discussed in both judgments is “if, in order to enjoy the fiscal bonus analyzed, it is necessary that the person who is part of the family group and who fulfills the requirement to exercise effective management functions of the family business, Majority of its income, it must also hold a stake in the capital of said company. ” Both the central administration, through the lawyer of the State, and the lawyer of the Community of Madrid, answered affirmatively, not to mention that the daughters of the deceased were holders of shares of the company at the time of the accrual and therefore did not form part of the family group.
Transfer of social contributions from the offender to his spouse and children
In the case examined, it was a case of transferring inheritance of social shares of a family business to the two daughters and the husband of the deceased, in terms of the usufruct vidual, being the two sisters who have long exercised the functions Directives and the income they receive constitutes 100% of their annual income, and also, with 100% of the social units in the family. Before the decease of the deceased, her husband and the latter had 100% of the social shares in the family business and they were exempt from the Estate Tax, and, once it happened, the two daughters and the widower continue to hold 100 % Of them, the two daughters being the ones that exercise the functions of direction.
Purpose of the bonus
In its judgment, the TS begins by recalling the purpose of this bonus, which is to “exclusively favor business assets that meet certain requirements through which their ‘family’ character was externalized, regardless of whether it was an individual company or Of shares in entities “.
“Consequently, the Chamber continues, in the face of doubt, it must always be to the finalist interpretation of the rule, so that if what is intended is the granting of a benefit to family businesses to facilitate, as far as possible, their transmission Avoiding an eventual liquidation for the payment of the donation tax, it is logical to interpret the rule in a way tending to that purpose. “(FD Sixth.3)
Legal requirements for the application of the bonus
The Board then recalls that “For both cases of death and participation in entities, sections 2 and 6, respectively, of article 20 of Law 29/1987, of December 18, on Inheritance and Donation Tax , Establish as a prerequisite for the application of the reduction that in both sections provides for the exemption of such shares in the Tax on the property of the originator or donor as appropriate.
This prior condition means that the requirements set forth in Article 4. Eight must be met in respect of such shares. Two of the Law 19/1991, of June 6, of the Tax on Patrimony “.
“The first requirement is the need for the participation of the taxpayer in the capital of the entity to be at least 5% computed individually or 20% jointly with the relatives considered by the law in the family group Tax on the Patrimony, spouse, ancestors, descendants or collateral of second degree, already has its origin the kinship in the consanguinity, in the affinity or in the adoption). ”
According to the Chamber, this requirement “demonstrates – as said the judgment of this Chamber of April 28, 2016 (Cassation 2639/2014) – that the share in the capital must occur in the cause, although, as it turns out Logical, as a consequence of his death, and from then on, the requirement must be given to the heir, either alone or in conjunction with others, “but” Nowhere is it required that the taxable person, prior to the accrual of the tax, must Bear a title other than that which occurs with hereditary succession. ”
The second requirement is that it refers to the need for the taxable person to effectively perform functions involving the administration, management, coordination, and operation of the undertaking, irrespective of the name used to qualify the Functions performed by the subject in the commercial entity, (STS January 18, 2016, marriage unification doctrine 2316/2015), receiving therefore a remuneration that represents more than 50% of the total of business, professional and personal work income . ”
In this respect, the Chamber concludes that “This second requirement also does not result in the obligation of the person exercising the management functions to be the owner of shares, which may belong to the family group.” (FD Sixth.4)
Typical assumption of transmission of a family business
And in order to resolve the alleged plantedo, the TS explains that to the extent that the company, company or participation enjoys an exemption in the Tax on the Estate, the transfer by inheritance of the same or the actions in which it is represented will have a reduction of 95% in the taxable amount of the Inheritance and Donations Tax of the acquirer, provided that the acquirer is in the subjective scope of the kinship group delimited by the Law.
“The fact that the company, the business or the shares in question are exempt from the tax on capital, shows that the share of capital must be in the As a matter of course, as a consequence of his death, and thereafter, the requirement must be given to the heir, either in person or in conjunction with others. In no place is it required that the taxable person, prior to the accrual of the tax, must bear a title other than that which occurs with hereditary succession.
“Consequently,” says the Supreme Court, “it is clear that [the assumption raised in the case] is the most typical assumption of transmission of family business to the children and widower of the offender, being in this case Tax benefits that favor said transmission “, thus avoiding an eventual closure of the family business to pay the inheritance tax.