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'Splitting', family businesses and donations: how the rich prepare to avoid the new tax on large fortunes

2022-11-24T11:28:07.626Z

The solidarity tax will be applied to assets of more than three million The processing of the new tax on large fortunes is advancing: the Government has accelerated the procedures and wants to have it ready before the end of the year. In parallel, inquiries to tax advisers and lawyers are growing to try to avoid the tax or, at least, lower it. There are several stratagems, depending on the amount and the composition of the wealth: generating a splitting effect , which



The processing of the new tax on large fortunes is advancing: the Government has accelerated the procedures and wants to have it ready before the end of the year.

In parallel, inquiries to tax advisers and lawyers are growing to try to avoid the tax or, at least, lower it.

There are several stratagems, depending on the amount and the composition of the wealth: generating a

splitting

effect , which is nothing more than dividing the assets, for example through donations;

create family businesses;

acquire exempt assets or defer income in personal income tax.

The room for manoeuvre, however, is limited, explains Luis del Amo, tax adviser and technical secretary of the General Council of Economists: there is little time to plan and many requirements to meet.

The new solidarity tax on large fortunes —this is the official name of the tribute— will be calculated on this year's financial year and will be paid starting at three million euros, with increasing rates.

Its structure is the same as the wealth tax that the communities manage: there is a minimum exemption of 700,000 euros and 300,000 euros are left out of the habitual residence, the family business or debts.

So that there is no double taxation, this last tax will be deductible in the new tax.

The government revenue forecasts are 3,000 million in the two years that it plans to maintain the tax (2023 and 2024).

The bulk of this income will come from Madrid, the only community that does not charge wealth tax as it is 100% subsidized and where inquiries to specialized offices have multiplied.

Family business

The family business is one of the first options that is considered.

Their shares are exempt from wealth tax and, therefore, from solidarity.

To do this, you must own at least 5% of the capital individually or 20% on a family scale.

"But there are other conditions," warns Del Amo.

In the first place, the company must be involved in an economic activity.

In addition, the taxpayer or one of the family members must direct management functions and obtain from the company more than 50% of their income from work and activities during the year.

"Therefore, it is not easy to adapt the unplanned at this point," adds the prosecutor.

If the company is of a patrimonial nature —that is, the financial activity prevails over the economic activity for 90 or more days—, things get complicated because it will not be exempt from the new tax.

This circumstance is common with

family offices

, investment platforms that are in charge of managing family fortunes and that usually have large amounts placed in funds and shares, without being really involved in any business, so the assets would have to be rearranged and changed. his, her nature.

Housing and works of art

The most recurring way to reconvert assets is to go to the real estate sector: buy homes and rent them.

In this case it is necessary to hire a full-time person;

otherwise, the activity will be considered patrimonial.

Investing in paintings, sculptures or antiques that meet certain requirements can also reduce the tax bill, although there are limits depending on their price.

For works of art of great value, there is the possibility of assigning them to museums or foundations for at least three years.

share packages

Another widely used formula to reduce the bill is the 5% share packages, also exempt if they have been owned for a year or more and the investee company is not patrimonial.

"This is, in itself, a private banking product: offering these

family offices

5% packages," explains a lawyer for the sector, who adds that this scheme and the family business are the most in demand right now.

Income-equity limit

Another technique is to make the most of the income-equity limit.

The share of these two taxes cannot exceed 60% of the sum of the tax bases (general and savings) of the income tax.

If it occurs, the estate lien is reduced up to that limit, without the reduction exceeding 80%.

The rule is that the less income you have, the less equity you pay.

For this reason, the advisors recommend deferring income in personal income tax, encapsulating them in a vehicle such as life insurance.

divide the wealth

The offices also put the splitting

effect on the table

.

This term comes from the English separate and refers to the division of assets so that it remains below the threshold set by the tax.

A taxpayer with a fortune of five million can donate part of it - operations in favor of children are usually the cheapest - and keep less than 3.7 million.

This would avoid the obligation to pay taxes.

"Be careful with what is donated that is not money, because it can generate capital gains in personal income tax and skip the municipal tax (IIVTNU, or municipal capital gains)," warns Del Amo.

In other words, there is a risk of paying an amount greater than the savings that are intended to be produced.

Another technique is to take advantage of the marital property regime, in which each spouse has 50% of the assets.

If one of the two has a property of a private nature, from an inheritance, for example, he can transfer it to the community of property.

What is the advantage?

That this formula has no tax cost: it is not a donation, nor does it mean an increase in assets.

Change of address

When the Government announced the intention to create a new tax, many taxpayers began to study the possibility of moving abroad, with Portugal as a favorite destination.

But it is not so easy to stop being a tax resident in Spain.

The law requires that taxpayers live in another country for more than half the year, although it also takes into account where their center of vital and economic interests is, such as companies, assets, accounts, family relationships, which are more complicated to transfer.

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Source: elparis

All business articles on 2022-11-24

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