Emma S. Corretger analyzes the new tax uncertainty for family businesses in Expansión

On December 8, 2024, Expansión published an opinion piece by Emma S. Corretger, partner and expert in family business taxation at CIM Tax & Legal, analyzing recent Supreme Court rulings and their impact on the tax benefits applicable to family businesses.

Through two rulings issued in October and November 2024, the Supreme Court is establishing a new criterion regarding the period to be considered for determining compliance with the primary income source requirement in donations. This change directly affects key taxes such as the Inheritance and Donations Tax (ISD) and the Personal Income Tax (IRPF), creating a new challenge for the tax planning of entrepreneurial families.

According to the regulations, one of the requirements to obtain these benefits is that the taxpayer, or someone within the "family group," must perform management functions in the company whose shares are being donated and receive compensation for these functions that represents more than 50% of their income from work and economic activities. The Supreme Court's new criterion establishes that the period to consider for verifying compliance with this requirement is from January 1 until the date of the donation, rather than the previous year, as was previously applied based on the 1999 Resolution and the criteria set by the Directorate-General for Taxes (DGT).

This change, which mainly affects donations made at the beginning of the year, creates uncertainty in the sector, as family businesses relying on the previous interpretation by the DGT may be at risk of inspection if they fail to meet the new criterion. Furthermore, Emma S. Corretger highlights the need for greater clarity and stability in tax regulations to avoid these issues and ensure proper planning for family businesses.

The article emphasizes the importance of staying informed about the regulations applicable in each autonomous community, such as in Catalonia, which has specific regulations regarding the Inheritance Tax.

You can read the full article here.

At CIM Tax & Legal, we thank Expansión for allowing us to share our expertise and María Galán for her ongoing collaboration with our team.